Harlan F. Stone

“ It may well be that he whose house has been burned has sustained a loss whether he knows it or not and may recover a tax paid in ignorance of that material fact. But we cannot say that the merchant whose action has been based not merely on ignorance of a fact but on faith in a prophecy-even though the prophecy is made without full knowledge of the facts-can claim to have sustained a loss before the future fails to justify his hopes.
Here the only fact relied upon to show a loss is the outcome of the litigations two years after respondent's payment to Jouravleff. ”

“ But we do not think that a loss resulting from a buyer's prepayment to a seller who proves to be irresponsible in necessarily sustained, in the statutory meaning, as soon as the money is paid. The statute was intended to apply not only to losses resulting from the physical destruction of articles of value but to those occurring in the operations of trade and business, where the business man has ventured on a course of action in the reasonable expectation that the promised conduct of another will come to pass. ”

“ His case is not like that of a man who fails to learn of the theft of his bonds or the burning of his house until a year after the occurrence, but rather resembles the position of a merchant who buys in one year, for sale in the next, merchandise which shifting fashion renders unsaleable in the latter. ”