ANCO TV Cable Co., Inc. v. Vista Communications Ltd. Partnership I

• Decision Date: 17 December 1993
• Citation: 631 So.2d 860
• Parties: ANCO TV CABLE COMPANY, INC. v. VISTA COMMUNICATIONS LIMITED PARTNERSHIP I and Vista Communications, Inc. Granberry Holland WARD III v. VISTA COMMUNICATIONS LIMITED PARTNERSHIP I and Vista Communications, Inc. 1920982, 1920986.
• Court: Alabama Supreme Court

Page 860

631 So.2d 860

ANCO TV CABLE COMPANY, INC. v. VISTA COMMUNICATIONS LIMITED PARTNERSHIP I and Vista Communications, Inc.

Granberry Holland WARD III v. VISTA COMMUNICATIONS LIMITED PARTNERSHIP I and Vista Communications, Inc.

1920982, 1920986.

Supreme Court of Alabama.

Dec. 17, 1993.

Wm. Allen Smyly, Jr. of Bradley, Arant, Rose & White, Birmingham, for appellant.

W. Joseph McCorkle, Jr. and Lois S. Woodward of Balch & Bingham, Montgomery and J. Lee McPhearson of Utsey, McPhearson & Christopher, Butler, for appellee.

HORNSBY, Chief Justice.

The plaintiffs in two separate actions, ANCO TV Cable Company, Inc. ("ANCO"), and Granberry Ward, appeal from a summary judgment in favor of the defendants, Vista Communications Limited Partnership I and Vista Communications, Inc. (both hereinafter referred to as "Vista"), in an action to accelerate and recover on a promissory notes. We affirm.

In 1988, Vista acquired a television cable system from ANCO and Skyline TV Cable Company, Inc. ("Skyline"). To finance this venture, Vista executed notes dated September 9, 1988, to Fleet National Bank ("Fleet") in the principal amount of $3,500,000 and to Alta Subordinated Debt Partners LP I and Alta Subordinated Debt Partners LP II (Alta groups are hereinafter referred to as "Alta") in the aggregate principal amount of $1,300,000. On this same date, Vista executed three purchase money promissory notes, one to ANCO in the principal amount of $500,000 and two to Skyline in the principal amounts of $172,920 and $350,000. Skyline assigned its notes to Granberry Ward on December 29, 1988. Contemporaneously with the execution of the notes, ANCO and Skyline entered into essentially identical "Intercreditor and Subordination Contracts" with Vista for the benefit of Fleet and Alta. In each contract, Vista and the respective purchase money lender agreed that its note(s) would be subordinate to those of Fleet and Alta (the "Senior Lenders"). On September 10, 1990, Vista defaulted on the Fleet and Alta loans. Later, on December 18, 1990, Vista defaulted on ANCO's and Skyline's notes.

Following the defaults, ANCO, for itself, and Ward, as assignee of Skyline, brought separate actions on December 20, 1990, to recover under the notes. The two actions proceeded through the court together. The court found that the senior notes were outstanding and unaccelerated, and, thus, that according to the subordinated notes and "Subordination Contracts," ANCO and Ward were prohibited from bringing these actions. The trial court entered a summary judgment for Vista against ANCO, appealed in case number 1920982, and for Vista against Ward, appealed in case number 1920986. In both appeals, the issue is whether the trial court correctly entered the summary judgment based on its interpretation of the subordinated notes and Subordination Contracts.

"In reviewing the disposition of a motion for summary judgment, we utilize the same standard as the trial court in determining whether the evidence before [it] made out a genuine issue of material fact" and whether the movant was "entitled to a judgment as a matter of law." Bussey v. John Deere Co., 531 So.2d 860, 862 (Ala.1988); Rule 56(c), A.R.Civ.P. When the movant makes a prima facie showing that there is no genuine issue of material fact, the burden shifts to the nonmovant to present substantial evidence creating such an issue. Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Evidence is "substantial" if it is of "such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990).

In its motion for summary judgment, Vista contended that the subordinated nature of the notes owed to ANCO and Ward prevented any payment to ANCO and Ward so long as the senior notes remained outstanding and unaccelerated. To support its contention, Vista referenced Section 3(c) of the subordinated notes:

"No payment on account of the principal of or interest on this Note shall be made if, at the time of such payment or immediately after giving effect thereto, there shall exist a default or an event of default with respect to any Senior Indebtedness or in the instrument or instruments under which the same is outstanding, permitting the holder or holders thereof (or any representative on behalf of such holder or holders) to accelerate the maturity thereof, unless and until such default shall have been cured or waived; provided, however that if a default or event of default shall have occurred and if the holders of the Senior Indebtedness shall have not accelerated the payment of the Senior Indebtedness within 360 days after the occurrence of such default or event of default, then, subject to the other provisions of this Note, after the expiration of such 360 day period and until such acceleration occurs (or if during such 360 day period the default or event of default is cured or is waived by the holders of the Senior Indebtedness, then after the time of such cure or waiver), the registered holders of this Note may, from time to time receive payments in respect of principal of and interest on this Note, including any accrued interest which was not paid as a result of or during such 360 day period, except that if such default or event of default is waived by the holders of the Senior Indebtedness or is cured and any other default or event of default occurs or shall have occurred, then no payment shall be permitted under the foregoing provisions of this sentence until the expiration of 360 days after such other default or event of default (or until the cure thereof or waiver thereof by the holders of the Senior Indebtedness if such cure or waiver occurs during such 360 day period)."

(Emphasis added.)

Moreover, Section 3 of the Subordination Contracts substantiates the same default payment scheme as the subordinated notes. It states:

"Limit on Right of Action. The Subordinated Lender, for itself and its successors and assigns, agrees for the benefit of the holder or holders of the Senior Indebtedness that so long as the Senior Indebtedness remains outstanding, the Subordinated Lender will not take any action to accelerate the payment of the Subordinated Indebtedness or to foreclose, execute upon, or otherwise realize on any security given by the Borrower to secure the Subordinated Indebtedness or any judgment obtained with respect to the Subordinated Indebtedness prior to the acceleration of the Senior Indebtedness by the holder thereof; provided, however, upon prior written notice to you, the Subordinated Lender may exercise the remedies available to it under, and as limited by the provisions of, Section 3(c) of the Note Subordination Provisions."

The provisions in both documents establish the conditions under which payments of the subordinated notes may be made if a default under the senior indebtedness has occurred and is continuing. In construing contracts, the court must give effect to the intention of the parties. World's Exposition Shows, Inc. v. B.P.O. Elks, No. 148,...