Flagg-Utica Corp. v. City of Florence

• Decision Date: 09 May 1963
• Docket Number: FLAGG-UTICA,8 Div. 74
• Citation: 275 Ala. 475,156 So.2d 338
• Parties: CORPORATION v. CITY OF FLORENCE.
• Court: Alabama Supreme Court

Page 338

156 So.2d 338

275 Ala. 475

FLAGG-UTICA CORPORATION v. CITY OF FLORENCE.

8 Div. 74.

Supreme Court of Alabama.

May 9, 1963.

Rehearing Denied Sept. 26, 1963.

Mitchell, Poellnitz & Cox, Florence, for appellant.

Dumas, O'Neal & Hayes, Birmingham, and Arnold Teks, Florence, for appellee.

PER CURIAM.

Defendant below appeals here to review a general judgment rendered against it in the circuit court of Lauderdale County in the sum of $5,789.11 by the trial judge without the aid of a jury.

The suit has its genesis in a written contract whereby the appellee, which for convenience we will at times call the City, agreed to sell and the appellant, which we will often refer to as Flagg, agreed to buy natural gas at rates set forth in the contract.

The contract, admittedly signed by both parties on May 16, 1955, and made effective July 1 of the same year, contains three pivotal paragraphs that are important factors in the determination of his case. We will later copy and advert to these provisions.

It appears from the evidence that the contract was draw by a firm of attorneys who at the time were retained in a professional capacity by both signatories and their services in drafting the contract were mutually acceptable. Both contracting parties submitted to these attorneys such information as they thought necessary to be incorporated in the contract.

Neither side can successfully assert that the contract was solely the product of the other, to the end that one party alone can be charged with responsibility of authorship so as to fasten on it applicable provisions of law.

Section 3 of the contract reads as follows:

'3. TERM OF THE CONTRACT.

'This contract shall be effective as of the date of initial delivery as provided in paragraph 2 above (July 1, 1954), and shall continue in effect one (1) year; provided however that all obligations of the parties hereto with regard to the rendition of service and payment therefor and to the computation of payment periods hereinafter referred to shall commence from the date of initial delivery as defined in Section 2 hereof. Said contract shall continued from month to month after the term provided above unless either party shall give the other 90 days notice in writing prior to any anniversary of the date of termination of the contract, of its intention to terminate said contract.'

Section 6(a)(b) is as follows:

'6. The Corporation shall purchase and pay for gas furnished by Municipality according to the following schedule of rates:

* * *

* * *

'(a) Under this Industrial Rate, Interruptible Gas, Schedule I-1, the Corporation agrees to permit their gas service to be curtailed to zero at any time at the discretion of the Municipality, within a period of time not to exceed two (2) hours after said Corporation has been notified that it is necessary that their gas service be curtailed to zero.

'(b) This schedule of rates is based on the present Natural Gas Tariff of the Alabama-Tennessee Natural Gas Company, the supplier of the Municipality, and approved by the Federal Power Commission, Washington, D. D., and any change in such Tariff will be reflected in this contract in the same amount by which the City's Commodity Charge is increased or decreased. These rates do not and will not include a demand charge.'

The complaint contains three counts, to each of which defendant directed a demurrer with multiple grounds When the court overruled the demurrers the defendant filed special pleas that attempted to assert the Statute of Frauds of Alabama as a defense. Demurrers of plaintiff to these special pleas were sustained. The trial was had on three pleas:

(1) Want of consideration for the agreement sued on.

(2) Failure of consideration for the agreement sued on.

(3) General issue.

It appears briefly from all three counts of the complaint that the City and Flagg entered into a contract (copy of which is attached haec verba to the complaint as an exhibit) providing for the sale by the City to Flagg from its natural gas distribution system for the distribution and sale of natural gas within the corporate limits of Florence and adjacent area. The service to be provided was on an interruptible basis, thus insuring cheaper rates than on a firm or non-interruptible plan. Flagg had two industrial plants or locations to be served. One was its main plant on Lee Highway and the other a satellite plant situated on Sweetwater Avenue.

