1 Jo hn T. Boy d, Chief Justice (Ret.), S eventh Cour t of Appeals, sit

ting by assignment. Tex. Gov’ t Code Ann. § 75.002( a)(1) (Vernon Supp. 2002). NO. 07-02-0015-CV IN THE COUR

T OF APPEALS FOR THE SEVEN TH DISTRICT OF TEXAS

AT AMARILLO PANEL E DECEMBER 2, 2002

______________________________ BETTY FROST MCALEER, APPEL LANT

V. EASTMAN KODAK COMPANY AND EASTMAN CHEM ICAL COMPAN Y, APPELLEES

_________________________________ FROM THE 359 TH DISTRIC T COURT O F MONTGOM ERY COUNTY; NO. 97-12-04730- CV; HONOR ABLE JIM KEESH AN, JUDGE

_______________________________ Before QUINN and REAVIS, JJ., an d BOYD, SJ. 1 Appellant

Betty Fr

ost McAlee r appeals from a summary j udgment in favor of ap pellees Eastman Kodak Company (Kodak) and E astman Chemical Company (Chemical ) in her laws uit seeking declaratory judgment w ith respect to what she alleges is a license2

agreement

and damages for tr

espass. The agr

eement granted theright to Kodak to lay and operate a pipeline acro ss certain real property in MontgomeryCounty ow ned by the predecessors -in-inter

est to appellant. The di spute between the partiesarose as a result of the creation b y Kodak of a new corpora tion, Ch emical, and the ability ofKodak to assign those rights to Chemical or the right of Chemical to succeed to the rig hts of Kodak under the agreement. Appe llant clai med that no such r ight exi sted and that theagre eme nt terminated as a result of Kodak’s purpor ted assignment. Kodak asserted a counterclaim for declaratory judgment. The tria l court d enied summary judgment to appel lant and granted summary

judgment in favor of appellees aw arding them at

torney’s fees. Appellant

claims the trial court erred in ig noring the terms of the license a greement, which were cl ear and unambiguou s and in refusing to apply th e law as i t existed when the license agreement was executed. The p ertinent lang uage of the agr eement over

which the parties disagree is as follows:
The permission herein gr anted is person al to Second Party, and may not be assigned or convey

ed. If Second Party

shall be merg ed or be consol idated with or into another

corporation or if another corporation sha ll acqui re all or substantially all of the proper ty of Second Party, th e resulting or succeedin g corporation shall succeed to this permit and shall be personally liable to First Party, thei r successor

s and assig ns, for the performance of the obligatio ns hereof which subsequently accrue. The agreement also provided th at it could be terminated at th e option of the f irst party in the event of default by

the second party . The origi nal 1961 licens e or easemen t was in favor of “Eastman Koda k Company, a New Jersey co rporation o f which Texas Eastman Company

is a div ision.” In 1988, an a me ndment to the agr eement was ex

ecuted by3

appellant

in favor of “ Texas Eastman Company, a di vision of E astm an Ko dak C omp any” to permit the lay ing of a second pi peline. Then, in December 1993, Kodak mailed a letter to ap pellant notify ing her: “ Kodak intends to divest i tself of substantial ly all of the asset s of its Eastman Chemic al Company di vision t hrough a stoc k spin-off that w ill occur on or aboutJanuary 1, 1994 (the ‘Spin-off ’). The Spin-off will result in Kodak’s Eastman Chemical Company div ision becoming a separate and independent corporation chartered under the law

s of the state of Delaware (‘Eastman Chemi cal Company’ ).” As par t of the transaction, Kodak intended to assign all of its rights a nd obligatio ns under the ag reement with appellant to C hemical. Alth ough appellant refused to consent, the assignment subsequently

occurred.
The standards appl icable to rev iew of a trad itional motion for summary judgment are
so well es tablished as to make their r eiteration unnecessary. See Nixon v. Mr. Proper ty Management

