author: MADDOX, Justice.

text:
    DRILL PARTS & SERVICE COMPANY, INC., on its own behalf and on behalf of its agents, servants, and employees, and Carlton Montgomery v. JOY MANUFACTURING COMPANY.
    82-265.
    Supreme Court of Alabama.
    Sept. 23, 1983.

      Charles Cleveland of Gordon, Silberman, Loeb, Cleveland & Gordon and Frederick A. Erben of Beddow, Fullan & Vowell, Birmingham, for appellants.
    Jasper P. Juliano and William J. McDaniel of McDaniel, Hall, Parsons, Conerly, Scott & Lusk, Birmingham, for appellee.
   MADDOX, Justice.

This is a case of first impression. There are basically three major issues to be addressed: whether Alabama recognizes the trade secrets doctrine, the scope of the doctrine, and what is the appropriate standard of appellate review when a preliminary injunction has been issued which prohibits the use of a trade secret. We hold that Alabama does recognize the doctrine, and affirm.

The essential facts are as follows:

Robbins, Inc. began manufacturing rotary drilling equipment (the subject matter of the trade secret) in the early 1950’s. In 1971, Joy Manufacturing Company (hereafter Joy) purchased the assets of Robbins, Inc. and established the Robbins Division of Joy. These “Robbins Drills” are mounted on wheels or crawlers and are used to drill holes in the earth for the placement of explosives. The construction and mining industries are the primary customers for the drills. There are nine models which range in price from $150,000 to $1,000,000. There are several thousand parts for each drill, some of which are standard and can be purchased from over one hundred suppliers and some of which are specifically designed and manufactured by the Robbins Division for the drills. Joy sells both types of replacement parts to its customers. There are several companies competing with Joy which sell replacement parts for Robbins Drills. The defendant Drill Parts and Service Company, Inc. (hereafter Drill Parts) is one of these competing companies and defendant Carlton Montgomery is its president. Drill Parts’ primary business and income is from the sale of these parts. Montgomery worked for Joy as a salesman from 1972 until 1977, when he left Joy to form Drill Parts.

The evidence from which the trial court could have made its findings to support the issuance of an injunction are as follows: Before manufacture of the drills can begin, Joy’s engineers design the drills and make an engineering drawing for each part used in the drill. The drawings of the specially manufactured parts are detailed and COntain technical data such as allowable tolerances, metal to be used, the heat treatment to be applied, etc. Testimony was offered to show that it takes approximately two years to develop and design a new model drill from the initial design concepts to the finished model. The evidence further indicated that ten to twenty thousand engineering man-hours go into the design and development of a drill model. Testimony was offered to show that much of the information contained in the drawings could not be obtained by “reverse engineering,” that is from the study of an actual part. For example, tolerances could not be determined by merely measuring the dimensions of an individual part. The establishment of tolerances for a particular part is a function of the tolerances, heat treatment, metal, etc. of other parts with which the part comes in contact. Testimony was also offered to show that Drill Parts had no engineers in its employ who were capable of reverse engineering. The only testimony about the possibility of reverse engineering was by one Bannister, a subcontractor of Joy, who had manufactured parts for Drill Parts by using the drawings of Joy. The evidence was in dispute as to whether Joy actually had knowledge of Drill Parts’ use of the drawings. There is no dispute that Joy did not give express consent to Drill Parts for the use of the drawings.

In addition to technical data, each drawing contains a legend which reads:

“The design and details shown on this drawing are our property and must not be used except in connection with this machine and Robbins Machine and Manufacturing Company, Inc. All rights of design and invention are reserved.”

The evidence was in dispute as to security procedures used by Joy to prevent the drawings from being published to competitors. It was not disputed that Joy has a paper shredder in the offices where the designs are made and that subcontracts have been made by Joy with approximately ten different machine shops to manufacture various parts of drills, using drawings supplied by Joy. Copies of the drawings are sent to the subcontractors who submit bids to Joy to manufacture the parts. Joy has dealt with each of these shops for several years. After a bid is accepted by Joy, a purchase order is sent to the subcontractor machine shop. On each purchase order, the following is printed:

“VENDOR: Agrees to supply the materials, equipment, and or services specified below subject to all conditions, specifications and instructions on both the face and the reverse side of this order as well as all attachments hereto.
“Confidential Disclosure. Seller shall keep confidential all sales, data, designs, processes, drawings, specifications, reports, data, and other technical or proprietary information and the features of all parts, equipment tools, gauges, patterns, and other items furnished or disclosed to the seller by the buyer in connection with this order.
“Confidential Information. Seller expressly agrees not to use the confidential information or any other information belonging to or supplied by on behalf of the buyer except in the performance of the work for buyer. Seller expressly agrees that a confidential relationship exists between buyer and seller relative to the matter covered by this section. Seller shall return all confidential information and other information or property at the buyer’s request and, in any event, upon completion of this purchase order. No confidential information relative to the purchase or use of materials or articles covered by this purchase order is to be published without first obtaining buyer’s written consent.”

The same subcontractor (Bannister) who had manufactured Robbins drill parts for the defendant, using Joy’s drawings without express consent, and who testified about the possibility of reverse engineering, also testified about an incident in 1978 wherein Montgomery, president of Drill Parts, obtained many copies of Joy drawings used by the subcontractor. The subcontractor (Bannister) telephoned Joy and informed agents of Joy, and asked permission to discard many drawings he was no longer using. According to the testimony, Montgomery, whose offices are directly across the street from the subcontractor, later observed the drawings in a trash bin outside the building and asked the subcontractor if he could remove them. The subcontractor testified that he gave his permission without consulting Joy.

In addition to getting the drawings, Montgomery had an arrangement whereby he received scrap from Joy’s machine shop. Joy had a contract with a scrap dealer to dispose of metal refuse from the manufacture of machine parts. This included such things as metal shavings, parts improperly machined and other discarded metal products. There was testimony that paper material was often discarded along with the metal scrap. The scrap dealer did not know what was on the papers. Joy did not know of this agreement between the scrap dealer and Montgomery to sell Montgomery this scrap.

In addition to using the drawings in manufacturing, Montgomery also, on October 19, 1982, sold sixty-four copies of engineering drawings of Robbins drills to an undercover police officer for $18,000 cash. Several of the drawings had paper flaps taped over the restrictive language. The Birmingham police officer was assigned to the Leviticus project, a seven-state cooperative of police departments investigating industrial espionage in the coal industry. This officer had contacted Montgomery in the middle of 1982 after an investigation was begun on Drill Parts. Using an assumed name, the officer informed Montgomery that he wished to purchase plans for the manufacture of replacement parts to Robbins drills to be sold in Mexico. On October 18, 1982, the officer and Montgomery met at the Airport Inn and exchanged the money for the drawings. During these conversations, Montgomery admonished the officer not to disclose the source of the drawings to anyone. After the exchange, Montgomery was placed under arrest. No criminal charges had been brought against Montgomery as a result of that incident as of the time of trial of this case.

The plaintiff, Joy, brought suit on November 1, 1982, alleging that its engineering design technology as embodied in its engineering drawings had been improperly obtained and used by Montgomery and Drill Parts and requested the trial court to enjoin the defendants from further use of the drawings. A hearing was held on November 22, 1982, and on December 2, 1982, the trial judge entered an order finding the engineering drawings were “confidential, trade secrets and proprietary items of property owned by Joy” and enjoined the defendants as follows:

“1. The defendants, Carlton Montgomery and Drill Parts & Service, Inc., their agents, servants or employees, are preliminarily enjoined pending further orders of the Court from:
“A. Using for their own benefit or gain, including the selling thereof, any engineering drawings, blueprints or designs, or copies thereof, developed, engineered, produced or designed by Joy Manufacturing Company or Robbins Machine & Manufacturing Co., Inc.
“B. Manufacturing, machining or selling any drill part made, manufactured or machined utilizing engineering drawings, blueprints or designs developed, engineered, produced or designed by Joy Manufacturing Company or Robbins Machine & Manufacturing Co., Inc.
“2. The said Defendants, their agents, servants or employees, are ordered and directed to deposit with the Register of the Court within ten days of the effective date of this order any and all engineering drawings, blueprints or designs or copies thereof, developed, engineered, produced or designed by Joy Manufacturing Co., Inc., in the possession or custody of the said Defendants or their agents, servants or employees.
“3. This order shall become effective upon the Plaintiff posting security with the Register of the Court in the sum of $25,000 conditioned and as provided by the provisions of Rule 65(c), Alabama Rules of Civil Procedure.”

On motion of the defendants, the order was modified:

“1. That paragraph 1 B of the order of the Court entered on December 2,1982, is hereby amended to read as follows:
“B. Manufacturing, machining or selling any drill part made, manufactured or machined utilizing engineering drawings, blueprints or designs developed, engineered, produced or designed by Joy Manufacturing Company or Robbins Machine & Manufacturing Co., Inc.; provided that the prohibition here applicable to selling drill parts shall not apply to used drill parts salvaged from drills or equipment, or to those specific drill parts manufactured and sold by Joy Manufacturing Company, or to those drill parts the equal or equivalent of which are not manufactured by or for Joy Manufacturing Company and thereafter sold by Joy Manufacturing Company.”

At the hearing, Joy called Montgomery as an adverse witness. On questioning, Montgomery invoked his Fifth Amendment privilege and refused to answer any questions. On January 26, 1983, Drill Parts and Montgomery filed a motion stating that the original investigation had been terminated without presentation of any evidence to a grand jury and requesting that the preliminary injunction hearing be reopened so as to permit Montgomery to testify. This motion was denied by the trial court.

I

First we discuss the primary issue in this case: Was there a trade secret? We have not directly addressed the trade secrets doctrine in any previous cases, but we have recognized the concept of trade secrets in our rules of procedure, and have recognized a property right in a computer program; for instance, see Ala.R.Civ.P. 26(c)(7) and National Surety Corp. v. Applied Systems, 418 So.2d 847 (Ala.1982). In National Surety Corp., the two defendants had worked for the plaintiff as a creator of computer programs and as a computer operator. Their employment was for a four-year period. The defendants left the plaintiff’s company and started their own computer service company. Programs were used by the defendants which had been developed for the plaintiff’s customers. Evidence showed the programs could only have been obtained by “either an illegal taking, an illegal assumption of ownership, or an illegal use or misuse of the programs.” National Surety Corp., supra, 418 So.2d at 849. Also of interest, although not at issue, in National Surety Corp., is the fact that the plaintiff was granted both a temporary restraining order and a preliminary injunction prohibiting the defendants from using a computer program that was later found to have been converted by the defendants. We hold that National Surety Corp. is ample precedent for our recognition of the trade secrets doctrine in Alabama, and that the doctrine is applicable here.

