The opinion of the court was delivered by: MEANEY
These three actions were brought by the various plaintiffs to recover alleged excess amounts assessed against them for income taxes for the years 1951 and 1952.
The plaintiffs, J. Berkeley Gordon, Charles J. Audesirk and Margaret Rose McKeon, were employees of the State of New Jersey. Isabel Gordon joins as plaintiff with her husband, J. Berkeley Gordon, as they filed a joint return for the years in question.
J. Berkeley Gordon in 1951 and 1952 occupied the post of medical director of the New Jersey State Hospital at Marlboro, N.J.
Charles J. Audesirk during the same years was a foreman plumber and steamfitter at the same institution.
Margaret Rose McKeon in 1951 and 1952 was an employee of the State, serving as resident X-ray technician at the New Jersey State Hospital at Trenton.
All three plaintiffs were required by the terms of their employment to live at their posts and to be available twenty-four hours per day. In the event that they were absent at any time, they were required to leave information as to where and how they could forthwith be reached in case of emergency.
The medical director of the Marlboro State Hospital was provided with a house for himself and his family, food and service.
The other two plaintiffs were provided with rooms and food served at the institution. If they did not eat meals served at the institution, they were not recompensed.
Discussion and Conclusions of Law
For many years it was agreed by the Department of Internal Revenue, after negotiations between State officials and authorized agents of the Internal Revenue Service, that certain selected employees were to receive housing and maintenance in addition to the compensation paid them by the State. This was considered to be for the convenience of the State and as such not to be included in gross income.
This question has been passed upon by several courts. In the Second Circuit, in Diamond v. Sturr, 221 F.2d 264, the United States Court of Appeals felt that the rule of convenience of the employer rule had been applied for such a long period that the new regulation should not offset the old regulation which had attained the status of law by long continued use.
In the Third Circuit, in the case of Saunders v. Commissioner of Internal Revenue, 215 F.2d 768, Judge Biggs of the Court of Appeals for the Circuit, outlined the judicial history of the convenience of the employer rule and arrived at the conclusion that the cash allowance of $ 70 per month in lieu of meals to be furnished State troopers was not evident compensation for services ...