I located the episode, it is Episode 12 of Season 3 "Harry Von Zell dates a married woman".
The plot of the episode is: Harry Von Zell takes a woman out to the Mocambo nightclub, she is married but Von Zell doesn't know it at the time. With a mixup of the names Harry Morton and Harry Von Zell, Blanche Morton thinks that it is her Harry who has taken the woman out.
The situation escalates and George goes over to this married woman's apartment to straighten things out. Gracie calls the woman at the same time George is there and Gracie thinks George is now interested in her too!
The last part of the episode is one of the funniest of Season 3: Blanche tells Gracie that the woman is probably one of those 'sophisticated types' with a long cigarette holder. Gracie comes out in the living room to George holding exactly that and trying to act what she thinks is sophisticated. She comes out with a glass and some water in a carafe and starts drinking "chasers" as she calls them-in front of George. She walks around the living room with that cigarette holder in her hand, striking these poses and tossing back "chasers" (which again is really only water).
George says "I didn't know you drank". Gracie replies "I've been drinkin' ever since I was thirsty".
Gracie is hilarious in that way that only Gracie can be.
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