Smith v. Sparks Milling Co.
| Decision Date | 02 February 1942 |
| Docket Number | 27559. |
| Parties | SMITH v. SPARKS MILLING CO. |
| Court | Indiana Supreme Court |
Walker Hilleary & Cox, of Terre Haute, and Claycombe & Stump, of Indianapolis, for appellant.
Cooper Royse, Gambill & Crawford, of Terre Haute, Green & Hoagland, of Alton, Ill., and Burrell Wright, of Indianapolis, for appellee.
This action was brought by appellant to impress a trust for the benefit of himself and others in class with him, upon funds which had been collected by appellee milling company from appellant and others in his class, to use in paying its processing taxes under the Agricultural Adjustment Act, 7 U.S.C.A. § 601 et seq., but which funds were not, and cannot now be used for that purpose, because the act was declared unconstitutional, and to obtain an accounting of the funds thus collected and distributed to appellant and others in class with him of the balance of the fund after proper charges against it have been deducted.
The issues were made upon appellant's second amended complaint, to which appellee demurred. The trial court sustained appellee's demurrer. Appellant refused on plead over and judgment was rendered on the pleadings, and this appeal followed.
The sufficiency of appellant's complaint is the only error presented.
In the complaint, it is alleged that appellee is a foreign corporation, organized and operating under the laws of Illinois, and qualified to do business in Indiana, with its principal place of business at Terre Haute, Vigo County, Indiana.
Appellee corporation was engaged in the manufacture of flour and other grain products, and was a first domestic processor of corn, wheat, and rye, as first domestic processor was defined in an act of Congress known as the Agricultural Adjustment Act. Appellant was engaged in the bakery business in Attica, Indiana.
On August 29, 1935, appellant entered into a contract with appellee for the purchase of 210 barrels of 98 Used Car Hi Speed flour, $6.90 per barrel, and the same was delivered on September 3, 1935. A second contract was executed September 19, 1935, for 250 barrels of flour to be delivered on November 4, 1935.
The contracts were labeled, 'Millers' National Federation Uniform Sales Contract,' adopted July 10, 1934.
The principal question presented by the record involves the construction of the contracts and more particularly the following paragraph contained in each of the contracts:
The contracts were fully executed; the flour shipped and accepted, and the purchase price paid as stipulated in the contract. The complaint also alleged that the proper authorities, acting under the provisions of the Agricultural Adjustment Act, adopted certain conversion factors with reference to products processed from wheat, and that according to said conversion factors, fixed the processing tax on all wheat flour except whole wheat and graham at $1.38 per barrel of 196 pounds.
Appellant alleged that pursuant to said Agricultural Adjustment Acts, appellee, in accord and unison with the flour mills throughout the United States, added to the then prevailing and existing price of wheat flour and to the price named in the contract of sale, a separate and distinct item of $1.38 per barrel for the purpose of placing the defendant in funds for the payment of the said processing tax.
It is also specifically alleged in the complaint that appellant and others similarly situated, and for whose benefit this action is brought, did not pass the said processing tax of $1.38 per barrel, or any part of it to their customers.
The complaint further recites that on or about July 1, 1935, appellee began an action in the District Court of the United States, for the district of Illinois, against the collector of internal revenue, for the purpose of restraining and enjoining the collection of the processing tax from the appellee, on the theory that said act, under which said processing tax was levied, was unconstitutional. An order was issued, restraining the collector of internal revenue from collecting said processing tax which had accrued after May 1, 1935. The court further ordered the petitioner, however, to deposit with the clerk or a designated bank a sum of money equal to the processing taxes claimed to have accrued against it during the period covered by the order, and in complying with said order, the petitioner did make deposits equal to the amount of said processing taxes which accrued pursuant to said law against it for the months of May, June, July, August, September, October, and November, in the aggregate sum of $300,000, all of which sum had been accumulated by the milling company from the purchasers of its flour and other products in the manner set out above. All of said sum, according to said order, was to be held until the final determination of said cause. In the event the act was held to be valid, said money was to be turned over to the Government, but should the act be held unconstitutional, the funds were to be released to the petitioner. The act was held to be invalid on January 6, 1936, by the Supreme Court of the United States in the case of United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914, and as a result of this decision the restraining order was made permanent, and all the funds turned back to the petitioner.
The complaint herein is lengthy and we will not attempt to set out all the averments made, but it may be considered that facts are alleged in the complaint that fully present the questions hereinafter discussed.
The first question presented is whether or not, under the contract, plaintiff is entitled to a refund equal to the amount of the tax imposed upon the processing of flour purchased from the defendant, and paid by plaintiff.
This identical question has been before the court quite a few times since the decision of the Butler case. Following are some of the cases in which this question has been considered; some of them are cited and relied upon by appellee: Johnson v. Igleheart Brothers, Inc., 7 Cir., 95 F.2d 4; Continental Baking Co. v. Suckow Milling Co., 7 Cir., 101 F.2d 337; Moundridge Milling Co. v. Cream of Wheat Corp., 10 Cir., 105 F.2d 366; O'Connor-Bills, Inc., v. Washburn-Crosby Co., D.C.W.D.Mo., 20 F.Supp. 460; Johnson v. Scott County Milling Co., D.C.E.D.Mo., 21 F.Supp. 847; Lash's Products Co. v. United States, 278 U.S. 175, 49 S.Ct. 100, 73 L.Ed. 251; Heckman & Co. v. I. S. Dawes & Son, Inc., 56 App.D.C. 213, 12 F.2d 154; Golding Bros. Co. v. Dumaine, 1 Cir., 93 F.2d 162, 115 A.L.R. 664; Cohen v. Swift & Co., 7 Cir., 95 F.2d 131; G. S. Johnson Co. v. N. Sauer Milling Co., 148 Kan. 861, 84 P.2d 934; Zinsmaster Baking Co. v. Commander Milling Co., 220 Minn. 128, 273 N.W. 673; Carolina Textile Co. v. Eastern Yarn Co., 1939, 304 Mass. 489, 24 N.E.2d 149; Noll Baking & Ice Cream Co. et al. v. Sparks Milling Co., 1940, 304 Ill.App. 624, 26 N.E.2d 425; United States v. Hagan & Cushing Co., 10 Cir., 1940, 115 F.2d 849 (divided court); City Baking Co. v. Cascade Milling & Elevator Co., D.C., 24 F.Supp. 950; Consolidated Flour Mills v. Ph. Orth Co., 7 Cir., 1940, 114 F.2d 898, 132 A.L.R. 697; Crete Mills v. Smith Baking Co., 1939, 136 Neb. 448, 286 N.W. 333; United States v. American Packing & Provision Co., 10 Cir., 1941, 122 F.2d 445.
One of the early cases decided involving a similar contract, and one much relied upon by appellee, is the case of Johnson v. Igleheart Bros., Inc., supra. The court in that case had occasion to discuss the question of an implied contract. After quoting from several cases as to the proper function of courts in the construction of contracts, in which rules we fully concur, it announces the rule as follows : 'It seems clear to us that the law is well settled that where parties expressly contract, under what circumstances an obligation may arise with reference to a certain subject-matter, where the same is entered into without fraud or mutual mistake, it excludes the possibility of an implied covenant of a contradictory or different nature.'
We think this is a correct statement of the law, and we will have occasion to refer to this rule again later in this opinion.
It was also urged by the plaintiff in that case that he should be allowed to recover on the equitable principle that a denial of his claim will result in an unjust enrichment of the defendant at his expense. The court answered this contention by saying that: 'We do not think we are...
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