2 F.(2d) 518 under the view already taken touching the contractual powers of the city, immutably fixed rates for the whole period could have been agreed on, and both parties would have been bound, both at law and in equity. Southern Iowa Electric Co. v. Chariton, 255 U. S. loc. cit. 542, 41 S. Ct. 400, 65 L. Ed. 764. But nothing of this sort was done. What was done was that the company under the letter of the contract was irrevocably bound to furnish service at a maximum rate, which it had no power to change or alter; while the city could, at its election, change or move to change this rate, within limits fixed by years, at its own volition. Either, then the contract, in order to be valid, ought to have fixed rates which would have been binding upon both parties for the whole term, or binding upon both parties for certain fixed portions of these terms, or both parties should have been given the right to move for a revision of rates at the termination of the periods stated. In either of these situations we think the contract might have been valid. When sections 5 and 6 of the ordinance are read together and in the light of each other, it is seen to be a close question whether these sections in their sum do not amount to a retention by the city of the power to regulate rather than manifest an exercise of the power to contract. If they stood alone and without reference to the enabling statute (section 5019, supra), such construction would do no violence to either language or sense; and such a construction would make the problems presented so simple as to obviate all difficulty, for in that case all questions would be settled by the case of Southern Iowa Electric Co. v. Chariton, 255 U. S. 542, 41 S. Ct. 400, 65 L. Ed. 764. But, unfortunately for this view, the city can exercise no power except that conferred on it by the Legislature of Nebraska. State ex rel. v. Irey, 42 Neb. 186, 60 N. W. 601. This rule is well-nigh universal in all jurisdictions. Section 5019, supra, does not grant the power to regulate, but the power to contract. So, it follows from what has been said already, that we are not able to resolve all difficulties by considering the ordinance as merely retaining the power in the city to regulate rates, even though the language used may fairly warrant such a view. [9] It may be contended that the contract provided merely for a revision, and not necessarily for a revision downwards, and that, such being the case, it will be presumed that, if a revision upwards shall be come necessary in order to save the company from bankruptcy and confiscation of its property, the right inhering in the mayor and city council will be promptly exercised. There exists, it is true, a convenient presumption of law to the substantial effect that officers who are saddled with a duty will perform that duty rightly. But "presumptions," as was said by Lamm, J., "are the bats of the law, and they fly away in the light of facts" evidencing a situation out of consonance with the presumption. Mockowik v. Railway, 196 Mo. loc. cit. 571, 94 S. W. 256. Here the city council took steps in March, 1920, to ascertain whether the rates fixed by the ordinance were confiscatory, and having ascertained, and solemnly announced, that the ordinance rates were insufficient, yet took no steps under the contract to revise these rates upward. Moreover, the presumption in fact does not apply here, because the mayor and the city council are not required to act; if they were, the contract might be good, and action might be compelled by the company. [10] It may also be argued that this contract has been partly performed by the company; therefore it will be enforced, whether it lacks mutuality or not. There are cases which so hold; but it is apprehended that they bottom the ruling upon estoppel, which ought not to apply here, because, if for no other reason, the periods at which the mayor and city council may move to revise the rates are fixed at 2, 5, 10, and 15 years. Partial performance might well be excused upon the hope, notwithstanding the light of human experience, that the officers of the city would move for a revision if the rates should become confiscatory. Moreover, as forecast above, the city has not been misled to its hurt by the partial performance of the company. If, having a plant of its own, it had torn it down in reliance on part performance of a contract lacking mutuality, there might be estoppel. We have found no case exactly on all fours, but, when the facts here are applied to well-known general rules, the conclusion seems inevitable that this contract is not mutual and binding alike upon both parties. Houston v. Telephone Co., 259 U. S. 318, 42 S. Ct. 486, 66 L. Ed. 961; Laurens v. Northern, etc., Co. (C. C. A.) 282 F. 432; Central Power Co. v. City of Kearney (C. C. A.) 274 F. 253; City of Denver v. Stenger (C. C. A.) 277 F. 865. It follows that so much of the ordinance which purports to fix maximum rates for the franchise period of 20 years is void and unenforce able, and that the case should be reversed and remanded, with directions to the trial court to hear and determine the issues raised by the counterclaim, as to whether the rates sought to be fixed by section 6 of the ordinance are in fact confiscatory, and, if they are found so to be, to dismiss the bill of the city and enjoin the latter from enforcing