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50 S.Ct.

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—that is, pecuniary obligations *payable to or by the company were treated as if discharged when incurred. Purporting to proceed as permitted by section 13(d), Title I, Revenue Act of 1916 (39 Stat. 771), they made returns to the collector upon the same basis. The Commissioner ascertained that the books showed excessive inventory values and thereby indi

cated net incomes much too small. The valuation placed on large quantities of tin plate had been marked up from $3.60 per box to $7, and the higher rather than the lower cost of this raw material had been reported.

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Thereupon, he dis*allowed the inflation, corrected the erroneous entries, and made reassessments according to the returns so modified. Respondents claimed that this action amounted to rejection of the basis upon which their returns had been made. Also that, after such rejection, no assessment could be made except one based upon receipts and disbursements; that is, upon amounts ascertained by deducting from gross income received, expenses paid out, losses charged off, interest, and taxes (section 12, Act 1916, 39 Stat. 767).

pany, subject to the tax imposed by that subdivision of that section. *

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"Sec. 206. That for the purposes of this title the net income of a corporation shall be ascertained and returned • (c) for the taxable year upon the same basis and in the same manner as provided in Title I of the Act entitled 'An Act to increase the revenue, and for other purposes,' approved September eighth, nineteen hundred and sixteen, as amended by this Act, except.

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The Act of September 8, 1916, 39 Stat. 756, 765, 766, 767, 770, 771, c. 463, provided:

Title I, § 10. "That there shall be levied, assessed, collected, and paid annually upon the total net income received in the preceding calendar year from all sources by every corporation, joint-stock company or association, or insurance company, organized in the United States, no matter how created or organized but not including partnerships, a tax of two per centum upon such income;

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"Sec. 12 (a). In the case of a corporation, jointstock company or association, or insurance company, organized in the United States, such net income shall be ascertained by deducting from the gross amount of its income received within the year from all sources" [Expenses, losses, interest, taxes.]

"Sec. 13 (a). The tax shall be computed upon the net income, as thus ascertained, received within each preceding calendar year ending December thirty-first:

"(b) Every corporation, joint-stock company or association, or insurance company, subject to the

And, further, that computation should be made without regard to inventories.

The District Court of New Jersey and the Circuit Court of Appeals, Third Circuit, accepting respondents' view, awarded and approved judgments against the United States aggregating some $4,000,000. The result, we think, is manifestly erroneous. Upon the findings, judgments should have gone the oth

er way.

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[1-3] The claims of respondents rest upon improper construction of paragraph (d), § 13, Act of September 8, 1916. This provides that "a corporation * * keeping accounts ceipts and disbursements, unless such other upon any basis other than that of actual rebasis does not clearly reflect its income, may, subject to regulations

** * * make its re

turn upon the basis upon which its accounts are kept, in which case the tax shall be computed upon its income as SO returned. *

"Basis of keeping accounts" as there used refers to the general bookkeeping system followed by the taxpayer and not to the accuracy or propriety of mere individual items or entries upon the books. And to correct an im

tax herein imposed, shall, on or before the first day of March, nineteen hundred and seventeen, render a true and accurate return of its annual net income in the manner and form to be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, and containing such facts, data, and information as are appropriate and in the opinion of the commissioner necessary to determine the correctness of the net income returned and to carry out the provisions of this title. The return shall be sworn to by the president, vice president, or other principal officer, and by the treasurer or assistant treasurer. The return shall be made to the collector of the district in which is located the principal office of the corporation, company, or association, where are kept its books of account and other data from which the return is prepared,

"(d). A corporation, joint-stock company or association, or insurance company, keeping accounts upon any basis other than that of actual receipts and disbursements, unless such other basis does not clearly reflect its income, may, subject to regulations made by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, make its return upon the basis upon which its accounts are kept, in which case the tax shall be computed upon its income as so returned.