The Restatement of Torts, § 757 (1939), provides:

“One who discloses or uses another’s trade secret, without a privilege to do so, is liable to the other if
“(a) he discovered the secret by improper means, or
“(b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or
“(c) he learned the secret from a third person with notice of the facts that it was a secret and that the third person discovered it by improper means or that the third person’s disclosure of it was otherwise a breach of his duty to the other, or
“(d) he learned the secret with notice of the facts that it was a secret and that its disclosure was made to him by mistake.”

In the comments to § 757, there is a general definition of “trade secrets” adopted by many courts which have addressed the issue:

“A trade secret may consist of any formula, pattern, device or compilation of information which is used in one’s business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it. It may be a formula for a chemical compound, a process of manufacturing, treating or preserving materials, a pattern for a machine or other device, or a list of customers. It differs from other secret information in a business in that it is not simply information as to single or ephemeral events in the conduct of the business, as, for example, the amount or other terms of a secret bid for a contract or the salary of certain employees, or the security investments made or contemplated, or the date fixed for the announcement of a new policy or for bringing out a new model or the like. A trade secret is a process or device for continuous use in the operation of the business. Generally, it relates to the production of goods, as, for example, a machine or formula for the production of an article. It may, however, relate to the sale of goods or to other operations in the business, such as a code for determining discounts, rebates or other concessions in a price list or cata-logue, or a list of specialized customers, or a method of bookkeeping or other office management.
U * * *
“An exact definition of a trade secret is not possible. Some factors to be considered in determining whether given information is one’s trade secret are: (1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.”

One of the earliest trade secret cases reported involved the wrongful appropriation of non-copyrighted patterns used in the manufacture of pumps which were no longer patented. Tabor v. Hoffman, 118 N.Y. 30, 23 N.E. 12 (1889). The plaintiff-inventor had created patterns for each part of his pump. These patterns were used to form molds which were in turn used to form the individual parts. The inventor sent these patterns to be repaired and the repairman surreptitiously copied the patterns and delivered them to the defendant. The parts were made of different metals which contracted and expanded at different rates. The inventor had “spent much time, labor, and money in making and perfecting such patterns” such that these differences were taken into account in the dimensions used in the individual patterns. Tabor, supra, 118 N.Y. 30, 23 N.E. at 13. The Court, discussing these patterns, found:

“ ‘[T]hat a competent pattern-maker can make a set of patterns from measurements taken from the pump itself, without the aid of plaintiff’s patterns,’ but refused to find, upon the like request, that this could be done ‘with little more expense and trouble than from measurements taken from plaintiff’s said patterns.’ It appeared from the evidence that the finished pump ‘does not comply with the patterns,’ because it is made of brass and iron, which expand unequally in the finished casting, and also contract unequally when cooling during the process of casting; that some of the patterns are subdivided into sections, which greatly facilitates measurements and drawings, as each section can be laid flat upon the wood or paper; and that it would take longer to make a set of patterns from the pump than it would to copy the perfected patterns themselves.”

Tabor, supra 118 N.Y. 30, 23 N.E. at 12. There have been many cases since Tabor recognizing that trade secrets can be embodied in patterns and drawings which are capable of being improperly appropriated. RTE Corp. v. Coatings, Inc., 84 Wis.2d 105, 267 N.W.2d 226, (1978), Data General Corp. v. Digital Computer Controls, Inc., 297 A.2d 437 (Del.1972), Ellicott Machine Corp. v. Wiley Man. Co., 297 F.Supp. 1044 (D.Md.1969), A.H. Emery Co. v. Marcan Prods. Co., 268 F.Supp. 289 (S.D.N.Y.1967), National Rejectors v. Trieman, 409 S.W.2d 1 (Mo.1966), ILG Industries, Inc. v. Scott, 49 Ill.2d 88, 273 N.E.2d 393 (1971).

What constitutes a trade secret is a question of fact for the trial court.. Kodekey Electronics, Inc. v. Mechanex Corp., 486 F.2d 449 (10th Cir.1973).

The appellants insist that novelty and breach of a confidential relationship are necessary before there can be a trade secret and misappropriation of that trade secret. The Restatement of Torts § 757 (1939), comment 6, is to the contrary. “Novelty and invention are not requisite for a trade secret as they are for patentability. . .. [Here appears a discussion of patent law.] But such is not the case with a trade secret. Its protection is not based on a policy of rewarding or otherwise encouraging the development of secret processes or devices. The protection is merely against breach of faith and reprehensible means of learning another’s secret.” (Emphasis added.) See Kodekey, supra, E.I. Dupont de Nemours v. Christopher, 431 F.2d 1012 (5th Cir.1970). In Christopher, supra, an unknown competitor had hired professional photographers (the defendants) to take aerial photographs of a methanol plant under construction. The plaintiff alleged it had developed a secret but unpatented process for producing methanol, a process which gave DuPont a competitive advantage over other producers. Because the plant was still under construction, parts of the process were exposed to view from directly above the construction area. Photographs of that area would have enabled a skilled person to deduce the secret process. The court held this was an improper means of discovering DuPont’s trade secrets and was actionable.

Drill Parts lastly argues that if the drawings constituted a trade secret, it was abandoned because the plaintiff allowed the engineering drawings to be published through Montgomery’s discovery of drawings mixed in with scrap metal and because Montgomery found the drawings in the trash bin of the subcontractor of Joy. Absolute secrecy is not required; a substantial element of secrecy is all that is necessary to provide trade secret protection. See A.H. Emery Co. v. Marcan Products Co., supra; Kewanee Oil v. Bicron Corp., 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974). Whether Joy had abandoned its trade secrets was disputed, and the law is that whether the holder of a trade secret has abandoned the secret is a question of fact for the trial court. In such cases where the evidence is presented ore tenus and without a jury, findings of fact are presumed to be correct and will not be set aside except for plain and palpable abuse of discretion. Chism v. Hicks, 423 So.2d 143 (Ala.1982), Mac Pon Co. v. Vinsant Painting and Decorating Co., 423 So.2d 216 (Ala.1982).

II

Montgomery claims that the trial court in evaluating the evidence erred in considering the fact that he refused to testify. The trial court, in its recitation of facts in the preliminary injunction order, noted that Montgomery had refused to testify. After further recitation of facts, the court then went on to say: “[upon] consideration of these matters and other evidence presented at trial, the trial court finds and concludes to this point in the action that Joy has shown a sufficient case. ... ” Drill Parts argues that the trial court incorrectly presumed that the answers to the questions put to Montgomery by the plaintiff would have been unfavorable to Drill Parts.

We have searched the record and find there was sufficient evidence to support the finding of the trial court, and it was not error for the court in evaluating the evidence to consider Montgomery’s refusal to testify. Anonymous v. Anonymous, 353 So.2d 510 (Ala.Civ.App.1977). See also Kirkland v. Kirkland, 236 Ala. 120, 181 So. 96 (1938); C. Gamble, McElroy’s Alabama Evidence § 377.03, (3d ed. 1977). Having determined this, we find no need to require the trial court to reopen the hearing on the preliminary injunction in order to allow Montgomery to testify.

III

Drill Parts next argues that the federal patent and copyright laws have preempted state action in the area of trade secrets, citing Compco Corporation v. Day-Bright Lighting, Inc., 376 U.S. 234, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964), Sears, Roebuck and Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964), Kewanee Oil Company v. Bicron Corporation, 416 U.S. 470, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974). In Compco, supra, the U.S. Supreme Court held that a state unfair competition law prohibiting the copying and selling of unpa-tented articles was pre-empted by federal patent law. In Stiffel, supra, the Court similarly held that a state unfair competition law was pre-empted by federal patent and copyright law. In Kewanee, supra, Chief Justice Burger, writing for the Court, held a state’s trade secret law was not pre-empted by federal patent and copyright law. Drill Parts argues that “the state of the evidence is inadequate to determine if the federal laws pre-empt state regulation.” Apparently, this is in reference to possible patents on the “Robbins Drills.” The trial court’s order does not prohibit the appellants from using information that is in the public domain as a result of the granting of a patent. The order prohibits the use of engineering drawings by the defendants which were improperly obtained. The defendants are free to use any other proper means for determination of tolerances, measurements, etc. necessary for the manufacture of replacement parts. This would include “reverse engineering,” use of patents which have expired, and- the use of engineering drawings properly obtained, such as by purchase, or by procuring drawings already in the public domain. This is not a patent case, so our courts are not precluded from acting under their general equity power. See Van Products Co. v. General Weld. & Fab. Co., 419 Pa. 248, 213 A.2d 769 (1965), Quaker State Oil Refining Co. v. Talbot, 322 Pa. 155, 185 A. 586 (1936).

IV .

Drill Parts next argues that the trial court abused its discretion by granting the preliminary injunction. This argument is based on an apparent split in our cases as regards the proper standard of review of preliminary injunctions. Appellants cite two cases which they argue are in conflict on their face. Alabama Educational Association v. Board of Trustees, 374 So.2d 258 (Ala.1979), International Molders v. Aliceville Veneers Division, 348 So.2d 1385 (Ala.1977). The apparent discrepancy between the cases, appellants argue, is due to the type of relief granted. Appellants are correct in their argument that the standard of review is different for these two cases; however, the appellants are incorrect as to why the standards are different.

