Indiana-Kentucky Elec. Corp. v. Green

• Decision Date: 01 April 1985
• Docket Number: INDIANA-KENTUCKY,No. 1-1183A364,1-1183A364
• Citation: 476 N.E.2d 141
• Parties: ELECTRIC CORPORATION, Appellant (Plaintiff Below), v. Robert E. GREEN and Green Construction of Indiana, Inc., Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 141

476 N.E.2d 141

INDIANA-KENTUCKY ELECTRIC CORPORATION, Appellant (Plaintiff Below), v. Robert E. GREEN and Green Construction of Indiana, Inc.,

Appellees (Defendants Below).

No. 1-1183A364.

Court of Appeals of Indiana,

First District.

April 1, 1985.

Karl J. Stipher, Lewis D. Beckwith, Baker & Daniels, Indianapolis, Rabb Emison, Robert P. Doolittle, Emison, Emison, Doolittle & Kolb, Vincennes, for appellant.

Curtis V. Kimmell, L. Edward Cummings, Kimmell, Funk & Cummings, Vincennes, Richard McMillan, Jr., Paul W. Reidi, Crowell & Moring, Washington, D.C., for appellees.

ROBERTSON, Judge.

The plaintiff-appellant Indiana-Kentucky Electric Corporation (IKEC) operates an electrical generating facility located in Madison, Indiana. In 1954, the defendant-appellee Green Construction of Indiana, Inc. (GCI), owned by defendant-appellee Robert E. Green (Green), then doing business as Green Coal Company, entered into a long-term Coal Supply Agreement with IKEC. In 1973, Green and GCI ceased selling coal to IKEC which precipitated litigation with IKEC filing suit seeking specific performance with the cause coming to trial in late July and early August, 1975, however, during the trial the parties entered into negotiations and subsequently, a settlement agreement. Among other things, the final version of the written settlement agreement contained Article 2.6 which reads in pertinent part:

It is agreed that each party shall have the right to discontinue deliveries or receipts of coal if, for any reason, it is impossible or not practicable for either party to utilize or deliver the coal, upon the giving of at least twelve (12) month's notice to the other party.

One month after signing the 1975 Coal Settlement Agreement, GCI gave notice of its intent to terminate delivery of coal in twelve months. IKEC again commenced litigation seeking damages for anticipatory repudiation of the 1975 Settlement Agreement. The course of the proceedings was complicated and included action in this court as well as the supreme court and the death of the original trial judge. Suffice it to say that this cause eventually came on for a bench trial on the issues of liability and damages. The essence of the judgment was that Green and GCI were within their rights to cease delivery of coal after giving the twelve month notice and that IKEC was not entitled to damages.

Prior to a discussion of the issues on the merits, our standard of review should be mentioned. On appeal, the burden of showing reversible error is upon the appellant and all reasonable presumptions are indulged in favor of rulings and the judgment of the trial court. The record must reveal the error assigned as basis for reversal. Raymundo v. Hammond Clinic Ass'n., (1983) Ind., 449 N.E.2d 276. When a judgment is attacked as being contrary to law, this court neither considers the credibility of the witnesses nor weighs the evidence, instead, we look solely to the evidence most favorable to the judgment, together with all reasonable inferences therefrom, and it is only when this evidence is without conflict and leads to but one conclusion and the trial court reaches a contrary conclusion, will we reverse a decision for being contrary to law. Litzelswope v. Mitchell, (1983) Ind.App., 451 N.E.2d 366. In reviewing for sufficiency of the evidence, we will not weigh the evidence or resolve questions of credibility, however, we will look to the evidence which supports the verdict. Lloyds of London v. Lock, (1983) Ind.App., 454 N.E.2d 81. In cases tried to the court, the findings and judgment of the trial court will not be set aside unless they are clearly erroneous, i.e., where there are no facts or inferences to be drawn therefrom which support the findings. (Our emphasis). Kimbrell v. City of Lafayette, (1983) Ind.App., 454 N.E.2d 73.

The Court of Appeals presumes the trial court correctly applied the law. Matter of VMS, (1983) Ind.App., 446 N.E.2d 632. We also observe that IKEC is appealing from a negative judgment. In determining whether a negative judgment is contrary to law, the court will neither weigh the evidence nor judge the credibility of the witnesses and we will only consider the evidence favorable to the prevailing party together with all reasonable inferences flowing therefrom. Young v. Van Zandt, (1983) Ind.App., 449 N.E.2d 300. An insufficiency of the evidence presents no issue on review of a negative judgment. Rogers v. Rogers, (1982) Ind.App., 437 N.E.2d 92. These various standards should be recalled in the subsequent discussion on the merits because it appears to some extent that IKEC's argument would have us re-evaluate or reject the facts as found by the trial court.

