533 So.2d 567 (Ala. 1988), 86-852, Thermal Systems of Alabama, Inc. v. Sigafoose

Docket Nº:86-852.
Citation:533 So.2d 567
Opinion Judge:MADDOX, Justice.
Party Name:THERMAL SYSTEMS OF ALABAMA, INC., et al. v. J. Boyd SIGAFOOSE, et al.
Attorney:George L. Simons, Mobile, for appellants. Joseph J. Boswell, Mobile, for appellee Thermal Conducting Systems, et al. Norton Brooker, Jr., of Lyons, Pipes & Cook, Mobile, for appellees.
Case Date:September 16, 1988
Court:Supreme Court of Alabama
 
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Page 567

533 So.2d 567 (Ala. 1988)

THERMAL SYSTEMS OF ALABAMA, INC., et al.

v.

J. Boyd SIGAFOOSE, et al.

86-852.

Supreme Court of Alabama.

September 16, 1988

Page 568

George L. Simons, Mobile, for appellants.

Joseph J. Boswell, Mobile, for appellee Thermal Conducting Systems, et al.

Norton Brooker, Jr., of Lyons, Pipes & Cook, Mobile, for appellees.

MADDOX, Justice.

This appeal involves the validity of agreements made by the owner of a patent for a heat exchanger with individuals who agreed to distribute and sell the product.

The plaintiffs (Thermal Systems of Alabama, Team Energy Management Consults, and W. Frank Todd) based their action upon theories of breach of contract, interference with business or contractual relations, and unfair competition. The trial judge held that the contracts upon which plaintiffs sued were unenforceable because of uncertainty or lack of mutuality of obligation. Based solely upon this holding, the trial judge granted summary judgment in favor of the defendants (J. Boyd Sigafoose, Thermo Conducting Systems, Don A. Druse, and Donn Kaufman) on all of the plaintiffs' claims.

Plaintiffs raise two issues on appeal: whether the trial judge erred (1) in holding the contracts invalid, and (2) in concluding that the invalidity of the contracts precluded plaintiffs' claims for interference with business or contractual relations.

FACTS

Boyd Sigafoose owned Thermo Conducting Systems, Inc. ("Thermo Conducting"), which manufactured and sold a heat exchanger called a "Go-Between." Sigafoose designed this heat exchanger for the purpose of reducing the costs of heating water. A Go-Between, when installed between a refrigeration or air conditioning unit and a water heater, utilizes the hot freon from the refrigeration or air conditioning unit to heat the water in the heater. Sigafoose designed the Go-Between so that the hot freon and the water never come into direct contact. Sigafoose received letters patent on the Go-Between, issued June 7, 1983, for the term of 17 years. The Go-Between was the sole product manufactured by Thermo Conducting.

Beginning in 1982, Sigafoose began to grant distributorships for the purpose of marketing and selling the Go-Between, and the plaintiffs operated the distributors of the Go-Between.

Although the facts are disputed, we set out a summary of the facts and the claims of the parties, as we understand them.

I

On June 30, 1983, Thermo Conducting entered into a written contract with plaintiff Thermal Systems of Alabama, Inc. ("Thermal"). Under the contract, Thermal became the exclusive distributor for the Go-Between product within a certain defined territory in Alabama. The contract set up an arrangement, expressly referred to as a "franchise," whereby Thermal had the right to purchase Go-Betweens from Thermo Conducting for the purpose of resale to "commercial accounts." The contract specifically stated that Thermal was not an agent of Thermo Conducting and was not authorized to transact any business in Thermo Conducting's name. The contract stated that Thermo Conducting was "relying upon [Thermal] for satisfactory representation of Manufacturer's Products in sufficient volume, properly servicing such products, and maintaining the good will of the public." The contract refers to Thermo Conducting as "Thermo Conducting" and as "Manufacturer." The contract refers to Thermal as "Dealer."

Page 569

According to the contract, title to the Go-Betweens would pass to Thermal upon purchase. Thermal would provide a "Manufacturer's Warranty" to each of its subsequent retail purchasers, and Thermal would obligate itself to perform the requirements of the warranty.

In the contract, Thermo Conducting expressly disclaimed liability for failures or delays in filling any orders of Thermal when those failures or delays were due to certain prescribed events, "or any causes beyond the control" of Thermo Conducting.

The contract was silent concerning its duration. However, the contract did state that Thermal (dealer) could terminate the contract at any time by giving 30 days' written notice. The contract also provided that Thermo Conducting could terminate the contract in the event of certain prescribed contingencies.

On December 7, 1983, Thermo Conducting entered into another contract with Thermal, identical to the June 30, 1983, contract, in which it granted Thermal an exclusive distributorship for a certain defined territory in Florida.

On November 28, 1984, Thermo Conducting and Thermal amended the two contracts then existing to extend Thermal's exclusive distributorship territory to cover the entire states of Alabama and Florida. The president of Thermal stated that two of the major reasons he contracted with Sigafoose were (1) his knowledge that the Go-Between was...

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