Federal Employees Dist. Co. v. Franchise Tax Bd.

—This is an appeal from a judgment which in effect ordered a refund of franchise taxes paid by Federal Employees Distributing Company, a corporation (hereinafter called Fedco), in the amount of $67,213.71.

In a complaint filed May 18, 1965, plaintiff sought to recover a judgment for $67,213.71 from the Franchise Tax Board for and because of illegally assessed and collected taxes.

Fedco was organized in 1949 under the General Nonprofit Corporation Law IIand has its principal office in Los Angeles County. During the years in question, 1957-1964, it operated stores in Southern California and sold consumer goods to its members and their guests. The members of Fedco pay $2 at the time they join and receive at such time a membership certificate. This fee is the only payment required by Fedco from its members ■ there is no renewal fee, nor are there any dues or other periodic payments. The single fee is Fedco’s sole source of paid-in equity capital. At the start of Fedco’s business in 1949 approximately 2,000 federal employees contributed $4,000 in capital for the operation of the business— no other capital funds were provided. The purpose of the members was to organize and provide a…