DONOHOE, Chief Judge.
The court is presently concerned with nine tax cases involving substantially the same narrow point. The procedure followed with respect to assessment and collection of the taxes was not precisely the same in each individual case, but the parties seem to concede, for the purpose of reaching a determination in all the cases on the merits, that the necessary conditions precedent to institution of these actions for tax refunds by the petitioners have been fulfilled. 26 U.S.C.A. § 3772. In connection with each of the cases the court makes the following special
Findings of Fact:
Each of the taxpayers operates a dance hall or ballroom, either indoors or outdoors which consists of a dance floor of various sizes, around which there are tables, chairs and booths provided as seating accommodations for the patrons. Music is furnished for dancing by an orchestra or band regularly during certain nights of the week. A charge for admission to the ballroom is made and during the periods involved, the taxpayers collected from their patrons admissions taxes under Section 1700(a) of the Internal Revenue Code on the amounts received from their patrons for the price of admission to their dance hall. In connection with the operations of taxpayers’ dance halls, refreshments, including sandwiches, soft drinks, beer and cigarettes are served for the usual charges to those patrons desiring the same. The Commissioner has assessed against each of the taxpayers a cabaret tax under Section 1700(e) of the Internal Revenue Code.
Discussion
In Avalon Amusement Corporation v. United States, 1948, 165 F.2d 653, the Court of Appeals for the Seventh Circuit held that a dance hall for which there was an admission charge, and in connection with which beer, soft drinks and confections, but no meals, were sold, was a “roof garden, cabaret or other similar place” within the provisions of Section 1700(e) of Title 26, U.S.C. (1946 Ed.) Shortly after this decision the same question arose in this circuit in the Northern District of Iowa. Larry Geer and his wife operated a ballroom for which an admission charge was made. Lounging space serving 17% per cent of the capacity of the dance floor was available to the patrons and a fountain was operated [692] in connection therewith. Tobacco, soft drinks and confections were served at the fountain at regular retail prices. After careful and mature deliberation which is reflected in an extended and instructive memorandum, Judge Graven reached the conclusion that such ballroom was not a roof garden, cabaret or other similar place within the meaning of 1700(e). Geer v. Birmingham, D.C.N.D.Iowa 1950, 88 F.Supp. 189. However, the Court of Appeals for the Eighth Circuit reached the opposite conclusion Birmingham v. Geer, 1950, 185 F.2d 82, 85, and the Supreme Court of the United States denied certiorari, 340 U.S. 951, 71 S.Ct. 571, 95 L.Ed. 686.1 Judge Woodrough, in the Court of Appeals opinion points out:
“The facts controlling decision in the Seventh Circuit are analogous to the facts here and this court must either declare itself in accord or announce decision in conflict. Despite vigorous arguments to the contrary, it appears as clear to this court as it did to the court in the Seventh Circuit ‘that the (taxpayer’s) dance hall comes within the (statute’s) definition of a “ * * * hall * * * where music and dancing privileges * * * are afforded to the patrons in connection with the serving or selling of * * * refreshment * *
After the decision in Birmingham v. Geer, supra, Congress amended the provisions of the Internal Revenue Code relating to the tax on cabarets and roof gardens by Section 404 of the Revenue Act of 1951, 26 U.S.C.A. Int.Rev.Acts, page 348, which provides as follows:
“(a) Ballrooms and dance halls. —Section 1700(e) (1) (relating to tax on cabarets, roof gardens, etc.) is hereby amended by inserting after the second sentence thereof the following new sentence: ‘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, unless such place would be considered, without the application of the preceding sentence, as a “roof garden, cabaret or other similar place.” ’
“(b) Effective date. — The amendment made by subsection (a) shall be applicable only with respect to periods after 10 antemeridian on the first day of the first month which begins more than ten days after the date of enactment of this act.”