In International Molders, supra, this Court reversed a preliminary injunction which had enjoined a labor union from mass picketing during a strike. The trial court had merely found some evidence of violence or threats of violence toward employees attempting to cross picket lines. We held there was insufficient evidence of “demonstrations of impending violence and threats to personal safety.” International Molders, supra, at 1391. In cases involving labor disputes, the power of state courts to issue preliminary injunctions is well settled; however, this power is circumscribed by First Amendment rights and because Congress has pre-empted certain state action by enactment of federal labor laws. See Thornhill v. Alabama, 310 U.S. 88, 60 S.Ct. 736, 84 L.Ed. 1093 (1940), Baggett Transportation Co. v. Local No. 261, 259 Ala. 19, 65 So.2d 506 (1953). We will scrutinize injunctions granted in labor disputes under the strict standard enunciated in International Molders:

“[T]he right of complainant must be clear and unmistakable on the law and the facts; and there must exist an urgent and paramount necessity for the issuing of the writ in order to prevent extreme or other serious damage which would ensue from withholding it.”

International Molders, supra, 348 So.2d at 1390, quoting City of Decatur v. Meadors, 235 Ala. 544, 180 So. 550 (1938).

In the review of other cases, the standard in Alabama Educational Association, supra is to be followed:

“Initially, we define the perimeter of our scope of review in an appeal from an order granting a motion for preliminary injunction. Wide discretion is accorded the trial judge hearing the application and deciding whether to grant a temporary injunction and his action will not be disturbed on appeal unless he abuses his discretion.... His discretion is a legal or judicial one subject to review for abuse or improper exercise, as where there has been a violation of some established rule of law or principle of equity, or a clear misapprehension of the controlling law.” (Citations omitted.)

Alabama Educational Association, supra 374 So.2d at 260.

We hold the trial court did not abuse its discretion in granting the preliminary injunction.

V

Drill Parts next contends that Joy’s claim was barred by the statute of limitations; that the applicable statute of limitations is one year in an action based on the trade secrets doctrine and that the evidence shows Joy knew of Drill Parts’ use of the drawings for a period of at least five years. This assertion is based on the testimony of the same subcontractor who “gave” the discarded drawings to Montgomery. We have examined the testimony of this subcontractor. The only evidence offered to show that Joy had any knowledge of Montgomery’s possession of copies of drawings was a conclusory statement by the subcontractor:

“Question: And you did not tell Joy or Robbins or anyone over there that you were going to use those drawings, those engineering drawings to make parts for anyone else?
“Answer: They knew it.”

No direct evidence was offered to show Joy’s knowledge of the improper use of the engineering drawings before the investigation by the police; therefore, we conclude that the trial judge could have found that Joy had no knowledge prior to one year before the suit was filed that Drill Parts was using its drawings. Having decided that the trial court could have found that Joy had no knowledge of Drill Parts’ possession and improper use prior to one year before suit was brought, we need not address whether the trade secrets doctrine would come under the continuing torts doctrine as advocated by Joy. In such cases where the trial court takes the evidence ore tenus without a jury, findings of fact based upon competent evidence are presumed to be correct and will not be disturbed on appeal if supported by the evidence or any reasonable inference therefrom unless they are plainly and palpably erroneous or manifestly unjust. Chism v. Hicks, 423 So.2d 143 (1982); Mac Pon Co. v. Vinsant Painting and Decorating Co., 423 So.2d 216 (1982).

For the foregoing reasons, we must affirm.

AFFIRMED.

TORBERT, C.J., and JONES, SHORES and BEATTY, JJ., concur.


source: Caselaw Access Project

author: JONES, Justice.

license: Public Domain

text:
    EXPOSITION ENTERPRISES, INC. v. DOUBLE C. PRODUCTIONS, INC.
    No. 82-318.
    Supreme Court of Alabama.
    Sept. 23, 1983.
    James S. Ward, Birmingham, for appellants.
    William L. Irons, Birmingham, for appel-lee.
   JONES, Justice.

This case requires us to examine issues relating to an alleged breach of contract for sale of the “Birmingham Sport and Boat Show” (Show) by Double C. Productions, Inc. (Double C.), to Exposition Enterprises, Inc. (Exposition). Double C. sued Exposition, seeking injunctive relief and recovery of its security in the form of damages.

This is the second time this case has been before us. In an earlier proceeding, the trial court denied Double C.’s application for a restraining order and its motion for a preliminary injunction. This Court granted Double C.’s petition for mandamus (Double C. Productions, Inc. v. Exposition Enterprises, Inc., 404 So.2d 52 (Ala.1981)) whereupon the trial court granted Double C.’s preliminary injunction. At a subsequent trial, the jury returned a verdict finding Exposition to be the owner of the Show. The trial court granted Double C.’s JNOV motion, and Exposition appeals. We affirm.

Double C., a Texas corporation, successfully did business in Alabama for over ten years as owner and sponsor of the Birmingham Sport and Boat Show. The Show grew to be the largest of its kind in the Southeast.

Exposition entered into a contract with Double C. on August 12, 1980, to purchase for $80,000, payable in installments, the name of the Show, goodwill associated with the name, accounts, contract receivables, and all books, records, documents, and inventory relating to the Show. The contract also provided that, until Double C. was paid in full, Double C. retained a security interest in those items capable of being secured under the Texas Commercial Code.

In addition, the contract, among other provisions, provided that:

1) Exposition was to deposit all contract receivables into a joint Texas bank account;

2) Exposition was to send all contracts with Show exhibitors to Double C., and such contracts were to show Exposition’s address;

3) Exposition was to provide $500,000 in liability insurance coverage for the Show; and

4) Exposition was to make a $500 expense payment to Double C.

The contractual default provisions specified Exposition was “in default” on the “happening of any of the events or conditions following”: 1) Default in the payment or performance of any obligation, covenant, or liability contained or referred to in the contract; 2) Any time the secured party (Double C.) believes that the prospect of payment of any indebtedness secured for the performance of the contract is impaired.

The contract further specified:

“In performing any act under this agreement, and the obligations secured thereby, time shall be of the essence. [Double C.’s] acceptance of partial or delinquent payments or the failure of [Double C.] to exercise any right or remedy shall not be a waiver of any obligation of [Exposition]. ... ”

Exposition did not comply with several contractual provisions. Double C. sent Exposition notice of foreclosure on January 23, 1981, and such notice was received on January 26,1981. Double C. foreclosed on January 30,1981, at the time and place indicated in the letter of foreclosure, and thereafter filed its complaint in this case, seeking an injunction preventing Exposition from operating or advertising under the name “Birmingham Sport and Boat Show,” and, additionally, seeking as damages the items in which Double C. retained a security interest, profits from the 1981 Show, and reasonable attorney’s fees. Double C. moved to strike all claims for money damages prior to trial, and the trial court granted this motion.

Following this Court’s remand of this cause regarding denial of preliminary in-junctive relief, Exposition counterclaimed, contending the contract had not been materially breached, and seeking as damages profits from the 1981 Show. The trial judge denied each side’s directed verdict motions and submitted the case to the jury, which returned a verdict on September 17, 1982, rejecting Double C.’s claim and accepting Exposition’s claim as owner of the Show. The jury rejected, however, all claims for damages for profits sought by Exposition in its counterclaim.

The trial court entered a final judgment based on the verdict, but thereafter granted Double C.’s timely JNOV motion, holding that no evidence supported the jury’s verdict. The issue before us, then, is simply whether sufficient evidence existed to create a jury question as to Exposition’s alleged material breach of contract, because the standards for testing directed verdict and JNOV motions are the same. Ex parte Bennett, 426 So.2d 832 (Ala.1982); Housing Authority of the City of Prichard v. Malloy, 341 So.2d 708 (Ala.1977); White v. Packer, 345 So.2d 312 (Ala.Civ.App.1977).

Exposition, prior to trial, admitted:

1) On January 10, 1981, Exposition did not pay the sum of $20,000 — the first installment — as required by the contract (Exposition had paid $15,000 of that installment, however);

2) On December 22, 1980, Exposition deposited a contract receivable for the Show into Exposition’s corporate checking account, in violation of the contract;

3) The $500 expense payment, required under the contract, was not paid by Exposition.

4) Exposition did not forward one or more of the exhibitor contracts to Double C. as required under the contract.

5) Exposition obtained only $300,000 of liability insurance coverage for the Show, rather than the $500,000 as required by the contract.

Exposition at trial and on appeal fails to assert a cognizable legal defense to the admitted contract breaches. Rather, Exposition seeks to explain why the breaches occurred, and attempts to justify the breaches as minor deviations necessary to fulfill the main objective of the contract, that being the operation and administration of the Show itself. In so doing, Exposition points out that foreclosure and commencement of the suit occurred during the January 1981 Show, when it was unable to adequately respond to the foreclosure letter.

In substance, Exposition’s argument can be summarized thusly: Double C. did not complain of the contract breaches before foreclosure, breaches which Exposition says were excusable and immaterial; therefore, Exposition says, given the fact that Exposition put on the Show, which was the main purpose of the agreement, Exposition produced sufficient evidence to create a jury question on the issue of materiality of breach.

The evidence shows Double C. had no duty to complain of contract breaches prior to foreclosure. Furthermore, the contract default provisions stated time was of the essence, and that “acceptance of partial or delinquent payments or the failure of [Double C.] to exercise any right or remedy shall not be a waiver of any obligation of [Exposition] or right of [Double C.]

No useful purpose can be served in detailing Exposition’s excuses for the admitted breaches. Suffice it to say that reasons for the breaches that fall short of legal defenses do not affect the issue whether the contract was materially breached. The fact remains that Exposition admitted, pursuant to Rule 36, ARCP, numerous contractual breaches. Evidence of other less significant breaches was produced at trial. In Evans v. Insurance Co. of North America, 349 So.2d 1099 (Ala.1977), this Court stated that an “admission made in response to the request ‘is conclusively established’ unless (1) there is a motion for amendment or withdrawal of the admission, and (2) the trial court grants that motion.” 349 So.2d at 1102. Exposition did not object to these admissions, and it is bound thereby as a judicial stipulation.

The trial court, in its final order, concluded:

“There was no scintilla of evidence presented contrary to these undisputed facts and that these breaches were defaults of the contract between the parties. .. . The verdict of the jury was contrary to the undisputed evidence at trial....”

