The "favored-nation" clause of a contract for the sale of
natural gas by respondent to a pipeline company provided that
respondent would be entitled to a price increase should the
pipeline company thereafter "enter into a contract providing for
the purchase by it of gas" at a higher price. Thereafter, the
pipeline company agreed to a higher price under a preexisting,
long-term contract with another producer, which required that the
price be redetermined every five years, either by agreement of the
parties or by arbitration. In proceedings under the Natural Gas Act
to determine its effective rate as of June 7, 1954, respondent
filed its contract with the Federal Power Commission as a rate
schedule. The Commission held that the price redetermination under
the pipeline company's preexisting contract with the other producer
was not a contract for the purchase of gas within the meaning of
the "favored nation" clause in respondent's contract, and that,
therefore, the price payable by the pipeline company to respondent
had not been increased. The Court of Appeals vacated the
Commission's order.
Held:
1. Since the Commission disposed of the case solely upon its
view of the result called for by the application of ordinary rules
of contract construction employed by the courts, and did not rely
on matters within its own special competence, the Court of Appeals
was justified in making its own independent determination of the
correct application of the governing principles. Pp.
363 U. S.
268-270.
2. In the circumstances, consideration of the scope of judicial
review of administrative determinations need not deter this Court
from reviewing the decision of the Court of Appeals and deciding
the proper construction of the "favored-nation" clause. P.
363 U. S.
270.
3. The Commission correctly construed the "favored-nation"
clause as not effecting an increase in respondent's price by reason
of
Page 363 U. S. 264
the increased price agreed upon between the pipeline company and
the other producer under their preexisting agreement. Pp.
363 U. S.
270-276.
4. The judgment is reversed, and the cause is remanded to the
Court of Appeals for further proceedings, including consideration
of the question whether the enforceability of the contract between
the pipeline company and the other producer is material to the
decision of this case, and, if so, whether that contract was
enforceable. Pp.
363 U. S.
276-277.
263 F.2d 223 reversed.
MR. JUSTICE BRENNAN delivered the opinion of the Court.
One of the series of orders issued by the Federal Power
Commission after this Court's decision in
Phillips Petroleum
Co. v. Wisconsin, 347 U. S. 672,
required affected independent producers of natural gas to submit
rate schedules in effect on June 7, 1954, the date
Phillips was decided. [
Footnote 1] The respondent, Shell Oil Company, on November
18, 1954, submitted its contract dated May 1,
Page 363 U. S. 265
1951, with Texas Gas Transmission Corporation, [
Footnote 2] as a rate schedule on June 7,
1954, for gas from its Chalkley Field, Cameron Parish, Louisiana.
The Commission, on March 13, 1957, accepted the contract as a rate
schedule, but ordered a hearing for the purpose of determining and
fixing the price effective thereunder on June 7, 1954. [
Footnote 3]
At the hearing, Texas Gas contended that paragraph 1 of Article
VI of the contract specifying the price of 8.997 cents per thousand
cubic feet (Mcf.) for the period which included June 7, 1954,
established that price for the date. [
Footnote 4] This was the price at which Shell was billing
Texas Gas for gas at the time. However, Shell contended that, when
Texas Gas, prior to June 7, 1954, began paying 12.5 cents per Mcf.
to Atlantic Refining Company for gas produced in nearby Acadia
Parish, Shell became entitled to receive the same price under the
so-called "favored nation" clause of the Shell contract. That
clause, paragraph 3 of Article VI, provides that, "[i]f, at
Page 363 U. S. 266
any time after December 31, 1951, [Texas Gas] shall enter into a
contract providing for the purchase by it of gas" at a higher price
than that currently being paid under this -- the Shell -- contract,
the price currently being paid will be increased to equal the
"price payable under such other contract." [
Footnote 5]
When Texas Gas and Shell made the contract of May 1, 1951,
Atlantic Refining Company was selling gas to the former from Acadia
Parish production under a contract concluded in 1943 for a 25-year
term. The Atlantic contract specified a price effective for the
first five years and provided that, during succeeding five-year
periods, "prices to be paid will be determined at the beginning of
each period. . . ."
"The price to be paid . . . is to be agreed upon . . . after a
survey of prevailing prices for gas being sold in similar
quantities in the southwestern part of Louisiana."
