The Grange Insurance Association of California v. Commissioner of Internal Revenue

The Commissioner of Internal Revenue and the Tax Court have concluded that The Grange Insurance Association of California is not exempt from taxation under 26 U.S.C.A. § 501 (c) (8), which exempts organizations meeting the following description:

Appellant satisfies clause “(A)” since it is a fraternal association operating for the exclusive benefit of the members of a fraternity (the California State Grange) which operates under the lodge system.

As to clause “(B)”, appellant provides for the payment of benefits to its members, but the benefits compensate for property loss by fire, and the Commissioner and the Tax Court have interpreted the phrase “life, sick, accident, or •other benefits” in clause “(B)” to limit the application of the subsection to associations which pay benefits for injuries to the person as distinguished from injuries to property.

We read the statute differently. “Generally speaking, the language in the Revenue Act, just as in any statute, is to be given its ordinary meaning * *.” In ordinary usage, the adjectives “life” •and “sick,” qualifying “benefits,” suggest payments for non-property losses, but this is not true of “accident.” The adjective…