Shay v. AGRICULTURAL STAB. & CONSERV. STATE COM. FOR ARIZ.

• Decision Date: 24 January 1962
• Docket Number: No. 17236.,17236.
• Citation: 299 F.2d 516
• Parties: Glen H. SHAY et ux., Appellants, v. AGRICULTURAL STABILIZATION AND CONSERVATION STATE COMMITTEE FOR ARIZONA et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

299 F.2d 516 (1962)

Glen H. SHAY et ux., Appellants, v. AGRICULTURAL STABILIZATION AND CONSERVATION STATE COMMITTEE FOR ARIZONA et al., Appellees.

No. 17236.

United States Court of Appeals Ninth Circuit.

January 24, 1962.

Walter Roche of Kramer, Roche, Burch & Streich, R. J. Ellis of Rawlins, Davis, Ellis, Burrus & Kiewit, Phœnix, Ariz., for appellants.

William H. Orrick, Jr., Asst. Atty. Gen., Alan S. Rosenthal and Marvin S. Shapiro, Dept. of Justice, Washington, D. C., C. A. Muecke, U. S. Atty., Phœnix, Ariz., for appellees.

Before JERTBERG, MERRILL and DUNIWAY, Circuit Judges.

DUNIWAY, Circuit Judge.

Before us are an appeal from a final judgment of September 20, 1956, an appeal from an order of March 14, 1961 overruling a motion to vacate a post-judgment order of December 30, 1960, and a motion to dismiss that appeal. We conclude: (1) that the judgment must be reversed; (2) that the motion must be denied; (3) that the order must be reversed.

The action arises under the Soil Bank Act of 1956 (called "the Act", 70 Stat. 188, 7 U.S.C.A. § 1801 ff). The court below had jurisdiction under § 107(d) (7 U.S.C.A. § 1831(d)). We have jurisdiction under 28 U.S.C. § 1291.

1. The judgment must be reversed.

Shay and wife, plaintiffs below and appellants here (called "plaintiffs") brought this action to review the determination of the appellee, Agricultural Stabilization and Conservation State Committee for Arizona, and its members, sued as such (called "defendant" or "the Committee") that, for reasons hereafter discussed, the plaintiffs must refund $66,549.60, the entire payment theretofore received by them under a soil bank contract. The judgment affirmed the determination of the committee.

a. The Facts

The basic facts are undisputed. Plaintiffs, on March 26, 1957, entered into a "Soil Bank 1957 Acreage Reserve Agreement" with the Secretary of Agriculture. The agreement is embodied in a printed government form. It is a perfect example of a so-called "contract of adhesion" — one which gave the plaintiffs but one choice — to adhere to it or to reject it. (See Kessler, "Contracts of Adhesion — Some Thoughts About Freedom of Contract", 43 Col.L.Rev. 629; Patterson, "The Delivery of a Life Insurance Policy," 33 Harv.L.Rev. 198, 222). The lands involved are 421.2 acres, 300 of which are in the N ½ of Section 13 and the balance, 121.2 acres, parts of two parcels, one of 100 acres in the NW ¼ and one of 60 acres in the SE ¼ of Section 19, all in Pinal County, Arizona. The three parcels are not contiguous. The lands had been used for cotton growing. Under the contract, they were "withdrawn from production" of that commodity. A certificate for $66,549.60 was issued to the plaintiffs under the agreement and cashed by them.

In the contract, under "Part IV — PRODUCERS' CERTIFICATIONS", there appears, in bold-faced type: "The producers will be subject to a civil penalty as specified in Part IX, Section `D', if they knowingly and willfully graze or harvest any crop in violation of this agreement." "PART IX — TERMS AND CONDITIONS" contains three columns of fine print covering the whole of the back of the form. We quote only the pertinent portions:

"A. AGREEMENT SUBJECT TO REGULATIONS.

"(1) Each * * * owner * * * (hereinafter called the `producer\') whose signature appears on the front hereof * * * fully understands that this agreement is subject to all of the provisions of the regulations issued by the Secretary governing the 1957 acreage reserve program. (Such regulations * * * are hereby made a part of this agreement * * *. Copies of such regulations are available at the office of the county committee.) * * *.

"B. USE OF ACREAGE RESERVE * * *

"(2) Harvesting and grazing prohibited.

No crop shall be harvested from the acreage reserve * * * prior to January 1, 1958, and the acreage reserve shall not be grazed * * * before January 1, 1958, unless the Secretary gives written consent to such grazing * * *.

"(3) Planting restricted. No crop shall be planted on the acreage reserve * * * prior to January 1, 1958, except (i) crops planted in the fall of 1957 for harvest in 1958 or a later year * * *.

