Appeals, Nos. 262 and 263, Jan. T., 1959, from judgment of Court of Common Pleas No. 6 of Philadelphia County, June T., 1956, Nos. 7888 and 7889, in cases of Tax Review Board v. Slater System, Inc., and Same v. Slater Corporation. Judgment affirmed. Proceedings on appeal from decision of Tax Review Board refusing to review mercantile license tax assessments. Opinion filed dismissing appeals, and judgment entered, opinion by FLOOD, P.J. Taxpayer appealed.
W. Wilson White, with him Mervin M. Wilf, Bernard V. Lentz, and White and Williams, for appellants.
James L. Stern, Deputy City Solicitor, with him Matthew W. Bullock, Jr. and Leonard B. Rosenthal, Assistant City Solicitors, and David Berger, City Solicitor, for City of Philadelphia, appellee.
Before Jones, C.j., Bell, Musmanno, Jones, Cohen, Bok and Mcbride, JJ.
OPINION BY MR. JUSTICE BOK
These are appeals from the judgment of the court below affirming the action of the Philadelphia Tax Review Board in holding appellants liable for the gross receipts tax under the mercantile license tax ordinance.
The two appeals involve companion cases which present one problem and concern tax assessments for the years 1953-1955. The facts are not disputed and the parties differ only in their legal conclusions.
Various businesses, schools, and other institutions find it desirable as a "fringe benefit" to offer their employes food, mainly luncheon, at prices below those to be found in outside restaurants. These companies have the equipment, including space and napery and cutlery, and they hire Slater to provide the food and service.
The disagreement between the parties is in Slater's contention that it is only the agent for the companies and should be taxable on nothing but the management fee which it charges, and in the City's contention that Slater is in the complete business of catering and operating cafeterias and should be taxable on its gross receipts, including management fee, operational costs, and the collected price of food sold to the employes.
We think that the City's view is the correct one. Slater's brief never uses the word "catering" and its counsel before the Board said specifically that his client was not in the "catering" business. However, the purpose clauses of its Articles of Incorporation include the following: "To provide a complete food service and to operate cafeterias, restaurants, canteens and other food dispensing units for individuals, industrial and business establishments, institutions and other organizations of all kinds. Also, to act as consultants and advisors in the industrial feeding business and to buy and sell, prepare, dispense, serve, and otherwise deal in food and eatables of all kinds, and all other articles used in catering....
"The nature of the business for which this corporation is established, and the objects and purposes proposed to be transacted, promoted and carried on are:
Buying and selling, preparing, dispensing, serving, and otherwise dealing in food eatables of all kinds, and all other articles used in catering. To act as consultants and advisors for catering to hotels, boarding houses, fraternities, persons and organizations of all kinds." (Emphasis ours)
There was also offered in evidence a copy of Slater's typical contract with its clients, which contains the following provisions: "1. Company hereby grants to Slater as an independent contractor the exclusive right to sell food products, candy, tobacco, cigarettes and non-alcoholic beverages at its plant.
"2. Company agrees at its expense to provide Slater with suitable cafeteria space (including adequate sanitary toilet facilities and dressing rooms for Slater's employes) completely equipped and ready to operate ...
"A. To operate upon its own credit a general catering business for the employes and visitors of the Company and to furnish nutritious, wholesome, palatable food at such hours as Company may from time to time determine.
"B. To submit for approval menus complete with prices to such person as Company shall designate at least twenty-four (24) hours in advance of offer for sale. ..
"C. At all times to maintain an adequate staff of its employes on duty at Company's plant ...
"D. To take advantage of all trade discounts, which shall be credited to the cost of operations and to practice all feasible economies in the operation of the food service. ...
"F. To bear any loss resulting from dishonest acts on the part of its employes.
"G. To furnish Company with a certificate ... that Slater carries workmen's ...