such confiscatory rates. An order may be entered accordingly, reversing and remanding the case, with directions. SANBORN, Circuit Judge, concurs in re sult. LEWIS, Circuit Judge (dissenting). I cannot see that there is a lack of mutuality in the obligations of the ordinance contract. The terms on which it was to be carried out are clearly stated and there are no conditions on which either is released from its execution. In consideration of the easement and franchise rights granted to it by the city, the gas and electric company agreed to furnish electric current to the inhabitants for 20 years at charges therefor not in excess of the rates named in the ordinance. As a further consideration it was agreed that the city might at stated times during the 20 years initiate arbitration proceedings as to rates, and the new rates, when so found, were to be thereafter charged, provided they were sufficient to yield a fair net return on the investment. The city has not asked for an arbitration. The gas and electric company complains that the maximum rates are not high enough now to yield a fair net return and it wants to charge more. But if it has contractually bound itself by accepting the grant not to charge more, its complaint is no more nor less than an effort to get out of a bad bargain by the assistance of the court. The city was given the right to initiate a change, but that change could not be made if it denied the gas and electric company a fair net return on its investment, and that is all that it could ever ask in the absence of contract for more. The gas and electric company charged the maximum rates and they were apparently sufficient for a while. The city has done nothing to render them unremunerative. That is due to changed conditions over which neither party had control and which were not anticipated and guarded against. If the gas and electric company is contractually bound to not charge in excess of the named rates, a right to it to initiate arbitration for a change of the named rates would be an idle and vain thing. It could not charge more than the maximum, even with the assistance of arbitrators, if it has bound itself not to do so; and it was at all times free to charge less than the maximum, but it was not required to do so except after arbitration in the way specified in the ordinance and on condition that the rates so fixed by arbitration would yield a fair net return on the investment. As I understand the proposition on which reversal is rested, it is this: The contract cannot be enforced because it does not give the gas and electric company a right to initiate arbitration, like that given the city; that is, if one has the right to arbitrate downward from the named maximum the other must have the right to arbitrate upward, or there is no mutuality. That means, it seems to me, that the law will not permit the parties to do what they clearly intended to do, contractually fix maximum rates that could never be exceeded, and contractually provide a method of reducing those rates at stated periods, but not below what would yield a fair net return. I have no doubt that is just what the parties intended to do, and what they agreed to do; and I think they are mutually bound for sufficient considerations to each. urt. denied cert, 267 2 593 69 L Ed. 804 CULLEN et al. v. UNITED STATES. * 2 F.(2d) 524 Martin J. Cullen and others were convicted of using mails to defraud, and they bring error. Affirmed. Alfred L. Bartlett, Thos. P. White, Leo M. Rosecrans, and Otto J. Emme, all of Los Angeles, Cal., for plaintiff in error King. Schenck & Kittrelle and J. M. Bowen, both of Los Angeles, Cal., for plaintiffs in error Cullen and Dennison. David V. Cahill and Charles L. Nichols, Sp. Asst. Attys. Gen., for the United States. Before GILBERT, ROSS, and RUDKIN, Circuit Judges. GILBERT, Circuit Judge. The plaintiffs in error were convicted under an indictment which charged them with using the mails in a scheme to defraud, in violation of section 215 of the Penal Code (Comp. St. § 10385). It is contended that it was error to deny their motions for instructed verdicts of acquittal. [1] So far as the defendants Cullen and Dennison are concerned, the evidence was amply sufficient to justify the submission of the case to the jury. They purchased at $3.25 per acre 1,120 acres of land, which they had never seen, and they organized a corporation, known as Great Angelus Oil & Land Corporation, with a capital of $250,000. They had no other assets than the land. They divided it into 4,480 tracts, of one-quarter of an acre each, which they denominated "drill sites," and they offered the drill sites for sale as oil lands at prices ranging from $25 to $100 each. They received from purchasers thereof $147,056.96, out of which they paid to themselves as salaries $61,000. The land was hilly, and was without water, and was covered with a sparse growth of desert brush. The defendants falsely represented it to be oil land; that it was land where "the geologists claimed the widest long channel of oil in California was to be found"; whereas, the facts were that no indication of oil was ever found on the land, and the nearest producing oil well was 47 miles distant therefrom. The defendants, to carry out their representations, drilled on the land a hole 400 feet deep, and falsely represented that they were down 1,300 