Treasury Decision No. 2609, promulgated December 19, 1917:

"(1). For the purposes of income and excess-profits tax returns, inventories of merchandise, etc., and of securities will be subject to the following rules: "A. Inventories of supplies, raw materials, work in process of production, and unsold merchandise must be taken either (a) at cost or (b) at cost or market price, whichever is lower, provided that the method adopted must be adhered to in subsequent years, unless another be authorized by the Commissioner of Internal Revenue.

"C. Gain or loss resulting from the sale or disposition of assets inventories as above must be computed as the difference between the inventory value and the price or value at which sold or disposed of. "(2). In all other cases inventories must be taken at cost or at value as of March 1, 1913, as the case may be."

proper item in a return-whether the result of mere error or designed-cannot properly be said to constitute rejection of the basis upon which the return was constructed. The statute empowers tax officers to make necessary rules and regulations and to take action

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essential to orderly *enforcement of the obligations imposed. Here the taxpayers kept their accounts on the accrual basis and elected to make their returns accordingly. They cannot complain because an item therein was changed so as to conform with admitted facts. If their returns had been made on the basis of actual receipts and disbursements, certainly they would have been subject to correction for errors without changing the basis; and the same thing is true of returns framed upon an accrual basis.

United States v. Anderson, 269 U. S. 422, 437, 440, 443, 46 S. Ct. 131, 70 L. Ed. 347, considered the meaning of sections 12(a) and 13(d), Act of 1916, and sustained the action of the Commissioner who had reassessed according to an adjusted return originally made up on the accrual basis.

We need not discuss the question whether under any circumstances the taxable income of a manufacturing or mercantile corporation can be ascertained without reference to inventory values. Certainly, in most instances. where the taxpayer carries on an extensive business, this cannot be done.

The challenged judgments are reversed. The causes will be remanded to the District Court for appropriate action in harmony with this opinion.

Reversed.

(281 U. S. 57)

ILLINOIS CENT. R. Co. v. CRAIL. Argued Jan. 10, 1930. Decided Feb. 24, 1930.

No. 75.

1. Carriers 94(4)-Damages recoverable against carrier for failure to deliver part of interstate shipment of coal was, under circumstances, wholesale market price thereof (Cummins Amendment March 4, 1915, as amended, 49 USCA § 20(11).

Damages recoverable under Cummins Amendment March 4, 1915, 38 Stat. 1196, as amended, 41 Stat. 494 (49 USCA § 20(11), against rail carrier for failure to deliver a part of interstate shipment of coal intended to be added to stock of coal for resale, was the wholesale market price, where shortgage was capable of replacement, and was in fact replaced in course of business from purchases made in carload lots at wholesale market price without added expense.

2. Damages 3-Common-law remedies afford compensation only for injuries actually suffered.

Compensation is recoverable under common law only for injuries actually suffered. 3. Carriers 94(4)-Test of market value in determining damages recoverable for failure to deliver interstate shipment may be discarded, if inapplicable or not exact (Cummins Amendment March 4, 1915, as amended, 49 USCA § 20(11).

Test of market value in determining damages recoverable under Cummins Amendment March 4, 1915, 38 Stat. 1196, as amended, 41 Stat. 494 (49 USCA § 20(11), against rail carrier for failure to deliver interstate shipment, is at best but a convenient means of getting at loss suffered, and may be discarded, and other accurate means resorted to, if for special reasons it is not exact or otherwise not applicable. 4. Carriers 94(4)-Damage for shortage in delivery of fungible goods, in absence of special circumstances, is measured by bulk price (Uniform Sales Act, § 44).

In absence of special circumstances, damage for shortage in delivery by seller of fungible goods sold by quantity is measured by the bulk price rather than price for smaller quantities, both at common law and under Uniform Sales Act, § 44.

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*Mr. Justice STONE delivered the opinion of the Court.

