Opinion ID: 390017
Heading Depth: 2
Heading Rank: 3

Heading: The Parties' Intent to be Bound

Text: 57 Burlington Northern next argues that the Commission's enforcement of the agreed rate was erroneous because the parties had no intent to be bound by the rate negotiated in 1973. The parties' intentions present an issue of fact which we review under the substantial evidence standard. Burlington Northern, Inc. v. United States, supra, 555 F.2d 637. 58 The Commission carefully analyzed evidence of negotiations between the parties spanning the years 1973-1976. On the basis of their course of conduct, the Commission determined that both demonstrated the requisite intent to be bound. I & S 9199, supra, 364 ICC at 190-92. The Commission noted that BN actually sought permission to publish a rate of $5.23 (the contract rate); that Iowa Power concluded a formal contract with Amax Coal Company after agreeing to BN's proposed base rate; and that the presence of an annual escalation clause and gross inequity provision in the letter of understanding provided an orderly and agreed mechanism for resolution of unfairness. Id. 59 Against this substantial evidence, BN merely argues that the parties could not have intended to be bound because they knew that the Commission would view contract rates as unenforceable under the authority of such cases as Guaranteed Rates, supra, 315 ICC 311, and Contract Rates on Rugs, supra, 313 ICC 247. 60 We are unconvinced. Under existing case law, see Section B, supra, the parties in 1973 could reasonably have concluded that a contract rate would be considered important evidence as to the reasonableness of a proposed rate. Moreover, it is difficult to imagine why the parties took such pains to negotiate and agree upon terms if they could be unilaterally changed at any time. The railroad itself first attempted to rely upon the agreement it now seeks to repudiate when, in 1977, it stated that it would publish a higher rate due to the existence of a gross inequity within the meaning of the parties' agreement. I & S 9199, supra, 364 ICC at 191. In sum, there is substantial evidence to support the Commission's conclusion that the parties intended to be bound. 61