HANNA MINING COMPANY, Appellant, v. MINNESOTA POWER AND LIGHT COMPANY, Appellee.
No. 83-2625.
United States Court of Appeals, Eighth Circuit.
Submitted April 11, 1984. Decided July 31, 1984.
Rehearing and Rehearing En Banc Denied Oct. 3, 1984.
739 F.2d 1368
None of the recognized grounds for reformation applies in this case. While the agreed upon per rod compensation is low in light of current economic trends, there is nothing in the record to indicate that the agreements entered into between the original parties were not the result of free and fair bargaining or that any of the landowners affected by the 1980 installation took their land without notice of the easements. Cf. Kleinheider v. Phillips Pipe Line Co., 528 F.2d 837 (8th Cir. 1975) (applying Missouri law) (action by landowners challenging validity of easements similar to the ones involved in the present case, raising argument of unconscionability); Northwest Pipeline Corp. v. Forrest Weaver Farm, Inc., 646 P.2d 422 (Idaho 1982) (same).
Williams’ offer to compensate appellants at a higher-than-contract per rod rate did not work to rescind or modify the written agreements. Schumacher v. McDonald, 320 N.W.2d 640, 643 (Iowa App. 1982), states: “rescission requires clear and convincing proof of intent to repudiate the contract.” The district court found no such intent, a finding clearly supported by the evidence.
Nor did Williams’ offer modify the compensation terms of the agreements. In order to modify a contract, the new agreement must have all the requisites of a valid and enforceable agreement, or it will not be binding. Mere negotiations for a variance in the terms of the contract do not constitute a modification. Hueston v. Pointer Brewing Co., 222 Iowa 630, 269 N.W. 754, 756 (1936). One party to a contract cannot alter its terms without the assent of the other; the minds of the parties must meet as to the proposed modification. Id. Appellants’ rejection of the $7.50/$6.00 per rod offer precludes a conclusion that the offer modified the easement agreements.
Accordingly, we affirm the judgment of the district court.
John M. Carroll, Debora L. Threedy, Mayer, Brown & Platt, Chicago, Ill., Robert H. Magie, III, Donovan, McCarthy, Crassweller & Magie, Duluth, Minn., for appellant.
Samuel L. Hanson, R. Scott Davies, Charles B. Rogers, Briggs & Morgan, P.A., Minneapolis, Minn., James R. Habicht, Minnesota Power & Light Co., Duluth, Minn., for appellee.
Before ROSS, ARNOLD and FAGG, Circuit Judges.
The Hanna Mining Co. (Hanna) brought this action to have the district court1 declare that a contract, under which Minnesota Power and Light Company (MP & L) has supplied electric power to the Butler Taconite Project in Northern Minnesota, was no longer binding. The district court, 573 F.Supp. 1395, dismissed the action on two grounds: first, that the action is barred by
Facts
Hanna manages the Butler Taconite Project about 15 miles west of Hibbing on Minnesota‘s Mesabi Range. In 1974 Hanna, acting as agent for Inland Steel Mining Co. and Itasca Pellet Co., entered into an electric service agreement under which MP & L would annually supply up to 44,700 kilowatts of electricity to the taconite project. The contract provided that a minimum demand of 26,820 kilowatts, or 60% of the maximum, would be billed to and paid by Hanna whether the power was used or not. In 1981, MP & L petitioned the Minnesota Public Utilities Commission (MPUC) for a rate change. The MPUC concluded that the minimum demand provision in the contract was unreasonably preferential and ordered it abrogated. In its place, the MPUC established a 90% minimum payment. Hanna filed this suit after MP & L insisted that the agreement, as amended by the MPUC, continues in force. Hanna seeks damages for amounts allegedly improperly billed and a declaration that the entire electric service agreement is a nullity, without force and effect.
Johnson Act
The Johnson Act of 1934 seeks to foreclose federal court interference with state control over intrastate utility rates. The Act provides:
The district courts shall not enjoin, suspend or restrain the operation of, or compliance with, any order affecting rates chargeable by a public utility and made by a State administrative agency or a rate-making body of a State political subdivision, where:
(1) Jurisdiction is based solely on diversity of citizenship or repugnance of the order to the Federal Constitution; and,
(2) The order does not interfere with interstate commerce; and,
(3) The order has been made after reasonable notice and hearing; and,
(4) A plain, speedy and efficient remedy may be had in the courts of such State.
Hanna contends that this case is purely a contract case and does not come within the ambit of the Johnson Act. They claim that it is pure fortuity that the contract term abrogated happened to involve rates. On the contrary any ruling by a court that Hanna may nullify the contract in the wake of the MPUC order would be an action that “restrain[s] the operation of, or compliance with, any order affecting rates ***.”
“Rate” means every compensation, charge, fare, toll, tariff, rental and classification, or any of them, demanded, observed, charged, or collected by any public utility for any service and any rules, regulations, practices, or contracts affecting any such compensation, charge, fare, toll, rental, tariff, or classification.
The remaining requirements of the Johnson Act are satisfied. Jurisdiction of this case is based solely on diversity of citizenship. The MPUC order does not interfere with interstate commerce and it was made after reasonable notice and hearing. Finally, Hanna may assert its contract claim in state court to receive a plain, speedy and efficient remedy. We hold that the Johnson Act prohibits federal jurisdiction in this case.
Because of our resolution of the Johnson Act issue we neither reach nor discuss the other issue raised by the appellant.
FAGG, Circuit Judge, dissenting.
I dissent.
The MPUC order in question simply declares that “[t]he existing minimum billing demand portion of the Butler-MP & L contract is hereby abrogated.” The legal issue at hand concerns the effect of that abrogation on the viability of the electrical service agreement between Hanna and MP & L. Hanna does not challenge the order or MPUC‘s asserted statutory power to abrogate a material term of its negotiated power agreement with MP & L. Hanna only questions, as a matter of contract law, if it can be held to an agreement that is now radically different from the one it made.
The MPUC order has triggered, but it is not the subject of, the parties’ dispute. MP & L is clearly mistaken when it argues that Hanna‘s action “would require the Court to question and interpret the MPUC‘s intent, analyze the reasonableness of the MPUC action and second-guess the MPUC‘s public policy choices.” Hanna does not seek to “restrain the operation of, or compliance with,” the MPUC order in this action. Hence, the Johnson Act has no application here.