In this case certiorari was granted May 27, 1929 (279 U. S. 833, 49 S. Ct. 483, 73 L. Ed. 982), to review a ruling of the Court of Appeals for the Eighth Circuit upon the measure of damages recoverable in a suit brought under the Cummins Amendment of March 4, 1915, 38 Stat. 1197, as amended 41 Stat. 494, 49 U. S. C. § 20 (11), (49 USCA 20 (11) against a rail carrier for failure to deliver a part of an interstate shipment of coal.

Respondent, plaintiff below, a coal dealer in Minneapolis, purchased, while in transit, a carload of coal weighing at shipment 88,700 pounds. On delivery at destination, the respondent's industrial siding, there was a shortage of 5,500 pounds. At the time of

For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

50 S.Ct.

arrival, respondent had not resold any of the coal. It was intended to be, and was, added to his stock of coal for resale, but the shortage did not interfere with the maintenance of his usual stock. He lost no sales by reason of it, and purchased no coal to replace the shortage, except in carload lots. In the course of his business, respondent could and did, both before and after the present shipment, purchase coal of like quality in carload lots of 60,000 pounds or more, delivered at his siding, at $5.50 per ton, plus freight. The market price in Minneapolis for like coal sold at retail in less than carload lots was $13 per ton including $3.30 freight.

The case was twice tried. On the first trial, the District Court gave judgment for the wholesale value of the coal not delivered. 2 F.(2d) 287. The Court of Appeals reversed the judgment, holding that it should have been for the retail value of the coal. 13 F. *63 (2d) 459. Upon *retrial, the District Court gave judgment accordingly, 21 F.(2d) 831, which was affirmed below, 31 F.(2d) 111.

By the Cummins Amendment the holder of a bill of lading issued for an interstate rail shipment is entitled to recover for failure to make delivery of any part of the shipment without legal excuse, "the full actual loss, damage, or injury to such property" at point of destination. Chicago, etc., Ry. Co. v. McCaull-Dinsmore Co., 253 U. S. 97, 40 S. Ct. 504, 64 L. Ed. 801.

when applied to cases as they usually arise, it is a convenient and accurate method of arriving at an amount of recovery which is *64

*compensatory. As so stated, it would have been applicable here if there had been a failure to deliver the entire carload of coal, since the wholesale price, at which a full carload could have been procured at point of destination, would have afforded full compensation, Chicago, Milwaukee, etc., Ry. Co. v. McCaullDinsmore Co., supra; Central of Georgia Ry. Co. v. American Coal Co., 28 Ga. App. 95, 110 S. E. 320; Wendnagel v. Houston, 155 Ill. App. 664; Lake Erie, etc., R. R. Co. v. Fantz, 85 Ind. App. 569, 154 N. E. 875; Cutting v. Grand Trunk Ry., 13 Allen (Mass.) 381; Crutchfield & Woolfolk v. Director General of R. R., 239 Mass. 84, 131 N. E. 340; Smith v. N. Y., O. & Western Ry. Co., 119 Misc. Rep. 506, 196 N. Y. S. 521; Yazoo & M. V. R. Co. v. Delta Grocer Co., 134 Miss. 846, 98 So. 777; Chicago, R. I. & Pac. Ry. Co. v. Broe, 16 Okl. 25, 86 P. 441; Roth Coal Co. v. Louisville & Nashville R. R., 142 Tenn. 52, 215 S. W. 404; Quanah, A. & P. Co. v. Novit (Tex. Civ. App.) respondent had been under any constraint to 199 S. W. 496, or, in some circumstances, if loss or carry on his business, for in that event purchase less than a carload lot to repair his the measure of his loss would have been the retail market cost of the necessary replacement, Haskell v. Hunter, 23 Mich. 305, 309. But in the actual circumstances the cost of replacing the exact shortage at retail price was not the measure of the loss, since it was capable of replacement, and was, in fact, replaced in the course of respondent's business from purchases made in carload lots at wholesale market price without added ex

pense.

