The opinion of the court was delivered by: FOLLMER
In this case plaintiff seeks to recover $ 5,835.60 with interest, alleged to have been erroneously overpaid as income tax for the calendar year 1950. The case was tried to the Court without a jury.
The Court having considered the pleadings, the evidence adduced at the trial, and the briefs of the parties, and being advised in the premises, now finds the facts herein and states its conclusion as follows:
1. Plaintiff, Frank Weiler, instituted this action against defendant under 28 U.S.C. § 1346(a)(1) and the Internal Revenue Laws.
2. Plaintiff is a citizen of the United States and resides in Armagh Township, Mifflin County, Pennsyvania.
3. Since 1927 plaintiff has been engaged in the egg huckstering or egg wholesaling business operating out of Reedsvill, Mifflin County, Pennsylvania.
4. Plaintiff's method of operation was to collect fresh eggs daily from farmers throughout central Pennsylvania. The price paid for the eggs was based upon the market price at 11:40 o'clock a.m. on the preceding day. For eggs collected on Mondays the price thereof was based upon the market price at 11:40 o'clock a.m. on the preceding Fridays. Having collected the eggs, the plaintiff would separate them by color, grade them for size, candle and repack them. He would thereafter haul them to Jersey City, New Jersey, for sale to his then one customer, Gem Dairy Products Company.
5. Not having engaged in the egg storage business, it was plaintiff's general custom on collection to purchase all the eggs available for sale by the farmers and to sell them as seen as possible after processing which sales usually occurred within two to five days thereafter.
6. From 1927, at which time the plaintiff entered the egg huckstering business, through 1950 the annual price variation in eggs would range from a high in autumn to a low in winter or early spring.
7. The processing interval was lengthened somewhat when it ran into a week end because the market is closed on Saturday and Sunday. If the price fell between 11:40 o'clock a.m. of the day before an egg was bought and the time three to five days later when the egg was sold, plaintiff would sustain a loss.
8. Prior to 1950 plaintiff's loss due to the seasonal fall in the price of eggs amounted to $ 7,000 to $ 10,000 per year.
10. During the seasonal rise in the price of eggs, plaintiff had the risk of scarcity. His inventory varied from 3,000 to 4,000 cases worth $ 30,000 to $ 40,000. A single buyer had relied on obtaining plaintiff's inventory for supply since 1932. In times of scarcity plaintiff bought fresh and many times refrigerated eggs from others than the farmers on his route wherever he could get hold of them, in order to maintain his supply to his single buyer. Plaintiff had taken actual delivery of not less than thirty-three carloads of eggs purchased by him in futures transactions in longs. Keeping the business of the single buyer was economically imperative not only to plaintiff but also to the farmers within a radius of 50 miles of plaintiff who relied on plaintiff's buying and selling of their eggs.
11. Plaintiff did not store eggs.
12. No insurance or any other form of protection except hedging transactions was available to protect plaintiff's business against the aforementioned risks of loss and scarcity due to the seasonal variation in production of egg actuals.
13. Plaintiff entered into transactions in the egg futures commodity market, the Chicago Mercantile Exchange, as hedging transaction for the purpose of protecting his business against the uninsurable risks of loss and scarcity due to the seasonal variation in production of egg actuals.
14. The egg futures commodity market is an organized commodity market, to wit, the Chicago Mercantile Exchange.
15. Prices on a commodity futures market follow the prices on the market of actuals of the same commodity. Any spread between the two is kept to a minimum by straddle ...