during allocation periods on the basis of a recent take formula except where it would conflict with Airco's right to take 69% of Vistron's production during allocation periods. Since Airco did not insist on its full 69% during the periods in which Vistron applied a recent take formula, Vistron's conduct during those periods does not aid the Court in determining the interpretation to be given to paragraph 10.
In instances such as this where the meaning of a contractual provision is not clear from the face of the contract or is capable of more than one reasonable interpretation, the Court may look beyond the four corners of the contract and consider extrinsic evidence regarding the negotiations and circumstances surrounding the making of the contract in order to glean the parties' intent. Chuy v. Philadelphia Eagles Football Club, 595 F.2d at 1271; Stony's Trucking Co. v. Public Utilities Commission, 290 N.E.2d at 568; Ferguson v. Sharkey Construction Co., 75 Ohio L. Abs. 206, 137 N.E.2d 525, 527 (Ohio App.1956). As heretofore stated, the Court has found: that in the course of the negotiations of the amended contract, Mr. Murray showed the Airco allocation clause to Mr. Richards for the purpose of making him aware of the difficulty of designing a new allocation provision for Thermice that would result in more CO 2 for Thermice during allocation periods without conflicting with the Airco allocation clause; that both parties were aware that Airco repeatedly failed to purchase all of its 69% allocation share; that Vistron twice rejected an allocation clause because Vistron feared that it would conflict with Airco's allocation rights; and, that Vistron would not write a new allocation provision for Thermice until the quantity provisions in the Airco agreement were finalized. In light of these findings, which are based upon the credible evidence submitted at trial, the Court finds that at the time the amended contract was negotiated the parties did not intend the amended allocation clause to conflict with Airco's right to purchase up to 69% of Vistron's CO 2 output during allocation periods. Accordingly, we find that amended paragraph 10 requires application of a recent take formula in determining the apportionment of CO 2 during allocation periods subject, however, to Airco's right to demand and receive 69% of Vistron's output during allocation periods.
The Court is compelled to reject Thermice's interpretation of paragraph 10 for another reason-under the facts as found by the Court such an interpretation would render the contract, or at least the allocation clause, illegal. It is a generally accepted precept of contract law that where two parties knowingly enter into a contract contemplating the breach of the contractual rights of a third party, such a contract is illegal and unenforceable. Diversified Utilities Sales, Inc. v. Monte Fusco Excavating Contracting Company, Inc., 71 F.R.D. 661, 664 (E.D.Pa.1976); Restatement of Contracts § 576 (1932); 15 Williston on Contracts § 1738 (3d ed. 1972). If, as Thermice asserts, the allocation clause requires Vistron to apportion its CO 2 production solely on the basis of recent take, a situation inevitably would arise where an apportionment in accordance with a recent take formula would require Vistron to breach its contract with Airco. Since this Court has already determined that both parties were aware of the provisions of the allocation clause in the contract between Airco and Vistron, acceptance of Thermice's interpretation of paragraph 10 would require this Court to find that the parties knowingly entered into a contract which they knew would induce a breach of Airco's contract and such a finding would render the contract, or at least its allocation provision, illegal and unenforceable. See generally, C. A. King & Co. v. Horton, 116 Ohio St. 205, 156 N.E. 124 (S. Ct. Ohio 1927), error dismissed, 276 U.S. 600, 48 S. Ct. 322, 72 L. Ed. 725 (Court has the right to develop evidence and charge on illegality of contract although neither party asserted illegality.) In situations such as this where a contract provision is subject to two interpretations one of which will render the contract illegal and one which will sustain the validity of the contract, the Court will adopt the latter if it is reasonable. Cordovan Associates, Inc. v. Dayton Rubber Company, 290 F.2d 858, 861 (6th Cir. 1961); Schellentrager v. Tradesmens National Bank & Trust Co., 370 Pa. 501, 88 A.2d 773, 775 (1952); Rothstein v. Jefferson Ice Manufacturing Co., 137 Pa.Super. 298, 9 A.2d 149, 153 (1939).
In addition, the Court's determination that paragraph 10 provides for allocation on the basis of recent take to the extent that the apportionment is compatible with Airco's contractual rights is also in accord with the rule of construction which states that a Court should attempt to give meaning to every part of a contract and should attempt to read all provisions as being compatible whenever possible. See Treasure Craft Jewelers, Inc. v. Jefferson Insurance Co., 431 F. Supp. 1160 (E.D.Pa.1977), aff'd, 583 F.2d 650 (1978). Here, Thermice's interpretation would require the Court to ignore that portion of paragraph 10 which provides that "THERMICE understands that VISTRON has concurrent contracts to supply liquid and solid carbon dioxide from the Facility to THERMICE and others. In accordance with the commitments, VISTRON will ..."
The only remaining question is whether Vistron breached paragraph 10 of its contract with Thermice. The burden of proving by a preponderance of the evidence that such a breach occurred rested with plaintiff. Thermice proved only that during the periods in question Vistron apportioned a smaller percentage of its allocation output of CO 2 to Thermice on the ground that Airco had demanded its right to take up to 69% of Vistron's allocated output. These actions on the part of Vistron did not constitute a breach of paragraph 10. Therefore, the Court finds that Thermice has failed to prove by a preponderance of the evidence that Vistron breached the provisions of the 1970 Thermice agreement as amended in 1977 and Thermice is not entitled to damages or injunctive relief. This memorandum is in lieu of findings of fact and conclusions of law pursuant to Fed.R.Civ.P. 52(a). An appropriate order will accordingly be entered.
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