After reviewing all the evidence appearing of record, we cannot say the trial judge erred in granting Double C.’s JNOY motion. Although we cannot and do not speculate as to whether evidence of any admitted breach or other breaches supported by evidence at trial, standing alone, would foreclose from jury consideration the question of materiality, the totality of the evidence relating to materiality of breach is of such magnitude that no evidence exists from which reasonable jurors could find immaterial contract breach. Stated otherwise, the evidence of contract breach, when construed in light of the clearly expressed intentions of the contracting parties relating to default, went to the essence of the contract, and thereby eliminated any factual question relating to materiality of breach. Accordingly, we affirm the trial court’s judgment.

AFFIRMED.

All the Justices concur except FAULKNER, J., not sitting.


text:
    Henry SHELTON, Corine S. Freeman, Gladys S. Schakleford and Zilla S. Wright v. George S. WRIGHT and Camille W. Cook.
    82-473.
    Supreme Court of Alabama.
    Sept. 23, 1983.

      James D. Smith of Hubbard, Waldrop, Tanner & deGraffenried, Tuscaloosa, for appellants.
    James J. Sledge of Rosen, Harwood, Cook & Sledge, Tuscaloosa, for appellees.
   MADDOX, Justice.

This appeal involves a quiet title action involving the severed mineral estate of two specific parcels of real estate situated in Tuscaloosa County. The judgment of the trial court is affirmed.

The Tuscaloosa County lands which are the subject of this appeal are: 160 acres located in Section 26, Township 19 South, Range 11 West; and 240 acres located in Section 27, Township 19 South, Range 11 West. The appellants, who were the defendants below, and the appellees, who were the plaintiffs below, claim title to the mineral interests of these two parcels through a common grantor, E.B. Tierce, who acquired the mineral interests in 1914. The trial court, following the filing of the appellees’ complaint, quieted title in the appellees, and this appeal followed.

The facts surrounding the conveyances appear as follows: By a deed dated March 8, 1915, E.B. Tierce, conveyed the mineral interests in the above described parcels of land to W.E. Bowers, who, along with his wife, mortgaged the mineral estates to Reuben H. Wright. The mortgage was then transferred to Bessie Wright Ragland, who purchased the mineral interests at a foreclosure sale, as evidenced by a foreclosure deed dated July 24, 1934. On the same day, an instrument was executed by Bessie Ragland conveying the mineral interests to Reuben Wright, which interests later passed to the appellees under the will of Reuben Wright.

The facts indicated that those individuals in the chain of title from W.E. Bowers to the appellees assessed the mineral interests for ad valorem taxes beginning in 1916, and continued without interruption through 1971. As to the mineral interests located in Section 26, assessment and payment of taxes continued unabated to the filing of this suit. In 1972, however, the Tuscaloosa County tax assessor inadvertently removed the mineral interests in Section 27 from the appellees’ property assessment. This error was discovered by the appellees after the quiet title action was filed. The tax assessor corrected the error by making amended returns and noted on the returns the error and reason for the correction. The appel-lees subsequently paid the taxes for the entire period.

The appellants’ claim rests on a mineral deed from E.B. Tierce to C.M. Ayres dated July 11, 1914. The deed to Ayres recites that the consideration was paid by a promissory note and reserves a vendor’s lien. The interest of Ayres passed through three estates to the appellants, who gave an oil, gas and mineral lease to Conwood Exploration, Inc. Neither C.M. Ayres nor any of his devisees or the heirs of his devisees assessed the lands for taxation prior to the time the complaint was filed. After the complaint was filed, appellants assessed the mineral interests for taxation by means of an escape assessment.

The evidence indicates that there has been no development of the mineral rights, either through mining or drilling, for either oil or gas or other minerals. Consequently, neither party is in actual possession of the mineral interests.

I

The appellants contend that this is an adverse possession case under Code 1975, § 6-5-200. As denominated in both the complaint and the trial judge’s order, however, this is an in rem action to quiet title to the described mineral interests, pursuant to §§ 6-6-560 through 6-6-573. This statute is often referred to as the Grove Act.

In their reply brief, the appellants claim that the Grove Act was intended to clear up title disputes involving surface rights and not those title disputes involving mineral interests, although the statute contains no language which would otherwise limit its application to in rem proceedings resolving only surface right disputes. In fact, Section 6-6-570 contains the following pertinent wording: “When any person, natural or artificial, claims either in his own right or in any representative capacity whatsoever, to own any land or any interest therein ...” (emphasis added). This language suggests that the statute is applicable to establish a person’s right or title irrespective of the type of interest claimed.

The fundamental rule of statutory construction is that a court is under a duty to ascertain and effectuate legislative intent as expressed in the statute, see e.g., Gundy v. Ozier, 409 So.2d 764, 765, 766 (Ala.1981), which may be gleaned from the language used, the reason and necessity for the act and the purpose sought to be obtained. See Rinehart v. Reliance Ins. Co., 273 Ala. 535, 538, 142 So.2d 254, 256 (1962).

The Grove Act, as originally enacted, was adopted for the purpose of clearing “up all doubts or disputes concerning [land titles].” Williams v. First National Bank of Mobile, 384 So.2d 89, 94 (Ala.1980). Thus, consistent with this purpose and the unequivocal plain meaning of the language “any interest,” we believe the legislature intended to include not just claims involving surface rights, but also those claims related to severed mineral estates.

II

An action to quiet title under the terms of the Grove Act may be commenced when any one of the following situations is shown to exist:

“(1) When the complainant is in the actual, peaceable possession of the lands.
“(2) When neither the complainant nor any other person is in the actual possession of the lands and complainant has held color of title to the lands, or interest so claimed, for a period of ten or more consecutive years next preceding the filing of the bill, and has paid taxes on the lands or interest during the whole of such period.
“(3) When neither the complainant nor any other person is in the actual possession of the lands and complainant, together with those through whom he claims, have held color of title and paid taxes on the lands or interest so claimed for a period of ten or more consecutive years next preceding the filing of the bill.
“(4) When neither the complainant nor any other person is in the actual possession of the lands and complainant and those through whom he claims have paid taxes during the whole of such period of ten years on the lands or interest claimed, and no other person has paid taxes thereon during any part of said period.”

Fitts v. Alexander, 277 Ala. 372, 375, 170 So.2d 808, 810 (1965). The appellees submit that they have met the burden of proof under situations (2), (3) and (4) of the alternatives established in Fitts. The findings of the trial court plainly indicate they have done so.

First, the trial court found that neither the appellees nor anyone else was in possession of the land, that the lands were undeveloped insofar as mineral rights were concerned, and that no drilling or mining had occurred on the lands. Consequently, no one was in either constructive or actual possession of the mineral interest in the lands subject to this suit. Cf. Thomason v. Mullinax, 403 So.2d 883 (Ala.1981). Second, the trial court found that the appellees and their predecessors in title have held color of title to the lands for a period of ten or more consecutive years preceding the filing of the suit. Third, the trial court found that the appellees had paid taxes on the mineral estates for a period of ten or more consecutive years preceding filing of the complaint.

The trial court specifically found that those persons in the chain of title leading into the appellees had assessed and paid taxes on the mineral interests located in Section 26, Township 19 South, Range 11 West, beginning contemporaneously with the deed from E.B. Tierce to W.E. Bowers in 1915. As to the mineral interests located in Section 27, Township 19 South, Range 11 West, the trial court found that the appel-lees or their predecessors in title had assessed this interest and paid taxes continuously from 1916 until 1972, when the tax assessor, through a clerical error, caused Section 27 to be deleted from the tax assessment of the appellees’ predecessor, the estate of Reuben Wright. The trial court concluded, however, that the clerical error was corrected by the tax assessor and that the appellees paid ad valorem taxes on the mineral interests in Section 27 for the entire period between the date the clerical error occurred and the date of the correction.

A public official has the inherent authority to amend errors in the public record by correcting the error or omission. 76 C.J.S. Records, § 24 (1952). In this case, the trial court found that the tax assessor mistakenly removed the mineral interests in Section 27 from assessment of appellees’ predecessor in title and corrected the error when it was discovered in 1982, by amending the appellees’ tax return for the period affected by the error. Under these circumstances, the appellees were entitled to have the record corrected and the tax assessor properly did so. See Singley v. Land, 244 Ala. 692, 694-695, 15 So.2d 564, 566 (1943); see also § 40-7-9.

Appellants assert that the appellees have not established the exclusivity of the assessment and payment of taxes mandated under the Grove Act because appellants filed an “escape assessment” pursuant to § 40-7-23. Although the appellants attempted to make the escape assessment, after the complaint was filed, for the preceding ten years, the trial court found that the appellants’ escape assessment did not constitute payment of taxes during the ten years prior to filing of the complaint. Hence, the trial court, under these facts, was authorized to conclude that no other person had paid taxes on the mineral interests during all of the previous years. See Hart v. Allgood, 260 Ala. 560, 563, 72 So.2d 91, 93 (1954).

Ill

The appellants claim that “[t]o now allow [the appellees] to come in and use the ‘technical’ aspects of the Grove Act would effectively put a burden on record title holders to search the record forward to determine whether or not anyone has acquired a later interest in the lands to which they hold clear undisputed title.”

As the evidence in the record shows, and the trial court found, the appellees and their predecessors in title have assessed the mineral interests in question since E.B. Tierce conveyed the mineral estates to W.E. Bowers in 1915. Indeed, the testimony of one of the appellees indicates that the mineral interests have been leased for oil and gas development, yet the appellants presented no evidence of payment of taxes for the mineral interests in question from 1915 to 1981 and no evidence that they have otherwise exercised dominion or control over the minerals.

In Boshell v. Keith, 418 So.2d 89 (Ala.1982), the Court held that a claim unassert-ed for twenty years is thereafter barred by the rule of repose. The circumstances of Boswell are similar to the circumstances of the present case. An action was brought to quiet title to mineral interests in certain parcels of real estate. The mineral interests had been conveyed in September of 1958 to the defendant, who paid the annual assessment. Not until February of 1980 did any heirs of the grantor seek to assert claim to the mineral interests in question.

