Peabody Coal Co. v. Nixon

• Decision Date: 07 August 1915
• Docket Number: 4361.
• Parties: PEABODY COAL CO. v. NIXON et al.
• Court: U.S. Court of Appeals — Eighth Circuit

226 F. 20

PEABODY COAL CO. v. NIXON et al.

No. 4361.

United States Court of Appeals, Eighth Circuit.

August 7, 1915

On Motion for Rehearing, October 1, 1915.

George F. Haid, of St. Louis, Mo. (James C. Jones and Lon O. Hocker both of St. Louis, Mo., and Underwood & Smyser, of Chicago Ill., on the brief), for appellant.

Edward T. Miller, of St. Louis, Mo. (William F. Evans, of St. Louis Mo., on the brief), for appellees.

Before CARLAND, Circuit Judge, and LEWIS, District Judge.

LEWIS District Judge.

Receivers were appointed in a suit against the St. Louis & San Francisco Railroad Company on May 27, 1913, with power and authority to continue the operation of the railroad. Eight days later the court made an order in the cause giving the receivers six months within which to affirm or renounce any contract of the company. Within a month after their appointment a conference was had between a representative of the receivers and the vicepresident of appellant concerning a contract by which, in May, 1912, the coal company bound itself to furnish, and the railroad company to take and pay for, coal at an agreed price for twenty years. The result of this conference was a notification from the receivers to the coal company, on June 24, 1913, that they would not perform the contract on the part of the railroad company, but that they would renounce it, and they at once, on June 26th, presented a petition to the chancellor asking that their renunciation be approved. The petition bore the endorsement of approval of the master, and an order was entered giving the coal company leave to answer and be heard. The coal company answered opposing the petition. The matter was referred to the master under direction to hear the parties and report the facts and law and his conclusion and recommendations. The receivers thought that an understanding and agreement had been reached at the conference with the vice-president of the coal company by which they were to have the coal not on the terms fixed by the old contract but at a flat price of one dollar per ton f.o.b., and that a written agreement was to be prepared and signed to that effect. They prepared such a contract and submitted it to the coal company on the next day, but it refused to execute it. It took the position that the contract with the receivers was not to be executed until it could be ascertained what should be finally done with the old contract; but the receivers continued in their refusal to comply with the old contract. They accepted and took appellant's coal but remitted therefor at the rate of one dollar per ton. Appellant received and retained the remittances, but in each instance replied that it was credited on account and that the balance, in accordance with the terms of the old contract, was due.

On the hearing before the master it appeared that under the old contract the railroad company had bound itself to purchase and receive from the coal company f.o.b. mines for its fuel purposes not less than 450 and not more than 900 tons of mine-run coal per day produced from the mines of the coal company. The price for the coal was 'to be determined by adding ten cents per ton to the average actual cost to the coal company per ton of coal produced from all such mines during such month.'

The contract set forth in detail the items which were to enter into the cost of production and the way in which the average actual cost of production per ton should be ascertained. The items thus entering into the price to be paid by the railroad company included rentals, royalties, depreciation, interest on part of the investment, insurance premiums, cost of maintaining, repairing and renewing plant (in part), wages and salaries of employes, payments made as damages, cost and attorneys' fees for claims for personal injuries to employes, for insurance against such claims, net cost of props, and all other supplies and material used during such month, wages and salaries of officers, and all other proper expenses usually chargeable to the operation of coal mines, all of which were to be distributed pro rata over the entire production at all of the coal company's mines, to which was to be added ten cents on each ton taken by the railroad company.

The first impression is, that this is unlike an agreement between parties dealing at arms length. The coal...