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BUSH'S, INC. v. UNITED STATES

March 16, 1959

BUSH'S, INC., PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Juergens, District Judge.

This action was instituted under the provisions of Section 1346(a)(1) of Title 28 United States Code, as amended, for refund of federal "cabaret" taxes and interest thereon. These taxes were imposed under the provisions of Section 1700(e) of the Internal Revenue Code of 1939, 26 U.S.C.A. § 1700(e), and Section 4231 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 4231.

The plaintiff is a corporation organized and existing under and by virtue of the laws of the State of Illinois and has its principal place of business in East St. Louis, Illinois.

Prior to the institution of this action, plaintiff paid the taxes in dispute and thereafter duly filed with the District Director of Internal Revenue at Springfield, Illinois, its claim for refund which was denied. All administrative procedure preliminary to filing a suit in this Court has been complied with and all such administrative relief was exhausted prior to the filing of this action.

This cause was tried to the Court without a jury on August 4, 1958. Testimony was heard and thereafter the parties filed written briefs.

For some time prior to December 1, 1951, plaintiff Bush's Steak House, Inc. (hereinafter referred to as Bush) operated a dining room, bars and private dining rooms at 100 W. Broadway, East St. Louis, Illinois, first under the name of Bush's Steak House, Inc. and after March 16, 1953, as Bush's, Inc. The operation continued until 1957 when the establishment closed.

The operation was conducted in various rooms. One such room was located in the basement of the building, which consisted of a bar and was called the "Porthole". There was no entertainment of any kind in this room. There was no cabaret tax assessed against the operations conducted in this room and the operations therein are not in issue.

On the main floor of the building were located the kitchen, the main dining room, a private dining room and a bar, called the "Cloverleaf Bar". Activities carried on in the kitchen, main dining room and private dining room did not include taxable entertainment and cabaret taxes were not assessed against these operations. The Cloverleaf Bar was the scene of public performances and entertainment furnished by the plaintiff for the benefit of its guests and was admittedly subject to "cabaret" tax. The main dining room and the Cloverleaf Bar were separate and distinct rooms and the performances in the Cloverleaf Bar could not be witnessed by the plaintiff's customers in the main dining room.

On the second floor of the building a barroom, known as the Celebrity or Blue Room (hereinafter referred to as Celebrity Room) was located. The Celebrity Room was open to the general public only on Saturday night and if opened at other times was used only for private parties. The Saturday night activities were admittedly subject to cabaret tax and tax for these activities was paid in full.

Of the numerous rooms in the building occupied by the plaintiff, only two are concerned in this action; these are the Cloverleaf Bar and the Celebrity Room.

In the Cloverleaf Bar plaintiff furnished some type of entertainment each night with certain exceptions and these exceptions are not in dispute. From the time the bar was opened until midnight, when entertainment was furnished by the plaintiff, it was limited to non-taxable instrumental music. This entertainment started at varying times but always ended at midnight. It consisted of a piano player and an accordionist. It is not alleged that this type of entertainment subjected the plaintiff to the payment of a cabaret tax. At midnight each night and continuing until approximately 3:00 A.M. each morning, in addition to the above instruments a singer was employed for the entertainment of the plaintiff's customers.

No dancing or group singing, either organized, directed or sponsored by the plaintiff was conducted in the Cloverleaf Bar, nor was any master of ceremonies or an equivalent employed.

At or before 3:00 A.M. each day the singer went off duty and the entertainment thereafter consisted solely of non-taxable instrumental music, which latter type of entertainment continued until closing.

The only type of taxable entertainment presented by the plaintiff for the benefit of its customers in the Cloverleaf Bar was a vocalist between the hours of midnight and 3:00 A.M.

The Celebrity Room was open to the public, as stated above, only on Saturday night — this for the purpose of permitting dances on the premises. A singer was also sometimes engaged from about midnight to approximately 3:00 A.M. The only type of taxable entertainment presented by plaintiff in the Celebrity Room was dancing from midnight to 3:00 ...


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