The Court has applied the rule of repose in a variety of situations. In Spencer v. Hurd, 201 Ala. 269, 77 So. 683 (1918), the plaintiff sought to quiet title against a mortgage given in the year of 1889 and due in 1890, but which had remained dormant until 1916 when an heir of the mortgagee demanded payment. Although there was no evidence to show discharge of the debt, the Court, citing Snodgrass v. Snodgrass, 176 Ala. 276, 58 So. 201 (1912), held that the mortgage was barred under the rule of repose. Likewise, in Ballenger v. Liberty National Life Ins. Co., 271 Ala. 318, 123 So.2d 166 (1960), an employee who was shown in corporate records as having received one of the fifty original shares of a funeral benefit association that eventually became Liberty National Life Insurance Company, but never received a share certificate, brought suit more than twenty years after incorporation, demanding his stock. Relying, once again on Snodgrass, supra, the Court rejected the plaintiff’s claim even though there were no records produced to indicate that the plaintiff had ever conveyed or released his original share of stock.

In the instant case, there are two mineral deeds from the same grantor, both acknowledged by the same attorney. The first deed conveyed the mineral rights to the appellants’ predecessors in title, and reserved a vendor’s lien. The record indicates that after receiving the deed, the appellants’ predecessors never assessed the mineral interests and did not lease the interests to another or otherwise manifest any signs of ownership of the particular mineral interests for more than sixty years. The second deed, executed only a year after the first, was to the appellees’ predecessors in title, who, the record shows, promptly assessed the mineral interests and continued to do so down through the years. Based on these circumstances, the implication arises that the grantor in these two deeds foreclosed his lien against the appellants’ predecessors and conveyed the mineral interests to the appellees’ predecessors. Indeed, this implication is confirmed by the appellants’ failure to exercise any ownership rights over the property until they had been contacted by an oil exploration company many years later.

After reviewing all the relevant details and facts of this case, the Court finds no indication that the trial court erred under the circumstances here by quieting title in the appellees to the mineral interests in question; therefore, the judgment of the trial' court is affirmed.

AFFIRMED.

TORBERT, C.J., and JONES, SHORES and BEATTY, JJ., concur.


text:
    J.F. FOUNTAIN and Frank Fountain v. Gilmer P. PHILLIPS, et al.
    82-527.
    Supreme Court of Alabama.
    Sept. 23, 1983.

      Michael L. Roberts of Floyd, Keener & Cusimano, Gadsden, for appellants.
    George Hawkins and Roger C. Suttle, Gadsden, for appellees.
   JONES, Justice.

Plaintiffs/Appellees Gilmer P. Phillips and Inez B. Phillips initiated this cause on March 8, 1973, against Defendants/Appellants Frank Fountain and his father, J.F. Fountain, seeking to quiet title to approximately 1,377 acres of realty situated in Eto-wah and St. Clair Counties. Defendants answered and counterclaimed, alleging that they held interests in the real estate through certain instruments, particularly a lease/option to purchase agreement between the Phillipses and J.F. Fountain. Plaintiffs, while admitting the existence of certain transactions between the parties, denied the existence or execution of J.F. Fountain’s alleged “option,” and further contended that he had lost his interest because of abandonment and nonpayment of rent.

Subsequent to a mistrial in April of 1982, a jury, on November 5, 1982, returned a verdict in favor of the Plaintiffs. Defendants’ post-trial motions were denied. This appeal, by J.F. Fountain only, followed. We affirm.

FACTS

When this case was before us on a prior appeal (in which the trial court’s order granting Plaintiffs’ motion for a summary judgment was reversed, Fountain v. Phillips, 404 So.2d 614 (Ala.1981)), this Court’s opinion set forth a basic outline of the triable factual issues. For purposes of this appeal, we need only relate those facts and procedural events essential to a consideration of the issues here presented and treated in this opinion.

During trial, J.F. Fountain sought to testify concerning an alleged handwritten “option to purchase,” which, according to him, was executed by the Phillipses and given to him at the same time he received a one-year leasehold agreement. The trial court sustained objections to this evidence. Pertinent portions of that colloquy are quoted verbatim from the record, to-wit:

“Q [L]et me again call your attention to this Lease Agreement here dated July of 1972. Let me ask you if another agreement was entered into with the Phillips’ at that time?
“A The balance of the agreement would have been something like this was on the option to purchase the same — something like Frank had had.
'Q Okay. Is it your testimony that you all entered into an agreement concerning an option?
‘A Yes, we did.
‘Q Okay. And what were the terms of that option at least as far as if you can compare it to anything?
“Mr. SUTTLE: Your Honor, if it is in writing we would object to any oral statement or testimony concerning the terms of the option agreement. If it is in writing then the writing would control.
“THE COURT: It would unless there was some controversy about it or if the provisions were unclear in some respect.
‘Q Well, if I could just go forward just a moment. This agreement that we are talking about, do you have the original of that, this July Option Agreement?
‘A I don’t have the original of it. I happen to have the original of this.
‘Q Well, who, if anyone, had the original of this July Option that you are talking about?
‘A We drew it up on their table. It was drawn up on their table at the same time this was.
‘Q Did you ever take possession of it?
‘A I don’t think I did.
‘Q Okay. Who had possession of it the last time that you saw that particular document?
‘A It was still in their office.
‘Q Okay. Have you had occasion since that time to ask them to provide it to you?
‘A Yes, because I didn’t get it when I got this.
‘Q And what was their response?
‘A Well, ‘we couldn’t find it right then’ or ‘we would get one’ or ‘draw up another one’ and they did.
“MR. ROBERTS: Your Honor, I think that satisfies the predicate as far as the best evidence objection.
“THE COURT: Where did this one come from? I’m still not clear.
“MR. ROBERTS: This is the lease right here that we have been talking about.
“THE COURT: You are talking about an option that we don’t have before us?
“MR. ROBERTS: Yes, sir, Judge.
“MR. SUTTLE: Is he talking about some other option other than what has been offered in evidence, some other written document? Is that what he is talking about?
“MR. ROBERTS: Yes, sir.
“THE COURT: But it is not part of what has been offered?
“MR. ROBERTS: Right. It is one that we have never had possession of, your Honor.
“MR. HAWKINS: You are not talking about Defendant’s Exhibit 2?
“MR. ROBERTS: No, sir.
“THE COURT: Well, now, I don’t know if he can testify about some lost Option Agreement.
“MR. SUTTLE: That is what it amounts to, if the court please.
“MR. ROBERTS: We need to take it up, I believe.
“MR. SUTTLE: By oral statements—
“THE COURT: — Well, you all approach the bench.
“(Whereupon the following side bar discussion took place.)
“MR. HEDGSPETH: There was testimony at the last trial offered to the effect—
“MR. ROBERTS: —I assume their objection is on the best evidence rule, and the number one exception to that rule is where the document was last in the possession of the adverse party and not available to the party testifying about it.
“THE COURT: Well, is there any evidence that the adverse party ever had possession other than his testimony?
“MR. ROBERTS: That is all that is required under the Best Evidence Rule, your Honor. This was gone into before.
“MR. SUTTLE: We are dealing with land, Judge.
“THE COURT: It seems to me that it is kind of self serving. You could always say the other side had them.
“MR. ROBERTS: That is the law. I can find it here.
“THE COURT: I am going to sustain. If you can find me a case that says that I will let you go into it.”

During summation to the jury Plaintiffs’ counsel made the following argument, in part (quoting from the record):

“But the Fountains were not satisfied with filing these documents in the Record Room where you record mortgages and deeds and things of that kind. They were not satisfied after the probate of the Phillips Estate. What did they do? They filed against the Estate of Gilmer P. Phillips in the Probate Court of Eto-wah County a claim of J.F. Fountain and the claim of Frank Fountain. There is attached to these claims a copy of these documents I referred to which was the April 23, 1971 Lease Option with Frank and attached a copy of the 1969 Lease Option with Frank and the amendment. But then they attached to that claim the same document, January, 1972 — I mean July, 1972. That is the one year Lease which we admit is legal and was entered into but which was waived and abandoned by Mr. Joe on January 29, 1973. They attached to that claim a copy of this document which is the initialed document, which we deny ever existed. They attached to that claim a copy of these pages which they claim to be an option. They filed that against the estate of Gil-mer Phillips and they claimed that the deceased owed the claimant the total sum of Five Hundred Thousand Dollars plus the interest thereon and the additional sum of Five Thousand — what did I say? Did I say Five? — I mean Five Hundred Thousand plus interest and the additional sum of Five Hundred Thousand Dollars in punitive damages. So Mr. Joe over here filed a One Million Dollar claim against the Phillips Estate which is still owing or unsatisfied, which the court will charge you constitutes a blanket lien against all property, real estate, personal property and what not owned by Gilmer P. Phillips at the time of his death. This is a part of what we are trying to have removed from the records of Etowah County. This is in the Probate Court. Frank Fountain filed a similar claim— identical — claiming Five Hundred Thousand Dollars damages and an additional Five Hundred Thousand Dollars punitive damages. So the Fountains have filed over a total of Two Million Dollars of claims against the Estate of Gilmer Phillips in the Probate Court of Etowah County. Here five years after the death of Gilmer Phillips these claims cloud everything involved in his estate. Ladies and Gentlemen, we are dealing with serious business here. The same thing could happen to you.
“MR. HEDGSPETH: Judge, I am going to object to that. That is totally improper and Mr. Suttle knows that, trying to draw personal references to the jury. We object to that and ask the court to instruct the jury to ignore that.
“MR. SUTTLE: I have the right to argue what the potentialities are.
“THE COURT: All right. Go ahead.
(Mr. Suttle continuing with closing argument:)
“What I started to say is that the same thing could happen to you or to your family or your estate if people are allowed to come in and file documents like this which we say are forgeries, spurious, illegal and have no legal validity and tie up your estate for years and years and years and require your people to litigate. This suit was filed in 1973 in an effort by [Plaintiffs’ first lawyer, now deceased] to clear this title. We are still litigating in 1982 nine years later.”

ISSUES

Of the several issues presented, we consider the two issues arising out of the procedural context set out under “FACTS” above deserving of our treatment:

Appellant states those issues thusly:
“[1] That the trial court erred in sustaining the Phillips’ Best Evidence Rule objection to Joe’s testimony concerning the handwritten July, 1972 option.
“[2] That error appears in the overruling of objections to ‘Golden Rule’ argument made by the Phillips’ attorney during closing argument.”

Fountain contends that the trial court erred in failing to accept his testimony concerning the alleged “missing” option agreement of July 1972. We disagree.