Co., Inc., 690 S.W.2d 546, 548-49 (Tex. 1985). When the trial court fails to spec ify the grounds upon which summary judgment was granted, as in this case, we must affirm it i f any

of the gr ounds stated in t he motion are meri torious. Carr v. Br asher, 776 S.W.2d 567, 569 (Tex. 1989). Appellee s sought summary judgment on the basis that the agreement

was tran sferred by ope ration of law , the law does not favor for feiture and, alte rnat ively, the assignment from Ko dak to Chemical specifica llyexcluded any agreements which by their terms would become void or voidable if assigned, which could notbe transferred without consent of other part ies whose cons ent had not been secur ed, or whic h could not law

fully be conveyed.4

In her first i ssue, a ppellant clai ms the trial court erred in ignori ng the terms of the agreement

which were unambiguous. Those terms, she a sserts, spec ifically provide t hat the agreement may be assigned only in the event Kodak merged w ith or was consolidated with another corpor

ation, i.e. , one company combining with another, and do not apply in the event that one company is s plit into tw o companies by

a spin-off acti on . Appellant posits that the meaning of the words us ed should be gi ven their common one and the court should upho ld the int ent of the parties to th e original agreement as expressed in those words.
In her second is sue, she complai ns that the tri al court erre d in refusing to apply the law as it exi sted at the time t he agreement w as executed. The gist of this complai nt is that, while the current provisions of the Texas Busi ness Corp oration Act s pecifically define “merger” to include the divisi on of a corporatio n into two or mor e n ew corpor

ations, that statute applies only

to domestic corporations, meani ng Texascorporations , which K odak is not, and it cons titutes an ex post facto law

that the parti es did n ot co ntemplate when executing the agreement. Because ap pellees argue appellant’s two issu es tog ether in their response, we will likewi se discuss t hem together.
Wheth er a contract is ambiguou s is a ques tion of law t hat must be decided by examining the contract as a whol e in light of circumstances

present w hen the contract w as entered. Columbi

a Gas Transm ission Cor

p. v. New Ulm

Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996 ). A

cont rac t isambi guo us i f itsmean ing is u ncer tain and d oubt

fu l or if it i s reasonably susceptible to more than one meaning. Coker v. Coker , 650 S.W.2d 391, 393-5

94 (Tex. 19 83). However, confli cting inte rpretations of a contract and unc lear and uncertain language do

not necessari ly mean a cont ract is ambi guous. Cook Composites, Inc. v. Westlake Styr

ene Corp., 15 S.W.3d 124, 131 ( Tex.App.--H ouston [14 th Dist.] 2000, pet. dism’d). O ur primary concern in r

eviewi ng the contract is to determine and give effect to the intentions of th e partie s as expr essed in the con tract. Coker, 650 S.W.2d at 393. Appellant

argue s tha t, be caus e we are requi red to examine the contract in l ight of cir cumstances present w hen the contract was entered into, we may not consi der an y current definitions of merg er

which mi ght include a spin-off or the splitti ng of one company into two companie s. She citesto a 1961 ver sion of Webster’s Collegi ate Dictionar y and
a 1990 Black’sLaw Dic tionary w hich contain defin itions of merg er whic h refer ence a n absorption of one compan y by anot her. Therefore, sheposits, we must interpr et the contract in light of the or dinary meani ng of merger in 1961, whi ch did not inc lude a splitt ing apart of one company

