Admiral Motor Hotel of Tex., Inc. v. Community Inns of America, Inc.

• Decision Date: 15 April 1965
• Docket Number: No. 115,115
• Citation: 389 S.W.2d 694
• Parties: ADMIRAL MOTOR HOTEL OF TEXAS, INC., Appellant, v. COMMUNITY INNS OF AMERICA, INC., Appellee.
• Court: Texas Court of Appeals

Page 694

389 S.W.2d 694

ADMIRAL MOTOR HOTEL OF TEXAS, INC., Appellant, v. COMMUNITY INNS OF AMERICA, INC., Appellee.

No. 115.

Court of Civil Appeals of Texas, Tyler.

April 15, 1965.

Rehearing Denied May 6, 1965.

David M. Kendall, Jr., Woodruff, Hill, Bader & Kendall, Dallas, for appellant.

Edmund Benchoff, McAlister & Benchoff, Nacogdoches, for appellee.

DUNAGAN, Chief Justice.

This is a venue case. The appeal is from an order of the District Court of Nacogdoches County overruling the plea of privilege of Admiral Motor Hotel of Texas, Inc., appellant, seeking to transfer the case to Tarrant County, Texas, the county of its residence. Appellee, Community Inns of America, Inc., controverted the plea relying upon Exception 23 of Article 1995, Vernon's Ann.Tex.Rev.Civ.St. The venue hearing was had before the court without a jury. No findings of fact or conclusions of law were requested by either party.

Appellee instituted this suit against appellant seeking to recover upon two causes of action: first, the balance of an account for services rendered, and second, for damages for breach of contract. Appellee is engaged in the business of furnishing services for the organizing, franchising, advising and managing hotels, motor-hotels and motor-inns. In 1962 appellant became interested in the construction and operation of a motor-hotel in Arlington, Texas. It apparently sought the services of appellee and in May of 1963 requested services relating to the design and construction of appellant's motor-hotel. It appears that the transaction whereby such services were to be rendered and the charges therefor were evidenced by a letter dated May 7, 1963, directed from appellant to Herbert Q. Wilson, appellee's president. ¹ Appellee alleged performance of the services; and that appellant had paid the sum of $1,500.00, leaving an unpaid balance of $3,500.00. Appellee alleged a demand for payment and a refusal by appellant. For convenience, this transaction will be referred to herein as the first contract.

Appellee's petition alleged also the execution between the parties of a written contract dated October 4, 1962, under the terms of which appellant agreed to pay the appellee 5% of the gross income from appellant's facilities in Arlington in consideration of the services to be rendered by it under the contract. The relevant portions of this contract provide that appellee would provide a training system for and furnish a resident manager for appellant's motor-hotel and that it would furnish to the appellant various professional services and programs for maintaining competent management of the facilities. The contract covered various items unnecessary to here relate but did provide for supervision of the operation of the motor-hotel by appellee subject to the approval of appellant. Provisions in the contract were made for audited reports and for the expenditure of funds derived by appellant from the operation of the motor-hotel. Either party to the contract could cancel the same upon giving ninety days written notice of such cancellation and by the payment of a $25,000.00 forfeit fee by the party seeking cancellation. It was further provided that should any dispute arise between the parties concerning the interpretation or performance of the agreement which could not be resolved, the dispute would be submitted to an Arbitration Board of three members, one member appointed by appellee, one member appointed by appellant and the two members thus appointed selecting the third member. A decision by a majority of the Arbitration Board, it was agreed, would be binding on the parties. For convenience and clarity, this transaction will be referred to herein as the second contract.

The only witness produced by appellee was Herbert O. Wilson, president of Community Inns of America, Inc., who testified, in substance, that appellee is a consulting management firm for hotels and motor-hotels and as a part of its business furnishes services to the owners of such establishments from the standpoint of installation, construction, designing and equipping new facilities. Subsequent to the opening of a hotel or motor-hotel, appellee furnishes management services. Wilson testified that in addition to the written contract of October 4, 1962, appellee in 1963 performed other services for appellant. However, he did not explain why the obligation of appellant as shown by the letter dated May 7, 1963, was drawn in favor of Community Inns Supply Company, a separate and distinct corporation not a party to the lawsuit. He testified that after signing the contract of October 4, 1962, appellant approached him in Nacogdoches, Texas, requesting services in connection with the plans and designs of appellant for its motor-hotel then under construction in Arlington, Texas.