[1] It is not denied that a recovery measured by the wholesale market price of the coal would fully compensate the respondent, or that the retail price, taken as the measure of the recovery allowed below, includes costs of delivery to retail consumers which respondent did not incur, and a retail profit which he had not earned by any contract of resale. But respondent contends, as was held below, that the established measure of damage for nondelivery of a shipment of merchandise is the sum required to replace the formity, which would justify sacrificing the

exact amount of the shortage at the stipulated time and place of delivery, which, in this case, would be its retail value, and that convenience and the necessity for a uniform rule require its application here.

[2] This contention ignores the basic principle underlying common-law remedies that they shall afford only compensation for the injury suffered, Milwaukee, etc., R. R. Co. v. Arms et al., 91 U. S. 489, 23 L. Ed. 374; Chicago, etc., Ry. Co. v. McCaull-Dinsmore Co., supra, 100 of 253 U. S., 40 S. Ct. 504, 64 L. Ed. 801; Robinson v. Harman, 1 Exch. 850, 855; Sedgwick, Damages (9th Ed.) 25; Sutherland, Damages (4th Ed.) § 12; Williston on Contracts, § 1338, and leaves out of account the language of the amendment, which likewise gives only a right of recovery for "ac tual loss." The rule urged by respondents was applied below in literal accordance with its conventional statement. As so stated,

[3, 4] There is no greater inconvenience in the application of the one standard of value than the other, and we perceive no advantage to be gained from an adherence to a rigid uni

reason of the rule, to its letter. The test of market value is at best but a convenient means of getting at the loss suffered. It may be discarded and other more accurate means resorted to, if, for special reasons, it is not

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exact or otherwise *not applicable. See Wilmoth v. Hamilton (C. C. A.) 127 F. 48, 51; Theiss v. Weiss, 166 Pa. 9, 19, 31 A. 63, 45 Am. St. Rep. 638; Pittsburg Sheet Mfg. Co. v. West Penn Sheet Steel Co., 201 Pa. 150, 50 A. 935; Williston on Contracts, §§ 1384, 1385. In the absence of special circumstances, the damage for shortage in delivery by the seller of fungible goods sold by quantity is measured by the bulk price rather than the price for smaller quantities, both at common law, see Morgan v. Gath, 3 Hurl. & C. 748; Avery v. Willson, 81 N. Y. 341, 37 Am. Rep. 503, and under section 44 of the Uniform Sales Act. Likewise, we think that the wholesale market price is to be preferred as a test over

the retail when, in circumstances like the present, it is clearly the more accurate measure. Brown Coal Co. v. Illinois Central R. R. Co., 196 Iowa, 562, 192 N. W. 920. See State v. Smith, 31 Mo. 566; Wendnagel v. Houston, supra, 666, 667 of 155 Ill. App.; Wood & Co. v. Chicago, Milwaukee & St. Paul Ry. Co., 320 Ill. 341, 151 N. E. 229. Compare Heidritter Lumber Co. v. Central R. R. of N. J., 100 N. J. Law, 402, 122 A. 691, 125 A. 926; Leominster Fuel Co. v. New York, N. H. & H. Ry. Co., 258 Mass. 149, 154 N. E. 831, 50 A. L. R. 1464, cited as supporting the conclusion of the court below. In these cases it does not clearly appear whether the consignee suffered special damage by reason of the shortage, measured by the retail price, or whether he did or could replace it at the wholesale price in the ordinary course of busi

ness.

The court below thought that the fact that the award to respondent of the expense and profit, included in the retail price to consumers, did not militate against the rule it applied for the reason that the wholesale

price, as is often the case where market price

is the measure of loss, likewise included a profit over mine cost plus freight. But respondent had done every act and incurred every expense prerequisite to procuring delivery at destination. Any profit included in its market value at the stipulated time and place of arrival was, therefore, appropriately included in the measure of his loss. In this

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respect it is *distinguishable from the expense and prospective profit not actually incurred or earned by respondent, represented by the retail price. See Central of Georgia R. R. Co. v. American Coal Co., supra; Yazoo & M. V. R. Co. v. Delta Grocer Co., supra, 846 of 134 Miss., 98 So. 777. Compare Cincinnati, N. O. & T. P. Ry. Co. v. Hansford, 125 Ky. 37, 100 S. W. 251; Smith v. N. Y., O. & Western Ry. Co., supra; Quanah, A. & P. Co. v. Novit, supra.