It is further alleged that from time to time, during and after the first effective year of the contract, City notified Flagg that pursuant to paragraph 6(a), supra, that it was necessary for Flagg's gas service at both plaints to be curtailed to zero, and that Flagg, pursuant to said notices, from time to time did shut off the gas or closed the valves on its premises so as to reduce the gas service to zero. It was further averred that neither had elected to terminate the contract in accordance with its provisions after notice. The City contends in its suit the contract continued in full force and effect pending the alleged failure to curtail the gas.

Count three of the complaint contains paragraph 3 as follows:

'The course of conduct by plaintiff in giving curtailment notices and by defendant in complying with such notices by closing the valves located in its two aforesaid plants and so shutting off the flow of gas from plaintiff's distribution system to plaintiff's two said plants constituted an agreement or understanding or interpretation by the parties to the Gas Contract that this was the method of curtailment provided by paragraph 6(a) of the Gas Contract and obligated defendant to comply with curtailment notices received from plaintiff by curtailing the flow of gas by closing the valves in its two aforesaid plants.'

The City further contends by allegations in its complaint that on January 4, 1959, it gave defendant notice that gas service would have to be curtailed to zero for a period of not more than two hours, to-wit, not later than 3:30 P.M. on January 4, at both of defendant's plants. The complaint further avers that notwithstanding said notice defendant violated its obligation to the plaintiff and without any notice to plaintiff failed to close its valves controlling the flow of gas from plaintiff's distribution system to defendant's main plant or otherwise to curtail the said flow of gas and continued to use the same until 8:00 A.M. on January 5, 1959, consuming during said time 173,900 cubic feet of gas at its said main plant.

The City avers that as a proximate consequence of defendant's improper failure to close the valves or otherwise curtail the flow of gas during said period of time, plaintiff was required, by the terms of said tariff, to pay and did pay an excess demand charge for gas which plaintiff did not need or use for period of twelve months following January 5, 1959, pursuant to tariff imposition. It is alleged that said tariff imposes on plaintiff a demand charge based upon the maximum quantity of gas taken on any one day by plaintiff from its supplier and that this demand charge continues for one year after such gas is taken.

The trial court heard evidence at length as to the contractual responsibilities of the parties in shutting off the gas so as to reduce consumption to zero. The contention of appellant below, and here, is that the words, 'the Corporation agrees to permit their gas service to be curtailed to zero at any time at the discretion of the Municipality' clearly and unambiguously imposed on the City the duty and responsibility to do the curtailing by shutting the valves. The City contends that the words are ambiguous and uncertain.

The trial judge did not write an opinion when it rendered judgment in favor of the City against Flagg, but from his rulings on the evidence over the objections of defendant, we are of the opinion that he considered the words were indefinite and ambiguous in their placement of responsibility and duty to curtail the flow of gas. We concur in the trial judge's conclusion and state that evidence was admissible to show that Flagg assumed that responsibility.

Before we proceed further with this opinion, we think it is appropriate at this time to say that the contract, in our opinion, is continuing in its effect until notice is given by either party thereto of a desire to terminate.

As we have already pointed out, the contract recites the effective date as of the date of initial delivery, which under section 2, was fixed at July 1, 1954, and shall continue in effect for one year. Then next following, the agreement provides that it shall continue from month to month after the term provided (one year) unless either party shall give the other 90 days' notice in writing prior to any anniversary of the date of termination of the contract, of its intention to terminate the contract.

This contract continuing in full force and effect without any action to renew on the part of either party, and expressing considerations (the furnishing of gas service under named conditions and payment therefor), and also being in writing, we cannot see where its legal efficacy is in any wise jeopardized or affected by our Statute of Frauds, or its validity impaired by want or failure of consideration as appellant contends by appropriate pleading.

The provision in the contract that it continue from one year from July 1, 1954, the date of initial delivery fixed by the agreement, was inserted in our opinion to establish an...