ContractsProf Blog

Duty to Disclose?: This House Used to Be a Meth Lab Edition

We spend a lot of time in Contracts talking about bugs and whether the seller of a home has a duty to disclose known, latent defects -- e.g., termites or bed bugs.  Then we usually talk about ghosts: does a seller have a duty to disclose that the house is haunted?  Well, here's a new one: does the seller have a duty to disclose that the house has a history of use as a meth lab?  Or, is it buyer beware? 

Ask Jenn Friberg and Rob Quigley.  CNN reports that they bought their first home, a 4-bedroom house near Philadelphia in March.  They moved in only to discover from a neighbor that the $190,000 house had previously been used as a meth lab.  Professional removal costs well over $20,000.  They were horrified.  From CNN:

The couple complained of having headaches, sore throats and difficulty breathing after moving in -- all symptoms of possible methamphetamine exposure.

"It was really odd," Quigley said. "I would go to work and it would go away. I would come home and it would just start again."

They went to a doctor, who confirmed they had inflamed lungs and nostrils, he said. A test of the house revealed it had low levels of methamphetamine.

* * *

Friberg and Quigley's real estate agent said he was as blindsided as his clients.

"I have never seen anything like this in the 20 years I've been in the business," said Ellis Harrison, who also helped Quigley's parents buy their home.

"It's ugly and I wish I had the solution. Anything that could be done for these kids would help."

Harrison called the district attorney's office for answers after learning of the home's history from Quigley. The DA's office confirmed the home had been used to manufacture methamphetamine.

Routine home inspections generally do not include searching for evidence of a meth lab, and Pennsylvania does not (yet) have mandatory disclosure laws specifically addressing meth labs (it does, however, generally mention hazardous materials).  And, there is a U.S. Drug Enforcement Administration's National Clandestine Laboratory Registry, which lists addresses where local authorities have reported finding drug manufacturing facilities or dumps.

Here's an interview the couple gave to the local CBS affiliate:

They also have a blog "Our Meth House."

[Meredith R. Miller - h/t Kevin Hagler]

This may remind you of The Merchant of Venice

There's a nice little classroom hypothetical brewing over in Germany, where a man paid the equivalent of £3700 for his girlfriend's breast augmentation surgery, in exchange for her agreement to "stay with him at least a year."  They broke up soon after, and the man wants his money back.  The ex-girlfriend (no, that's not her at the left, it's just a pretty cool ad) apparently doesn't have it.

Setting aside the questions whether the contract for  cohabitation would be void as against public policy, or whether unjust enrichment or reliance might be available to ground a cause of action, there are some interesting issues with respect to remedies.  Would the girlfriend's promise be enforceable by specific performance?  We all know that SP is a much more common remedy in Germany than in the U.S., but would it be available for this type of -- um, "personal services"?  And since the man paid for the implants, does he have a security interest in the goods?  That's significant because he's apparently threatening to repossess them.

FGS 

Goldberg v. Eisenberg on excuse of performance

The current issue of Harvard's online Journal of Legal Analysis has an excellent give-and-take about excuse of performance between a pair of well-matched heavyweights.  In the right corner, from New York City, wearing the light blue trunks with the white stripes, is Victor Goldberg, the Jerome L. Greene Professor of Transactional Law at Columbia Law School.  In the left corner, from Berkeley, California, wearing gold trunks with a royal blue stripe, is Mel Eisenberg, the Koret Professor of Law at Boalt Hall.  The exchange started last year when Eisenberg published Impossibility, Impracticability, and Frustration, 1 J. Leg. Analysis 207 (2009). 

Goldberg now responds to that article with Excuse Doctrine: The Eisenberg Uncertainty Principle.  Here's the abstract:

The world is in a bit of a mess. Oil prices soared to over $140 per barrel and within months plummeted to below $40. The pound fell from $2 to less than $1.40. Housing and stock prices crashed. Foreclosures, bankruptcies, and bailouts became newspaper staples. When things go awry like this, inevitably there will be many people and firms that regret having entered into contracts under more favorable circumstances.  Many of them will be looking for ways to limit, or better yet avoid, the consequences.  In a recent paper, a pre-eminent contracts scholar, Professor Melvin Eisenberg (2009), has provided them with considerable ammunition, arguing for expanding the domain of the excuse doctrines. His arguments for giving the disappointed contracting party a “get out of jail (almost) free” card, however, are seriously flawed.

