*1 pro- CORP., FRIGI- 1944 Act with pear MOTORS GENERAL DAIRE DIVISION rights accorded cedural dealing dismissals v. veteran was sense in the ‘cause’ or demotions UNITED STATES. conduct individual behavior No. 47657. or, possibly, his employee, of Claims. Court United States spoke capabilities and that when June efficiency promoting service, part it had of the Act in that efficiency promoting in mind * * * incompetents. removal of to cover construed section be If this organization general efficiency the bureau, its ef- operation nullify in most cases fect would be case of reduc- protection in the nearly could argued because it tion force successfully always resulting in concen- a consolidation and economies of activities

tration promote payroll the ef- ‘will in the * * * ficiency I the service.’ that the am of the ‘for cause demotion was such efficiency promote

will expression service’ as applied in the Act to be tended

1944.” foregoing cases authori clear that validi

ties make it there recovery argument ty in defendant’s greater give him for the rights would au wartime veterans. in act was

thorities affirm enlarge rights restrict tended veterans, veteran, in wartime that a plaintiff, similar to that of the situation rights equivalent to those of of 1912. under the act summary judg- motion for Plaintiff’s granted is, therefore, and defend-

ment summary judgment motion ant’s

denied.

Judgment entered in favor of will be $1,493.85. plaintiff in amount of ordered.

It is so

MADDEN, WHITAKER, and LIT-

TLETON, Judges, concur.

LARAMORE, J., took no or decision this case.

consideration

93$ by until March and thereafter Section 3405 of Code, Revenue the Internal 26 U.S.C.A. of the taxes controversy were those attributable charge plaintiff to a made $5 sale each warranty presently de- which will scribed. refrigerator, plain-

In the sale of tiff compris- included a certificate which warranty refrig- parts aed all except refrigerat- erator the sealed-in ing year, for one and an replace refrigerating or unit inoperative the event that that unit became years following

within five refrigerator’s delivery the date original purchaser. to the householder designated The latter was the certificate as the “Five-Year Pro- tection Plan.” The Five-Year Protec- priced tion Plan tiff, plain- was at $5 separtely stated on vendees, invoices to its and persons buying obliged, exceptions not here material, for the Protection Plan. In 1933 the had offered a war- Washington, C., Ellison, D. Newell one, two, W. or three $6 at. Henry Hogan, plaintiff. M. New year, option purchaser. at the City, Gribbon, M. Calvert York Daniel four-year In 1935 warranty, it offered a Thomas, Detroit, Mich., Donald C. Alex- $10, option still at the Covington Burling, ander, and & Wash- adopted chaser. In 1936 it plan ington, C.,D. on the briefs. which is here involved. Hussey, Washington, C., J. D. with W. plaintiff says it sold Atty. H. whom was Asst. Gen. Brian “something else,” Holland, for Andrew D. defendant. something that that else was not within Sharpe Joseph Sheppard, H. Wash- category things subject ington, C., D. were the brief. manufacturer’s excise tax. We think that what the sold was a war JONES, Before Chief refrigerator, ranted refrigera and not a LITTLETON, WHITAKER, MADDEN tor and else. In sale Judges. LARAMORE, merchandise, new there implied is an warranty of fitness. sale MADDEN, Judge. question, here in that im sues recover certain warranty plied replaced by an ex paid by manufacturers’ excise taxes it press warranty parts of all of the re period May 10, 1937, through for the frigerator express December It manufactured may warranty more, less, been electric which were sub- than the extensive which ject ato manufacturer’s excise tax im- read would have into law plication, the im posed Section 608 the Revenue Act if there had express been U.S.C.A.Int.Rev.Acts, page warranty. suppose, One for exam-. by implication, custom refrigerator warranties