All parties concede that the taxes in these cases were levied and assessed for activities which occurred prior to the effective date of the above amendment. The Government argues that this court is bound to follow the decision in Birmingham v. Geer, supra, because the amendment should be given only prospective effect. Brewster v. Gage, 280 U.S. 327, 50 S.Ct. 115, 74 L.Ed. 457; United States v. Magnolia Petroleum Co., 276 U.S. 160, 48 S.Ct. 236, 72 L.Ed. 509; United States v. St. Louis, San Francisco and Texas Railway Company, 270 U.S. 1, 46 S.Ct. 182, 70 L.Ed. 435; Fullerton-Krueger Lumber Co. v. Northern Pacific Ry. Co., 266 U.S. 435, 45 S.Ct. 143, 69 L.Ed. 367; Southwestern Coal & Imp. Co. v. McBride, 185 U.S. 499, 22 S.Ct. 763, 46 L.Ed. 1010; Russell v. United States, 278 U.S. 181, 49 S.Ct. 121, 73 L.Ed. 255; Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858.
Petitioners argue, on the other hand, that the 1951 amendment was merely declaratory of existing law and should be given retroactive effect in disregard of Birmingham v. Geer, supra. Jordan v. Roche, 228 U.S. 436, 33 S.Ct. 573, 57 L.Ed. 908. Cf. Girard Investment Co. v. Commissioner of Internal Revenue, 3 Cir., 1941, 122 F.2d 843. In support of their position petitioners refer to the legislative history of the 1951 Act. The House Report contains the following comment on Section 404:
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DONOHOE, Chief Judge.
The court is presently concerned with nine tax cases involving substantially the same narrow point. The procedure followed with respect to assessment and collection of the taxes was not precisely the same in each individual case, but the parties seem to concede, for the purpose of reaching a determination in all the cases on the merits, that the necessary conditions precedent to institution of these actions for tax refunds by the petitioners have been fulfilled. 26 U.S.C.A. § 3772. In connection with each of the cases the court makes the following special
Findings of Fact:
Each of the taxpayers operates a dance hall or ballroom, either indoors or outdoors which consists of a dance floor of various sizes, around which there are tables, chairs and booths provided as seating accommodations for the patrons. Music is furnished for dancing by an orchestra or band regularly during certain nights of the week. A charge for admission to the ballroom is made and during the periods involved, the taxpayers collected from their patrons admissions taxes under Section 1700(a) of the Internal Revenue Code on the amounts received from their patrons for the price of admission to their dance hall. In connection with the operations of taxpayers’ dance halls, refreshments, including sandwiches, soft drinks, beer and cigarettes are served for the usual charges to those patrons desiring the same. The Commissioner has assessed against each of the taxpayers a cabaret tax under Section 1700(e) of the Internal Revenue Code.
Discussion
In Avalon Amusement Corporation v. United States, 1948, 165 F.2d 653, the Court of Appeals for the Seventh Circuit held that a dance hall for which there was an admission charge, and in connection with which beer, soft drinks and confections, but no meals, were sold, was a “roof garden, cabaret or other similar place” within the provisions of Section 1700(e) of Title 26, U.S.C. (1946 Ed.) Shortly after this decision the same question arose in this circuit in the Northern District of Iowa. Larry Geer and his wife operated a ballroom for which an admission charge was made. Lounging space serving 17% per cent of the capacity of the dance floor was available to the patrons and a fountain was operated [692] in connection therewith. Tobacco, soft drinks and confections were served at the fountain at regular retail prices. After careful and mature deliberation which is reflected in an extended and instructive memorandum, Judge Graven reached the conclusion that such ballroom was not a roof garden, cabaret or other similar place within the meaning of 1700(e). Geer v. Birmingham, D.C.N.D.Iowa 1950, 88 F.Supp. 189. However, the Court of Appeals for the Eighth Circuit reached the opposite conclusion Birmingham v. Geer, 1950, 185 F.2d 82, 85, and the Supreme Court of the United States denied certiorari, 340 U.S. 951, 71 S.Ct. 571, 95 L.Ed. 686.1 Judge Woodrough, in the Court of Appeals opinion points out:
“The facts controlling decision in the Seventh Circuit are analogous to the facts here and this court must either declare itself in accord or announce decision in conflict. Despite vigorous arguments to the contrary, it appears as clear to this court as it did to the court in the Seventh Circuit ‘that the (taxpayer’s) dance hall comes within the (statute’s) definition of a “ * * * hall * * * where music and dancing privileges * * * are afforded to the patrons in connection with the serving or selling of * * * refreshment * *
After the decision in Birmingham v. Geer, supra, Congress amended the provisions of the Internal Revenue Code relating to the tax on cabarets and roof gardens by Section 404 of the Revenue Act of 1951, 26 U.S.C.A. Int.Rev.Acts, page 348, which provides as follows:
“(a) Ballrooms and dance halls. —Section 1700(e) (1) (relating to tax on cabarets, roof gardens, etc.) is hereby amended by inserting after the second sentence thereof the following new sentence: ‘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, unless such place would be considered, without the application of the preceding sentence, as a “roof garden, cabaret or other similar place.” ’
“(b) Effective date. — The amendment made by subsection (a) shall be applicable only with respect to periods after 10 antemeridian on the first day of the first month which begins more than ten days after the date of enactment of this act.”
