Dulles v. Johnson

A wealthy New York attorney, William Cromwell, left portions of his estate to the New York County Lawyers Association, the Association of the Bar of the City of New York, and the New York State Bar Association. His estate, through its executor Dulles (plaintiff), claimed charitable deductions for each of these bequests, but those claims were denied by the Commissioner of Internal Revenue (the commissioner) (defendant). The estate filed a claim for refund in the district court, but the claim was denied. The estate then appealed. While Internal Revenue Code § 812(d) [Editor’s Note: now § 2055] allowed deductions for all transfers to or for entities established and functioning exclusively for charitable, religious, educational, scientific, or literary purposes, the Code also prohibited allowing deductions for organizations whose activities substantially included propaganda or attempting to influence legislation. The district court leaned on the latter point to deny the deduction, finding that the legal associations existed primarily to benefit lawyers and to make recommendations on legislation. The court noted four primary activities of the associations: 1) regulating the unauthorized practice of law, 2) handling professional misconduct issues, 3) recommending judges, and 4) conducting activities in support of or in opposition to legislative proposals. The estate and the commissioner both appealed.