52 F.Supp. 174 (S.D.N.Y. 1943), Restaurants and Patisseries Longchamps v. Pedrick

Citation:52 F.Supp. 174
Party Name:RESTAURANTS AND PATISSERIES LONGCHAMPS, Inc., v. PEDRICK, United States Collector of Internal Revenue for Second District of New York.
Case Date:September 28, 1943
Court:United States District Courts, 2nd Circuit, Southern District of New York

Page 174

52 F.Supp. 174 (S.D.N.Y. 1943)

RESTAURANTS AND PATISSERIES LONGCHAMPS, Inc.,

v.

PEDRICK, United States Collector of Internal Revenue for Second District of New York.

United States District Court, S.D. New York

Sept. 28, 1943

Joel J. Weiner, of New York City, for plaintiff.

James B. M. McNally, U.S. Atty., for Southern District of New York, of New York City (Florence P. Shientag, of New York City, of counsel), for defendant.

HULBERT, District Judge.

Defendant moves for judgment dismissing the complaint upon the pleadings and an examination of the plaintiff before trial.

The action is to recover employment taxes alleged to have been erroneously and illegally assessed for the quarterly period beginning on April 1, 1942 and ending on June 30, 1942, and the question presented is whether payments made to plaintiff's employees were wages or 'tips.'

Plaintiff operates four restaurants in the City of New York and controls several others affiliated with it.

During the period for which refund is sought and for several years prior thereto, the plaintiff's restaurants made known to their patrons that 'tipping' was not permitted; in fact it is conceded that if a waiter had accepted a tip, to the knowledge of the plaintiff, he would have been discharged. But in lieu of 'tips' 10% of the customer's check was added thereto as a service charge, and the entire sum was collected and paid over to the plaintiff's cashier. No segregation of the service charge from other items on the check was made by the cashier. On the following day, all money collected on the previous day was deposited in a bank servicing the particular restaurant. On the day following the one on which the money was received the restaurant checks were forwarded to the central office of the plaintiff where they were audited and verified, and the amounts received as service charges were apportioned, a certain percentage of the amount attributable to food was credited to the bus boy; a certain percentage of the amount attributable to drinks, served at the table, was credited to the bartender, and the balance of the service charge was credited to the waiter under the heading 'Commissions' on the 'Commission Sheet.' On the time sheet these amounts were entered under the heading 'Commissions'; the payroll record indicated these amounts as 'Commissions' and the ledger entries were headed 'Waiters' Commissions.'...

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