"That any Indian allotment held under a trust patent may be leased by the allottee for a period not to exceed five years, subject to and in conformity with such rules and regulations as the Secretary of the Interior may prescribe."

Regulations were prescribed, and many leases were made of Indian allotments. The treaty of 1898 provided that the Indians who held isolated tracts on the land ceded to the United States might retain the same, or if they chose to do so might remove to the reservation. The clause of article 8, "so long as said Indians remain where they now live," referred to those who chose the latter alternative, and it seems clear that water was intended to be permanently reserved for the tracts which the Indians chose not to relinquish, and that neither the actual leasing of their lands under the authority to lease nor the surrender of possession to the lessees operated to relinquish any water rights in the lands which they so chose to retain. This is the view. which the executive authorities took, for the patents which were issued for all allotments were identical in their provisions, and made no distinction between the lands allotted to individuals who retained their isolated tracts and the lands allotted to those on the larger reservation. They contained no provision that any rights should be lost in the event the allottee should lease his allotment or absent himself therefrom.

The decree is affirmed.

ROCKHILL IRON & COAL CO. v. CITY OF TAUNTON.

(Circuit Court of Appeals, First Circuit. May 12, 1921.)

No. 1458.

1. Municipal corporations 232-In the absence of regulations, manager of electric plant can contract for coal to be delivered after his term expires. Under St. Mass. 1905, c. 410, § 3, authorizing the mayor to appoint a manager of municipal lighting, to have, under the direction of the mayor, full charge of the plant and of the purchase of supplies, a manager appointed by the mayor for a fixed term can, in the absence of regulations by the mayor to the contrary, make a contract for the purchase of coal needed by the plant for a period extending beyond the manager's term, and such contract is binding on the city after the expiration of such term. 2. Sales 381-Burden is on defendant to prove damages could have been minimized.

In an action for breach of contract for the purchase of a particular kind of coal, where the plaintiff claimed the right to recover the difference between the contract price and the cost of production, on the theory that the coal was to be specially mined to fill the contract, the burden was on defendant to prove that such damages could have been prevented, by proving that plaintiff had the coal ready for delivery, and that the difference between the market price of such coal at the time and place of delivery and the contract price would have been less than the damages claimed by plaintiff, if such were the facts.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

(273 F.)

3. Sales 384 (6)-Measure for breach of contract to sell coal not mined is difference between contract price and cost of production.

The measure of damages for the breach of a contract for the purchase of a particular kind of coal, which was not yet mined by the seller, is the difference between the contract price and the cost of producing the coal, and of delivering it at the place of delivery.

4. Damages 12-Only nominal damages can be recovered for breach of contract, if evidence does not establish substantial damages.

In an action for breach of contract, only nominal damages can be recovered, if there is no evidence produced from which the facts necessary to determine the damages under the proper rule can be determined.

5. Sales 383-Evidence held not to show cost of coal at place of delivery. in an action for breach of a contract for the purchase of coal to be delivered by the seller, a table of cost of producing coal and of its selling price at the mine is insufficient to sustain a judgment for substantial damages, if the table referred to coal of a kind different from that specified in the contract, or even if it referred to the same kind of coal, since it cannot be assumed that the profit on the sales at the mine was the same as the profit on the sales under the contract, which would be necessary to establish the difference between the mine price and contract price as the cost of delivery.

Anderson, Circuit Judge, dissenting in part.

In Error to the District Court of the United States for the District of Massachusetts; James M. Morton, Judge.

Action by the Rockhill Iron & Coal Company against the City of Taunton. Judgment for defendant (261 Fed. 234), and plaintiff brings error. Reversed and remanded.

Asa P. French, of Boston, Mass., for plaintiff in error.

Harvey H. Pratt, of Boston, Mass. (Albert Fuller, of Taunton, Mass., on the brief), for defendant in error.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

BINGHAM, Circuit Judge. This is an action brought by the Rockhill Iron & Coal Company, a Pennsylvania corporation, against the city of Taunton, a Massachusetts municipal corporation, for breach of

contract.

