Kantor v. United States, Civ. No. 6384
| Decision Date | 11 September 1956 |
| Docket Number | Civ. No. 6384,6385. |
| Citation | 154 F. Supp. 58 |
| Parties | Norman KANTOR, David Tobin and B. L. Weinstein, dba Theatre Lounge, Plaintiffs, v. UNITED STATES of America, Defendant. Norman KANTOR and B. L. Weinstein, dba Theatre Lounge, Plaintiffs, v. UNITED STATES of America, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
Weinberg, Sandoluski & Ginsberg, by R. M. Ginsberg, Dallas, Tex., for plaintiffs.
Heard L. Floore, U. S. Atty., Ft. Worth, Tex., by John Ford, Asst. U. S. Atty., for defendants.
The plaintiffs sued to recover a portion of certain excise tax collected from them by the government in the operation of the Theatre Lounge, a place of entertainment where refreshments were served, operated within the City of Dallas, Texas. The show consisted of more that one performance ordinarily each day, admissions were charged and in addition thereto refreshments were sold. The show consisted of comic expressions, ballet dancers and strip tease performances, refreshments being served the guests at tables provided from which they could observe the show.
There is a certain tax collected for admission at the door which does not include the price paid for refreshments.
Plaintiffs admit liability for the tax charged for admission but seek to recover the tax collected upon refreshments sold within the theatre during the performances.
The defendant, the United States Government, insists that the plaintiffs were operating a cabaret or place of entertainment of like character and were due to pay the tax collected of plaintiffs.
The law has been subject to a number of amendments and interpretations. In its more original state we find it under Title 26 U.S.C.A. (I.R.C.1939) § 1700.
This section was later amended and extended in more definite terms and the tax fixed at 20 per cent. It now appears as § 4231(6) of the Internal Revenue Code, 1954, in its revised and amended form as follows:
Among the earlier cases on this subject is that of United States v. Broadmoor Hotel Co., D.C., 30 F.2d 440. In this case a hotel served an afternoon tea at a charge of 75 cents and on certain days an orchestra was supplied for dancing during the tea period, there being no additional charge made to the 75 cents, a large percentage of those dancing not being guests at the hotel and not ordering tea or food nor paying for dancing. It was held in this case that the hotel was not subject to the tax, Judge Symes holding among other things that tax statutes must be construed strictly against the government.
The law has been amended several times since the foregoing decision. A very interesting and exhaustive discussion embracing more than forty pages of printed matter is given by District Judge Henry N. Graven in the case of Geer v. Birmingham, D.C., 88 F.Supp. 189, and notwithstanding the amendments, the holding in this case was that the plaintiffs were not subject to the tax.
The Seventh Circuit had in January 1948 in the case of Avalon Amusement Corporation v. United States, 165 F.2d 653, construed the statute in favor of the government and against the taxpayer. In November 1950 the Birmingham-Geer case tried by District Judge Henry N. Graven was presented to the Circuit Court of the Eighth Circuit and the decision of Judge Graven was overruled and decision rendered in favor of the government. 185 F.2d 82. Then this section was again brought before Congress and the Senate and House committees expressed themselves in favor of the legal interpretation given by Judge Henry N. Graven as being what Congress had intended to be the law, these expressions being given in the committee reports when the amended act was presented. The amended act is now before us and is above quoted under the head of excise tax with the subhead of admission as found in Para. 4231(6) and Para. 4232 (a) and (b), Internal Revenue Code, 1954.
It is insisted by the plaintiffs that this amended act by Congress was designed to relieve them of the payment of the tax which they here seek to recover. They direct the Court's attention to that proviso at the conclusion of Para. 4232 (b) which reads:
"* * * In no case shall such term include any ballroom, dance hall, or other similar place where the serving or selling of food, refreshment, or merchandise is merely incidental * * *".
In amending and changing and interpreting this act it is easy to see the Treasury's problem in collecting it. If the tax is by law based on admission only, the operator of the cabaret or place of entertainment can make a cover charge to take care of the admission that might have been collected at the gate. He can sell refreshments at a price far in advance of those...
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...referred only to some minor matter from which the collections must have been small or insignificant." (Kantor v. United States, D.C.N.D. Texas, 1956, 154 F.Supp. 58, 62). The foregoing considerations aside and relying solely on the tests set out in Geer v. Birmingham, supra, the decision is......
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