J.F. Fountain testified that the original “missing option” could not be found, and, as a result, Plaintiffs drew up a subsequent “option.” While the “best evidence rule” objection may have been inappropriate, the trial judge correctly excluded the evidence under the general objection of relevancy. To be admissible, all evidence must first have some tendency to shed light on the inquiry in issue. Stated simply, it must be relevant. Taylor v. Mason, 390 So.2d 1046 (Ala.1980); Ward v. State, 52 Ala.App. 392, 293 So.2d 307 (1974).

It is not the “missing option” which Fountain seeks to enforce, but a subsequent one alleged by him to have been agreed upon by the parties. This is the agreement which the jury, after hearing conflicting testimony as to its alleged existence, found contrary to Fountain’s assertions.

J.F. Fountain also testified that he never took possession of the alleged “missing option.” In 17 C.J.S. Contracts, § 64 (1963), we find the following:

“Generally delivery is an essential element of the execution of a contract in writing, and such a contract is not binding unless it is delivered.”

It is undisputed that the “missing option” was never delivered by the Phillipses to J.F. Fountain, and, as such, could not operate so as to bind the parties contractually. In other words, the very evidence offered to meet the requisite predicate for proof of a lost document failed the admissibility test for lack of relevancy and nondelivery of the instrument in question.

Fountain’s next point of contention is that the trial court erred in not excluding certain remarks by Appellees’ counsel during his closing arguments to the jury, when he stated:

“Here five years after the death of Gilmer Phillips these claims cloud everything involved in his estate. Ladies and gentlemen, we are dealing with serious business here. The same thing could happen to you." (Emphasis added.)

Generally, an appeal to the jury’s sympathy during closing argument by inviting the jurors, individually, to stand in the shoes of the litigant is considered improper. Allison v. Acton-Etheridge Coal Co., 289 Ala. 443, 268 So.2d 725 (1972). Case law demonstrates, however, that the courts have not been overly restrictive in their application of this rule. An argument similar to the one here challenged was addressed in British General Insurance Co. v. Simpson Sales Co., 265 Ala. 683, 93 So.2d 763 (1957):

“Mr. Jones: Now, the British General Insurance Company says oh, no, we can’t insure that, property. We can’t pay you for that. You can look at this Agency Agreement, and you can see we can’t insure that property. You can see we can’t go any farther than Jefferson County, that is as far as we can go. We can’t insure it anywhere else, so you are just out, big boy, we are sorry. How would you like to have that happen to you?” (Emphasis added.)

Commenting on these remarks, the Court said:

“We do not think these remarks were so improper and prejudicial as to justify a reversal of the trial court. It is generally held that it is improper to ask the jury to divest themselves of their impartial position and place themselves in the shoes of the plaintiff. Kahn v. Green, Tex.Civ.App., 234 S.W.2d 131; F.W. Woolworth Co. v. Wilson, 5 Cir., 74 F.2d 439, 98 A.L.R. 681; 53 Am.Jur., Trials, § 496, p. 401 (authorities cited by appellant).
“However, we have said that we ‘will not too narrowly criticize arguments of counsel in the matter of inferences drawn for illustration or figures of speech adopted in pressing a point.’ Louisville & Nashville R. Co. v. Tucker, 262 Ala. 570, 578, 80 So.2d 288, 295; Jones v. Colvard, 215 Ala. 216, 218, 109 So. 877. Nor should we encroach on the trial court’s discretion in the matter of argument of counsel. ‘Much must be left in such matters to the enlightened judgment of the trial court, with presumptions in favor of the ruling.” Smith v. Reed, 252 Ala. 107, 112, 39 So.2d 653, 657; Birmingham Electric Co. v. Mann, 226 Ala. 379, 381, 147 So. 165, 166.
“Regardless of the propriety or impropriety of the remarks of counsel in the case at bar, we do not feel there has been a showing of injury to appellant requiring a reversal. As stated in Birmingham Electric Co. v. Perkins, 249 Ala. 426, 430, 31 So.2d 640, 642:
“ ‘ * ⅜ * The trial court was present and was an eyewitness to all of the proceedings and in overruling the defendant’s motions in effect found that the remarks were not prejudicial to the defendant. Therefore the action of the trial court in denying the motions for mistrial and in overruling the motions for new trials will not be disturbed by this court unless it affirmatively appears from the entire record that the statements involved were probably prejudicial to the defendant, either as to result or the amount of damages assessed. * * *

See, also, Cofield v. State, 41 Ala.App. 469, 136 So.2d 897 (1961).

Fountain’s reliance upon Estis Trucking Co., Inc. v. Hammond, 387 So.2d 768 (Ala.1980), is misplaced. Indeed, the Estis Trucking Company Court, although reaching a different result, commented upon British General Insurance, supra, approvingly and distinguished the jury arguments in the two cases thusly:

“[I]n British General Insurance Co. v. Simpson Sales Co., 265 Ala. 683, 93 So.2d 763 (1957), this Court held that there had not been a showing of injury requiring reversal when plaintiff’s counsel, in closing argument, asked the jury, ‘How would you like to have that happen to you?’ In British General the main issue was whether plaintiff was insured, plaintiff’s counsel contending that plaintiff was led by the insurance agent to believe that he was covered, and asking, in argument, for the jurors to determine whether they would have believed they were covered if the same thing had happened to them.
“However, the argument in the instant case goes beyond the argument alleged to be improper in Hayles [v. Jeter, 279 Ala. 283, 184 So.2d 363 (1966)] and British General. In the instant case, there was not merely a bare invitation for the jurors to put themselves in the place of the plaintiff. There was more. The argument here presented was an appeal to the jurors’ feelings and passion, tantamount to requesting the jurors to hold in favor of the plaintiffs based upon the jurors’ sympathy for Mrs. Hammond. A jury verdict reached in favor of any party on the basis of bias, prejudice or sympathy must be set aside.”

As in British General Insurance Co., when the objected to portion of the argument in the instant case is viewed in its full context, we cannot say that “these remarks were so improper and prejudicial as to justify a reversal of the trial court.” The reluctance of the courts to find prejudicial error in these situations finds its motivation in the countervailing rule “that great latitude should be given counsel in the content and scope of their closing arguments.” R.C. Bottling Co. v. Sorrells, 290 Ala. 187, 275 So.2d 131 (1973).

After careful consideration of these and each of the other issues presented, we find no reversible error; therefore, the judgment below is due to be, and hereby is, affirmed; and this 10-year old case (submitted in this Court August 26, 1983) is brought to an end.

AFFIRMED.

TORBERT, C.J., and MADDOX, SHORES and BEATTY, JJ., concur.

      . Gilmer P. Phillips died in 1977 during the course of these proceedings, and Inez B. Phillips, as Executrix, was substituted as a party.

      . Although both defendants executed the notice of appeal, no adverse ruling pertaining to Frank Fountain is presented for review.


author: SHORES, Justice.

text:
    George W. WILSON v. VULCAN RIVET AND BOLT CORPORATION, et al.
    82-535.
    Supreme Court of Alabama.
    Sept. 23, 1983.
    David H. Thomas, Birmingham, for appellant.
    Robert G. Tate and F.A. Flowers, III of Thomas, Taliaferro, Forman, Burr & Murray, Birmingham, for appellees.
   SHORES, Justice.

George Wilson, former employee of Vulcan Rivet and Bolt Corporation (Vulcan), filed this suit against Vulcan and its former corporate president, claiming breach of an oral contract for life employment and tor-tious misrepresentation.

According to Wilson, in 1967 his union representative told him that Herbert E. Smith, Jr., at that time president of Vulcan, told the union representative that Wilson had life employment with Vulcan if he wanted it. It is undisputed that Smith never spoke directly with Wilson about this statement. Wilson learned about the alleged conversation only through his union representative.

Wilson worked continuously for Vulcan until July 30, 1980, when he was laid off. He has not worked for Vulcan since that date. He claims that Vulcan and Smith breached the employment contract by laying him off. Alternatively, Wilson claims that they misrepresented to him that he had a contract for life employment, and that he relied on this representation to his detriment and gave up his union benefits.

The trial court directed a verdict for Vulcan and Smith on both counts at the close of the plaintiff’s case. Wilson appeals from the judgment entered upon the directed verdict. We affirm.

There was absolutely no evidence of any promise or offer of life employment. Wilson’s own testimony is that he never spoke to Smith or anyone else in Vulcan’s management with authority to make this type of extraordinary contract. In fact, the only testimony about an offer is Wilson’s testimony that his union representative told him that Smith had said Wilson had a job with Vulcan for the rest of his life. This statement is hearsay. Wilson is offering it to prove that Smith, on behalf of Vulcan, offered him life employment. Testimony from the union representative would be admissible to prove that Smith made an offer. 6 J. Wigmore, Evidence in Trials at Common Law § 1770 (Chadbourn rev. 1976). However, only Wilson testified about an alleged offer, and all that his testimony proves is that the union representative, not Smith, made a statement. The union representative is admittedly not an agent of Vulcan or its officers, and any representations by him about life employment are not binding upon the company or Smith.

Wilson also failed to prove consideration for the alleged promise. In National Union Life Ins. Co. v. Ingram, 275 Ala. 310, 314, 154 So.2d 666, 669 (1963), we held that life employment contracts must be supported by “consideration of substantial value, independent of any service to be performed.” The consideration must be for “other than the service to be rendered for which he is to receive compensation.” Alabama Mills, Inc. v. Smith, 237 Ala. 296, 299, 186 So. 699, 702 (1939).

Wilson had suffered a severe injury to his hand while in the course of his employment at Vulcan in 1964. He filed a claim for workmen’s compensation and received a “small amount of compensation.” Wilson claims that he had intended to make a claim against Vulcan for further damages resulting from this injury. Instead, he claims to have released the claim in exchange for the promise of life employment.

We have recognized that release of a claim against one’s employer may be sufficient consideration to support a contract for “steady and permanent” employment with the employer. Alabama Mills, Inc. v. Smith, 237 Ala. at 299, 186 So. at 702. See, also, Air Engineers, Inc. v. Reese, 283 Ala. 355, 217 So.2d 66 (1968).

