Before FINNEGAN, LINDLEY and SWAIM, Circuit Judges.
Suit was brought by the appellees, Arthur and Anna E. Fritz to recover penalties assessed against them by the Collector of Internal Revenue for the first Illinois District because of their failure to collect admission taxes under sec. 1700(a) of the Internal Revenue Code, 26 U.S.C.A. § 1700 (a), for the period extending from April 1948 up to and through November 1948.
The case was tried in the District Court without a jury. The facts, in the main, were stipulated though one of the appellees gave some testimony. Judgment was entered against the Collector for $9,515.20, with interest. He prosecutes this appeal to reverse that judgment.
Appellant claims that the findings of fact are not in exact accord with the stipulation between the parties. We have examined and compared the findings and the stipulation and find no substantial material difference.
Appellees owned and operated a "recreational area" on the outskirts of the City of Chicago. It was an open tract of land comprising about 14 acres. Various paths, lanes and roadways, refreshment stands, booths, platforms, canopies, tunnels, bridges, tracks and other structures, either fully or partially enclosed, had been erected on the grounds. Rides and amusement devices of different sorts, including miniature gasoline automobiles, miniature steam trains, and tracks on which to operate them, a merry-go-round or carrousel, a ferris wheel 40 feet in diameter, a miniature roto-whip, miniature automobiles, a small gasoline train running on tracks, together with living ponies, were available. All were designed for the pleasure of the attendant public, especially the juvenile portion thereof.
The various devices and rides were operated and controlled by employees employed for that purpose. The merry-go-round or carrousel was typical. It consisted of a circular platform approximately 14 feet in diameter, containing various effiges or reproductions of animals and other objects upon which persons might seat themselves. The platform, elevated about 9 inches above ground, rotated about a central fixed axis, the motive power being furnished by a ten (10) horsepower motor. When the device was about to be placed in motion, an attendant would walk about the platform of the ride and collect tickets from the riders. Tickets would be taken from all persons riding on the platform, except for children in arms. The platform of the ride was surrounded for approximately threefourths (3/4) of its circumference by a wooden fence located approximately six (6) feet from the outside circumference of the platform. This fence was maintained by the plaintiffs in order to prevent accidents which might result from persons inadvertently walking into the merry-go-round or attempting to jump on the same when in motion. Save and except for the time when the merry-go-round was in motion, all members of the general public were free to enter within the enclosure made by such fence, and upon and around the platform and upon and in all devices mounted thereon without presenting a ticket.
The same privileges of free entry were accorded on all the other rides. Only those who took the ride were obliged to pay.
Portions of the applicable statute and Treasury regulations adopted thereunder, as in force at the times material, are as follows:
Sec. 1700 of the Internal Revenue Code, 26 U.S.C.A. provides: "There shall be levied, assessed, collected, and paid * * A tax of 1 cent for each 10 cents or fraction thereof of the amount paid for admission to any place, including admission by season ticket or subscription", and that the tax imposed "shall be paid by the person paying for such admission."
Sec. 1715 provides: "Every person receiving any payments for admission * * subject to the tax imposed by section 1700 * * * shall collect the amount thereof from the person making such payments", and that the amounts so collected "shall be paid to the Collector * * *."
Sec. 101.2 of Treasury Regulation 43 provides: "The tax is imposed on the 'amount paid for admission to any place,' and applies to the amount which must be paid in order to gain admission to a place * * *. The term 'admission' means the right or privilege to enter into a place," and sec. 101.3 of Regulation 43 provides: "The tax under sec. 1700(a) of the Code is on the amount paid for admission to any place. 'Place' is a word of very broad meaning, and it is not defined or otherwise limited by the Code. But the basic idea it conveys is that of a definite enclosure or location. The phrase 'to any place' therefore, does not narrow the meaning of the word 'admission,' except to the extent that it implies that the admission is to a definite enclosure or location."
Sec. 1650 of the Internal Revenue Code, 26 U.S.C.A., as amended by sec. 302(a) of the Revenue Act of 1943; c. 63, 58 Stat. 61, imposes a war tax rate effective as of April 1, 1944, of 1 cent for each 5 cents or major fraction thereof of the amount paid for admission to any place within the meaning of sec. 1700(a) of the Code, as amended, which tax is payable by the person paying for the admission. Children under 12 years of age are exempt from the imposition of the tax where the admission charge is less than 10 cents.
Sec. 1718(c) imposes as a penalty a sum equal to the amount of the admission tax upon the failure of the person or persons ...