Reversed.

(280 U. S. 491)

BALTIMORE & OHIO S. W. R. Co. v.
CARROLL.

Argued Jan. 15, 1930. Decided Feb. 24, 1930.
No. 87.

I. Limitation of actions 127(15)-Amended
complaint, demanding judgment for death of
employee, for injuries to whom plaintiff orig-
inally sued, held to state new cause of action
barred by statute (Federal Employers' Liabil-
ity Act [45 USCA §§ 51-59]).

Amended complaint, demanding judgment in single sum for injury sustained by employee during his lifetime and pecuniary loss resulting from his death over two years before amend

ment was filed in state court to which cause was remanded by United States Supreme Court for new trial after reversal of judgment for employee on ground that Federal Employers' Liability Act (45 USCA §§ 51-59), instead of state law, applied, introduced a new cause of action, distinct from that stated in original complaint for loss and suffering of deceased while he lived, and hence did not relate back to beginning of action so as to avoid bar of statute of limitations (Federal Employers' Liability Act § 6 [45 USCA § 561).

2. Master and servant 101, 102(8)-Employer is not absolutely responsible for reasonably safe condition of place, tools, and appliances, but must exercise reasonable care.

Employer is not held to absolute responsibility for reasonably safe condition of working place, tools, and appliances, but only to duty of exercising reasonable care to that end.

On Writ of Certiorari to the Supreme Court of the State of Indiana.

Action by Guerney O. Burtch against the Baltimore & Ohio Southwestern Railroad Company, in which Lula Carroll, administra

trix of plaintiff's estate, was substituted as a party on his death. A judgment for plaintiff was affirmed by the Indiana Supreme Court (163 N. E. 99), and defendant brings certiorari. Reversed.

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*Mr. William A. Eggers, of Cincinnati, Ohio, for petitioner.

Mr. Oscar H. Montgomery, of Seymour, Ind., for respondent.

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*Mr. Justice SUTHERLAND delivered the opinion of the Court.

The deceased, Guerney O. Burtch, sustained personal injuries while assisting to unload a heavy ensilage cutter from a freight train operated by petitioner. He sued in a state court, and recovered damages on the theory that state law, and not the Federal Employers' Liability Act (45 USCA §§ 51–59), applied. 192 Ind. 199, 134 N. E. 858. This court reversed the judgment, holding that the federal act applied, and remanded the cause for a new trial. On February 10, 1921, while the appeal was pending in the state Supreme Court, Burtch died, and his widow (now Lula Carroll) was appointed administratrix. Upon her application, she was substituted as respondent in this court. B. & O. S. W. R. Co. v. Burtch, 263 U. S. 540, 44 S. Ct. 165, 68 L. Ed. 433.

Three years after the death of Burtch, when the case was back in the state court of first instance, respondent, by leave of that court, amended the complaint, and, among other things, alleged for the first time the death of Burtch as a result of the injury, and demanded judgment in a single sum for the loss and injury sustained by the deceased

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50 S.Ct.

during his lifetime and the pecuniary loss resulting from his death. A motion to require respondent to state these claims as separate *494

causes of action was over*ruled. The answer affirmatively alleged that, in so far as the amended complaint was based upon the death of Burtch, the cause of action was barred because not brought within two years, as required by section 6 of the act (U. S. Code, tit. 45, § 56 [45 USCA § 56]), which provides that no action shall be maintained under the act unless commenced within two years from the day the cause of action accrued. The jury returned a verdict for respondent, and the judgment thereon was affirmed by the state Supreme Court. 163 N. E. 99.