feet, and expected oil at 1,600 feet. They also falsely represented the land to be good agricultural land, and said it was good for raising "most any thing"; that it was "especially good for peaches or fruit of any kind." As to the defendant King the proof was that he was not a member of the corporation, nor a party to the original scheme, but was engaged as a salesman to sell lots on commission. He was found guilty on the fifth count. He earnestly contends that there was absence of testimony as to his connection with the scheme sufficient to justify the submission of the charge against him to tending to show that King practiced decepthe jury. There was evidence, however, tion in effecting sales of the land. He exhibited a fictitious check for $16,000, which, he said, represented a profit made by a purchaser. As to the land, he represented that it was a "wonderful, proposition"; that it was "good for raising anything that any land in California was good for raising things on." In the letter, which is referred to in the fifth count, he wrote to a purchaser: "Now, things are all excitement up by our well; so protect yourself and make payments, as I look for something big." King had been on the ground and he knew the nature of the land. The record contains no denial or explanation of his representations as to the property which he was engaged in selling. Enough appears in the evidence, we think, to justify the trial court in submitting to the jury the question of his complicity in the use of the mails as charged in the indictment. [2] Error is assigned to the admission in evidence of the corporate books to show the receipts and disbursements of the corporation. It is said that it was error to admit such evidence against the defendants Cullen and Dennison without proof that they authorized the entries or had knowledge thereof. Many cases hold that books of a corporation are not admissible in evidence against an officer or stockholder, unless he is shown to have had knowledge of the entries or authorized the same. But the rule applicable to the present case is, we think, that which obtains in regard to the admission of partnership books. Partnership books are evidence against the partners, for the reason that they are their acts and declarations, kept by them or by their authority, or by their servants under their direction and superintendence. [3] The defendants Cullen and Dennison were the corporation. They owned the stock, and had entire control and ownership of the corporate property. They were, respectively, president and secretary of the corporation. They passed all the resolutions of the corporation, conducted its correspondence, and managed its activities. They were, in effect, partners operating through the in strumentality of a corporation. That they were acquainted with the contents of their books is a justifiable inference. Under such circumstances there was no error in admitting the evidence. Wilson v. United States, 190 F. 427, 111 C. C. A. 231; Parker v. United States, 203 F. 950, 122 C. C. A. 252. The case is unlike Worden v. United States, 204 F. 1, 122 C. C. A. 315. There the admission of corporate books as against a stockholder was held erroneous, in the absence of proof that he had anything to do with the keeping of the books or had any knowledge of their contents, or such connection with the books as to justify an inference of actual acquaintance therewith. The judgment is affirmed. 3. Contracts 10(4)-Provision against cancellation of coal contracts after shipment held not to make contracts void for want of mutuality. Provision of coal contracts that order was not subject to cancellation after shipment was made, in view of partial performance and of surrounding circumstances, held not to mean that any portion of order not shipped was subject to cancellation by buyer, which would make contract void for want of mutuality, but to be disregarded as not affecting expressed obligation or as mere statement of rule of law. 4. Sales 54-Contract on seller's printed form construed most strongly against seller. Contract for sale of coal on seller's regular printed form should be construed most strongly against seller. 5. Sales 161-Seller agreeing to furnish cars bound to make reasonable effort to carry out agreement. Seller agreeing to furnish cars for transporting goods was bound to make every reasonable effort to carry out agreement. 6. Sales 161-Seller's mere demand on railroad's local agent held not reasonable diligence to carry out duty of furnishing cars. Where seller assumed duty of furnishing cars for transporting coal, mere demand for cars on railroad's local agent fell far short of exercising reasonable diligence to carry out agreement. 7. Sales 83-Under Illinois law, duty of seller of coal to furnish cars. seller of coal for shipment from mine to furUnder the law of Illinois, it is the duty of nish cars for transportation, especially where parties themselves so construed the contract. 