On petition for writ of certiorari to the United States Court of
Appeals for the District of Columbia Circuit.
The petition for a writ of certiorari is denied.
Justice REHNQUIST, with whom Justice STEWART and Justice POWELL
join, dissenting.
The initial question presented by this petition is whether the
Internal Revenue Service is entitled to deny tax-exempt status to a
private school which discriminates in its admissions policy. If so,
the additional question posed is what steps a private school must
take in order to establish that its admissions policy is in fact
nondiscriminatory.
Petitioner, Prince Edward School Foundation, was formed as a
nonprofit private school foundation to operate elementary and
secondary schools in Prince Edward County, Va. The principal
purpose for petitioner's establishment was to ensure a segregated
education for the white children who attended petitioner's schools.
Griffin v. School Board of Prince Edward-
Page 450 U.S.
944, 945
County,
377 U.S.
218, 223, 231 S., 84 S. Ct. 1226, 1229, 1233, 12 L. Ed. 2d 256
( 1964). Presently, petitioner's sole activity is the operation of
one private school, Prince Edward Academy.
From 1959 until 1970, petitioner was considered by the Service
as a tax-exempt organization within the terms of 501(c)(3) of the
Internal Revenue Code of 1954, 26 U.S.C. 501(c)(3). Section 501(a)
of the Code exempts from the federal income taxes organizations
described in 501(c)( 3), and this latter provision includes
corporations or foundations " organized and operated exclusively
for religious, charitable, scientific , . . . literary, or
educational purposes. . . ."
In 1970, the Service announced that it would no longer recognize
the tax-exempt status of any private school unless the school
adopted and administered a nondiscriminatory admissions policy.
This new position was announced during the course of litigation in
Green v. Connally,
330 F.
Supp. 1150 (DC 1971), in which the Service's prior policy was
being challenged. A three-judge panel in Green thereafter ruled
that a private school is not entitled to acquire or retain exempt
status under 501(c)(3) unless it has a racially nondiscriminatory
admissions policy. Although 501(c)(3) does not, by its express
terms, impose such a limitation on the right to tax-exempt status,
the Green court reasoned that such a limitation was mandated by
both public policy and the common-law definition of " charitable."
1
To effectuate its new policy regarding tax exemptions for
private schools, the Service issued Revenue Procedure 72-54
(currently Rev.Proc. 75-50, 1975-2 Cum.Bull. 587), which requires a
private school seeking tax- exempt status to publicize its
nondiscriminatory admissions policy to all segments
Page 450 U.S.
944, 946
of the community either through a newspaper of general
circulation or over the broadcast media.
Petitioner has continuously refused to publicize that its school
has a racially nondiscriminatory admissions policy, although it has
steadfastly contended that in fact this is the case. (App. to Pet.
for Cert. 49a). In 1978, the Service revoked petitioner's exempt
status because it "[had] not complied with the requirements of
Revenue Procedure 75-50 nor any of its guidelines that preceded it
and [has] not demonstrated that [it has] adopted a racially
nondiscriminatory policy as to students. . . ." (Id., at 18a).
Thereafter, petitioner brought this action under 26 U.S.C. 7428
to review the Service's determination regarding its tax-exempt
status, attacking both the statutory and constitutional validity of
Rev.Proc. 75- 50. Petitioner filed affidavits in the District Court
asserting that it has an open admissions policy and, although no
black student has ever attended its school, no black student has
ever applied for admission and no official of or personnel related
to the petitioner has ever done or said anything to discourage such
application. (App. to Pet. for Cert. 49a ). Petitioner also argued
to the District Court that since 1973 it has been subject to an
injunction entered by another District Court requiring it to admit
any qualified black applicants. McCrary v. Runyon,
363 F.
Supp. 1200 (ED Va. 1973), aff'd,
427 U.S. 160, 96 S. Ct.
2586, 49 L. Ed. 2d 415 (1976). No contention has been made that
petitioner is in violation of that injunction order.
On cross-motions for summary judgment, the District Court upheld
the Service's determination. The District Court concluded:
"It is accordingly undisputed that
the plaintiff has never admitted, never received an application
from, and thus has never denied admission to a black person.
Notwithstanding the absence of direct evidence in either party's
favor, it remains the plaintiff's burden to establish that
Page 450 U.S.
