Carolina Cable Network v. Alert Cable TV, Inc.

• Decision Date: 07 June 1994
• Docket Number: No. 24117,24117
• Citation: 447 S.E.2d 199,316 S.C. 98
• Parties: CAROLINA CABLE NETWORK, a South Carolina General Partnership, Respondent, v. ALERT CABLE TV, INC. and Cablevision Industries Corporation of whom Alert Cable TV is, Appellant. . Heard
• Court: South Carolina Supreme Court

Page 199

447 S.E.2d 199

316 S.C. 98

CAROLINA CABLE NETWORK, a South Carolina General Partnership, Respondent, v. ALERT CABLE TV, INC. and Cablevision Industries Corporation of whom Alert Cable TV is, Appellant.

No. 24117.

Supreme Court of South Carolina.

Heard June 7, 1994.

Decided July 5, 1994.

Frank R. Ellerbe, III, of Robinson, McFadden & Moore, P.C., Columbia, for appellant.

Stephen P. Groves and Amy R. Jordan, both of Young, Clement, Rivers & Tisdale, Charleston, for respondent.

TOAL, Justice:

In this appeal, we review a jury award for damages stemming from a contract dispute between a cable advertising company and the cable system company it serviced with local cable advertising. We reverse.

FACTS

On July 12, 1985, Carolina Cable Network (hereinafter CCN) entered into a contract with Alert Cable TV, Inc. (hereinafter Alert), to provide local cable advertising and local origination cable programming to Alert's Dorchester County cable television system. This contract allowed CCN to control and establish advertising rates between CCN and its advertising customers, and required CCN to remit payments to Alert at a rate of twelve cents ($.12) per cable subscriber per month. The initial term of the contract was for one year and CCN retained the right to renew at the expiration of a year.

From July 12, 1985 until July 12, 1991, CCN provided local advertising for insertion on the cable system and paid Alert the agreed-upon monthly fees. Sometime in December 1988, CableVision Industries Corporation (hereinafter CVI), purchased Alert and continued to operate under the original CCN contract until March 4, 1991. In March, Alert/CVI sent CCN a proposed new agreement which included a price increase to reflect the current market rate rather than the original twelve cents ($.12) per subscriber per month as contained in the original agreement. CCN rejected this proposal.

On June 12, 1991, CCN advised Alert that CCN would exercise its renewal option under the contract for the upcoming year. Thereafter on June 18, 1991, Alert/CVI advised CCN that Alert intended to terminate the agreement effective July 12, 1991. Alert advised CCN that the reason for termination was the low rate per subscriber in the original contract which Alert found to be well below the current market rate.

After Alert's termination of the contract, CCN initiated this action against both Alert and its parent company, CVI, claiming breach of contract, unfair trade practices, and intentional interference with contractual relations. A jury trial was conducted from December 9 to December 11, 1992. At the conclusion of CCN's case, Alert and CVI moved for directed verdicts on each cause of action. These motions were granted except on the breach of contract claim, where Alert's motion for directed verdict was denied. The breach of contract claim against Alert was allowed to continue to the jury which returned a verdict in favor of CCN for forty thousand dollars ($40,000). It is from this jury award that Alert now appeals.

ISSUES

The issues raised on appeal are:

1. Whether the disputed contract granted CCN the unilateral perpetual right of renewal, and, if not, whether Alerts' actions to terminate the contract were reasonable as a matter of law; and,

2. Whether the jury's award of forty thousand dollars ($40,000) was supported by the evidence contained in the record.

LAW/ANALYSIS

Perpetual Right of Renewal

Alert asserts that as a matter of law, the contract cannot confer upon CCN a unilateral perpetual right of renewal. Alert argues that since there is by law no perpetual right of renewal, the contract was terminable at will, therefore, reasonable notice of termination was all that was required to relieve Alert from any contractual obligation.

Historically, perpetual contracts have not been favored in South Carolina and are generally upheld only where the perpetual nature of the agreement is an express term of the contract. See Childs v. City of Columbia, 87 S.C. 566, 70 S.E. 296 (1911). In Childs, the contract at issue was completely devoid of any term of duration and we were forced to interpret the contract absent any evidence of the parties' intentions. Id. The parties all seem to concede that Childs is the governing law, and CCN acknowledges in their complaint that the contract term between CCN and Alert did not provide for a specific duration.

In Childs, we held that:

[w]here the parties to a contract express no period for its duration, and no definite time can be implied from the nature of the contract or from the circumstances surrounding them, it would be unreasonable to impute to the parties an intention to make a contract binding themselves perpetually. In such a case the courts hold with practical unanimity that the only reasonable intention that can be imputed to the parties is that the contract may be terminated by either, on giving reasonable notice of his intention to the other.

Id. at 572, 70 S.E. at 298. Here, as in Childs, the fatal defect of the complaint is that it alleges a contract term lacking specific duration. The original 1985 contract provides in relevant part that:

9) [The] period covered by this agreement is one year with the right of renewal by Carolina Cable Network at its expiration.

10) Alert, Inc. reserves the right to cancel this agreement with fifteen days notice under the following conditions:

a) Payment has not been made to Alert for use of its system within 60 days from the date of the original invoice.

b) Carolina Cable Network through its operation misuses either the equipment or office space made available by Alert.

Alert argues that this seemingly perpetual right of renewal is sufficient to make the terms of the agreement ambiguous and, therefore, terminable at will. This assertion is correct. Plainly, the contract attempts to confer on CCN the indefinite right of renewal, and in light of the clear precedent of Childs, supra, this contract can only be construed as terminable at will. Where the contract is terminable at will, reasonable notice from either party is all that is required to terminate the agreement. Childs, supra.

Reasonable Notice

Since either party can terminate this agreement upon reasonable notice, the relevant question becomes: Whether Alert's overall actions in terminating the agreement were as a matter of law reasonable.

The rules of construction governing contract in this case are analogous to those governing distributor contracts which have been the subject of extensive litigation in South Carolina. In distributor contracts, the overall reasonableness of terminating an agreement is often analyzed in the context of a wrongful termination action; however, the question of what business actions are reasonable should be consistent regardless of whether the action is at common law contract or wrongful termination of a distributorship.

A summary of South Carolina law on the question of reasonableness was recently provided by the Fourth Circuit Court of Appeals in Richland Wholesale Liquors v. Glenmore Distilleries, 818 F.2d 312 (4th Cir.1987). In Richland, the Fourth Circuit noted that:

[C]ourts applying South Carolina law have found wrongful termination only in extraordinary circumstances. Cf. Philadelphia Storage...