Standard Chemicals & Metals Corp. v. Waugh Chem. Corp.

Decision Date19 April 1921
Citation131 N.E. 566,231 N.Y. 51
PartiesSTANDARD CHEMICALS & METALS CORPORATION v. WAUGH CHEMICAL CORPORATION.
CourtNew York Court of Appeals Court of Appeals

OPINION TEXT STARTS HERE

Action by the Standard Chemicals & Metals Corporation against the Waugh Chemical Corporation. An order overruling a demurrer to a defense in the answer was affirmed by the Appellate Division (194 App. Div. 254,185 N. Y. Supp. 207), and plaintiff appeals.

Reversed.

Chase, J., dissenting.

Appeal from Supreme Court, Appellate Division, First department.

Abraham Benedict and Harold Kohn, both of New York City, for appellant.

Joseph H. Kutner, of New York City, for respondent.

CARDOZO, J.

By contract dated September 28, 1917, the plaintiff agreed to sell and the defendant to buy 1,600 tons of oleum at $45 per ton, deliveries to be made at the rate of 200 tons monthly, beginning November, 1917, and ending June, 1918, upon shipping instructions to be supplied by the defendant. A modification of the contract in November, 1917, gave the defendant the privilege of reducing the monthly installments, and thus extending the time for payment, but a reasonable time after June, 1918, was to be the limit of postponement.

In September, 1918, 1,189.2 tons had been accepted and paid for in accordance with the contract as thus modified. The defendant refused to give shipping instructions for the delivery of the residue (410.8 tons). The refusal, it is urged, is justified by the provisions of the Lever Act (Act Cong. August 10, 1917, c. 53, § 4; 40 Stat. 276; U. S. Comp. St. Ann. Supp. 1919, § 3115 1/8 ff), under which it is declared unlawful ‘to engage in any discriminatory and unfair, or any deception or wasteful practice or device, or to make any unjust or unreasonable rate or charge, in handling or dealing in or with any necessaries,’ or ‘to conspire, combine, agree, or arrange with any other person, * * * to exact excessive prices for any necessaries.’ The President by another section (section 1 [Comp. Statutes, § 3115 1/8 e]) ‘is authorized to make such regulations and to issue such orders as are essential effectively to carry out the provisions of this act.’ No claim is put forward that the price to be paid by the defendant was unjust, unreasonable, or excessive at the making of the contract. No claim is put forward that it became unjust or unreasonable afterwards. All that is claimed is that it became excessive ipso facto by force of executive pronouncement. The answer states that on June 27, 1918, the President of the United States fixed the maximum price of oleum at $32 per ton, and thereafter, on September 30, 1918, at $28 per ton. The result, we are told, was to make the performance of the contract illegal, and to relieve the defendant from the duty of performance.

I am unable for more than one reason to assent to that conclusion.

[1] 1. I feel constrained to hold, in adherence to the ruling of the Supreme Court of the United in U. S. v. L. Cohen Grocery Co., decided February 28, 1921, 255 U. S. 81, 41 Sup. Ct. 298, 65 L. Ed. 516, and Weeds v. U. S., 255 U. S. 109, 41 Sup. Ct. 306, 65 L. Ed. 537, that the prohibition of the Lever Act is void, and that illegality cannot result from the failure to obey it. I do not overlook the fact that the court was there dealing with a criminal prosecution. The ground on which it placed its judgment applies, and with like consequences, to civil suits as well. The prohibition was declared a nullity because too vague to be intelligible. No standard of duty had been established. No test had been supplied, as where statutes direct adherence to reasonable or market values (Int. Harv. Co. v. Ky., 234 U. S. 216, 221, 34 Sup. Ct. 853, 58 L. Ed. 1284;Collins v. Ky., 234 U. S. 634, 638, 34 Sup. Ct. 924, 58 L. Ed. 1510), or to rates fixed by a commission or other legislative agencies. There was merely the denunciation of ‘acts detrimental to the public interest when unjust and unreasonable in the estimation of the court and jury.’ U. S. v. L. Cohen Grocery Co., supra. The variant views of judges of the District Courts were quoted as evidence of the absence of a standard. If this is the rationale of the decision, its consequences are not limited to criminal prosecutions. A prohibition so indefinite as to be unintelligible is not a prohibition by which conduct can be governed. It is not a rule at all; it is merely exhortation and entreaty. The act, as the Supreme Court construes it, rejects all objective standards, all determinate or determinable criteria, the tests of practice or precedent or the market or the vicinage. Rejecting these, it sets the individual adrift upon the uncharted sea of subjective prejudice and favor. The arbitrium boni viri, unrestrained and undirected, becomes the test of right and wrong. I do not say that the lawmaking body is incompetent, in time of war, to compel the trader to accept such prices for his commodities as juries may consider fair. That question is not here. I am concerned now with the question whether there is an offense against the public order, bringing down upon his contracts, as a consequence, the penalty of illegality and forfeiture if he fails to adjust behavior to ideals of equity and wisdom as varied as the minds of men. Offending contracts are not merely modified, their exactions scaled down to conform to the finding of right reason as declared by court or jury after the event. They are wiped out altogether, their exactions adjudged illegal, their makers viewed as malefactors, for failure to conform to the unknown and unknowable. I do not attempt to consider whether the act might have been so restricted or interpreted as to save its validity either wholly or in part. Since the decision of the Supreme Court, the fact of indefiniteness is no longer open to inquiry. The lack of any standard, either expressly established, or ascertainable with approximate certainty from sources aliunde, is to be accepted as a datum. Disobedience is impossible unless there is something to be obeyed.

[2] We are told that the statute, if unintelligible and uncertain in its inception, gained meaning and certainty, and, with those qualities, validity, upon the promulgation by the President of an order fixing prices. I put aside the question whether the order, rightly construed, did prescribe a maximum beyond which charges were to be prohibited. Even if it did, it did not save the statute which it was intended to effectuate. We are not dealing here with an authority such as may be found in section [231 N.Y. 56]25, under which the President is expressly empowered to fix the price of coal and coke, with the aid of elaborate tests and safeguards for the protection of producers. They are to be allowed the cost of production, the expense of operation, maintenance, depreciation, and depletion, and in addition thereto a just and reasonable profit (section 25 [section 3115 1/8 q]). We are dealing here with an authority declared in general terms ‘to make such requlations and issue such orders as are essential effectively to carry out the provisions of this act.’

I cannot read that provision as a delegation of authority to fix the prices for all articles which the statute classifies as necessaries. It is a part, not of section 4, which prohibits unreasonable practices and charges, but of section 1, which is in the nature of a preamble, stating the aim of the statute and the general scope of the provisions. If Congress had meant to confer upon the President authority to fix prices generally, I think it would have used language as plain and simple as it did in section 25 in respect of coal and coke, and not left a power so vital to be deduced by doubtful inference. ‘Expressio unius est exclusio alterius.’ Cf. sections 14 and 15 (sections 3115 1/8 kk, 3115 1/8 l), dealing with prices of wheat. Two members of the Supreme Court (Pitney and Brandeis, JJ.) thought that the prohibition of the statute had no relation in any circumstances (except in cases of conspiracy) to prices upon sales. They were unable to bring ‘prices' within the description of rates or charges ‘in handling in or dealing with’ the necessaries of life. Weeds v. U. S.; U. S. v. L. Cohen Grocery...

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