Lodi Canning Co. v. Commissioner

The taxpayer appeals from the determination of a deficiency of $1,205.G2 in income and profits taxes for the calendar year 1919. The deficiency arises from the disallowance of a claimed loss on a carload of canned peaches.

FINDINGS OP PACT.

1. The taxpayer is a California corporation with its principal place of business at Lodi.

2. On November 5, 1919, the taxpayer shipped to Birdsong Bros., of New York, 1,450 cases of peaches, in a box car designated as W. P. Car No. 18014. A 10-day draft was drawn on the consignees at or about the time of shipment and paid by them within the time specified.

3. Upon arrival of the car at destination in January, 1920, the consignees refused to accept delivery, claiming that the peaches were below the standard specified by the contract of purchase, and *709demanded a settlement by arbitration. On February 20, 1920, the board of arbitration of the Dried Fruit Association of New York rendered an award in favor of Birdsong Bros., sustaining the rejection of the peaches, and held that Birdsong Bros, were to be reimbursed for the amount paid, plus interest and other accrued charges.

4. On March 9, 1920, Birdsong Bros., drew a sight draft against O. A. Harlan & Co., of San Jose, Calif., for $10,657.57, and forwarded with it an invoice in the same amount. The draft and invoice were apparently directed to O. A. Harlan & Co. in error, due to the fact that O. A. Harlan was president of the taxpayer company. The draft after being protested on March 17, 1920, for nonpayment was forwarded to the taxpayer, by which it was honored and paid by check dated March 20, 1920.

5. The goods were turned back to the taxpayer in New York and it authorized the firm of Sandford & Timpson to dispose of them. This firfti succeeded in making final disposition of the peaches in 1921 and rendered an account to the taxpayer on March 4, 1921, showing sales of 1,447 cases in the total amount of $4,365.85.

DECISION.

The determination of the Commissioner is approved.