* * * * * *

"D. CIVIL PENALTY. If the producer (i) knowingly and wilfully grazes or harvests any crop from the acreage reserve in violation of this agreement, * * *, he shall be subject to the civil penalty of 50 per centum of the compensation payable * * * imposed by section 123 of the Soil Bank Act. Such penalty shall be in addition to any amount required to be forfeited or refunded under section `L\' of this Part IX.

* * * * * *

"L. VIOLATIONS.

"(1) If the Secretary determines that there has been a violation of this agreement and that such violation is of such a substantial nature as to warrant termination of this agreement, the producer agrees that all rights to compensation hereunder shall be forfeited, and agrees to refund to the United States all compensation received by him or by any tenant or sharecropper hereunder.

"(2) If the Secretary determines that there has been a violation of this agreement but that such violation is of such a nature as not to warrant termination of this agreement, the producer agrees to accept such adjustments in compensation, to forfeit such benefits, and to make such refunds to the United States of compensation received by him or by any tenant or sharecropper hereunder as the Secretary may determine to be appropriate.

"(3) * * * if a refund of less than the face amount of the certificate is required, the producer agrees to make a cash refund to the United States, plus interest at the rate of 6 percent per annum.

"(4) The determination as to whether a violation has occurred, and whether such violation is of such a substantial nature as to warrant termination of this agreement, and the amount of any adjustment, forfeiture, or refund, shall be made in accordance with regulations issued by the Secretary. * * *"

The foregoing is only a small part of the fine print embodied in Part IX.

It is conceded that until December 12, 1957, plaintiffs fully complied with the agreement. On that day they put 150 head of weaner calves on the 60-acre parcel in Section 19, and kept them there 14 days, expressly for the purpose of grazing the land. On the same day, they placed 150 head of cattle on the 100-acre parcel in Section 19, and kept them there until January 1, again expressly for the purpose of grazing the land. There was no violation at any time as to the 300 acres in Section 13.

The background of plaintiffs' otherwise rather surprising action explains, if it does not legally justify, what they did. In early October, 1957, they "dry planted" the lands in section 19 to barley, expecting that, by reason of the normally arid climate, no rains would come in October, and the seed would not germinate until late in the year. Under this program, the crop would not be sufficiently advanced to be damaged by the frosts that usually occur in January and February, and it would be harvested later in 1958. This would comply with the provisions of Part IX, B, (3)(i) of the agreement, quoted above. The method of planting used is customary in the area. As it turned out, October, 1957 was one of the wettest on record in that area, the crop came up early, and it was in such condition by December, that, if not mown or grazed, it could be lost by being frost-killed in January or February. It was for the purpose of saving the crop that plaintiffs, in December, put the cattle on the lands in question. They did not need to do so to feed the cattle; they had not expected to graze the cattle until after the first of the year, and had plenty of hay and other feed on hand to carry them until then. No effort was made to obtain the Secretary's permission to graze.

The court found that plaintiffs knew, when they placed the cattle on the acreage reserve lands, that their doing so was in violation of the agreement. In this it was clearly correct. They claim that they were forced to do so by an Act of God. Not so. The unprecedentedly heavy rain may well have been an Act of God, but it was not a legal cause of what plaintiffs did. The grazing of the lands was an act of the plaintiffs, voluntarily done by them to save themselves from a probable economic loss, the amount of which, according to the evidence, would not exceed $6,000, and probably would be less. The value to them of the grazing that occurred was stipulated to be $648. As plaintiff Glen Shay testified: "that the grazing was my cheapest and easiest way out of it * * *" Such voluntary action, in admitted and knowing violation of a contract, taken solely to save money, in no way resembles the unpreventable action of the elements, unforeseen and usually unforseeable, that may be a defense under the convenient rubric of "Act of God". It is not clear from plaintiffs' briefs whether they are urging "Act of God" as a direct cause of whatever breach there was, or as a species of impossibility of performance, excusing breach. But it makes no difference which contention is made. Plaintiffs still could have performed, but chose not to do so because performance would probably have cost them some money. (cf. Cronk v. Benson, D.C.Colo. 1960, 187 F.Supp. 4)

The court also found that plaintiffs' act was done "knowingly and wilfully". It did not find as a fact, but did conclude as a matter of law, that the knowing and wilful grazing was "a violation of such substantial nature as to warrant termination of the Agreement . ." and that the "nature of the * * * violation was such as to defeat or substantially impair the purposes of the contract."

The Committee, whose determination was being reviewed by the court (see §§ 103 and 107(d) of the Act, 7 U.S.C.A. §§ 1821 and 1831(d)), determined that the lands were knowingly and wilfully grazed, and that the entire payment made to plaintiffs should be refunded. But it did not "determine" that the violation was "of such a substantial nature as to...