All parties concede that the taxes in these cases were levied and assessed for activities which occurred prior to the effective date of the above amendment. The Government argues that this court is bound to follow the decision in Birmingham v. Geer, supra, because the amendment should be given only prospective effect. Brewster v. Gage, 280 U.S. 327, 50 S.Ct. 115, 74 L.Ed. 457; United States v. Magnolia Petroleum Co., 276 U.S. 160, 48 S.Ct. 236, 72 L.Ed. 509; United States v. St. Louis, San Francisco and Texas Railway Company, 270 U.S. 1, 46 S.Ct. 182, 70 L.Ed. 435; Fullerton-Krueger Lumber Co. v. Northern Pacific Ry. Co., 266 U.S. 435, 45 S.Ct. 143, 69 L.Ed. 367; Southwestern Coal & Imp. Co. v. McBride, 185 U.S. 499, 22 S.Ct. 763, 46 L.Ed. 1010; Russell v. United States, 278 U.S. 181, 49 S.Ct. 121, 73 L.Ed. 255; Hassett v. Welch, 303 U.S. 303, 58 S.Ct. 559, 82 L.Ed. 858.
Petitioners argue, on the other hand, that the 1951 amendment was merely declaratory of existing law and should be given retroactive effect in disregard of Birmingham v. Geer, supra. Jordan v. Roche, 228 U.S. 436, 33 S.Ct. 573, 57 L.Ed. 908. Cf. Girard Investment Co. v. Commissioner of Internal Revenue, 3 Cir., 1941, 122 F.2d 843. In support of their position petitioners refer to the legislative history of the 1951 Act. The House Report contains the following comment on Section 404:
[693] “This section amends section 1700 (e) (1) of the Internal Revenue Code to exempt from the cabaret tax bona fide dance halls, ballrooms, and other similar places where the serving or selling of food, refreshments, or merchandise is merely incidental to the music and dancing privileges furnished unless the conduct of the place is such as to bring it within the normal concept of a roof garden, cabaret, or similar place. This determination will be made- by reference to the over-all operation of the establishment, including such factors as the relative income from the several activities over a period of time, the relative portion of space devoted to the various activities, the type of refreshments served or sold, the scope and character of the entertainment furnished, and the hours of operation.
“The purpose of this amendment is to make it clear that the principles set forth by the district court in the case of Geer v. Birmingham (88 F.Supp. 189) are controlling in the determination of whether the establishment involved is operating as a cabaret or as a dance hall, and to avoid the broad construction placed upon the statute in the case of Avalon Amusement Corporation v. United States (165 F.2d 653) and in the court of appeals decision reversing the decision of the district court in the Geer case (Birmingham v. Geer, 185 F.2d 82), which require that dance halls and similar establishments be taxed as cabarets, even though the serving or selling of food, refreshments, or merchandise is merely incidental.
“The amendment ’ made by this section shall take effect at 10 a. m., on the first day of the first month which begins more than 10 days after the date of the enactment of this bill.”