Petrof Trading Co. v. Intermountain Research & Eng. Co., 252-69

• Decision Date: 28 April 1970
• Docket Number: No. 252-69,283-69.,252-69
• Citation: 424 F.2d 704
• Court: U.S. Court of Appeals — Tenth Circuit
• Parties: PETROF TRADING COMPANY, a California corporation, Plaintiff-Appellee, v. INTERMOUNTAIN RESEARCH & ENGINEERING COMPANY, Inc., a Utah corporation, Defendant-Appellant. PETROF TRADING COMPANY, a California corporation, Plaintiff-Appellee-Cross-Appellant, v. INTERMOUNTAIN RESEARCH & ENGINEERING COMPANY, Inc., a Utah corporation, Defendant-Appellant-Cross-Appellee.

424 F.2d 704 (1970)

PETROF TRADING COMPANY, a California corporation, Plaintiff-Appellee, v.INTERMOUNTAIN RESEARCH & ENGINEERING COMPANY, Inc., a Utah corporation, Defendant-Appellant.

PETROF TRADING COMPANY, a California corporation, Plaintiff-Appellee-Cross-Appellant, v.INTERMOUNTAIN RESEARCH & ENGINEERING COMPANY, Inc., a Utah corporation, Defendant-Appellant-Cross-Appellee.

Nos. 252-69, 283-69.

United States Court of Appeals, Tenth Circuit.

April 28, 1970.

C. Keith Rooker, Salt Lake City, Utah (Dale A. Kimball, Salt Lake City, Utah, on the brief), for appellant.

Arthur H. Nielsen, Salt Lake City, Utah, (David S. Cook, Salt Lake City, Utah, on the brief), for appellee.

Before MURRAH, Chief Judge, and HILL and HICKEY, Circuit Judges.

HICKEY, Circuit Judge.

The amended complaint seeks reformation and damages for breach of the contract existing between plaintiff-appelleePetrof Trading Co. and defendant-appellantIntermountain Research and Engineering Co. Intermountain counterclaimed and defended on the theory that the contract was usurious and that therefore Intermountain was entitled to damages awarded pursuant to Utah statute penalizing usury.

The trial court refused reformation and awarded judgment to Petrof for the claims for money due under the contract.The defense of usury and the counterclaim for damages were denied.

Intermountain appeals to this court on the basis of the ruling denying the defense of usury and its counterclaim for damages.Petrof cross-appeals from the trial court's refusal to reform the contract.

Intermountain and Petrof executed the contract in question wherein Petrof agreed to sell and Intermountain agreed to purchase an amount of Navy surplus smokeless powder.Some of the powder was at Hastings, Nebraska, and some was located at McAlester, Oklahoma.

The issues presented herein relate to the interpretation of paragraph G(2) of the contract:

"Petrof may be able to pay 50% of the loading charges at Hastings.If he does Intermountain agrees to pay an additional ¼ cent per pound net (on Hastings material on which the loading charges are so paid) on or before the 31 December, 1966, provided, however, that Intermountain shall repay such amount when the last of the powder is resold if earlier than 31 December, 1966."

Intermountain contends the foregoing sets forth a device to extract usurious interest for the forbearance of a debt due, thereby sustaining their defense and establishing their claim for damages.

Petrof contends the parties intended the paragraph to provide that the entire Hastings material would increase ¼ cent in price if one-half the loading charges were paid.The court agreed with none of the foregoing contentions which gives rise to the issues appealed.

Petrof was the successful bidder for the purchase of gunpowder stored in Navy depots at various locations in the United States.This surplus property obtained by Petrof had to be loaded for transportation by experienced government personnel.The contract between the government and Petrof provided that the cost of loading would be an amount agreed upon which would be paid immediately upon loading.This was Petrof's obligation.Petrof entered into an agreement with Intermountain to sell Intermountain the gunpowder purchased from the government, and providing for an agreed price at the time of loading.Petrof paid the government from the amount paid it by Intermountain at the time of loading and an additional amount was agreed upon to be paid by Intermountain when it sold or used the gunpowder or in any event within five years thereafter.

Paragraph G(2), above set out and creating the issues herein, relates only to an amount of powder stored at Hastings, Nebraska, and is the only source of conflict in the transactions between the parties.

The evidence sustains the court's findings that after one-half of the powder had been loaded at Hastings under the provisions of the agreement, Petrof exercised its option to pay the loading charges thereby earning the price increase as provided in the contract provision.At this juncture in the transaction Petrof, in accord with the provision set out, notified...