The contract further provided that, "[i]n the event that the
parties are unable to agree upon the price . . . , such
determination shall be submitted to arbitration,"
Page 363 U. S. 267
the arbitrators to be selected as provided in the agreement.
[
Footnote 6] Negotiations
between Atlantic and Texas Gas as to the price to be effective for
the five-year period beginning September 1, 1953, terminated with a
letter agreement dated February 17, 1954, which recited: "[I]t is
hereby agreed that the price to be paid . . . between September 1,
1953, and August 31, 1958, both inclusive, shall be 12.2 cents net"
plus .3 cent for severance tax, or 12.5 cents. It is this letter
agreement which Shell contends triggered the Shell contract's
"favored nation" clause.
The Commission's examiner issued his decision on August 9, 1957.
He held that, in making the Atlantic letter agreement, Texas Gas
"enter[ed] into a contract providing for the purchase by it of gas"
within the meaning of the Shell "favored nation" clause, and that
this had escalated the Shell price to 12.5 cents per Mcf. The
Commission
Page 363 U. S. 268
reversed the examiner's decision and determined that the
effective price on June 7, 1954, was 8.997 cents per Mcf., the
price fixed in paragraph 1 of Article VI. 18 F.P.C. 617. Shell's
petition for rehearing was denied. 19 F.P.C. 74. The Court of
Appeals for the Third Circuit, on review, vacated the Commission's
order. 263 F.2d 223. We granted the separate petitions for
certiorari of Texas Gas and Louisville Gas and Electric Company in
No. 167, and of the Federal Power Commission in No. 170, being
particularly moved to do so by the contention made in both
petitions that the Court of Appeals exceeded the appropriate scope
of judicial review of the Commission's determination. 361 U.S.
811.
We may assume with the petitioners that the Court of Appeals did
not treat the Commission's order as one which it was required to
accept if reasonably supported in the record, and instead
considered that it could examine
de novo the question of
the proper interpretation to be given the Shell "favored nation"
clause. The petitioners' argument that the Court of Appeals
exceeded the allowable limits of judicial review is based upon the
premise that the Commission's interpretation of the "favored
nation" clause reflects the application of its expert knowledge and
judgment to a highly technical field, so that the Court of Appeals
was required to accept the Commission's interpretation if it had
"warrant in the record" and a "reasonable basis in law," citing
Unemployment Compensation Comm'n v. Aragon, 329 U.
S. 143,
329 U. S.
153-154. But the record nowhere discloses that the
Commission arrived at its interpretation of the "favored nation"
clause on the basis of specialized knowledge gained from experience
in the regulation of the natural gas business, or upon the basis of
any trade practice concerning "favored nation" clauses. On the
contrary, the opinions of the examiner and the Commission show that
both treated the question as one to be determined
Page 363 U. S. 269
simply by the application of ordinary rules of contract
construction. The examiner stated that
"[t]he language [of the 'favored nation' clause] is clear enough
to reveal the intent of the parties without resort to parole
evidence or self-serving memoranda. . . . [I]ts plain meaning is .
. . Shell sought to cause its selling price to rise to that called
for by any other contract Buyer made for gas after an agreed date.
. . . The language was evidently broad, not narrowly technical, in
character."
The examiner concluded that "elemental principles of contract
law . . . too commonly known to the legal profession to require
citations in support thereof" compelled the decision he reached.
The Commission, in turn, relying for authority entirely upon court
decisions and texts, construed the "favored nation" clause to be
applicable only when Texas Gas entered into a "new" contract after
December 31, 1951, and held that the February 17, 1954,
"agreement with Atlantic does not constitute a new contract as
required by Shell's escalation clause, but merely represents action
taken under a preexisting contract between Texas Gas and
Atlantic."
18 F.P.C. at 618-619. It is apparent that the Commission rested
its determination upon a construction of the words of the contract
as it supposed a court would interpret them. [
Footnote 7]
Page 363 U. S. 270
"The grounds upon which an administrative order must be judged
are those upon which the record discloses that its action was
based."
Securities & Exchange Commission v. Chenery
Corp., 318 U. S. 80,
318 U. S. 87.
Therefore, since the Commission professed to dispose of the case
solely upon its view of the result called for by the application of
canons of contract construction employed by the courts, and did not
in any wise rely on matters within its special competence, the
Court of Appeals was fully justified in making its own independent
determination of the correct application of the governing
principles.
