HP Coffee Company v. Reconstruction Finance Corp.

• Decision Date: 08 October 1954
• Docket Number: No. 667.,667.
• Citation: 215 F.2d 818
• Parties: H. P. COFFEE COMPANY v. RECONSTRUCTION FINANCE CORPORATION.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

215 F.2d 818 (1954)

H. P. COFFEE COMPANY v. RECONSTRUCTION FINANCE CORPORATION.

No. 667.

United States Emergency Court of Appeals.

Heard at St. Louis, Missouri, August 9, 1954.

Decided October 8, 1954.

Martin E. Sheets, Jr., St. Louis, Mo., for complainant.

Maurice S. Meyer, Atty., Dept. of Justice, Washington, D. C., with whom Warren E. Burger, Asst. Atty. Gen., and Marvin C. Taylor, Atty., Dept. of Justice, Washington, D. C., were on the brief, for respondent.

Before MARIS, Chief Judge, and McALLISTER and LINDLEY, Judges.

LINDLEY, Judge.

This is a complaint under Section 408 (a) of the Defense Production Act of 1950, as amended, 50 U.S.C.A.Appendix, § 2108(a), to review an order of respondent entered March 8, 1954, denying a protest of a claim for recapture of certain coffee subsidy payments previously paid to complainant.

Complainant, an importer of green coffee, entered into Agreement No. 160 with respondent, effective November 19, 1945, for participation in the coffee subsidy program, executed pursuant to the provisions of Directive 87 of the Office of Economic Stabilization, 32 C.F.R., 1945 Supp. Sec. 4003.62, and providing that respondent would pay complainant a subsidy of three cents per pound on green coffee purchased by it between November 19, 1945 and March 31, 1946, and shipped, or having had shipping space booked for shipment, prior to April 1, 1946, not to exceed 2,313,920 pounds. Paragraph 13 provided that the contractual terms might be modified at any time by mutual consent of the parties, but that any such change would "not affect any right accrued under this agreement prior to such modification."

By mutual consent the parties entered into a modification effective March 19, 1946, as authorized by Amendment 2 to Directive 87, 32 C.F.R., 1946 Supp. Sec. 4003.62, which more than doubled complainant's import subsidy quota and extended by several months the permissible dates of purchase and shipment. Paragraph 14 was added to provide for recapture of subsidy payments based on the shipper's terminal inventory in the event maximum prices for coffee were increased. Pursuant to Amendment 3 to Directive 87, 32 C.F.R., 1946 Supp. Sec. 4003.62, the agreement was further modified by mutual consent, effective May 7, 1946.

As thus modified, Paragraph 14 provided that:

"14. In the event of an increase in or removal of OPA maximum prices on coffee, the importer shall pay to RFC an amount equal to the equivalent of the increase in value of his inventory, computed as follows:

"a. The rate shall be three cents a pound green basis, or the increase in OPA maximum prices, whichever is lower.

"b. The inventory shall include all types of coffee measured in green basis equivalents, at the close of business on the day prior to such increase in or removal of maximum prices, which either the importer owns in the continental United States or for which a bill of lading covering shipment to the United States for the importer\'s account has been issued in a foreign port; provided that the total inventory shall be reduced by the quantity of such coffee which the importer has contracted to sell at fixed price not to exceed the OPA maximum prices for such coffee in effect April 1, 1946.

"c. The total amount of repayment to RFC under this paragraph shall not exceed the amount of payments by RFC to the importer under this agreement as amended."

Complainant purchased coffee periodically under the original agreement and its modifications. Subsidy claims on such purchases were approved by RFC and paid. Price controls on coffee were removed and the coffee subsidy suspended on July 1, 1946, with the expiration of the 1942 Act, but maximum prices were reimposed on July 25, 1946 by the Price Control Extension Act of 1946, 60 Stat. 664. On August 14, 1946, the ceiling price was increased by Amendment 16 to Revised Price Schedule 50, 11 F.R. 8868, but the subsidy program was never resumed.

On November 26, 1946, respondent, by letter-order, asserted its claim receivable against complainant under the inventory recapture provisions of paragraph 14 of the agreement, as modified, calculated upon the total quantity of coffee which complainant had in inventory on August 14, 1946, in the amount of $35,227.11. To this amount respondent credited complainant's then payable subsidy claims in the amount of $3,960 and demanded restitution of the balance of $31,267.11 plus interest thereon at the rate of 4% per annum from and after December 1, 1946.