To which Eisenberg replies with Impossibility, Impracticabilty, and Frustration—Professor Goldberg Constructs an Imaginary Article, Attributes It to Me, and Then Criticizes It:

Last year I published an article, “Impossibility, Impracticability, and Frustration,” in this Journal (Eisenberg 2009). Professor Victor Goldberg, a leading figure in the law-and-economics of contracts, has now published a counter-article, “Excuse Doctrine: The Eisenberg Uncertainty Principle,” also in this Journal (Goldberg 2010). Although Goldberg’s article purports to be a criticism of mine, in fact most of his points are directed to an Imaginary Article he has constructed out of thin air, consisting of statements I did not make and positions I did not imply. Accordingly, a major reason for this response is to set the record straight by comparing what Goldberg says that I said and implied with what I actually said and implied. In addition, those portions of Goldberg’s article that addressed what I did write are for the most part either based on a fallacious rhetorical device, simply incorrect, or both. Therefore, a second reason for this response is to show where and why Goldberg’s criticisms go astray. Finally, in one instance Goldberg has identified an erroneous sentence in “Impossibility, Impracticability, and Frustration,” and I also write to acknowledge that error.

For anyone who loves contract law doctrine and economics, it's a terrific exchange.  Don't miss it.

FGS

Today in History -- November 30

1804 – The U.S. Senate begins the impeachment trial of Supreme Court Justice Samuel "Old Bacon Face" Chase, on charges he is biased, intemperate, and incompetent. As these are not disqualifications for judicial office, he will be acquitted.

1824 – The Welland Canal Co., with $150,000 in stated capital, turns over the first shovel of earth on the canal that will connect Lake Erie with Lake Ontario, bypassing Niagara Falls. The first trip on the Welland Canal will take place exactly five years later to the day.

1886 – The Folies Bergere stages its first revue in Paris. Skeptics doubt that men will pay good money to watch naked women cavorting on a stage, but they are proved wrong.

1934 – The London & Northeastern Railroad’s locomotive no. 4472—known as the Flying Scotsman—is the first train to exceed 100 mph without plunging off a trestle.

1940 – 29-year-old B-movie comedienne Lucille Ball marries Cuban bandleader Desi Arnaz in Greenwich, Connecticut. Ten years later, they will found Desilu Productions and revolutionize television with hits like Ben Casey, Star Trek, The Andy Griffith Show, Mission: Impossible, The Dick Van Dyke Show, The Lucy Show, My Three Sons, Family Affair, Make Room for Daddy, The Untouchables, Gomer Pyle, USMC, and I Spy.

1954 – Mrs. Ann Hodges of Sylcauga, Alabama,is hit by a meteorite while taking a nap in her home in Sylacauga, Alabama. She escapes with bruises and a pretty good story to tell.

1999 – Exxon and Mobil agree to terms on a $73.7 billion merger agreement, thus creating Exxon-Mobil, the world's largest company.  [Corrected]

If you win a Harrier from Pepsi, you've now got a place to put it!

Your own 17,000 ton aircraft carrier!

Judge Kimba Wood thought the offer of a Harrier jet in Leonard v. Pepsico. Inc. 88 F. Supp. 2d 116, (S.D.N.Y. 1999), aff'd 210 F.3d 88 (2d Cir. 2000),was a joke, but this one's not.  The British government is selling HMS Invincible, a veteran of the Falklands War and the former flagship of the Royal Navy. It's got a cruising range of 7,000 nautical miles, room for a crew of 1,051, and can carry 18 GR7/9 Harriers for offensive punch and 4 Sea King ASaC helicopters.to deal with those pesky submarines.

It's being sold by the Disposal Services Authority through tenders over the internet at the an on-line auction site edisposals.com.  Tender closing date is January 5, 2011.

Price does not include aircraft, fuel, or ammunition.  Other terms and conditions apply.  See site for details.

FGS

No oral modification clauses, part IV

In responding to an earlier post on no-oral-modification clauses, in which I questioned why NOM clauses were strictly enforceable in government contracts but not in private contracts, reader John Patrick Hunt wrote:

Wouldn't the often-asserted superior efficiency of private enterprise suggest better supervision of agents and thus less need for a bright-line rule enforcing NOM clauses?