A synopsis of facts favorable to the judgment and relating to the history of the Settlement Agreement, as gleaned from the trial court's findings, shows that on Thursday, July 31, 1975, while the original trial was being held, a meeting occurred between Green and Dunlevy, an officer of IKEC. An agreement was reached which provided, among other things, that Green would deliver to IKEC 2,000,000 tons of coal over a five-year period at a rate of 400,000 tons per year. IKEC would pay Green his mine costs plus 20% profit, up to a maximum of $10.00 per ton for the first million tons and $11.00 per ton for the second million tons. Dunlevy sought and secured company approval of the proposed settlement. IKEC lawyers prepared a draft copy of the agreement which was given to Green's lawyers the next morning, Friday, August 1, 1975. Green was not present at the meeting and did not see the draft copy. Article 2.6 was included in the original draft and read:

It is agreed that IKEC shall have the right to discontinue deliveries of coal by Seller, if, for any reason, legislative, administrative or judicial action by any governmental authority, including, but not restricted to action to enforce environmental regulations makes it impossible or impracticable for Buyer to utilize the coal.

The purpose of this provision was to protect IKEC in the event governmental restrictions prevented the use of Green's coal, however, Green's lawyers found the provision unacceptable because it was one-sided. IKEC's lawyers redrafted the provision so that either party could terminate in the event governmental restrictions prevented mining or use of the coal. At a meeting on Friday night, Green still rejected Article 2.6. He told Dunlevy that no agreement would be signed unless it was cancellable for any business reason including economic feasibility. Dunlevy replied that such an arrangement could suddenly leave IKEC without a coal supply. Green suggested a twelve month notice of cancellation. Dunlevy observed that would make it a one-year contract to which Green agreed as to coal delivery, but that the remainder of the agreement relating to Green's obligations on the 1954 contract would be over five years. During the three-hour meeting, Green was adamant regarding termination. At the conclusion of the meeting, Dunlevy believed that in order for the agreement to be acceptable to Green, it would have to permit Green to cancel for any reason. The next morning, Dunlevy called his lawyer (Emison) and instructed him to contact Green's lawyer (Kimmel) and have Kimmel prepare a version of Article 2.6 which Green would find acceptable and sign. That version of Article 2.6, as heretofore quoted, appeared in the final Settlement Agreement. When Dunlevy signed the agreement, he noted that the language relating to governmental restrictions had been deleted, that "not practicable" had been substituted for "impracticable", and that the twelve month cancellation provision had been added. Without further discussion with Green, Dunlevy signed the Settlement Agreement on the same day.

IKEC's first issue states that the trial court erred when it determined that Article 2.6 of the 1975 Settlement Agreement is ambiguous. The trial court's finding reads:

Article 2.6 of the Settlement Agreement is ambiguous and the intent of the parties in using the ambiguous language cannot be determined from the four corners of the Settlement Agreement. Extrinsic evidence must, therefore, be used to determine the intent of the parties.

In ruling from the bench about ambiguity, the trial judge indicated that there had to be a reason to add the modifying words "for any reason" to the phrase "impossible or not practicable".

The essence of IKEC's argument on this issue is that the phrase "impossible or not practicable" incorporates the impracticability standard of U.C.C. Sec. 2-615 ¹ (I.C. 26-1-2-615) and that the phrase "for any reason" eliminates the requirements other than impracticability as used in U.C.C. Sec. 2-615.

Green argues that there are at least four reasons why the trial judge was correct. When the ruling is construed with the remainder of the 1975 Settlement Agreement, the background facts and common sense, the term "not practicable" is to be given its ordinary meaning, not the U.C.C. meaning of "impracticable" with the result that Green could terminate delivery, with timely notice, for any business reason including "commercial impracticability". Also, there is no indication that the parties intended Article 2.6 to be more onerous than Sec. 2-615 which is what IKEC's position suggests in that both parties are required to perform for twelve months after it became commercially impracticable. Next, the Settlement Agreement does not define "impossible or not practicable" which is a different term than used in Sec. 2-615. And last, an ambiguity exists between the force majeure provision ² and Article 2.6 relating to the excusing or termination of coal delivery.

The springboard in resolving this issue was summarized by Judge Lybrook in Bd. of Dir., Ben Davis, Etc. v. Cloverleaf Farms, Inc., (1977) 171 Ind.App. 682, 359 N.E.2d 546:

In construing a contract, several maxims should be kept in mind. First, the instrument should be construed as a whole,...