The plaintiff's business consists in mining coal in Pennsylvania and shipping it to purchasers in the different states. The defendant corporation was authorized (Acts of Massachusetts 1905, c. 410, § 3) to maintain and operate a plant for manufacturing and distributing electricity for the benefit of its inhabitants. The provisions of the above act, so far as material to this case, read as follows:

"Sec. 3. The mayor of a city shall appoint a manager of municipal lighting who shall, under the direction and control of the mayor have full charge of the operation and management of the plant, the manufacture and distribution of gas or electricity, the purchase of supplies, the employment of agents and servants, the method, time, price, quantity and quality of the supply, the collection of bills, and the keeping of accounts. His compensation and term of office shall be fixed in cities by the city council [or corresponding body]. All bills chargeable to the plant or to the appropriations therefor shall be paid by the treasurer on requisition by the manager.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes 273 F.-7

By ordinance the term of the manager was fixed at three years. On December 16, 1911, Michael Golden was appointed manager for an unexpired term ending June 30, 1914. June 17, 1913, he entered into a contract in behalf of the defendant with the plaintiff for the purchase of coal for the lighting plant, covering the balance of his term and a year and a half beyond it.

In the contract it was agreed that the plaintiff would supply and the defendant would buy all of the bituminous coal required by the lighting plant from the date of the contract to December 31, 1915. For the year 1913 the defendant was to take 4,000 tons more or less, and for each of the years 1914 and 1915, 5,000 tons more or less. All shipments were to be alongside wharf of the lighting plant and the price of the coal was to be $4.25 per gross ton alongside. Payments were to be made on the 15th day of each month for coal furnished the previous month, and the coal was to be of the brand known as "Rockhill" semibituminous smokeless coal and of the same quality previously furnished the lighting plant.

Under this contract 7,866 tons of coal were delivered from time to time down to and including August 7, 1914, and were paid for. Of this amount five shipments of 2,336 tons were received between July 1 and August 7, 1914.

On or about July 1, 1914, Leland D. Wood was appointed manager to succeed Golden, whose term had expired. August 7, 1914, Wood, having entered upon the performance of his duties, notified the plaintiff that the defendant refused to recognize as valid the contract of June 17, 1913, and declined to receive or pay for any further coal which might be tendered under the contract; whereupon, on the 19th of December, 1914, this action was brought.

During the period from August 7, 1914, to December 31, 1915, the defendant, through its manager, purchased from another dealer for use at its plant 9,895 tons of coal, which was the total amount purchased for consumption at the plant during the unexpired term of the contract. It further appeared what the coal thus purchased cost at the mines and what its selling or market price there was, and that the profit to the vendor on this basis of computation for the 9,895 tons was $5,641.43.

In the declaration the plaintiff set out the contract, alleged its breach by the defendant, and that it had been at all times ready and willing to perform.

The defendant in its answer set up three defenses: (1) It denied the authority of Golden to make a contract for, the city beyond the period of his employment; (2) alleged that the plaintiff and Golden did not act in good faith in making the contract; and (3) that the contract was void for the reason that the plaintiff was not licensed to do business in Massachusetts. No evidence was adduced at the trial to support the second defense, and, as to the third, the court found and ruled against the defendant.

It was agreed that no regulations pertaining to the duties of the manager of the lighting plant had been prescribed by the mayor, and that none were in force during Golden's tenure of office.

(273 F.)

The case was submitted to the court upon agreed facts and certain oral testimony, the latter of which is not reported, as it is not material to the questions presented.

The plaintiff requested the court to rule: (1) That, upon all the evidence, Golden, as manager, was authorized to execute, in behalf of the defendant, the contract declared upon; (2) that Wood's refusal, as manager, to receive or pay for the balance of the coal, constituted a breach by the defendant of the contract; (3) that, upon all the evidence, the measure of damages was the difference between the cost of production and the selling price at the mines of such coal as the defendant refused to receive and pay for in accordance with the terms of the agreement; and (4) that, upon all the evidence, the plaintiff was entitled to recover damages in the sum of $5,641.43, with interest from the date of the writ. These requests were refused, and the plaintiff excepted.

The court found and ruled: (1) That Golden had no authority to make the contract, unless it was conferred upon him by the statute under which the defendant operated its municipal lighting plant; (2) that it was not established that the contract sued upon was actually or impliedly authorized; (3) that the defendant rightfully terminated the contract on August 7, 1914, and is not liable for its refusal to accept subsequent deliveries thereunder; and (4) that the plaintiff, if entitled to recover, could recover only nominal damages. Judgment was entered for the defendant, and the plaintiff prosecutes this writ of error. In Capron v. Taunton, 196 Mass. 41, 81 N. E. 873, section 3 of chapter 410 of the act of 1905, and the preceding acts of which it was an amendment, were under consideration. It was held that section 3 took away from the city council the right of supervision over the manager previously vested in that body and conferred it "solely upon the mayor"; that while the mayor, like the city council before it, was not required to prescribe regulations by which the manager's "statutory duties should be performed," he was empowered, if he thought it expedient, to prescribe "such general regulations concerning the exercise by him of his statutory powers as were found to be reasonably required, and as did not violate the statute."