Complainant protested the order on December 11, 1953, on the grounds, (1) "That the determination of the amount of the claim is arbitrary and capricious, (2) That the determination of the amount of interest due on said claim is arbitrary and capricious, and (3) That the regulation or so-called agreement upon which the above determinations are made are not in accordance with law." The protest was denied March 8, 1954, and this complaint followed, in which objection is made to both the claim and the assessment of interest thereon.

Complainant contends that the agreement should be interpreted as limiting recapture thereunder to inventory on which complainant received subsidy payments under the March 19, 1946 modification. It argues that any other interpretation would result in destruction of rights accrued to complainant under the original agreement in violation of the express provision of paragraph 13a that any modification by mutual consent should "not affect any right accrued under this agreement prior to such modification." In the alternative, complainant asserts that recapture should be limited to that portion of its inventory on which it, in fact, had received subsidy payments. Respondent insists that it has correctly claimed recapture on the basis of total terminal inventory without regard to whether or not subsidy payments had been made thereon.

Complainant's argument must be construed in the light of this court's decision in Duncan Coffee Co. v. R.F.C., Em.App., 178 F.2d 926, certiorari denied 339 U.S. 947, 70 S.Ct. 801, 94 L.Ed. 1361, in which we reviewed the coffee subsidy program and the recapture provisions of the standard subsidy agreements. There Duncan advanced the contention that paragraph 14 "should be construed as applying only to the green coffee actually imported by the Duncan Coffee Company during the life of the contract, and not to that coffee which had been imported prior to the inception of the coffee subsidy program, or to coffee purchased by the Duncan Coffee Company from other importers", on which, therefore, Duncan had received no subsidy payments. 178 F.2d at page 929. We held the recapture provisions of paragraph 14 providing for recapture based on total terminal inventory owned by the importer "at the termination of the coffee subsidy program" valid, saying, 178 F.2d at page 930: "To construe it as complainant urges would be to rewrite the agreement of the parties. * * * While complainant denies that it ever consented to the interpretation placed on the contract by respondent, nevertheless, it adopted the language from which that interpretation logically flows."

This language effectually disposes of complainant's arguments as to the construction of paragraph 14. As pointed out in Duncan, we are dealing with contractual stipulations, wherein, in consideration of a substantial increase in its subsidy quota on green coffee and extended shipping dates, complainant agreed to repay to respondent three cents per pound green basis on all types of coffee "`which the importer owns in the continental United States, at the close of business on the day prior to such increase in maximum prices.'" This language is too clear to admit of any construction other than to give to it its natural meaning. United States v. Choctaw, Etc., Nations, 179 U.S. 494, 21 S.Ct. 149, 45 L.Ed. 291. In voluntarily executing this agreement complainant assumed the obligations and accepted the benefits flowing therefrom. It has no legal cause for complaint if, in retrospect, the obligations outweigh the benefits actually received.

This interpretation is clearly consonant with the purpose of the subsidy program instituted to eliminate the hardship on the coffee importer who was caught in the economic vise between a rigid sale price for his commodity and increasing cost prices therefor in his foreign market. Although the subsidy was paid on the basis of green coffee purchased, since entitlement to the subsidy was conditioned on sale of the subsidized commodity at or below established maximum prices, 32 C.F.R., 1945 Supp. Sec. 4003.62(7), the subsidy was, in effect, an adjunct to the maximum selling price. When the maximum prices were increased or removed, the enhanced value of the importer's inventory eliminated this hardship, and, to the extent of his inventory at that time, the reason for the existence of the subsidy disappeared.

Complainant relies, however, on the limitation clause contained in subparagraph c of paragraph 14 that "the total amount of repayment to RFC shall not exceed the amount of payments by RFC to the importer under this agreement as amended" as restricting recapture to inventory which was purchased after March 19, 1946. It argues that subsidies paid to it prior to that date were not conditioned on recapture and that, on payment of such subsidies, the right accrued to it to keep them, a right which, under the provisions of paragraph 13a of the original agreement, could not be affected by subsequent modification.

We considered a similar contention in the Duncan case, construing the proscription of paragraph 13 against subsequent modification affecting accrued rights as relating "only to subsequent downward modifications of the maximum quantity of coffee covered * * *." We concluded, "that the recapture provisions of paragraph 14 are not within the prohibition of paragraph 13 stipulating against modification of the contract affecting accrued rights." 178 F.2d at page 931. We...