Cordovan Associates, Inc. v. Dayton Rubber Company, 14029.

• Decision Date: 07 June 1961
• Docket Number: No. 14029.,14029.
• Parties: CORDOVAN ASSOCIATES, INCORPORATED, Defendant-Appellant, v. DAYTON RUBBER COMPANY, Plaintiff-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

290 F.2d 858 (1961)

CORDOVAN ASSOCIATES, INCORPORATED, Defendant-Appellant, v. DAYTON RUBBER COMPANY, Plaintiff-Appellee.

No. 14029.

United States Court of Appeals Sixth Circuit.

June 7, 1961.

Robert F. Young, Dayton, Ohio, and Morton Honeyman, Roanoke, Va. (Harshman, Young, Colvin & Alexander, by Robert F. Young, Dayton, Ohio, on the brief), for appellant.

James E. Corkey, Washington, D. C. (Philip C. Ebeling, Pickrel, Schaeffer & Ebeling, Dayton, Ohio, Gravelle, Whitlock, Markey & Tait, Washington, D. C., on the brief after remand by the Supreme Court; Pickrel, Schaeffer & Ebeling, by William G. Pickrel and Gordon H. Savage, Dayton, Ohio, on the brief), for appellee.

Before MARTIN, WEICK and O'SULLIVAN, Circuit Judges.

WEICK, Circuit Judge.

This case was remanded by the Supreme Court for consideration in the light of Commissioner of Internal Revenue v. Duberstein, 363 U.S. 278, 80 S.Ct. 1190, 4 L.Ed.2d 1218. Duberstein had not been decided at the time our original opinion in this case¹ was announced. We have complied with the mandate of the Supreme Court. Additional briefs were filed by counsel after the remand and the case was again heard on oral arguments.

As we understand Duberstein, not only are findings of fact made by the District Court binding on an appellate court unless clearly erroneous,² but the rule itself applies to factual inferences drawn from undisputed basic facts. United States v. United States Gypsum Co., 333 U.S. 364, 394, 395, 68 S.Ct. 525, 92 L.Ed. 746. But see: United States v. E. I. Du Pont DeNemours & Co., 353 U.S. 586, 598 footnote 28, 77 S.Ct. 872, 1 L.Ed.2d 1057. Even though an appellate court may draw different factual inferences from those of the District Court, it is not free to do so.

When it comes to conclusions of law and inferences to be drawn therefrom, the appellate court is free to act independently and draw its own legal conclusions and inferences. United States v. Mississippi Valley Generating Company, 364 U.S. 520, 526, 81 S.Ct. 294, 5 L.Ed.2d 268. If this were not so, the appellate court would be stripped of its power of review. Moreover, not all findings labeled as findings of fact are binding on an appellate court. Where a finding designated as a finding of fact is not in reality a finding of fact, but is a conclusion of law or a mixed finding of fact and conclusion of law, it is not binding on the appellate court. Bogardus v. Commissioner, 302 U.S. 34, 58 S. Ct. 61, 82 L.Ed. 32; Weible v. United States, 9 Cir., 1957, 244 F.2d 158; Chandler v. United States, 7 Cir., 1955, 226 F.2d 403. Where a finding is of an ultimate fact in the making of which is involved the application of legal principles, it is subject to review. Baumgartner v. United States, 322 U.S. 665, 64 S.Ct. 1240, 88 L.Ed. 1525.

The interpretation and construction of a written contract are matters of law within the competence of the Court of Appeals to review and do not come under the clearly erroneous rule. Crosley Radio Corp. v. Dart, 6 Cir., 1947, 160 F.2d 426. In Eddy v. Prudence Bonds Corporation, 2 Cir., 1957, 165 F.2d 157, 163, certiorari denied Prudence Realization Corp. v. Eddy, 333 U.S. 845, 68 S.Ct. 664, 92 L.Ed. 1128 Judge Learned Hand said:

"It is not necessary to analyze the mental process by which a court imposes legal consequences upon verbal utterances; possibly, it is proper to call the result a `finding of fact.\' It is enough here, that, whatever the right description, such a finding is assailable as an ordinary finding of fact is not; for appellate courts have untrammelled power to interpret written documents."

See also: Republic Pictures Corp. v. Rogers, 9 Cir., 1954, 213 F.2d 662, 665; United States v. John McShain, Inc., 1958, 103 U.S.App.D.C. 328, 258 F.2d 422, 425, certiorari denied 358 U.S. 832, 79 S.Ct. 52, 3 L.Ed.2d 70.

The contract, which was the subject of this action for declaratory judgment, was in writing. There was no dispute as to its terms and provisions. The only controversy between the parties was as to the proper interpretation of the provision for prices to be paid for the tires, the contract providing that they were to be "prices prevailing on date of shipment." An identical provision was contained in the contract with White Stores, Inc., the other customer in Dayton's chain store division. Dayton figured the prices on what it termed the cost justification plan.

In a subsequent separate contract with White, Dayton lowered its prices to White about ten percent computing the prices on a new pricing plan which it termed "based on cost price."

The question to be determined is whether Cordovan was being charged "prevailing prices" under its contract when the only other customer in Dayton's chain store division received prices ten percent lower than the prices charged to Cordovan.

In our original opinion, we construed "prevailing prices" to mean "prices, which, at any particular time, are charged by a seller for a certain product." We said:

"We think it would be illogical to hold that a seller may charge one of its two customers a lower price than the other for the same item, when both have contracts to receive goods at `prevailing prices.\' There can be only one `prevailing price\' at a given time; and, in the present context, it would fairly mean the lowest price for the commodity which the seller gives to either of his two large buyers in conformity with a contract provision for sales at `prevailing prices.\'" 279 F.2d 291.

The course of dealing between the parties and the practical construction of the contract by them supports our views. The Trial Judge found that for many years the only two customers in Dayton's chain store division were billed the same prices before and after the...