After stating that, subsequent to the enactment of section 3, "no regulations whatever were established by the mayor under which the manager should perform his official functions," the court further held that the legislative purpose manifest throughout the act was "that original authority to contract in behalf of the city for the hiring of all employees, or to discharge them, was delegated only to the manager," and that, inasmuch as the plaintiff, an employee of the electric lighting plant, had been discharged by the manager, the discharge was lawful, "and, the mayor not being vested with any authority to re-employ him, he [had] no cause of action either for wages or damages against the city."

The mayor having appointed Golden manager of the city lighting plant, without establishing any regulations limiting his discretion in the performance of his duties, the first question is whether the manager was authorized to make the contract here in suit.

* * *

[1] By section 3 express authority was vested in Golden as manager to purchase coal. In the language of the act he was given "full charge of the purchase of supplies," and, inasmuch as no regulations had been established by the mayor limiting his discretion and bad faith was not shown, the question reduces itself to whether, from the mere fact that the contract related to the purchase of a supply of coal for a year and a half beyond the period of his term of office, it can be said that he was acting without authority and that the contract was void.

In Blood et al. v. Manchester Electric Light Co. et al., 68 N. H. 340, 341, 39 Atl. 335, 336, the question before the court was whether a contract entered into by the city councils of Manchester with the Manchester Electric Light Company for lighting its streets was illegal and unauthorized for the reason that it was one for a term of ten years. In discussing this matter the court said:

"The city councils of Manchester were authorized to exercise the powers of the corporation, namely: ‘All the powers vested by law in towns, or in the inhabitants thereof.' P. S. c. 50, § 1; Laws 1846, c. 384, § 14. This language excludes all ground for believing that the Legislature intended to limit the authority of the councils, so that they could not bind the corporation beyond the unexpired part of their term of office. The Legislature would not leave such intention to be inferred from language which conveys no suggestion of the limi tation. The necessity for continuity in the operations of the government is a reason why there should be no such limitation. The agencies of the government change, but the government goes on without interruption. The authority of the city councils while in office being coextensive with the powers of the city or its inhabitants, the limitation in their term of office is immaterial in the decision of the question under consideration. The contract stands the same as if it had been made by a vote of the inhabitants acting under a town organization.

"In making contracts, a town or city does not act in its legislative capacity, but in what is termed, for the sake of distinction, its private capacity. 1 Dill. Mun. Cor. §§ 27, 39. In this capacity it resembles an individual or private corporation, and its contracts have the same binding force upon it that the contracts of individuals and private corporations have upon them. Greenland v. Weeks, 49 N. H. 472. 480, et seq.; South Hampton v. Fowler, 52 N. H. 225, 231; Small v. Danville, 51 Me. 359, 361. The city councils,

in exercising the powers of the city, could determine the kind of lights to be used for lighting the streets, their location, when they should be lighted, and all other details of the business. They had power also to determine the length of time a contract for lighting should continue, in view of the necessity and convenience of the service required. If they, in good faith, exercised the discretion lodged with them, their contract is a legal contract, and will bind the city the same as a similar contract made by the directors of a private corporation binds it. Dibble v. New Haven, 56 Conn. 199; Putnam v. Grand Rapids, 58 Mich. 416, 419. If they should make a contract for a term of unreasonable duration, this circumstance would be evidence of want of good faith on their part."

To the same effect, see Illinois Trust & Savings Bank v. Arkansas City, 76 Fed. 271, 282, 283, 22 C. C. A. 171, 34 L. R. A. 518; Biddeford v. Yates, 104 Me. 506, 515, 72 Atl. 335, 15 Ann. Cas. 1091; Baily v. Philadelphia, 184 Pa. St. 594, 39 Atl. 837, 63 Am. St. Rep. 812; Manley v. Scott, 108 Minn. 142, 121 N. W. 628, 29 L. R. A. (N. S.)

652.

The authority of Golden while in office, so far as concerned the purchase of supplies for the lighting plant, was coextensive with the