See Federal Communications Commission v. RCA
Communications, Inc., 346 U. S. 86,
346 U. S. 91.
There applies here what the Court said in
Chenery:
"Since the decision of the Commission was explicitly based upon
the applicability of principles [of contract interpretation]
announced by courts, its validity must likewise be judged on that
basis."
318 U.S. at
318 U. S.
87.
In the circumstances, considerations of the scope of review of
administrative determinations need not deter us from reviewing the
decision of the Court of Appeals and deciding the proper
construction of the "favored nation" clause. We proceed to do so,
since the question of interpretation of the clause was presented in
both petitions, our grant of certiorari was not limited to exclude
it, and the question has been briefed and argued.
The question to be decided is: did the parties to the Shell
contract mean that an agreement of the nature of the Atlantic
letter agreement of February 17, 1954, should constitute the
"enter[ing] into a contract [by Texas Gas] providing for the
purchase by it of gas . . ."? We first consider the nature of the
letter agreement. The pricing provisions of the Atlantic contract
specify a price for the first five-year period, and provide that
prices for the four succeeding five-year periods should be
determined by agreement of the parties, or, failing such agreement,
by
Page 363 U. S. 271
arbitration. [
Footnote 8] In
either case, the determination is to be made "after a survey of
prevailing prices for gas being sold in similar quantities in the
southwestern part of Louisiana." Pursuant to this provision, a
letter agreement dated October 29, 1948, and a modification
agreement dated February 16, 1949, established prices for the
five-year period from September 1, 1948, to August 31, 1953. The
letter agreement of February 17, 1954, setting the price for the
1953-1958 period was thus the second such agreement.
Shell urges that the letter agreement is, in actuality, an
entirely new contract which incorporates by inferential reference
the terms of the 1943 contract. There is nothing in the letter
agreement or otherwise in the record to substantiate this
contention. On the contrary, the letter agreement affirmatively
states that the action was taken "in accordance with" the 1943
contract. [
Footnote 9]
Page 363 U. S. 272
To be sure, the letter agreement may be said to have been a
"contract" insofar as Atlantic and Texas Gas agreed therein upon a
price and gave up the right to have arbitrators determine the price
for them. But their act was merely in the performance of an
undertaking they assumed in 1943, when they chose this binding
method for periodic price adjustments instead of some method which
would have foreordained the adjustments in precise amounts. The
letter agreement in discharge of this obligation assumed in 1943 is
thus simply "executory of the [1943] contract between the parties."
Phillips Petroleum Co. v. Federal Power Commission, 227
F.2d 470, 475. We therefore agree with the Commission's holding
that the letter agreement "merely represents action taken under a
preexisting contract between Texas Gas and Atlantic." 18 F.P.C. at
619.
In the light of this, we do not think that, in being party to
the letter agreement, Texas Gas "enter[ed] into a contract for the
purchase . . . of gas" within the meaning of those words as
employed by the parties in the "favored nation" clause. The
language of that clause of the Shell contract is virtually the same
as the parties used several times at the very outset of that
contract. The sense in which the parties used the language there
reveals its meaning in the "favored nation" clause, and, so
interpreted, the Atlantic letter agreement is not a "contract"
within the meaning of the clause. The contract begins:
"This Contract, made and
entered into as of May 1,
1951. . . ."
"Whereas, under date of October 1, 1943, Shell Oil Company,
Inc.,
entered into a contract for the sale of gas. . . .
"
Page 363 U. S. 273
"Whereas, . . . Buyer and Seller now desire to rescind said
contract and
enter into a new contract for the purchase of
gas. . . ."
(Emphasis added.)
What follows are the nine Articles which detail the many aspects
of the parties' relationship for the 20-year term of the contract.
The Articles are captioned "Sale of Gas," "Quantity of Gas,"
"Pressure Decline," "Point of Delivery," "Warranty of Title to
Gas," "Prices," "Arbitration," "Term of Contract," and
"Miscellaneous." In addition, an exhibit made part of the contract
deals with such matters as "Quality of Gas," "Measurements,"
"Billing and Payment," "Regulatory Bodies" and "Force Majeure." In
other words, "enter[ing] into a contract providing for the purchase
of gas" meant to the parties the making of a full-fledged contract
containing all the terms defining the complete relationship.