I'm not sure why this would be so, even assuming that government agents are less reliable than those of private parties.  The NOM clause is one of the things that private parties put into contracts to supervise their agents.  Maybe I'm missing something (it's happened before), but taking away one of the tools private parties use to supervise their agents on the grounds that private parties do a better job of supervising their agents seems circular.

FGS

Weekly Top Ten

Following are the Top 10 most-downloaded new papers from the SSRN Journal of Contract and Commercial Law for the 60 days ending November 28, 2010. (Last week's ranking in parentheses.)

1 (1) Two Faces: Demystifying the Mortgage Electronic Registration System's Land Title Theory, Christopher Lewis Peterson (Utah).

2 (3) The Need for Insurance Policy Transparency, Daniel Schwarcz (Minnesota).

3 (4) Choice of Forum Provisions in Intra-Corporate Litigation: Mandatory and Elective Approaches, Joseph Grundfest (Stanford).

4 (5) Suing the Government as a 'Joint Employer'–Evolving Pathologies of the Blended Workforce, Steven L. Schooner & Collin D. Swan (Geo. Washington).

5 (–) Party Autonomy in Rome I and II from a Comparative Perspective, Symeon C. Symeonides (Willamette).

6 (6) Misbehavioral Economics: The Case Against Behavioral Antitrust, Joshua D. Wright (Geo. Mason) & Judd E. Stone (Int'l Center for Law & Economics).

7 (7) Taking Punitive Damages Seriously: Why a French Court Did Not Recognize An American Decision Awarding Punitive Damages and Why it Should Have, François-Xavier Licari (Metz).

8 (8) The New Exit in Venture Capital, Darian M. Ibrahim (Wisconsin).

9 (10) The Regulation of Surrogate Motherhood in Greece, Aristides N. Hatzis (Athens–Philosophy).

10 (–) The Gold Clause Cases and Constitutional Necessity, Gerard N. Magliocca (Indiana-Indianapolis).

FGS

Today in History -- November 29

1394 – General Yi Seong-gye, who has seized the Korean throne, moves the capital of the kingdom from Kaesong to Hanyang, today known as Seoul. His Joseon Dynasty will rule the peninsula for more than 500 years.

1695 – Scots judge and statesman James Dalrymple, 1st Viscount Stair, author of the influential Institutions of the Laws of Scotland, dies at Edinburgh.

1777 – Nine soldiers, one vaquero, and five settler families establish the first town in the Spanish province of Alta Califonria. It is named San José de Guadalupe. It will grow to become California’s third largest city.

1781 – The crew of the he crew of the British slave ship Zong throw 54 sick African slaves overboard to claim £30 a head in insurance money.

1816 – Future U.S. Chief Justice Morrison Remick Waite is born at Lyme, Connecticut. In 1874, after four men have turned down President Grant’s offer of the job and two more nominations have been withdrawn, the largely unknown Waite will hear of his own nomination by telegraph.

1890 – The new Constitution of the Empire of Japan goes into effect.

1898 – Clive Staples Lewis is born at Belfast. Watching Hollywood butcher his Narnia books makes you grateful for the control J.K. Rowling insisted on keeping over her Harry Potter franchise.

 
1972 – The video game industry is born at Andy Capp’s Tavern in Sunnyvale, California, when Nolan Bushnell of Atari Corp. unveils Pong. It is a success.

FGS

Now for something completely different . . . .

Since it's Sunday of Thanksgiving weekend and nothing much is happening, I figure I'll bring the world's attention to the 2010 Tri-County Six-Man Pee Wee Football 13-and-Under Champion Eagles of Kopperl, Texas.  Congratulations to nose tackle Jack Snyder and to Seth, Ethan, Alex, Bubba, Jose, Bradley, Kolten,and Colln, who worked so hard and played so tough.

 

FGS

Today in History -- November 28

1520 – Seeking a westward route to the Spice Islands that doesn’t impinge on Portuguese territory, Spanish ships under the command of Ferdinand Magellan become the first Europeans to sail from the Atlantic to the Pacific.