In the case at bar, it is not clear that any claim was released. Wilson concedes that he had received some compensation benefits for this injury. There is no evidence indicating that he was entitled to more than he got, or that he had a good faith belief that he was entitled to more, regardless of the validity of the claim. Hartford Fire Ins. Co. v. Clark, 258 Ala. 141, 61 So.2d 19 (1952).

This Court has said that a promise to forbear from suit is adequate consideration to support a life employment contract only if it is given at the request of the employer. Air Engineers, Inc. v. Reese, 283 Ala. at 361, 217 So.2d at 72; Hartford Fire Ins. Co. v. Clark, 258 Ala. at 149, 61 So.2d at 24. There is no evidence that Smith or anyone else at Vulcan requested Wilson to release his claim in exchange for a contract of life employment. The evidence does not support Wilson’s contention that his forbearance from suit was given as consideration for a promise of lifetime employment with Vulcan.

Wilson claims that he gave additional consideration in 1969, when he accepted a management position and gave up his “union representation, collective bargaining, salary negotiability, grievance procedure, and legal protection from the judiciary.” He claims Vulcan knew that he gave up his labor status and union benefits and accepted a new position in exchange for the promise of life employment. Scott v. Lane, 409 So.2d 791 (Ala.1982). Again, there is no evidence that Smith or anyone else at Vulcan promised Wilson a job for the rest of his life in exchange for giving up his union benefits.

Wilson has failed to prove the elements of an oral contract for life employment. In the absence of proof of a promise or agreement, and consideration, it was proper to direct a verdict in favor of Smith and Vulcan on the count alleging breach of contract. A contract for employment which is indefinite and does not specify duration, is construed to be terminable at will. Bierley v. American Cast Iron Pipe Co., 374 So.2d 1341 (Ala.1979). A simple contract for employment is undoubtedly all that existed here, and Vulcan did not breach that contract when it laid off Wilson.

In the absence of proof of a statement or representation by his employer, we must hold that Wilson also failed to prove a prima facie case for fraud and tortious misrepresentation. The trial court properly granted the employer’s and Smith’s motions for directed verdict on this count. Its judgment is, therefore, affirmed.

AFFIRMED.

TORBERT, C.J., and MADDOX, JONES and BEATTY, JJ., concur.


text:
    Elsie M. CHAFFIN and Andrew A. Chaffin v. Charles HALL.
    82-678.
    Supreme Court of Alabama.
    Sept. 23, 1983.

      Michael L. Roberts of Floyd, Keener & Cusimano, Gadsden, for appellants.
    J. Richard Carr, Gadsden, for appellee.
   JONES, Justice.

This case requires us to determine whether a promissory note, executed by Defendants/Appellants, to Plaintiff/Appellee, is enforceable under Code 1975, § 7-3-408. Hall, as promissee, sued Elsie and Andrew Chaffin, along with Highland Development, Inc. (Highland), a corporation owned by the Chaffins, on two promissory notes signed by the Chaffins in their personal capacity, and by Mrs. Chaffin on behalf of Highland in her capacity as secretary-treasurer of the company. The Chaffins appeal the trial court’s judgment favorable to Plaintiff, contending no consideration existed to support one of the notes, and that such note did not meet the “no consideration” saving exception of § 7-3-408. Additionally, the Chaffins contend that, even if the note was valid and enforceable against them, the trial judge erred in denying credit on the notes for conveyances of property to Hall. We affirm.

Hall became involved in the Chaffins’ business in 1977, periodically loaning money to the corporation for which he was given promissory notes executed by Highland. The total indebtedness represented by these notes — $61,598—was combined into one promissory note that was executed by the corporation and signed by the Chaffins in an individual capacity on March 23, 1978. On March 23,1979, another promissory note for $26,157 was executed and signed in like manner. The record reveals this note was for accrued interest due Hall, and for money loaned the Chaffins to complete a house. Another note was executed, again by Highland and the Chaffins individually, on April 1, 1979, for $59,137. Hall testified money had been paid on the March 23, 1978, note, and that this note was given “just to update” the debt.

Hall did not attempt to collect notes issued prior to 1979, but, after nonpayment, sued Highland and the Chaffins on the 1979 notes seeking to collect the principal, interest, and reasonable attorney’s fees authorized by the notes. The trial judge entered judgment for $137,987 against Highland and the Chaffins, the amount requested in Hall’s complaint.

I. THE CONSIDERATION

Code 1975, § 7-3-408, the applicable U.C.C. provision concerning adequate consideration for commercial paper, states, in relevant part:

“Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (section 7-3-305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an antecedent obligation of any kind.”

Because it is conceded Hall does not have “the rights of a holder in due course,” and that no consideration passed to the Chaffins for the April 1, 1979, note, the issue simply becomes whether the April 1, 1979, note was “given in payment of or as security for an antecedent obligation of any kind.”

The Chaffins contend that because the antecedent debt evidenced by the April 1 note was not their debt, but rather Highland’s debt, the “except” clause of § 7-3-408 does not apply; therefore, they argue, the lack of consideration constitutes an affirmative defense to the note obligation. Stated differently, the Chaffins argue that the antecedent debt, being paid or secured, must be owed by the party giving the new instrument in order for the “except” clause of § 7-3-408 to eliminate the consideration requirement.

We disagree with the Chaffins’ contention. The Official Comment to § 7-3^408 explicitly states:

“2. The 'except' clause is intended to remove the difficulties which have arisen where a note or a draft, or an indorsement of either, is given as payment or as security for a debt already owed by the party giving it, or by a third person. • The provision is intended to change the result of decisions holding that where no extension of time or other concession is given by the creditor the new obligation fails for lack of legal consideration. It is intended also to mean that an instrument given for more or less than the amount of a liquidated obligation does not fail by reason of the common law rule that an obligation for a lesser liquidated amount cannot be consideration for the surrender of a greater.”

We find this unambiguous language disposi-tive, and hold that the “except” clause in § 7-3-408 applies to third parties in the position of the Chaffins. See Newman Grove Creamery Co. v. Deaver, 208 Neb. 178, 302 N.W.2d 697 (1981); Musulin v. Woodtek, Inc., 260 Or. 576, 491 P.2d 1173 (1971).

The Chaffins further contend that, even if the “except” clause applies to third parties in their position, the clause remains inapplicable because the April 1 note was not “given as payment of or as security for” the antecedent debt. The trial court decided this question of fact against the Chaf-fins.

Under the ore tenus standard of review, which prevails in this state, the findings of the trial court, when based upon competent evidence presented ore terns, are favored with a presumption of correctness and will not be disturbed on appeal if supported by the evidence or any reasonable inference therefrom, unless they are plainly and palpably erroneous or manifestly unjust. 2A Ala.Digest, Appeal & Error § 931(1).

The record reveals sufficient evidence from which the trial court reasonably could have concluded the note was “given in payment of or as security for” the debt. Mrs. Chaffin testified that the debt obligation represented by the April 1 note was a consolidation of previous notes issued by Highland. The evidence showed that Mr. Hall never sought to collect the numerous individual notes made prior to consolidation of these sums. Furthermore, “[pjersons who sign negotiable instruments are charged with liability according to the terms thereof.” 10 C.J.S. Bills and Notes § 32(a) (1938).

The Chaffins’ signatures, as makers, furnished additional security because of the personal assumption of primary liability for the corporate indebtedness, similar to the additional security afforded by accommodation endorsers. (For a good discussion of the liability assumed by accommodation endorsers not receiving direct benefit for assumption of liability, see Gavin v. Hinrichs, 375 So.2d 1063 (Ala.1979); Buffalo County v. Richards, 212 Neb. 826, 326 N.W.2d 179 (1982); Pitrolo v. Community Bank & Trust, N.A., 298 S.E.2d 853 (W.Va.1982); and Peoples American Bank, 132 Ga.App. 751, 209 S.E.2d 80 (1974)).

Accordingly, we find that the “except” clause in § 7-3-408 eliminated the requirement for consideration; therefore, the April 1 note was valid and enforceable against the Chaffins.

II. THE PROPERTY CONVEYANCES

The Chaffins contend that their interest in an 80-acre parcel of property was conveyed to Hall in complete satisfaction of Highland’s debt to Hall; Mrs. Chaffin so testified. Hall contends, however, that only the profit, if any, made from the resale of the property was to be applied in reducing Highland’s debt to him; Hall so testified. The undisputed evidence shows that Hall purchased the property with money he borrowed, and that, while the Chaffins did receive an interest in the property which was subsequently deeded back to Hall, the Chaffins did not contribute any money for the purchase or for payment of interest on the funds borrowed to purchase the property. Furthermore, the evidence also shows that Hall sold the property for essentially the amount of money he had invested in it, thereby making no profit on the resale.

When we apply our ore tenus standard of review, discussed previously, to the conflicting evidence before the trial judge, we find competent evidence supportive of the trial court’s findings, and we cannot say those findings were erroneous or manifestly unjust.

Because we find no error below, the judgment appealed from is affirmed.

AFFIRMED.

TORBERT, C.J., and MADDOX, SHORES and BEATTY, JJ., concur.

      . The Chaffins’ reliance on Flintkote Company v. Grimes, 281 Ala. 707, 208 So.2d 87 (1968), in support of their contention that no consideration existed, need not be addressed because this point is conceded by the Appellee.


author: BEATTY, Justice.

text:
    CENTRAL BANK OF THE SOUTH v. John BEASLEY. John BEASLEY v. CENTRAL BANK OF THE SOUTH.
    82-811, 82-837.
    Supreme Court of Alabama.
    Sept. 23, 1983.

      Michael L. Edwards and Susan Salonimer of Berkowitz, Lefkovits, Patrick, Isom, Edwards & Kushner, Birmingham, for appellant/cross-appellee.
    Benjamin C. Maumenee and Margaret G. Thomas of Bashinsky & Maumenee, Fair-hope, for appellee/eross-appellant.
   BEATTY, Justice.

These are appeals from a .declaratory judgment action seeking an injunction to prevent the enforcement of a noncompetition covenant. The trial court found that the covenant was overbroad, modified the covenant, and enjoined Central Bank of the South (Central) from enforcing the covenant except as modified. We reverse and remand.

