NIPSCO v. Carbon County
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| NIPSCO v. Carbon County | |
| Court | 7th Circuit |
|---|---|
| Citation | 799 F.2d 265 |
| Date decided | August 13, 1986 |
Facts
- Northern Indiana Public Service Co. = "NIPSCO" = plaintiff = coal buyer = electric utility company
- Carbon County Coal Co. (Carbon County) = coal mine company = company with a Wyoming coal mine on federal land = coal seller
- In 1978, the 2 parties contracted for NIPSCO to receive 1,500,000 (1.5 million) tons of coal/year for 20 years.
- The 2 parties agreed on $24/ton of coal subject to change.
- The contract included a force majeure clause.
- Coal prices went up:
1978
$24/ton of coal
1985
$44/ton of coal
- NIPSCO found a cheaper source of electricity; so, NIPSCO suspended the coal shipments from Carbon County.
Procedural History
- NIPSCO sued Carbon County in federal court in Indiana seeking a declaratory judgment that NIPSCO was excused from buying coal from Carbon County under the force majeure clause.
- NIPSCO lost.
- The jury awarded Carbon County $181,000,000 (181 million).
Issues
- Does monetary loss resulting from economic risk-taking
- constitute a force majeure or
- satisfy the doctrines of
- frustration of purpose or
- impossibility?
- Does the doctrine of illegality automatically void a contract?
Arguments
NIPSCO argued that the contract was un-enforceable because it violated the Mineral Lands Leasing Act of 1920. https://www.blm.gov/sites/blm.gov/files/MineralLeasingAct1920.pdf
Holding
- No. Monetary loss resulting from economic risk-taking doesn't constitute a force majeure or satisfy either the doctrines of frustration or impossibility.
- No. The doctrine of illegality doesn't automatically void a contract.
Judgment
Affirmed
Reasons
Richard A. Posner: The Indiana commission's authorization of the fuel surcharge didn't constitute a force majeure excusing NIPSCO's performance.
Posner: Also, this wasn't an inherently illegal contract. The Department of Interior & DOJ hadn't objected to Carbon County's mining.