1660 – Twelve men gather together to found a new weekly meeting group to discuss scientific experiments. It’s originally called the "College for the Promoting of Physico-Mathematical Experimental Learning," but will later be come known as the Royal Society.

1843 – After several years of squabbling over the Hawaiian Islands, Britain and France agree to recognize the islands as an independent nation.

1851 – Albert Henry George Grey, 4th Earl Grey, is born at London. As Governor-General of Canada he will donate a cup, named in his honor, that will be given annual to the champions of the Canadian Football League.

1907 – Twenty-three year-old scrap metal dealer Louis B. Mayer opens the refurbished Gem Theater in Haverhill, Massachusetts, as his first motion picture theater, the Orpheum.

1914 – After a shutdown caused by the outbreak of World War I, the New York Stock Exchange reopens for business.

1919 – American-born Nancy Witcher Astor, 2 nd Viscountess Astor, becomes the first woman Member of the British Parliament, as a Conservative member for Plymouth.

 

1929 – Future Motown record entrepreneur Berry Gordy, Jr., is born at Detroit.

1984 – Over 250 years after their deaths, William Penn and his wife Hannah Callowhill Penn are made Honorary Citizens of the United States. They must be very happy about that.

FGS

Oral change orders and the NOM clause, part III

I agree with Steve Feldman's comments on P&D Consultants that we published yesterday.  My point in the original post (which wasn't clear) is not that P&D Consultants is wrong, but that the same considerations that militate in favor of enforcing a no-oral-modifications clause in a government contract are present in private contracting.

Years ago in practice I was involved in a lot of litigation over oral change orders, and I know what an absolute mess they can cause.  The government obviously does not want to be bound every time some employee (even if it's the contracting offier or the Air Force general in charge of the program) says something.  But that's the same reason that private parties put those clauses in their agreements.  My point was that courts seem to think those clauses serve a very valuable protective function when it's the government's money, but not when it's a private transaction.  I don't see the distinction.

FGS

Today in History -- November 27

511 – Clovis I (right, middle), the first king to unite all the Franks, dies His conversion to Catholicism from the Arianism popular with other German tribes would go on have an immense impact on the future history of Europe.

1746 – Future lawyer, judge, and diplomat Robert Livingston is born at New York City. He is best remembered as one of the drafters of the Declaration of Independence and the man who negotiated the most profitable land deal in history, the Louisiana Purchase.

1839 – The American Statistical Association is founded in Boston. Among its goals are to "work for the improvement of statistical education at all levels" and to "promote the proper application of statistics." It will fail miserably in both of these efforts, though not from lack of effort.

1895 – Chagrined by a premature newspaper obituary that calls him a "merchant of death," Alfred Nobel signs a new will leaving his estate to create the Nobel Prizes—but not until after he dies and no longer needs the money.

1901 – Lawyer and U.S. Secretary of War Elihu Root establishes the U.S. Army War College at Washington Barracks in the District of Columbia.

1924 – Looking to jump start Christmas holiday sales, and stealing an idea from rival Gimbels (which had pioneered the concept in Philadelphia), the R.H. Macy Department Store on 34th Street creates the first Thanksgiving Day Parade in New York City.

1934 – Hit with six bullets in a gunfight with FBI agents, 25-year-old Lester "Baby Face" Nelson dies at Wilmette, Illinois.

1973 – The U.S. Senate votes 92-3 to confirm Gerald Ford as Vice President of the United States, replacing Spiro Agnew. Those were the days when politicians who engaged in tax evasion lost their jobs and went to jail.  Hard to believe, I know.

FGS

Gamboling Through Gaming and Gambling

The folks at Aspen Publishing -- or Wolters Kluwer if they prefer it -- have a new title out, Gaming and Gambling Law:  Cases and Materials, by Dean Kevin Washburn of New Mexico, 

With gambling now viewed not as a vice that discourages thrift and responsibility but as an "industry" that "brings job to the community," the subject is only going to get more popular.  Here's the publisher's synopsis:

Gaming and Gambling Law: Cases and Materials combines policy interrogatories and the application of legal concepts in a thoughtful examination of gaming and gambling, in casinos and on-line. Kevin Washburn has created a teaching vehicle that sparks students’ interest and prompts them to apply a range of legal concepts to current and real-world issues.