The issues presented for review are whether the trial court erred in determining that the covenant was (1) not void, (2) overbroad in geographic scope, and (3) over-broad in duration. Additionally, Central asks this Court to clarify the trial court’s meaning of the term “banking” as it is used in the court’s order.

The covenant at issue in this case was a part of an acquisition agreement for a merger of First National Bank of Baldwin County (First National) at Fairhope and Central. At the time of the merger, John Beasley was an officer and director of First National. Beasley admitted that he signed the acquisition agreement containing the noncompetition covenant.

The covenant reads as follows:

“10.2 Non-Competition. To induce Central Bank to enter into this Agreement, each of the First National directors and officers executing this Agreement agrees that for a period of two years after the later of (a) the Effective Date; or (b) the termination of employment or service of such officer or director from First National or the Continuing Bank, he will not, within Baldwin or Mobile Counties, Alabama, as principal, agent, trustee or through the agency of any corporation, partnership, association or agent or agency, engage in the business of banking and shall not (i) control or own (directly or indirectly) more than 5% of the outstanding capital stock of any corporation engaged in or controlling any such business having less than 500 shareholders, (ii) control or own (directly or indirectly) more than 5% of the outstanding capital stock of any corporation engaged in or controlling any such business having 500 or more shareholders (other than Central Bank or any of its affiliates), or (iii) serve as an officer, director or employee of any corporation, or as a member or employee of any partnership, or as an owner or employee of any other business, which directly or indirectly conducts a banking business within Baldwin or Mobile Counties, Alabama. In the event that the provisions of this Section 10.2 should be deemed to exceed the time or geographic limitations permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations permitted by applicable law.”

When Beasley and the other First National directors signed the acquisition agreement on September 16, 1981, Beasley received $256,000 in exchange for his First National stock. The directors, who were all members of a voting trust, received dividends on their stock until the effective date of the agreement, May 15, 1982.

Beasley remained with Central at Fair-hope after the merger as an officer and director until he terminated his employment on March 15, 1983. He then went to work for Farmers and Merchants Bank in Foley, approximately 20 miles from Fair-hope. Foley and Fairhope are both located in Baldwin County. Central’s president, Byrd Williams, notified Beasley that Central intended to enforce the noncompetition covenant of the acquisition agreement that he had signed. Beasley filed a motion for a preliminary injunction and instituted an action for a declaratory judgment and a permanent injunction to prevent enforcement of the agreement.

The trial court consolidated the hearing on the motion for preliminary relief with the trial on the merits. After the hearing, the court entered a decree finding that:

“1. John Beasley received consideration for the Noncompetition Agreement made the subject of this lawsuit.
“2. John Beasley is charged with knowledge of the terms of said Noncom-petition Agreement.
“3. That the Noncompetition Agreement is overbroad in geographic and time requirements, but is not invalid.”

The trial court relied on First Alabama Bancshares, Inc. v. McGahey, 355 So.2d 681 (Ala.1978), to find that the noncompetition agreement was not void. Beasley asserts that this Court wrongly interpreted Code of 1975, § 8-1-1(b), in McGahey. He contends that the covenant is void because it is not within the statutory exception of § 8-1-1(b).

Section 8-1-1 provides the statutory requirements for covenants not to compete:

“(a) Every contract by which anyone is restrained from exercising a lawful profession, trade or business of any kind otherwise than is provided by this section is to that extent void.
“(b) One who sells the good will of a business may agree with the buyer and one who is employed as an agent, servant or employee may agree with his employer to refrain from carrying on or engaging in a similar business and from soliciting old customers of such employer within a specified county, city or part thereof so long as the buyer, or any person deriving title to the good will from him, or employer carries on a like business therein.”

McGahey concerned a covenant not to compete resulting from a merger of First Alabama Bancshares (Bancshares) and Citizens Bank of Guntersville (Citizens). Bancshares attempted to enforce the covenant against a former director, president, and stockholder of Citizens who worked for the successor bank for a year after the merger.

First, this Court determined that an individual stockholder has a vendible interest in the good will of the corporation.

“[T]he well-settled rule in Alabama [is] that the stockholders of a corporation are the equitable owners of its assets. Williams v. North Ala. Express, 263 Ala. 581, 83 So.2d 330 (1955). Therefore, because the good will of a corporation is a corporate asset, a stockholder is the equitable owner of that good will in the proportion that his shares bear to the total outstanding shares of stock in the corporation....” 355 So.2d at 683.

We then concluded that the exchange of stock involved in a merger constitutes a “sale” of good will within the meaning of Tit. 9, § 23, Code (§ 8-1-1, Code of Ala. 1975).

“The intent of the Legislature in passing § 23 was to protect purchasers of a business from prior entrepreneurs where the good will of that business is one of the assets purchased.... We perceive no set of circumstances more illustrative of the legislative purpose than the instant case. Here, a statewide corporation merged and acquired the assets of a local banking institution. The utmost trust and personal faith is required of a banker by his customers. Obviously, then, the good will of Citizens Bank was an important asset acquired by Bancshares; and, therefore, Bancshares had a legitimate interest in preventing McGahey, who had helped establish and nourish that good will, from competing locally with it. The term ‘sale,’ as included in Tit. 9, § 23, Code, must be interpreted to include a transfer or acquisition. No less-expansive interpretation could foster the legislative intent.... ” (Citation omitted.) 355 So.2d at 683-84.

This Court rejects Beasley’s contention that McGahey should be overruled as against public policy.

As applied to the present facts, McGahey compels the conclusion that Central acquired the goodwill of First National. The noncompetition covenant, therefore, falls within the § 8-1-1(b) exception to the general rule of § 8-1-1(a). The trial court correctly relied on McGahey.

The covenant in this case is not void, but it still must meet certain requirements of reasonableness:

(1) The employer must have a protectable interest;

(2) The time and place of the restriction must be reasonably related to that interest;

(3) The restriction must not impose undue hardship. DeVoe v. Cheatham, 413 So.2d 1141, 1142 (Ala.1982).

The first requirement is met because Central has a legitimate interest in preventing competition which would undermine the goodwill it acquired in the merger. McGahey, supra, at 683-84.

The material facts concerning the time and place requirements are undisputed. “Where the evidence before the trial court is undisputed, the ore tenus rule is inapplicable, and the Supreme Court will sit in judgment on the evidence de novo, indulging no presumption in favor of the trial court’s application of the law to those facts.” Samford v. First Alabama Bank of Montgomery, N.A., 431 So.2d 146, 149 (Ala.1983).

As to the place requirement, Central proved that its market area includes all of Baldwin County and that bank customers frequently follow bank officers with whom they have established business relationships when those officers move to other banks within the same market area. Beasley admitted that he is well-known in Baldwin County and has many customers in the banking industry.

The trial court ordered that Beasley be “prohibited by the terms of the Noncompet-ition Agreement from banking in any city, town or village in Baldwin County in which Central Bank of the South, as of the date of the Noncompetition Agreement, had a banking facility.”

Central had no banking facility in Baldwin County at the time the noncompetition agreement was signed. At that time, Central had only an executory contract to acquire First National. The court’s order is ambiguous, but it is not necessary to discern the trial court’s intention because this Court holds that the trial court erred in modifying the covenant to apply to less than all of Baldwin County.

The covenant’s two-year time limitation was due to begin “after the later of (a) the Effective Date; or (b) the termination of employment or service of such officer or director from First National or the Continuing Bank.” The trial court modified this time requirement to run for two years from the effective date of the agreement, May 15,1982, rather than the later date of Beasley’s termination, March 15,1983. The covenant as modified would allow a former First National director to remain with Central for two years after the effective date of the agreement and then go to work for a competing bank, taking Central’s customers along with him, and decreasing the value of the goodwill he sold to Central. The purpose of the time limitation is to prevent competition with former First National directors. The trial court’s modification does not give effect to that purpose, because there is no competition until the director leaves Central’s employment.

The two-year time period from Beasley’s termination date is reasonably related to Central’s interest in protecting its goodwill by allowing it to establish a working relationship with its customers. The trial court erred in finding the covenant overbroad in duration.

The final consideration is whether the covenant imposes an undue hardship:

“[WJhether [the restraint necessary for the employer’s protection] imposes on the employee any greater restraint than is reasonably necessary to secure to the business of the employer, or the good will thereof, such protection, regard being had to the injury which may result to the public from restraining the breach of the covenant, in the loss of the employee’s service and skill and the danger of his becoming a charge upon the public. ... ”

Hill v. Rice, 259 Ala. 587, 592-93, 67 So.2d 789, 794 (1953) (cited in Cullman Broadcasting Co., Inc. v. Bosley, 373 So.2d 830, 836 (Ala.1979)).

Considering all of the circumstances, we cannot hold that Beasley will suffer undue hardship if the covenant is enforced according to its terms. As a former director and officer of First National, he bargained for and received over a quarter of a million dollars for his stock. He is free to accept employment in a bank outside of Baldwin County, or he can accept a nonbanking position within Baldwin County. On March 16, 1985, he will be totally free of the noncom-petition covenant. We do not see how any lesser burden could be placed on Beasley without completely derogating both the covenant’s purpose and its consideration.

The trial court’s order did not specifically name all of the activities provided for in the covenant; it used merely the term “banking.” “Banking” is defined in Black’s Law Dictionary 133 (Rev. 5th Ed.1979):

“The business of banking as defined by law and custom, consists in the issue of notes payable on demand intended to circulate as money when the banks are banks of issue; in receiving deposits payable on demand; in discounting commercial paper; making loans of money on collateral security; buying and selling bills of exchange; negotiating loans, and dealing in negotiable securities issued by the government, state and national, and municipal and other corporations.”

The definition of “banking” is broad enough to include, and the trial court clearly intended the term to include, the prohibited activities as they are stated in the covenant.

Based upon our conclusions and the authorities cited, the judgment is due to be, and it is hereby, reversed and the case is remanded for further proceedings consistent with the views expressed in this opinion.

REVERSED AND REMANDED.

MADDOX, JONES, EMBRY and ADAMS, JJ., concur.

      . The covenant’s restriction on geographic area covers Mobile and Baldwin counties. Central asks that this Court consider the restriction applicable only to Baldwin County.