. The provisi on in que st ion does not specifically def ine the meaning of m erger. However, appellees rel y upon an amendment to the Texas Business Corporation Act in 1989, which defines a merger as f ollows: (a) the division of a domestic corporation in to two o r more new domestic corporations or into a surviving corporation and one or more new dome stic or foreign corporations or other entities, or (b) the combi nation of one or more domestic corp orations w ith one or mor e domest ic or fore ign corporationsor

other entiti es resultin g in (i) one or more sur

vivi ng domestic or foreign cor porations or other enti ties, (ii ) the creati on of one or more new domestic or foreign corpora tions o r other entities, or (iii) one or more6

surviv ing domest ic or fore ign corporations or other entities and t he creation of one or more new

domestic or fore ign corpor ations or other

entities.
Tex. Bus. Corp. Act Ann. art 1.02(A)(18) (Vernon Su pp. 2002). The co mment to that provisi on states that the definition of merg er was ex panded beyond the t ypical defin ition of a combination of tw

o or more corp orations intoa single corporation. Id. cmt.
Init ially, we notethat

thi s statute isnot a n ex post fa cto law as r eferred to by appellant. The prohibiti on against ex post facto law

applies only

to retroacti ve crimi nal or penal laws. Barshop v. Me dina County Un derground Water Conser vation Dist

. , 925 S.W.2d 618, 633 (Tex. 1996). Further, no claim has b e en made by appell ees that the statute itself is ac

tually appl icable to thi s particul a r transacti on. The reference to t he statute is being used “as demonstr ating the le gislatur

e’s intent that

the common law should treat mergers and spin off s as the same corporate reorganization vehicle/tool.”
Article 5.06 of the Business C orporation Ac t further prov ides that w hen a merger takes effect, “all ri ghts, titl e and interests to all real estate and other prope rty own ed by each domestic or fore ign corpor ation and by each ot her entity that

is a party

to the merger shall be allocated toand vested i n one or more of the surviving or new domestic or fore ign corporations and other entities as provided in the plan of merger without reversio n o r impairment, without furt her act or deed, and without a n y transfer o r assignment having occurred . . . .” Tex . Bus. Corp. Ann. art. 5

. 06A(2) (Ver non Supp. 2002). The comment to that artic le further state s in relevant part:7

In 1987, Article 5.06 was amended to make clear thatwhile a merger vests the rig hts, privi leges , immu nitie s and franchises of the merged cor poration in t he surviving corporation, this is accomplished without a transfer o r assignment

having occurred. Prior to the 1987 amendment of TBCA, Article 5.06A, it was possible that a merger coul d have been v iewed to constitute a transfer in the contex

t of a contract or

license that required p rior approv al for a transfer or as signment.
Id. cmt. Appellees ass ert that the tr ansfer herein occ urred under thecommon law doctrine of assignment by

operation of law

in the manner di scussed in thi s comment.
In support of this argument, a ppellees cite us to the case of TXO Production Co. v. M.D. Mark, Inc. , 999 S.W.2d 137 (Tex.App.--Hous ton [14 th Dist.] 1999, pet. denied), for the proposition that a merger does not vi olate a non-ass ignment claus e in a contrac t. In that case, TXO Pr odu ctio n Com pan y (TXO ) and PGI enter ed into a seri es of contracts t hat allowed TXO to use seismic dataowned by PGI. Under t he contracts, the data was not to be made availabl e to third par ties. When TXO merged with M arathon Oil C o., PGI sought to charge a tr

ansfer fee to allow

Marathon touse the data. The court discuss ed case law in othe r juris dict ions which h ave found a merger not to be a viol ation of a non-assi gnment provisi on in insurance policies a nd real estate leases. In its disc ussion, the cour t noted thatcourts disfavor forfeiture i n leases. Id. at 14 0. Two other factors r elied upon by

the court in deciding tha t a fee was no t owed were the partie s’ failure to state that the nonassignment

provision was triggered by a merger and the intent expressed by the legislature that a prohibited transfer would not be impli ed by a merg er. Id. at 143.8

We note the disti nction between that case and the one before us in that there was
no dispu te in t he forme r as t o the def init ion o f me rger whi ch is r eall y the i ssue which we must decide. The constru ction of an unambiguous co ntract is a matter of law. Elliott - Wil liams Co., Inc. v. Diaz , 9 S.W .3d 8 01, 8 03 (T ex. 1999 ). In m akin g that cons truc tion , we must do so from a utili tari an standpoint bear ing in mind the particula r business ac tivity sought to be served. Reilly v . Rangers Ma nagement, Inc., 727 S.W.2d 527, 530 (Tex. 1987). The meaning of a part icular w ord in a contr

act depends on the kind and character of th e contrac t, its purpos es and circums tances, and the co ntext. Enchanted Estates Comm unity