Illuminating issues of criminal law, federalism, regulation, due process, and contracts, Gaming and Gambling Law features:

•  
  • the expertise of Kevin Washburn in field and classroom
  • key issues and policy questions that arise in both legal and illegal gambling
  • up-to-date coverage of the fast-growing phenomenon of on-line gamgambling
  • a comparative law and policy perspective looks at the different regulatory models that govern legalized gambling and highlights key differences

For a thoroughly engaging class experience with a high pay off in learning, Gaming and Gambling Law is a sure bet. A great draw for second and third-year law students, this concise coursebook engages students in the law, policy, and regulatory practices that surround an iconic industry.

FGS

Contract drafting: A narrative approach

One of the new books coming out this year that we're particularly interested in seeing when it comes out in a few weeks is Basic Contract Drafting Assignment:  A Narrative Approach, by Sue Payne (Northwestern), published by the fine folks at our LawProf sponsor, Aspen Publishing.  Here's the publisher's description: 

Basic Contract Drafting Assignments: A Narrative Approach is a unique supplement of contract drafting exercises designed to be used with any contracts or drafting course book. Instructors who want to incorporate drafting exercises into the classroom experience will find an invaluable asset in his supplement, which provides students with the tools necessary to develop skills that can be applied to various types of advanced transactional work.

Divided into four interest-catching sequences, this concise paperback takes a narrative approach, and gives students the opportunity to learn by doing:

• The first assignment in each sequence introduces the clients, their businesses, and their needs.
• In the second and third assignments those clients evolve and grow, and their business needs change.
• Each sequence features assignments of varying lengths and types, including gathering information, interviewing the client, outlining the issues that need to be considered from both sides of the table, and drafting the necessary memos, letters, and final contract.
• The assignments focus on methodologies in four areas:
  • How to conceptualize in writing the parties’ rights, duties, risks, and protections.
  • How to organize a contract on both the macro and the micro levels.
  • How to draft for clarity and enforceability.
  • How to express boilerplate terms.

Additional resources for students and instructors include:

• Entertaining and informative appendices, among them
  • What Deal Lawyers Say to Each Other: A Dictionary of Contract Negotiation and Drafting Slang
  • Ten Tips for Interviewing a Client about a Transaction
  • Decoding the Comments on Student Contracts: Some Samples with Illustrations
• A web-based Teacher's Manual that provides teaching tips, answers to the student exercises, and notes for the characters that the teacher plays.

Basic Contract Drafting Assignments will augment and enhance any book you are currently using by providing a wealth exercises that will help students learn real-world drafting techniques and skills.

FGS

 

Feldman on oral change orders

Our friend Steven Feldman, author of Government Contract Guidebook, 4th Edition and Government Contract Awards::Negotiation & Sealed Bidding knows a lot more about government contracting than we do.  He takes issue with our [i.e., my] analysis of a recent California case that enforced a no-oral-modifications clause in a government contract.  Here's his view:

I read with interest your recent posting regarding the opinion of the Court of Appeals of California in P&D Consultants, Inc. v. City of Carlsbad, 2010 WL 4680800 (Cal. App. 4^th Dist. Nov. 19, 2010). In P&D Consultants, the court ruled that California public contracts requiring written change agreements cannot be modified orally or through the parties’ conduct.

I agree with your observation that courts construing private contracts commonly allow parties to modify such terms through conduct and to thereby waive the owner’s protection. But I do not fully accept your critique that the court “gave no apparent explanation for drawing a distinction between the same clause in private and public contracts . . . except to note that one who deals with a public official must at its own peril make sure that the official has the necessary authority.”  While the California court did make this assertion, it also said, “The purpose of including a written change order requirement in a municipal works contract is obviously to protect the public fisc from the type of situation that occurred here.”

Other cases rely on this valid public policy in the control of scarce government resources. The former United States Court of Claims has ruled that the purpose of a standard contract clause requiring an order in writing from the Contracting Officer for extra work is to protect the Government against the cost of extra work ordered by a subordinate acting without authority. Standard Acc. Ins. Co. v. United States, 102 Ct. Cl. 770 (1945). Cf. also Kennedy v. United States, 965 F.2d 413, 420 (7^th Cir. 1992)(“[the] government could scarcely function if it were bound by its employees' unauthorized representations”). This point becomes clearer upon the realization that most federal, state and local agencies have numerous employees. Public expenditures would be wholly uncontrollable if otherwise well-meaning employees could issue informal changes to government contracts. Courts in this camp reason that as an expression of sovereign immunity, written change order terms may not be overcome by waiver or estoppel. 64 Am. Jur.2d Public Works and Contracts § 202 (2010).