This conclusion is borne out in the "Prices" Article itself.
That Article divides the contract term into five periods, one from
May 1, 1951, until January 1, 1952, and four others each of five
years. Paragraph 1 specifies the price for each period according to
a schedule of automatic step increases. Adjustment otherwise to
higher prices may result in one of two ways: (1) under paragraph 3,
the "favored nation" clause, or (2) under paragraph 4 -- applicable
only to the last two five-year periods -- if Shell requests a
"price redetermination." Upon such request, "determination is to be
made by the parties, or, if they are unable to agree, by the
arbitrators" upon the basis of "the three (3) highest prices to be
paid during such period by operating interstate transporters of
natural gas, including [Texas Gas]" for gas purchased from named
Louisiana fields.
In all probability, any "price redetermination" agreed upon by
Shell and Texas Gas under paragraph 4 would be evidenced by a
writing stating the determination. Surely the parties who used the
language "enter[ing] into
Page 363 U. S. 274
a contract" as they did in the preamble to their agreement would
not conceive of such a "price redetermination" as "enter[ing] into
a contract providing for the purchase . . . of gas." No more does
the similar periodic price adjustment under the Atlantic contract
partake of the nature of "enter[ing] into a contract providing for
the purchase . . . of gas" within the meaning of the language of
the Shell "favored nation" clause.
The Court of Appeals, in holding that the letter agreement came
within the intendment of "enter[ing] into a contract providing for
the purchase . . . of gas," stressed that Shell's objective was to
assure itself a "top price for its gas," and said that the facts
tended to show
"that the intention of the parties was for any higher price paid
by [Texas Gas] to another producer to trigger a rise on the Shell
contract to the same figure. . . ."
363 F.2d at 225. We think the contract demonstrates the
contrary, and we find the record barren of any other evidence which
would support this conclusion. Of course, we recognize that Shell
desired to protect itself during so extended a contract period by
provisions for price increases; and it did so. Indeed, in this
respect, the contract is a one-way street. Shell is guaranteed
automatic periodic step increases, and, in addition, during the
last 10 years of the contract term, at Shell's option, prices are
to be redetermined to reflect any higher prevailing market prices.
Then there is the "favored nation" clause -- also part of the
protection afforded Shell. Shell is entitled to the highest price
which any of these methods will yield. In contrast, there is no
provision allowing Texas Gas the possibility of a price
decrease.
Even assuming that the parties assigned paramount importance to
giving Shell the "top price," the "favored nation" clause, as
written, is not as broad as it might have been. Shell has made
other contracts with "favored nation" clauses which are triggered
by
every higher price
Page 363 U. S. 275
paid by the buyer to other producers. [
Footnote 10] In contrast, Shell concedes that this
"favored nation" clause would not be triggered by higher prices
paid by Texas Gas to other producers under preexisting contracts by
way of automatic increases or increases which are mathematically
determined. The most reasonable explanation for the inclusion of
the concededly more limited clause is that the parties meant to
distinguish between increases which Texas Gas was contractually
bound to pay under provisions of pre-1951 contracts and higher
prices which Texas Gas voluntarily assumed to pay after 1951. In
deciding which increases do and which to not trigger this "favored
nation" clause, we would be making an irrational distinction were
we to focus upon the mechanics chosen in the Atlantic contract and
conclude that the Shell clause was activated by a post-1951 price
determination under the Atlantic contract, although it would not
have been activated by price increases pursuant to a more
mathematically precise formula. In its essential respects, the
Atlantic price adjustment was no different from the latter,
Page 363 U. S. 276
for the Atlantic adjustment was required under a preexisting
contract, and Texas Gas was powerless to prevent it.
We therefore hold that the Court of Appeals erred in its
interpretation of the "favored nation" clause, and that the
Commission correctly construed it as not effecting an increase in
price by reason of the letter agreement.