pie, the cabinet that if agreement, by express trade, years two within corroded products, purpose attached to unfit it was show *3 prices priced the parts, from and the deducted other toAs was sold. for which product price of sold. been taxable the warranty have one-year the years’ experience case, implied war- instant several longer period the a for assigned by price the with five-dollar the covered. would have five-year warranty show- to the that claim not plaintiff does The yielded profit of more than ed that it a price be should some fulfilling the cost of above warranty express the of free because tax warranty. the that the Whether does, however, make It one sells, profit plaintiff’s normal on what it five-year warran as the a to claim such do not How much one- we know. the unit. We mechanical ty sealed-in warranty selling year price to added the the between whatever no difference see the how of and much ex warranties, the two between two nor. it, do cost fulfill we not know. We hand, and warranties, the on press Congress did that think not intend would, in warranty the law which' the taxing authorities should have to the warranty, have express of an the absence problems. with concern themselves those hand. sale, other on the the attached precedents assigned, cited its the sure, the To be tangible price of relate to combinations jects, two ob- accounting purposes, a five-dollar not, warranty. and five-year cer one taxable the other such That is jewelry dresses, pencils as costume and tainly war If of these immaterial. notebooks, “something trimming else,” and and fur in addi ranties refrigerators, coats. the cloth those cases the within “some- tion thing statute, tangible., meaning else” was obvious and tax-free tax have else would price of that not alternative claim is way other than in some determined to be by upon 3441(a) valid. It is based Section assignment by arbitrary the seller of the Internal Revenue 26 U.S. buyer and no choice has where cases says C.A., which : fixing therefore determining, purposes “In for the “something else.” price of the chapter, price of this for which repu- with a lesser If a manufacturer sold, an article is there shall be in- attempted to Motors than General tation any charge coverings cluded intrinsically good sell nature, containers of whatever Motors, it would General as those sold any charge placing incident to certainly them a sell at almost packed ready article in condition compete price success- in order lower fully. shipment, but there shall be exclud- lower, price Because imposed by ed the amount of tax Motors less tax. General would chapter, this whether or not stated truthfully, say, could charge. separate transporta- as a A refrigerator was Motors a General of getting tion, delivery, insurance, installa- “something refrigerator a tion, charge (not required or other arising security feeling else," viz. the foregoing sentence to manufacturer fact that the from cluded) shall be excluded from the reputation. But Motors General fine a price if the amount thereof is assign some- to that a not established the satisfaction part thing and claim else Commissioner, in with accordance regulations.” n free. tax think that here involved We the five-dollar tax statute The excise charge question here administra- difficult of the na indeed transportation, delivery, extents of ture insur several-kinds if tion charge, anee, Judge is there WHITAKER, (dissenting). installation “or fore not covered other the words agree I cannot charge” appear in the sentence majority. refrigera- excluding charges. certain The five-dol got refrig- money, tor for his charge lar was included in erator, but also the seller’s they packed when the ready keep it would paper shipment and the con good repair years. period of five taining warranty was the contract of obligation beyond This was an over refrigerator. packed in the the usual manufacturer’s product. *4 its think, however, We implied warranty every is an There on its recover claim by a manufacturer that the article it is entitled to a credit under Section is workmanship free from in defects 3443(a) (2) of the Internal Revenue Many material. times these defects can says 26 U.S.C.A. That section * * * be discovered from a use of the ar- “when the is read * * * ticle, and in the custom of the various by justed discount, a bona fide periods trades certain of time are al- rebate, allowance”, or the taxable lowed for up. these defects to show If by shall be reduced the amount of the re they up show allowed, within the time adjustment. When an article sold remedy the manufacturer must them at warranty, with a warranty and fulfillment of the expense. they his own If up do not show sum, costs the seller a certain time, presumed within this it he in fact has received for the article by faulty break-down manufacture, was occasioned by the amount which the sale by something else, but in fulfilling exceeded the cost of the war which event the maker is relieved from ranty. has, effect, given pur He in responsibility. an spent chaser “allowance” when he has money findings for his benefit. Here the automobiles,' the case of plaintiff expended $4,628,- show that the stance, ordinarily time is fulfilling five-year in 797.83 its warran days, 90 but in the case an electric says ties. The Government that some refrigerator the standard time is one finding making of the items shown in year. If the machine becomes defective up sum, the named improperly expiration year, pur- .after the of one charged fulfilling costs the warran necessary repair's chaser must make ties. But stipulated the Government has expense. own at his expenses these were “incurred obtaining This was the rule in the case discharging obliga of defendant’s until tions under the Protection Plan.” It year If, prior time, to that one of not asked has be relieved from its .to their went bad after it had stipulation. year, been in use more than it had repaired expense to be at the plaintiff is entitled to recover. Ordinarily purchaser chaser. Entry judgment suspended will be repair work done the retail deal- filing stipulation by await distributor, or the er but sometimes it showing parties the amount due the party; was done any an outside but in plaintiff, forego- in accordance with the purchas- event it was done at the ing following Findings opinion and the expense. er’s of Fact. quality repair work thus so It is ordered. causing of it done and the cost an plaintiff’s unfavorable reaction toward

