Court Opinion

ID: 6639240
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:44:03.852456+00
Date Added: 2024-06-11T15:59:10.928178
License: Public Domain

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 hound to not charge in ex-, cess 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 tbe 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.