There remains for mention an argument of Shell which the Court
of Appeals found unnecessary to consider because of the rationale
which it adopted. This is the contention that the 1943 Atlantic
agreement did not provide for a fixed and determined price beyond
the first five-year period, so that, under applicable state law,
enforceability was suspended until the contract price for a
particular succeeding five-year term was supplied by agreement or
arbitration. From this premise it is argued that, when the second
five-year period came to an end on August 31, 1953, neither
Atlantic nor Texas Gas was under any enforceable obligation to
continue the prior relationship, and therefore, when, on February
17, 1954, Texas Gas signed the letter agreement, it was not acting
pursuant to any preexisting obligation, but was exercising its free
choice to enter what was in effect a new contract. In its petition
for writ of certiorari, the Commission argued that not only was
there no doubt about the enforceability of the Atlantic contract,
but that the issue is immaterial, because the parties to that
contract treated the contract as binding, and that it is not for
Shell, a stranger to the contract, to say that it was not legally
enforceable. However, the Commission suggested that, should we
reverse the decision of the Court of Appeals, premised as it is
upon the assumption that the 1943 Atlantic contract imposed a
binding obligation for its entire stated term, and if we considered
the question of enforceability to be material, we should remand the
issue of enforceability to the Court of Appeals for its decision.
Shell has maintained
Page 363 U. S. 277
in this Court that the issue of enforceability is material, but,
in view of the Commission's statement, has argued neither that
issue nor the issue of enforceability. We agree that it is
appropriate that the Court of Appeals address itself to the
enforceability issue, if it is material, but, under the
circumstances, we think the Court of Appeals should first decide
the question of materiality. [
Footnote 11] We therefore reverse the judgment of the
Court of Appeals and remand for further proceedings consistent with
this opinion.
It is so ordered.
MR. JUSTICE BLACK concurs in the result.
* Together with No. 170,
Federal Power Commission v. Shell
Oil Co., also on certiorari to the same Court.
[
Footnote 1]
The
Phillips case held that the Commission had
jurisdiction over the independent producers, and the order in
question was Order No. 174-B, now incorporated in Regulations under
the Natural Gas Act, 18 CFR §§ 154.92-154.93.
[
Footnote 2]
The contract was actually between Shell and Louisiana Natural
Gas Corporation, a wholly owned subsidiary of the petitioner, Texas
Gas Transmission Corporation. The subsidiary was merged into its
parent in 1955.
[
Footnote 3]
The hearing was ordered after Shell filed on February 11, 1957,
an application for a rate increase from 12.5 cents per thousand
cubic feet (Mcf.) to 16.75 cents per Mcf. plus tax reimbursement.
This price increase has been suspended, and is pending before the
Commission in another proceeding. The Commission noted in its
opinion herein that it was "necessary, in connection with any rate
proceeding after suspension of increased rates . . . , that we know
the rate previously in effect. . . ." 18 F.P.C. 617, 618. Texas Gas
and its customer, the other petitioner in No. 167, Louisville Gas
and Electric Company, were permitted to intervene in these
proceedings.
[
Footnote 4]
Article VI, paragraph 1, provides in pertinent part:
"1. The prices to be paid by Buyer for gas hereunder shall be as
follows:"
"
* * * *"
"For all gas purchased from January 1, 1952, through December
31,"
"1956 . . . . . . . . . . . . 8.9970� per 1000 cu. ft."
[
Footnote 5]
Paragraph 3 of Article VI is as follows:
"If, at any time after December 31, 1951, Buyer shall enter into
a contract providing for the purchase by it of gas produced from a
field or fields located, and delivered to Buyer, within a radius of
fifth (50) miles of any point of delivery provided hereunder, Buyer
shall forthwith notify Seller of such fact, and if the price per
one thousand (1000) cubic feet at any time payable under such other
contract is higher than the price payable hereunder, each price
payable hereunder which is less than the price payable at the same
time under such other contract shall be immediately increased so
that it will equal the price payable under such other contract. In
determining whether the price payable under such other contract is
'higher' than the price payable for gas under this contract, due
consideration shall be given to the provisions of this contract as
compared with such other contract as to quality of gas, delivery
pressures, gathering and compressing arrangements, quantity,
provisions regarding measurement of gas, including deviation from
Boyle's Law, taxes payable on or in respect of gas delivered and
all other pertinent factors."
[
Footnote 6]
The pertinent provisions are in Article III of the 1943 Atlantic
contract reading as follows:
"The Buyer agrees to pay for the gas received hereunder a price
computed as follows:"
"
* * * *"
"(b) At the end of the first five-year period, Buyer and Seller
are to reach an agreement as to the price for gas sold and
delivered under this contract during the second five-year period.
