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reduction on any given sale.”). One commentator has explained
the distinction as being based on the impracticability, if not
the impossibility, of relating patronage dividends to gain or
loss upon any particular transaction with any particular patron.
Adcock, “Patronage Dividends: Income Distribution or Price
Adjustment”, 13 Law & Contemp. Probs. 505 (1948). As explained
by Professor Bunn (who, in Sunbeam Corp. v. Civil Service
Employees’ Cooperative Assn., supra, was credited for his
“scholarly discussion” that “greatly helped” the court):
[A patronage dividend] cannot be allowed or promised
when a sale is made, for it is made from earnings only,
and no one can be sure there will be any earnings. Our
business may sell at an eighty per cent mark-up and
still go broke if overhead exceeds that spread. And we
will not know our overhead per unit until we know our
total volume. Neither will we know our bad debts, or
other losses. We may make shrewd guesses, and quite
close estimates of earnings if we know our business
well, but we cannot be sure, and therefore we can never
promise. * * *
Bunn, supra at 173. Professor Bunn concludes:
True patronage dividends are divisions of net earnings.
Net earnings are not made on any single sale. They
result from the total operations of some accounting
period, and become known only after the results for
that period are in. A distribution of them, on
whatever basis, is not a price reduction nor a rebate
* * * .
Id. (fn. ref. omitted).
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