944, 947
its policy is to admit black students on the same basis as those
of other races. The plaintiff has failed to present any evidence to
that effect. On the other hand, the inference that plaintiff in
fact administers a racially discriminatory policy may be drawn from
the circumstances surrounding the school's establishment. . . . A
further inference that plaintiff administers a racially
discriminatory admissions policy can be drawn from the fact that
plaintiff has previously conceded that it practiced a racially
discriminatory policy of exclusiveness, was subsequently enjoined
from such practices by court order, but has failed to present any
evidence that it has since modified that policy." 2
The questions presented by this petition are of widespread
importance . The validity of the Service's policy of denying
tax-exempt status to private schools which have a racially
discriminatory admissions policy is not apparent from a reading of
the relevant provisions of the 1954 Code. Section 501(c)(3) speaks
to a number of different types of organizations which are entitled
to tax-exempt treatment. Separate references are made to
"educational" and "charitable" organizations. Arguably, these
separate references reflect Congress' intent that not all
educational institutions must also be charitable institutions (as
that term was used in the common law) in order to receive
tax-exempt status. Moreover, for statutory interpretation purposes,
it is difficult to distinguish between private schools which
discriminate on the basis of race, private "religious" schools
which dis-
Page 450 U.S.
944, 948
criminate on the basis of religion, and private "religious"
schools which discriminate on the basis of race but claim that
separation of the races is one of the tenets of their religion.
Certainly, the Service has never proffered any persuasive reason
why these situations should be treated dissimilarly.
Given the general rule that words of a statute, including the
Revenue Acts, should be interpreted where possible in their
ordinary, everyday sense, Malat v. Riddell,
383 U.S.
569, 571, 86 S. Ct. 1030, 1032d 102 (1966); Hanover Bank v.
Commissioner,
369 U.S.
672, 687, 82 S. Ct. 1080, 1089, 8 L. Ed. 2d 187 (1962), the
authority of the Secretary of the Treasury to promulgate this
policy regarding the tax status of private schools is sufficiently
questionable to merit review by this Court. Perhaps, implementation
by the Service of the express language of the statute will, as
suggested by the District Court in Green v. Connally, supra, create
problems of a constitutional nature. That, however, is a question
that this Court, as opposed to the Service, is better equipped to
address.
Assuming, arguendo, the validity of the Service's policy
pertaining to private schools, the determination made by the
District Court that petitioner does not qualify for tax-exempt
treatment is questionable on the record before us. Petitioner was,
and still is, under a court order not to discriminate in its
admissions. No contempt proceedings have been initiated against the
petitioner for violation of that order. Moreover, the District
Court had before it sworn affidavits that petitioner has an open
admissions policy. Admittedly, petitioner refused to advertise this
open admissions policy, but the Service's requirement of such is
one step further removed from the express language of the statute
and therefore of even more questionable statutory and
constitutional validity.
Not surprisingly, petitioner has not had the opportunity to
demonstrate the sincerity of its open admissions practice.
Petitioner has retained, and in fact teaches, its belief that
racial segregation is desirable. The Court, however, has upheld the
First Amendment right of parents to send their children to
educational institutions such as petitioner's, although we have
condemned as unlawful the practice of deny-
Page 450 U.S.
944, 949
ing admission to such institutions on account of race. McCrary
v. Runyon,
427 U.S.
160, 176, 96 S. Ct. 2586, 2597, 49 L. Ed. 2d 415 (1976). It is
easy to understand why any black parents would not seek their
child's admission to an "educational" institution which seeks to
inculcate the merits of segregation in the value system of its
students. It is not at all unlikely that petitioner will never
receive an application for the admission of a black child. This,
however is of no relevance to the narrow question of whether a
black child, if he desired to attend petitioner's institution,
would in fact be granted admission on the same basis as a white
child. The Service presented no evidence to rebut the evidence
brought forth by the petitioner that this would be the case.
Because I believe the time has come for this Court to deal with
the difficult statutory and constitutional questions raised in this
petition, I dissent from the denial of the petition for a writ of
certiorari.
Footnotes
Footnote 1 This Court
summarily affirmed the District Court's decision, sub nom. Coit v.
Green, 404 U.S. 997, 92 S. Ct. 564, 30 L. Ed. 2d 550 (1971), but we
later explained in Bob Jones University v. Simon,
416 U.S. 725, 740, n. 11,
94 S. Ct. 2038, 2047, 40 L. Ed. 2d 496 (1974), that this affirmance
lacks precedential weight because no controversy remained in Green
by the time the case reached this Court.
Footnote 2 The District
Court did not address petitioner's statutory and constitutional
challenges to Rev.Proc. 75-50. The court reasoned that a ruling on
the validity of this Revenue Procedure would not affect the
ultimate question of whether petitioner was in fact administering a
nondiscriminatory admissions policy. The opinion of the District
Court was affirmed in a per curiam order by the Court of
Appeals.
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