The price to be paid during such second five-year period is to be
agreed upon at the beginning of such period after a survey of
prevailing prices for gas being sold in similar quantities in the
southwestern part of Louisiana."
"(c) During succeeding five-year periods, prices to be paid will
be determined at the beginning of each period in the same manner as
provided for in paragraph (b) above."
"(d) In the event that the parties are unable to agree upon the
price to be paid for gas after the first five-year period, in
accordance with the arrangements set forth in paragraphs (b) and
(c) above, such determination shall be submitted to arbitration in
accordance with Condition XII."
[
Footnote 7]
The Commission reached its conclusion as to the interpretation
of the "favored nation" clause without dissent. There was one
dissent, by Commissioner Connole, from an alternative ground of
decision, namely, that the effective rate on June 7, 1954, was
8.997 cents per Mcf. because that was the charge actually being
collected from Texas Gas. 18 F.P.C. 621. The Court of Appeals found
no merit in this ground, saying,
"What that rate was . . . depends upon the contract-established
provisions, rather than on the fortuity of rates which were being
actually paid on that date."
263 F.2d at 224. The Commission did not present this question
among the Questions Presented in its petition for certiorari, and
we intimate no view upon its merits.
[
Footnote 8]
For purposes of its decision, the Court of Appeals
"assumed without deciding that the Atlantic contract of 1943
did, in fact, impose a binding agreement to agree on the price for
gas in each of the contract's last four five-year periods."
263 F.2d at 226. We proceed on the same assumption in reviewing
the interpretation of the "favored nation" clause in the Shell
contract.
[
Footnote 9]
The pertinent text of the letter is as follows:
"Under date of September 1, 1943, Defense Plant Corporation, as
Buyer, entered into a gas purchase contract with The Atlantic
Refining Company, as Seller, for the purchase of gas produced from
Seller's leases in the North Tepetate pool of Acadia Parish,
Louisiana, which contract was subsequently amended February 16,
1949. Louisiana Natural Gas Corporation purchased the pipeline
operated by Defense Plant Corporation, and the aforesaid contract
with The Atlantic Refining Company was assigned to Louisiana
Natural Gas Corporation."
"In accordance with Paragraph III of said (1943) contract, it is
hereby agreed that the price to be paid by Louisiana Natural Gas
Corporation to The Atlantic Refining Company for gas sold and
delivered under such contract between September 1, 1953, and August
31, 1958, both inclusive, shall be 12.2 cents net for each 1,000
cubic feet at a pressure base of 15.025 psia of gas received at the
central point or points set forth in the original contract,
regardless of whether such gas is delivered to a government plant
or not; and, in addition, Buyer shall reimburse Seller for all
state severance taxes, or similar taxes, which Seller is obligated
to pay and has paid to the State of Louisiana on such gas."
[
Footnote 10]
For example the Commission's opinion on the order denying
rehearing, 19 F.P.C. at 77, states:
"For instance. in Shell's Gas Rate Schedule No. 4. it is
provided:"
" If at any time or times the price per Mcf of gas or dry gas
purchased by [the Buyer] from any gas producer whomever . . . shall
be greater than the price per Mcf of gas purchased hereunder, [the
Buyer] will increase the price per Mcf payable to [Shell] for gas
delivered hereunder. . . ."
"In Shell's Gas Rate Schedule No. 7, it is provided:"
" Buyer agrees that if, during the term of this agreement, it
purchases or agrees to purchase natural gas at any place within a
distance of twenty-five (25) miles of the delivery point under the
present contract, as a price or prices higher . . . than the prices
provided for by the present contract, . . . it will, upon seller's
request, thereafter pay to seller a price or prices under the
present agreement not less than the higher price so being
paid."
"There are numerous other examples included in the present
record."
[
Footnote 11]
We do not read the following statement of the Court of Appeals
as foreclosing the Commission's argument that the issue of
enforceability is not material:
"We have assumed without deciding that the Atlantic contract of
1943 did, in fact, impose a binding agreement to agree on the price
for gas in each of the contract's last four five-year periods.
Thus, it has not been necessary to determine the several questions
raised in connection with the arguments directed to that phase of
the case. Of course, if the Atlantic contract of 1943 was not a
binding agreement to agree, that circumstance alone would place the
February, 1954, Atlantic contract fully within the terms of the
escalation clause in the Shell contract."
263 F.2d at 226.