[1] In respect of the statute of limitations, that court held that the challenged amendment did not introduce a new cause of action, but was a mere amplification of the original complaint and related back to the commencement of the action. In support of the ruling, reliance was had upon the decisions of this court that neither an amendment for the first time setting up the right of the plaintiff to sue as personal representative, Mo., Kans. & Tex. Ry. Co. v. Wulf, 226 U. S. 570, 33 S. Ct. 135, 57 L. Ed. 355, Ann. Cas. 1914B, 134, nor an amendment for the first time alleging that the parties were engaged in interstate commerce, N. Y. Cent. R. R. Co. v. Kinney, 260 U. S. 340, 43 S. Ct. 122, 67 L. Ed. 294, introduces a new cause of action. Each of these decisions proceeds upon the ground that the amendment did not set up any different state of facts as the ground of action, and therefore it related back to the beginning of the action. In the Kinney Case it was pointed out that the original declaration was consistent with a wrong under either state or federal law, as the facts might turn out, and that the acts constituting the tort were the same whichever law gave them that effect.

But here two distinct causes of action are involved, one for the loss and suffering of the injured person while he lived, and another for the pecuniary loss to the beneficiaries named in the act as a result of his death. St. Louis, Iron M. & S. Ry. Co. v. Craft, 237 U. S. 648, 658, 35 S. Ct. 704, 706, 59 L. Ed. 1160; C., B. & Q. R. Co. v. Wells-Dickey Trust Co., 275 U. S. 161, 162, 48 S. Ct. 73, 72 L. Ed. 216, 59 A. L. R. 758. In the Craft Case it was said: *495

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The statute, it is true, provides that "there shall be only one recovery for the same injury"; but this has the effect, not of merging the two rights into a single cause of action, but of limiting the personal representative "to one recovery of damages for both, and so to avoid the needless litigation in separate actions of what would better be settled once for all in a single action." St. Louis, Iron M. & S. Ry. Co. v. Craft, supra, page 659 of 237 U. S., 35 S. Ct. 707.

The cause of action which arises from death accrues at the time of death, and the two-year period of limitation then begins. Reading Co. v. Koons, 271 U. S. 58, 46 S. Ct. 405, 70 L. Ed. 835. Here, more than two years having passed, the amendment, introducing as it did a new and distinct cause of action, does not relate back to the beginning of the action so as to avoid the bar of the statute of limitations, Union Pacific Railway Co. v. Wyler, 158 U. S. 285, 296-298, 15 S. Ct. 877, 39 L. Ed. 983, and, since the verdict of the jury was for a single sum, including an undetermined amount as damages for the death, the judgment must be reversed, and the cause remanded for a new trial only upon the alleged cause of action for the personal injuries suffered by the deceased.

that this court, in disposing of the former apThe court below gave weight to the fact peal, remanded the cause for a new trial, and suggests that this would not have been done if the complaint was not subject to amend

ment so as to allow a submission of the case to a jury under the federal act. It is enough to say that on the former appeal the right to *496

maintain an action on account of *Burtch's death was in no way involved; and there is no warrant for assuming that this court had in mind any future proceedings in respect

thereof.

[2] We do not stop to discuss the complaint, rather faintly urged, that the trial court gave conflicting and improper instructions to the jury on the subject of assumption of risk. That question received the consideration of this court in Texas & Pacific Railway Co. v. Archibald, 170 U. S. 665, 671, 18 S. Ct. 777, 42 L. Ed. 1188, and Choctaw, Oklahoma & G. R. Co. v. McDade, 191 U. S. 64, 68, 24 S. Ct. 24, 48 L. Ed. 96, and the rule to be followed in any subsequent trial of this case will there be found fully and carefully stated. Under the rule established by these cases, some of the instructions of the court were over favorable to the railroad company rather than the reverse. On the other hand, the charge in respect of the duty of the employer to furnish safe appliances was without qualification, and the jury might well have understood that the duty was an absolute one. That is not the law. The employer is not held to an absolute responsibility for the reasonably safe condition of the place, tools, and

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