While the California court’s interpretation of the written change order requirement is the majority rule in the United States, some jurisdictions follow a different path.  These cases allow recovery for alterations or extras without a written change order where it appeared that the work was performed with the knowledge of the proper officers or representatives of the public entity and where other circumstances also tended to show an intention on the part of the public entity to waive or otherwise derogate from the stipulation. C. P. Jhong, Annot., Effect of stipulation, in public building or construction contract, that alterations or extras must be ordered in writing, 1 A.L.R.3d 1273 (1965 & Supp. 2010). Unlike P&D Consultants, these cases do follow the private law concept that “Contractual clauses requiring written change orders can be waived by conduct.” See G.M. Harston Const. Co., Inc. v. City of Chicago, 371 F. Supp. 2d 949, 952 (N.D. Ill. 2005)(citing private law Illinois authority).

The upshot is that the California court in P&D Consultants did correctly construe the contract and its decision was consistent with California public contract law and policy. Nevertheless, some other jurisdictions do follow a more liberal view allowing contractor recovery despite a contractual written change order provision, which means that practitioners should consult applicable law for further guidance.

Steven W. Feldman

Today in History -- November 26

1607– Future clergyman John Harvard is born at Southwark, England. He will later become the first American college benefactor to have the college he endows change its name in his honor.  There will be many others.

1789 – President George Washington declares a national Thanksgiving Day. Washington’s proclamation begins:

Whereas it is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore his protection and favor, and whereas both Houses of Congress have by their joint Committee requested me to recommend to the People of the United States a day of public thanksgiving and prayer to be observed by acknowledging with grateful hearts the many signal favors of Almighty God especially by affording them an opportunity peaceably to establish a form of government for their safety and happiness. Now therefore I do recommend and assign Thursday the 26th day of November next to be devoted by the People of these States to the service of that great and glorious Being, who is the beneficent Author of all the good that was, that is, or that will be.

1842 – Fr. Edward Sorin of the Congregation of the Holy Cross and eight other brothers found a new college with two students in a log chapel in St. Joseph County, Indiana. It will be named Notre Dame du Lac..

1858 – Katharine Mary Drexel, who will become the second American-born saint, is born to a wealthy banking family at Philadelphia. She is today known as the patron saint of racial justice.

1863 – President Abraham Lincoln, following Washington’s example, proclaims an annual Thanksgiving to be celebrated annually on the last Thursday of November.

1917 – At the Windsor Hotel in Montreal, representatives of three teams from the defunct National Hockey Association create a new "National Hockey League." The Montreal Canadiens, Montreal Wanderers, and Ottawa Senators will add a fourth team, the Toronto Arenas (later the "Blueshirts" and then "Maple Leafs") for the inaugural season.

1949 – The Constituent Assembly adopts a constitution for the new Republic of India.

1983 – Six men break into the Brink's-MAT warehouse at Heathrow Airport in London, inintending to steal what they think is £3 million in cash; instead they find three tonnes (6,800 gold bars) worth £26 million. Four of the robbers and most of the gold have never been recovered.

FGS

Happy Thanksgiving!

On a day like today, when the first icy (45° F) blast of winter is coming down the verdant Brazos Valley, chilling the rattlesnakes and rattling the Mexican junipers at Château Snyder, it's nice to sit in front of a fire with a steaming Tom & Jerry and think about . . . chicken feet.

 
Why chicken feet?  Because they (along with chicken skin) are prominent features of what I think is the only U.S. Supreme Court case about Thanksgiving turkeys.  The case is M. Kraus & Bros., Inc. v. United States, 327 U.S. 614; 66 S. Ct. 705; 90 L. Ed. 894 (1946).  It's a criminal case, but it does have something to do with contract law.

