Court Opinion

ID: 7826181
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:07:31.176213+00
Date Added: 2024-06-11T16:30:52.218292
License: Public Domain

DAVID Newbern, Justice, dissenting. The words of a contract are to be taken and understood in their plain meaning. First Nat. Bank of Crossett v. Griffin, 310 Ark. 164, 832 S.W.2d 816 (1992), cert. denied, 507 U.S. 919 (1993), appeal after remand, 318 Ark. 848, 888 S.W.2d 306 (1994); Farm Bureau Mut. Ins. Co. of Arkansas, Inc. v. Milburn, 269 Ark. 384, 601 S.W.2d 841 (1980). To hold that the term (duration) of a contract is not one of its terms and conditions raises legal sophistry to a new level. The evidence before the Chancellor included J. Dan Baker’s affidavit and the deposition of Harry Don Denton, assistant manager of the airport. Mr. Baker stated his intention was that the duration of the 1971 concession agreement was to be one of the terms and conditions subject to the “most-favored-nation clause.” Mr. Denton stated that, when the car-rental concession agreements were entered in 1971, all were of the same duration. At one point of his deposition, as abstracted, Mr. Denton also said: My concern was generated as a result of the words in the contract with really litde understanding of the concept of the most favored nation clause. There were two principal concerns: one, the actual reading of the sentence. The words in the contract implied to me that terms and conditions meant what it said. His other principal concern was the other facilities contracts at the airport which had similar terms. He said the “[i]ntention of the 7/94 agreement was to have all the concessionaires sign new agreement^] to eliminate the controversy over varying maturities.” The Airport Commission has entered an agreement with Budget with rental rate terms more favorable to Budget than those it now wishes to impose on the other concessionaires. The Budget lease was apparently entered without consideration of the fact that its duration exceeded the durations of the leases to the other concessionaires and might well violate the provision prohibiting the Airport Commission from granting to Budget terms and conditions more favorable than those granted to Baker and the others. In Eveleth Taconite Co. v. Minnesota Power & Light Co., 221 N.W.2d 157 (1974), the Minnesota Supreme Court rejected the invitation to define the meaning of “terms or conditions” in the context of whether it includes “term” or duration of the contract in all fact situations. The “most favored nation clause” in that contract provided, “if at any time during the term of this agreement it [the electric company] has in effect an agreement which gives or grants to any other customer ... more favorable treatment ... or otherwise gives or grants to any such customer more favorable price, terms or conditions ...” Eveleth would be entitled to obtain the same terms [emphasis by the Court]. Explaining its decision to differentiate the two references to “term” and “terms and conditions” in the case before it, the Court said: In our judgment, there is little doubt that the parties intended that the most-favored-nations clause would protect plaintiff from being placed in a noncompetitive position by provisions in its contracts with defendant, including the price of its electricity, which were less advantageous than provisions its competitors might be granted by defendant at a later time during the agreed-upon span of plaintiff’s contracts. We do not believe that the period of duration of the contract was intended to be included in the phrase “terms or conditions” because to do so would create a situation in which the contract could be indefinitely extended at plaintiff’s election if defendant continued to enter contracts with other taconite companies. In other words, these contracts would be perpetual if defendant entered other agreements with taconite producers because plaintiff, if it so chose, could continually assume the longer term of those contracts. That result appears inconsistent with the intent of the parties, particularly in light of the evidence concerning the precontract negotiations in which plaintiff successfully resisted defendant’s preference for a 10-year contract. In addition, the fact that the most-favored-nations clause uses the two separate phrases, “term” and “terms or conditions,” in different parts of the clause and in different contexts, gives further evidence that the parties intended those words to have different meanings.” To begin, the article of the contract before us containing the “most-favored-nation clause,” Article I.C.3., does not have in it both “term” and “terms and conditions.” Their appearance together in Article V having to do with the duration of the agreement is virtually irrelevant to the “most-favored-nation clause.” This difference robs the Eveleth case of much of its precedential value for this case. In addition, we have here no negotiating history of either party seeking leases of longer duration in 1971. To be noted carefully is the Minnesota Supreme Court’s recognition that the lease in question would be perpetuated only to the extent that other leases were entered with longer terms. The fear of “perpetual” agreements is ill-founded. There is nothing perpetual about the Budget lease. Honoring the “most-favored-nation clause” will not extend the Baker lease beyond the term of the Budget lease. As long as the Airport Commission remembers not to enter any other leases with durations past 2006, the leases of the other concessionaires will not endure beyond that point. The Airport Commission has made a mistake and has placed itself in a position of having to violate its agreement with its concessionaires in order to institute concessionaire rental rates more favorable to it. While it may, perhaps, be able to extricate itself from that position through negotiation with the concessionaires, it should not be allowed to do so by tortured interpretation of plain contract language. I respectfully dissent. Brown, J., and Special Chief Justice JOSEPHINE L. Hart, join.