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Northern Indiana Public Service Co. v. Carbon County Coal Co.

United States Court of Appeals for the Seventh Circuit
799 F.2d 265 (1986)


Northern Indiana Public Service Co. (NIPSCO) (plaintiff) agreed to buy a certain amount of coal from Carbon County Coal Co. (Carbon County) every year for 20 years. This coal was used to generate electricity. The price was set at the time that the contract was entered into, but subject to escalation. The contract included a force majeure clause, providing that NIPSCO could stop buying coal under the contract “for any cause beyond [its] reasonable control…including but not limited to…orders or acts of civil…authority…which wholly or partly prevent…the utilizing…of the coal.” In 1983, the price of the coal under the contract escalated to the point that NIPSCO requested permission from the Indiana Public Service Commission (the commission) to increase its fuel charges to its customers. The commission granted the request, but required NIPSCO to make a good faith effort to decrease its prices by finding alternative sources for electricity. NIPSCO did find cheaper sources of electricity and therefore stopped buying coal under its agreement with Carbon County. NIPSCO filed a declaratory judgment suit, seeking to excuse its performance of the contract with Carbon County under its force majeure clause or under the doctrines of frustration of purpose or impossibility. Carbon County filed a counterclaim for damages. The trial court, after a trial on the merits, entered judgment in favor of Carbon County, awarding a specific sum of money. Carbon County sought specific performance of the contract, but that request was denied by the trial judge. Carbon County appealed the denial of specific performance to the United States Court of Appeals for the Seventh Circuit.

Rule of Law


Holding and Reasoning (Posner, J.)

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