8. Sales 172-Seller not relieved from obligation to deliver because of inability to secure cars, provision as to place of delivery being for buyer's benefit. mine, wherein seller agreed to furnish cars, sell Under contract for sale of coal f. o. b. er was not relieved from its obligation because of difficulty of securing cars for shipment to named consignee, where it would have been subjected to no additional burden or expense by complying with buyer's offer to change destination and consignee, contract provision as he could waive without relieving seller. to destination being for buyer's benefit, which 9. Estoppel 63-After litigation begun, party cannot change his ground by giving an. other reason for his conduct. Where party gives reason for his conduct respecting matter in controversy, he cannot, after litigation has begun, change his ground and put his conduct on another consideration. In Error to the District Court of the United States for the Eastern District of Missouri; Charles B. Faris, Judge. Action by the Burton Coal Company against the Boehmer Coal Company. Judg ment for plaintiff, and defendant brings erAffirmed. ror. Rhodes E. Cave, of St. Louis, Mo. (Bryan, Williams & Cave, of St. Louis, Mo., on the brief), for plaintiff in error. Grover C. Niemeyer, of Chicago, Ill. (Maclay Hoyne, of Chicago, Ill., Ropiequet & Ropiequet, of East St. Louis, Ill., and Spencer & Donnell, of St. Louis, Mo., on the brief), for defendant in error. Before STONE and KENYON, Circuit Judges, and KENNEDY, District Judge. KENNEDY, District Judge. The defendant in error, plaintiff in the court below, instituted suit against the plaintiff in error, defendant there, for damages growing out of the alleged breach of two contracts for the purchase and sale of coal. Under these contracts the plaintiff in error was the seller, and defendant in error, the purchaser. After issue was joined, the case was tried to the court without the intervention of a jury, and the trial court found for the plaintiff, the purchaser, and assessed its damages in excess of $19,000, including interest, to which findings and judgment exceptions were taken and the case brought here upon proceedings in error. It will not be necessary to discuss the pleadings, as an outline of the facts will disclose the legal propositions involved. The seller received two oral orders for 2 F.(2d) 526 100 cars of coal each, from the purchaser, and accepted the orders by two written acceptances almost identical in form; the one calling for lump coal and the other for egg coal. The legal questions involved very largely grow out of the interpretation of these contracts, and as they are practically identical except as to the kind of coal specified, one only of them will be used for consideration here, being in form as follows: "Acceptance of Order. "Boehmer Coal Co., Miners and Shippers, "Anthracite, Bituminous, Foundry, Furnace, and Smithing Coal and Gas Coke, "Sixth Floor Wright Building, N. W. Corner 8th and Pine Streets. "Long distance phone: Bell, Main 2860. "Wholesale Department. "St. Louis, April 19, 1920. "Order No. 2196. "Wickham & Burton Coal Co., Chicago, Ill. We acknowledge receipt of your order as follows: of sale cash. All contracts not paid. by "This company shall not be liable for con- "Boehmer Coal Company, "By Will H. Boehmer, Pres. M.” The subsequent facts material to the discussion of the issues appear to be that the contracts were turned over to the Edwardsville Coal Company by the Boehmer Company, for fulfillment of the orders. Under the lump coal contract, some 30 cars were shipped, but none under the egg coal contract. The difficulty between the parties appears to have arisen out of the refusal of the Wabash Railroad, designated by the contracts as the carrier for the delivery of the coal, to furnish further cars; that railroad taking the position that inasmuch as the coal was for the use and benefit of the Pennsylvania Railroad, cars of that system should be furnished for the fulfillment of the con "When to ship: As fast as possible, at tracts. Demands were made upon the local rate of 1 to 5 cars per day. "Postal notices to Chicago, Ill. "Invoices to Chicago, Ill. agent of the Wabash Railroad at intervals for cars to make the shipments called for by the contracts, by the Edwardsville Coal Company advised the Burton Company of "Remarks: Verbal Mr. Lemon to me Company, and subsequently the Boehmer this p. m. "The above prices are per net ton of 2,- the difficulty arising in securing cars and 000 pounds. "If any error has been made in entering this order, as above stated, please advise by return mail. The order has been accept ed and entered subject to the following conditions of sales: This sale is based only on the present freight rates. Bill of lading to be proof of delivery as regards both time and quantity. Weights to govern shall be either mine track scale or railroad track scale as ascertained at original point of weighing. We make delivered prices as an accommodation to our customers, but do not bind ourselves thereby to accept destination weights. The buyer shall look to the carrier for any loss or damage in transit. Terms made demand upon the Burton Company to secure the necessary cars. The Burton Company evidently took the position that it was the duty of the Boehmer Company to provide cars, but in any event no further cars of coal were shipped under the contracts. During the negotiations between the parties, the Burton Company, the purchaser, proposed to have the remaining shipments diverted to other points and other consignees for the purpose of assisting the Boehmer Company in fulfilling its contract; but the Boehmer Company refused to accede to this arrangement, and in course of time this lawsuit originated. |