Assn., Inc. v. Timberlake Imp. Di st., 832 S.W.2d 800, 802 (Tex.A pp.--Houston [1 stDist.] 1992, no writ)

. It has been held that f or a non-assignability clause to prevent assignment, it must be proved that the grantor relied on the persona l trust, confidence, skill, character, or credit of anot her p arty. Eland Ene rgy, Inc. v. Rowden Oil & G as, Inc., 914 S.W.2d 179, 187 (Tex.App.-- San Antonio 1995, w rit denied). While there is no evidence that appellant r elied
on any of those feature s in this i nstance, the ag reement does permi t another party to succeed to the rig hts of Kodak in cer tain situati ons. Therefore, we mus t determine if the situation before us wasintended to be one of those in which a successio n of rights w as to
occur.
The agreement provides that t he permission granted is to be personal to the grantee. Thus, the intent was that s ome unrelated thir d party was not to be able to assert the rights g iven to Kodak. However, recogniz ing that corporate restructuring do es happen,9

in the event of such a situation th rough merger or co nsolida tion wit h or into another corporation or

if another corpor

ation acquir

es substantiall y all of

the assets of Kodak, the resulting company was to succeed t o Kodak’s ri ghts. While appellant ar gues that the placement

of th e word “m erger” i ndicates that i t is not inten ded to mean anythi ng other than the combinatio n of two entiti es into one, it could also be argued that theplacement of the word w

as inten ded to mean something different than “cons olidation w ith or into another corporation” or there would have been no need to use both ph rases.
The apparent reason for this prov ision wa s so that the pos session or control of the property would not be substantially changed, and there fore there would be no greater risk to the landowner

who has sou ght to protec t himself by

a non-assig nability

clause. In this instance, Texas Eastman C ompany, wi th which a ppellant h ad alr eady exec uted an amendmentof t he ag reem ent, was a di vision of Ch emic al, wh ich was a w holly ow ned business of Kodak. Chemical was then create d into a se parate corporate enti ty, the shares of which w

ere distri buted to the shareh olders of Kodak. The services provid ed by the new corporation are the same. Thu s, appellant will, in effect, be deali ng w ith th e same group she dealt w ith before, only now its assets are ow ned by a separ ate corporation which
was fo r m e r l y

a n u n i n c o r p o r a t e d d i v i s i o n o f K o d a k

. We do not see that the pu rpose of the non-assigna bility

provision is abrogated by this event. We also recogni ze legi slative intent, expressed prior to th e trans actio n that is the s ubject of this l awsuit, t hat the definition of merger should be a broa d one and that a merg er should not v iolate a non-as signabili ty clause. We further recognize that the law does not favor fo rfeitures, and we sh oul d therefore only cons true an agre ement to result in forfeiture if ther e can b e no other10

construction. See Re illy , 727 S.W.2d at 530; TBS Exco, Inc. v. E. N. Smith, III Energ y Corp., 818 S.W.2d 417, 422 (Tex.App.--Tex arkana 1 99 1, no wri t); Cambridge Oil Co. v. Huggins, 765 S.W.2d 540, 543 (Tex.App.--C orpus Chri sti 1989, w rit denied). Therefore, be aring i n mind the kind of con tract, its purpose, and public policy considerations, we be lieve the only reas onable construc tion of the contrac

t is that the transaction involved does not vi olate the non-assig nability provisi on of this agre ement, and thatthe new corporation succeeded to th e rights and obligations of Kodak. T he summary judgment is a ffirmed.
John T. Bo yd Senior Justice Do not publish

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