Andrews v. United States

• Decision Date: 01 November 1961
• Docket Number: No. 112-59.,112-59.
• Citation: 295 F.2d 819
• Parties: John P. ANDREWS, Albert Boyd and Gladys Boyd, William E. Cox and Lillian I. Cox v. UNITED STATES.
• Court: U.S. Claims Court

295 F.2d 819 (1961)

John P. ANDREWS, Albert Boyd and Gladys Boyd, William E. Cox and Lillian I. Cox v. UNITED STATES.

No. 112-59.

United States Court of Claims.

November 1, 1961.

Peter H. Behr, San Francisco, Cal., for plaintiffs.

J. Mitchell Reese, Jr., Dept. of Justice, Tax Division, Washington, D. C., with whom was Asst. Atty. Gen. Louis F. Oberdorfer, for defendant. Lyle M. Turner and Philip R. Miller, Washington, D. C., were on the brief.

PER CURIAM.

This is a suit by plaintiffs who are taxi drivers for the recovery of income taxes paid by them for the years 1955-1957. The sole question involved is whether tips received by plaintiffs constitute gross income to them, as defined in section 61(a) of the Internal Revenue Code of 1954, 68A Stat. 17, 26 U.S.C. § 61 (1958 ed.), or whether the tips constitute gifts as defined in section 102 of the Code, 68A Stat. 28, 26 U.S.C. § 102 (1958 ed.). We believe that the tips received by plaintiffs are includable in gross income and in so holding we agree with and rely on the decision by the Tax Court in Roberts v. Commissioner, 10 T.C. 581, aff'd 9 Cir., 176 F.2d 221 (1948). See also Commissioner v. Duberstein, 363 U.S. 278, at page 285, footnote 7 (1960), 80 S.Ct. 1190, 4 L.Ed.2d 1218. Plaintiffs are therefore not entitled to recover and their petition will be dismissed.

It is so ordered.

Findings of Fact

The court, having considered the evidence, the report of Trial Commissioner William E. Day, and the briefs and argument of counsel, makes findings of fact as follows:

1. Plaintiffs John Andrews, Albert Boyd, and William Cox were employed as taxicab drivers in San Francisco, California, during the years 1955 through 1957. Plaintiffs Gladys Boyd and Lillian Cox are parties to this action for the sole reason that they filed with their husbands joint income tax returns for the years 1955 through 1957. (Hereinafter, all findings refer to the years 1955 through 1957 and the term "plaintiffs" refers to the plaintiff taxicab drivers.)

2. The plaintiffs were members of Chauffeurs' Union, Local 265. Each plaintiff was employed by the Yellow Cab Company of San Francisco, California.

3. By this action, the plaintiffs seek refund of income taxes paid for the years 1955, 1956 and 1957 as to which deficiencies had been assessed by the Commissioner of Internal Revenue on account of tips received by the plaintiffs. The question for determination is, are such tips gifts or gratuities, or compensation?

4. At the beginning of the trial, the parties stipulated and agreed that "tip" means the payment by a passenger to a taxicab driver of an amount of money over and above the required charge shown on the meter of the taxicab for the particular trip in which the tip was rendered, and that it was recognized by the passenger, the driver, and the employer that the tip was the personal property of the driver upon receipt. The tips were received concurrently with the payment of fares by passengers.

5. It was further stipulated and agreed to in words, as follows:

"* * * At no time during the said period did the three plaintiffs render any service to any of their passengers who gave them tips or gratuities different from or greater than the service rendered by the three plaintiffs to any of their other passengers who did not give them tips or gratuities during the period. At no time during the period did the three plaintiffs request tips from any passengers or indicate disapproval in any manner whatsoever to any passenger who did not give them a tip or gratuity."

6. The amount of the fare for each trip was computed by a meter which was connected to the running gear of the taxicab. This was required by local ordinance of the City of San Francisco, which also fixed the rates which might be charged at 50 cents for the first one-fourth mile, 10 cents for each additional one-fourth mile, and ten cents for each 2½ minutes of waiting or traffic delay time.¹ A stated schedule of rates was also provided for trunks and large baggage which could not be conveniently carried within the vehicle. The ordinance specifically provided that no charge was to be made by the driver for loading or unloading baggage.

7. Section 1138(b) of the Police Code of San Francisco, in effect during all periods material herein provides as follows:

"Excessive Charges. Any charges made, or sought to be made, any patron of a public passenger vehicle for hire in excess of the charges authorized by this Article for the particular type of service rendered or sought, when shown either by confession of the party, or competent testimony, or any failure on the part of any driver or operator of any public passenger vehicle for hire to make proper returns to his employer, shall result in immediate suspension of the license of such driver or operator until such time as, after due process, such license is either reinstated or revoked.

"Either the person, or the employer of a person, responsible for any overcharge shall be required to make restitution to any defrauded patron, for the amount of such overcharge."

8. The working agreement between the plaintiffs' union and the taxicab operators of San Francisco was contained in a master agreement entered into between the various employers of taxicab drivers and the union. This agreement was the basis upon which the plaintiffs' employment was carried out. In general, it provided for a day to consist of not more than nine hours of straight shift time out of twenty-four hours, with one hour off for lunch four hours after the beginning of the shift. The provision for wages was $10.30 per day, computed on an hourly basis, or 50 percent of the weekly bookings whichever was greater, the same to be in lieu of all other commissions and bonuses. Effective June 1, 1955, this amount was increased to $10.50 per day, and it was again increased to $11 effective June 1, 1957. There were additional benefits provided such as a health and welfare plan, and also vacations of one or two weeks to eligible employees. A pension plan became effective June 1, 1957.

9. The Yellow Cab Company of San Francisco owned and operated the taxicabs driven by the plaintiffs in their work. This company furnished the gasoline, oil and provided necessary repairs and maintenance on the taxicabs.

10. The average daily wage paid to San Francisco Yellow Cab Drivers for the years in suit was as follows: 1955, $12.16; 1956, $12.39; 1957, $12.55. This amount did not include fringe benefits.

11. The parties have agreed and the testimony confirms that the amount of tips received by the plaintiffs equalled ten percent of the fares collected by...