JONES, machines, partly Chief and LARA- for this reason MORE, Judge, concur. decided to.'make available to a repair prior does At chines

purchaser own facilities. agreement must agree- appear, but purchaser an first offered sum be- repair for saved them a considerable have keep the machine ment to multiple-unit war- cause 93 year expiration of the after the option purchasers, enter- years, or who had ranty period, or for two might ing not, entered purchaser into the as the three elect; might purchaser refuse into it. or the agreements, proffered of these it cost record show that does any per- necessary any repairs made plaintiff $4,628,797.83 its ob- to fulfill might choose. son he agreements. ligation under the accepted If the average each was an cost of $65.00 agreements by plaintiff, he offered repaired. plaintiff was able That per required therefor $6.00 repair for into an to enter three-year took the If agreement, $65.00, $5.00, is ex- whereas it cost cost him it would thus $18.00. relatively plained by number small repair within of machines that needed then in 1935 determined Plaintiff *5 amount four-year the contract term. total purchaser a could offer a agreement agreements $10,- on collected the price $10.00, in- and at the 687,115.00. price stead of former $18.00 the pur- years. did. This it three Some profit It is true made a that advantage of it and some took chasers agree- of more 100 on the not. did ments, but that an cannot said agreement plaintiff $4,628,- which it cost following year, 1936, plaintiff - something perform 797.83 to was not purchasers that if all of concluded substantial over and the sale above four-year main- took its refrigerators. Except these the agreement, re- it could further tenance agreements, plaintiff would not have been pre- price to under Since duce $5.00. expend $4,628,797.83. required to this plans a vious substantial number of accept- purchaser can it that chasers of not Nor be said the something agreements, plain- ed the maintenance tiff, did not receive of substantial refrigerator put plan order to the into in the in value addition to $5.00 necessary agree- effect, require paid plaintiff’s to found it when he $5.00 might something purchasers of enter in- do which cost ment to agreement. So, from to maintenance to the do. it $65.00 optional, what had before been then on Evidently agreements not these were obligatory; price but now became the subterfuge the a increase the to agreement was reduced to the $5.00. refrigerators. successively thus reduced from agreement It was It said on all sales further three-year to for a $18.00 repair agreements these four-year agreement, $10.00 separately, and the were invoiced four-year agreement. for a then to $5.00 from and the amounts received them this facts recitation From performance entered of their were cost apparent that what seem sepa- in an account books on refrigera- was not sold refrigerator from account of rate keep an to tor also but sales. good in condition for four are defendant cases relied warranty period years, addition to the controlling. Products In Lash’s not of one 252, States, Company 64 Ct.Cl. v. United purchaser 100, 73 was of value to S.Ct. This 278 U.S. affirmed purchaser sum secured a substantial L.Ed. it cost money purchased only the article money it his Just how much fulfill it. to drink. keep in that was a soft case purchasers their ma- which to had cost tax-, said, player attachments, Supreme “The case the Court single price] able, purchase were sold as a amount added [to get goods apply only price. to paid The tax was to ruled price of the tax is because nothing That is not true attributable and for else.” got notwithstanding mechanism, here. got refrigerator. in- an He to a mechanism the attachment in addition repair together par- keep for four and the tended be used customary years, war- obtained in addition ticular mechanism could be through payment period. dealer amount that If an automobile of an agrees keep my for four cluded non-taxable car in at- he has sold me can it be said that tachment. nothing ? but an automobile 469, 1932; See also S.T. XI-2 C.B. selling 54-100, is also It obvious that Rev.Rul. 1954—11 I.R.B. 12. go advertising expenses into the say I am authorized to that LITTLE- things of an are article TON, dissenting joins in this gets pro- in addition opinion. question involved duct—which was the States, Company in Fitch v. United 409, 89 L.Ed. 472. 65 S.Ct. U.S. rulings is in line Internal Revenue Service com-

parable cases. *6 943, 221, pencils

In S.T. 1952 — 1 C.B. subject tax “were sold the manu GULF OIL CORP. spring facturer a unit” with loaded v. subject reels notebooks not tax. UNITED STATES. Bureau ruled tax that the attached Court, United States District portion to “that of the manufac S. D. New York. which is turer’s 27, 1954. May properly taxable allocable to the article.” Rev.Rul. I.R.B. 1953—20 gave retailer of taxable silverware purchaser a non-taxable article as

a sales incentive. ruled It was

transaction a sale constituted

silverware and a non-taxable article at a lump price, sum the tax should only by

be measured

total amount received that attribut- Clearly able the silverware. chaser here had full amount get silverware and not ob- separately.

tain the non-taxable article upon imposed But the tax was not paid by

full amount be- cause that amount the re-

ceived other than the taxable

article. In Rev.Rul. 1953—21 I.R.B.

phonograph mechanisms, which are tax- 3404(b) under

able section of the In- Revenue

ternal were combined