The case takes us back to Thanksgiving 1943, when wartime price controls have led to a serious shortage of meat (and lots of other things) in the U.S.  Because turkeys are in short supply, prices naturally tend to rise.  The Roosevelt Administration responds with the Emergency Price Control Act of 1942, which makes it a criminal offense to sell certain things (including turkeys) prices above a price "established" by the Office of Price Administration.  Because that price is fairly low, demand for turkeys at Thanksgiving 1943 far exceeds the supply.

The defendant operates a wholesale meat and poultry business in New York City.  In prior years it has usually received 100-150 rail cars of turkeys, but in 1943 it only gets one (1) car, and must decide how to divide that relative handful among its customers.  Because it can't raise prices, it decides to bundle the turkeys with chicken feet, chicken skin, and chicken gizzards, so that its customers who buy turkeys must also buy the other products.

The defendant is indicted.  The prosecution claims that by tying the turkeys to other products of dubious value the seller had violated the Price Administrator's regulations, which provided:

Price limitations set forth in this Revised Maximum Price Regulation No. 269 shall not be evaded whether by direct or indirect methods, in connection with any offer, solicitation, agreement, sale, delivery, purchase or receipt of, or relating to, the commodities prices of which are herein regulated, alone or in conjunction with any other commodity, or by way of commission, service, transportation, or other charge, or discount, premium, or other privilege or other trade understanding or otherwise.

The jury convicted and the Second Circuit affirmed.  The Supreme Court -- perhaps still not as friendly and accomodating to economic regulations as it would later become -- reversed the conviction 5-3 (Jackson did not participate), although the justices issued four separate opinions.  Relying heavily on the fact that the Administrator in other regulations had specifically mentioned "tying agreements" but did not do so in Regulation 269, Justice Murphy,Stone, Rutledge, Frankfurter, and Douglas all more or less agreed that a tying arrangement in which the goods had some value was not an "evasion" of the regulations, although Douglas and Rutledge (joined by Frankfurter) wrote concurrences as well.  Black wrote the dissent, joined by Burton and Reed.

It's interesting that only ten ears after unanimously striking down poultry price regulations in A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S. Ct. 837; 79 L. Ed. 1570  (1935), not a single justice even questioned the government's authority to set the price of every turkey in the United States.  As Mr. Dooley noted, "No matther whether th' constitution follows th' flag or not, th' supreme coort follows th' iliction returns.”

Happy Thanksgiving!

FGS

P.S. In case you're wondering what value chicken feet would have, here's a tasty recipe..

Miller on the Law of the Turkey

Judge Frank Easterbrook may h as written the most famous article on The Law of the Horse, but ContractsProf blogger Meredith Miller (Touro) has no peer when it comes to the Law of the Turkey.  Past Tanksgivings have featured her analysis of legal turkeys.  Or rather, turkeys involved in legal disputes.

Here are some of her greatest hits from Turkey Days past.  Enjoy!

 Turkeys, Oral Contracts, and Mr. Gouge (2005)

Turkeys, Damages, and Alternative Damages (2005)

The Law of the Turkey (2006)

ContractsProf Is Not Chicken (2008)

The Law of Turkey Leftovers (2008)

FGS 

Texas Wesleyan names former law dean as President

I'm personally very happy to announce that Texas Wesleyan University in Fort Worth has just named Frederick G. Slabach, CEO of the Harry S. Truman Scholarship Foundation in Washington D.C., as the 19th president of the 120-year-old university.

Slabach was dean of TWU's law school from 2003 to 2006  He's continued as Dean Emeritus and Professor of Law while holding the top leadership position at the Truman Foundation.  He replaces Harold Jeffcoat, who led the university for 10 years.

Before becoming dean at Texas Wesleyan, Slabach was vice dean and professor of law at Florida Coastal, associate dean for academic affairs at Mississippi College, and interim dean and associate dean at Whittier. He was an aide to Senator John Stennis and was Assistant Secretary of Agriculture for Congressional Relations in the Clinton Administration.  He also served a term as Executive Director of the Mississippi Democratic Party.  His wife is Pulitzer Prize-nominated writer Melany Nielsen.

Welcome back home, Fred.

FGS

There must be a better way of putting this . . . .

Homeland Security Secretary Janet Napolitano is thanking beleaguered Transportation Security Administration employees for their, um, "hard" work.

 

FGS