Detroit Edison Co. v. Wyatt Coal Co.

• Decision Date: 06 November 1923
• Docket Number: 2133.
• Citation: 293 F. 489
• Parties: DETROIT EDISON CO. v. WYATT COAL CO.
• Court: U.S. Court of Appeals — Fourth Circuit

293 F. 489

DETROIT EDISON CO. v. WYATT COAL CO.

No. 2133.

United States Court of Appeals, Fourth Circuit.

November 6, 1923

James V. Oxtoby, of Detroit, Mich. (Ernest E. Winters, Jr., of Huntington, W. Va., and Oxtoby, Robison & Hull, of Detroit Mich., on the brief), for plaintiff in error.

Fred O Blue, of Charleston, W.Va. (Poffenbarger, Blue & Dayton, of Charleston, W. Va., on the brief), for defendant in error.

Before WADDILL, Circuit Judge, and WATKINS and WEBB, District Judges.

WADDILL Circuit Judge.

This is an action of assumpsit instituted by the plaintiff in error hereinafter called plaintiff, against the defendant in error hereinafter called defendant, to recover the amount of certain payments on account of coal contracted to be sold by the defendant to the plaintiff, in excess of the price agreed upon, and which amount plaintiff insists was unlawfully and improperly exacted by the defendant. The jurisdiction of the District Court is based on diverse citizenship of the parties, the plaintiff being a corporation resident and a citizen of the state of New York, doing business in the state of Michigan, and the defendant a corporation of the state of West Virginia, resident and a citizen and doing business at the city of Charleston, within the Southern district of that state.

The cause of action grows out of a certain contract entered into between the plaintiff and the defendant, dated 10th of February, 1917, whereby the plaintiff bought and the defendant contracted to sell 250,000 tons of mine run coal, to be shipped between the 1st of July, 1917, and June 30, 1918, in equal monthly installments from the Berlin mines, on Cabin creek, Kanawha county, and the Main Island and McGregor mines, in Logan county, W. Va., at the price of $2.25 per ton, f.o.b. at mines. The contract price was by consent of parties, afterwards changed to $2.50 per ton, prior to the shipment of any coal thereunder. On the 1st of April, 1918, this contract was, with the consent of the plaintiff, assigned by the defendant to the Main Island Creek Coal Company. During the months of November and December, 1917, and from January to May, 1918, inclusive, the defendant shipped to the plaintiff 117,211 tons, charging $2.85 per ton, instead of $2.50, that is, 35 cents per ton extra, and aggregating $334,052.19, the excess price being $41,024.18, which the plaintiff paid, and it is to recover this last named sum that this suit is prosecuted.

The plaintiff in its declaration avers that by virtue of the act of Congress of the 10th of August, 1917, familiarly known as the Lever Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, Sec. 3115 1/8e et seq.), the President of the United States was authorized, and did by several orders and proclamations between the passage of the act and October, 1917, fix and prescribe the price at which coal of the class in question should be sold, and under which for the months aforesaid, viz. from November, 1917, to May, 1918, inclusive, the price was fixed at $2.85 per ton, or 35 cents a ton in excess of the price named in the contract aforesaid, which the defendant illegally charged the plaintiff, and the latter was forced to pay.

Plaintiff further avers that the provisions of the Lever Act did not apply to or affect contracts made in good faith prior to the publication of established prices of coal under the act, and that by section 25 the defendant was inhibited from demanding or receiving a greater sum than that specified in the contract and agreed upon by the parties, to wit, the 35 cents a ton over and above the price agreed upon, and which the plaintiff was forced to pay. Plaintiff further avers that on account of the character of the business in which it was then and is now engaged, viz. that of a public service corporation, supplying heat and electric light and power in the city of Detroit, Mich., and surrounding territory, and because at the time it was engaged in furnishing its services to manufactories engaged in war work for the government, it was imperative that the plaintiff should receive the coal, which the defendant was then under contract with it to deliver, and plaintiff was accordingly compelled by the nature of its business, the necessity and importance of keeping its plant in operation, and the then condition of the coal market to pay to the defendant the additional sum demanded by the defendant to be paid to it for said coal, and submit to the defendant's unlawful exaction of said additional 35 cents a ton, and did pay the same upon all coal delivered under said contract after November 1, 1917.

The defendant appeared, and demurred generally to the plaintiff's declaration, raising the question of the right of the plaintiff to recover under the contract in suit, and especially averred that the plaintiff and the defendant were in pari delicto in respect to any alleged violation of the contract, thereby disentitling the plaintiff to prosecute its action, and, further, that the payments in question were voluntarily made by the plaintiff, and not recoverable. Plaintiff joined in the demurrer, and, upon argument and hearing thereon, the court sustained the same, and the plaintiff, declining to amend its declaration, entered judgment in favor of the defendant, from which action this writ of error is sued out.

These questions are presented for the consideration of the court, and will be disposed of in the order named, viz.: The validity and effect of the provision of section 25 of the Lever Act (section 3115 1/8q), and its bearing upon the right of recovery herein; whether payments made under the circumstances set forth in the declaration can be recovered back, for the reasons therein stated; and whether said payments were not voluntarily made.

First. The plaintiff in argument in effect concedes that, if by the provisions of the act in respect to demanding and receiving the excess of 35 cents per ton for the coal in question over the agreed price the parties thereto were in pari delicto, then no recovery can be had.

Plaintiff insists its act in no sense disentitled it to recover the amount illegally exacted from and paid by it; that the same was charged in direct violation of the letter and spirit of the law, and that said section 25 expressly inhibited the defendant from making the charge; that the law was enacted for the protection of the plaintiff and persons similarly situated; and that the plaintiff was not in pari delicto with the defendant with respect to the payment of the excess charge. The section is as follows:

'Sec. 25. * * * Whoever shall, with knowledge that the prices of any such commodity have been fixed as herein provided, ask, demand, or receive a higher price, or whoever shall, with knowledge that the regulations have been prescribed as herein provided, violate or refuse to conform to any of the same, shall, upon conviction, be punished by fine of not more than $5,000, or by imprisonment for not more than two years or both. Each independent transaction shall constitute a separate offense.' 40 Stat. 276, 286.

This section, in plain terms, prohibits the defendant from asking, demanding, or receiving a higher price than that specified in the contract and agreed to by the parties. But it does not follow that this provision was enacted only for the benefit of persons buying coal, or that one in the plaintiff's position was not affected by the section.

The purpose of the legislation, and the regulations issued thereunder, was primarily intended as a means of national defense and safety, and to aid in the prosecution of the war by the equalization, as far as possible, of the distribution of coal to all industries and users alike, and to stabilize the production of whatever was needed for governmental or war purposes, and to prevent extortions upon the public during the then existing conflict. The defendant, in contravention of this legislation, charged the plaintiff, and the latter paid, more than the contract price agreed upon, which was the price recognized in the act....