67 L.Ed.2d 376
101 S.Ct. 1408
450 U.S. 944
PRINCE EDWARD SCHOOL FOUNDATIONv.UNITED STATES
No. 80-484
Supreme Court of the United States
February 23, 1981

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.


1
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.


2
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- County, 377 U.S. 218, 223, 231, 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.


3
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. . . ."


4
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


5
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 of the community either through a newspaper of general circulation or over the broadcast media.


6
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).


7
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.


8
On cross-motions for summary judgment, the District Court upheld the Service's determination.  The District Court concluded:


9
"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 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


10
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 discriminate 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.


11
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, 1032, 16 L.Ed.2d 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.


12
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.


13
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 denying 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.


14
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.



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.


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.