Wilson testified that he and his associates consulted with appellant's architect, advising him on changes made during the construction of the motor-hotel, furnishing appellant with complete lists of equipment needed, and assisting it in obtaining bids on such equipment. Other related services in connection with the advice and consulting with appellant were furnished according to Wilson, who estimated that about 50% of such services were rendered in Nacogdoches County. The agreement for payment for such services was evidenced by the letter dated May 7, 1963, admittedly sent by Homer H. Newman, president of Admiral Motor Hotel of Texas, Inc., appellant, to the witness Wilson. Wilson admitted on cross-examination that appellee's suit against appellant was based upon the letter dated May 7, 1963, and that there was due and owing thereon a balance of $3,500.00. It appears that appellee has been paid $1,500.00 by appellant on the services rendered.

With reference to the second contract upon which appellee's suit is based, Wilson testified that after the motor-hotel had been completed, pursuant to the contract, the appellee placed as manager in appellant's new facilities H. R. Swarger. According to the witness, in January, 1964, he received a call from Swarger informing him that appellant's president, Newman, had relieved him of his duties as manager and had ordered him off the property. The witness contacted Mr. Newman with reference to the discharge of Swarger and was told that as far as the contract was concerned they 'were through.' Witness Wilson admitted that under the terms of the contract, Newman had a right to discharge Swarger, but Wilson appeared to have expected Newman to contact him (Wilson) first. Wilson further testified that appellant never requested appellee to secure another manager to replace Swarger, but the witness admitted that he received a wire from appellant on January 12, 1964, in which Newman requested appellee to get together with the Admiral Motor Hotel people and discuss the continued performance of the contract. The record does not reflect specifically what other transactions occurred between the parties with reference to adjusting the matter except that, according to this witness the parties tried on several occasions to 'get together' but had not worked the matter out before suit was filed. The evidence does not show whether either party attempted to settle the matter by arbitration as provided in the contract. Apparently, the only dispute or difficulty arising under the second contract related to the discharge of Swarger by appellant, although appellee's witness admitted that appellant had the right to discharge him.

In order to defeat a defendant's privilege of being sued in the county of his residence, when challenged, the burden is upon the plaintiff to allege and prove that the case is within one of the exceptions to Article 1995, Vernon's Ann.Tex.Rev.Civ.St. of Texas. Berry v. Pierce Petroleum Corporation, 120 Tex. 452, 39 S.W.2d 824 (1931); Johnson v. Dallas Cooperage & Woodenware Co., 120 Tex. 27, 34 S.W.2d 845 (1931); McMurtry v. Addington, 332 S.W.2d 407 (Tex.Civ.App.) 1960, no writ. The 'venue facts' which the plaintiff must allege and prove in order to defeat the plea are those which are stated in the particular exception of Article 1995 applicable to the suit as alleged. Compton v. Elliott, 126 Tex. 232, 88 S.W.2d 91 (1935). The burden is plaintiff's to establish those venue facts by a preponderance of competent evidence. Hitchcock v. Pearce, 348 S.W.2d 408 (Tex.Civ.App.) 1961, no writ; Victoria Bank & Trust Co. v. Monteith, 138 Tex. 216, 158 S.W.2d 63 (1941); Fagg v. Benners, 47 S.W.2d 872 (Tex.Civ.App.) 1932, no writ.

Appellee here relies upon Exception 23 of Article 1995 ² to maintain its suit against appellant in Nacogdoches County. Under the Exception aforesaid, suits against private corporations may be brought in the county in which the cause of action or part thereof arose. No other portion of the Exception has been invoked by appellee. The 'venue facts', therefore, which appellee had the burden to establish are: (1) that appellant is a private corporation; (2) that appellee has, in fact, a cause of action against appellant; and (3) that said cause of action, or a part thereof, arose in Nacogdoches County. Appell Petroleum Corporation v. G. W. Townsend Lease Service, 375 S.W.2d 547, (Tex.Civ.App.) 1964, no writ; Drexler v. Architectural & Commercial Sales, 375 S.W.2d 550, (Tex.Civ.App.) 1964, no writ; Uvalde Const. Co. v. Shannon, 165 S.W.2d 512, (Tex.Civ.App.) 1942, no writ. It being undisputed that appellant is a private corporation, the remaining 'venue facts' necessary for appellee to establish in this case were: (1) that it did in fact have a cause of action against the appellant, and (2) that such cause of action, or a part thereof, arose in Nacogdoches County. Unless there is, in fact, a 'cause of action' there could be no 'part thereof' arising anywhere. Southern Farm Bureau Casualty Insurance Company v. Alexander, 326 S.W.2d 644, (Tex.Civ.App.) 1959, no writ; Home Ins. Co., New York v. Barbee, 166 S.W.2d 370, (Tex.Civ.App....