B & C Const. Co. v. Grain Handling Corp.

• Decision Date: 24 March 1975
• Docket Number: No. 8543,8543
• Citation: 521 S.W.2d 98
• Parties: B & C CONSTRUCTION COMPANY, Appellant, v. GRAIN HANDLING CORPORATION, Appellee.
• Court: Texas Court of Appeals

Page 98

521 S.W.2d 98

B & C CONSTRUCTION COMPANY, Appellant, v. GRAIN HANDLING CORPORATION, Appellee.

No. 8543.

Court of Civil Appeals of Texas Amarillo.

March 24, 1975.

Crenshaw, Dupree & Milam, J. Orville Smith, Cecil Kuhne, Lubbock, for appellant.

LaFont, Tunnell, Formby, LaFont & Hamilton, Thomas Hamilton, Plainview, for appellee.

REYNOLDS, Justice.

A plea of privilege interposed to the venue selected in a cause of action basically pleaded to arise Ex contractu in favor of a third-party beneficiary was overruled. The venue facts pleaded and proved failed to clearly establish an exception to the general venue statute required to maintain venue in the county of suit. Reversed and rendered.

United Steel Building Mfg., Inc., referred to as United, contracted in writing with, and thereby agreed to construct a steel building for bulk grain storage in Castro County on property owned by, Grain Handling Corporation, referred to as Grain Handling. United then entered into a written contract with B & C Construction Company, referred to as B & C, for the erection in a workmanlike manner of the building as designed and with materials furnished by United. During the erection, B & C encountered problems with the materials furnished by United to the extent that B & C's field superintendent thought the building would collapse. Before B & C would complete the erection, it sought and received from United a letter confirming that United accepted full responsibility for all structural design and fabrication. Upon completion of the building, United guaranteed to Grain Handling all labor and materials against defects in design and workmanship for a period of one year. Grain Handling took possession and began storing grain in the building. Within two and one-half months thereafter portions of the building collapsed.

Grain Handling filed suit in Castro County against David Walker, the president of United, individually and d/b/a United Steel Building Mfg., Inc., alleged to be a resident of Lubbock County; against United, alleged to be a Texas corporation with its office and principal place of business in Lubbock County; and against B & C, alleged to be a Texas corporation amenable to process in Houston, Texas. Referring to its contract with United, Grain Handling alleged that all defendants failed to perform under such agreement to design and construct the building in a good and workmanlike manner; that B & C impliedly warranted the materials used in the construction; that all defendants were negligent in specified particulars and grossly negligent in general in the construction of the building; and that the defendants falsely and fraudulently represented the building was suitable for its intended use. By its suit, Grain Handling sought judgment against the defendants, jointly and severally, for its damages resulting from the failure of the building.

United did not contest the venue. David Walker filed his plea of privilege which was overruled. Walker did not appeal and that aspect of the case is not further noticed.

B & C timely filed its plea of privilege, claiming its right to be sued in Harris County, its domiciliary county. Grain Handling Controverted the plea, alleging that venue was maintainable in Castro County under subdivisions 5, 7, 9a, 23 and 29a of the general venue statute, Vernon's Ann.Civ.St. art. 1995.* Following a hearing, the trial court overruled B & C's plea of privilege without stating in its judgment which one or more of the exceptions to general venue the court found applicable. Findings of fact and conclusions of law were neither requested nor filed.

General Principles Regarding Venue

Certain general principles are controlling in the determination of proper venue for the trial of a cause. In Resendez v. Lyntegar Electric Cooperative, 511 S.W.2d 350, 352 (Tex.Civ.App.--Amarillo 1974, no writ), we wrote:

'In enacting the general venue statute, V.A.C.S. art. 1995, the legislature determined to statutorily bestow upon the defendant the valuable right to be sued in his home county subject only to specific enumerated exceptions. These exceptions are strictly construed and must be clearly established before the defendant may be deprived of his statutory right. Kain v. Northland Insurance Company, 472 S.W.2d 304 (Tex.Civ.App.--Amarillo 1971, no writ); National Life Co. v. Rice, 140 Tex. 315, 167 S.W.2d 1021 (1943). Thus, in order to defeat the valuable right bestowed, the plaintiff has the burden not only to plead, but to prove by a preponderance of the evidence that the cause comes within one of the exceptions, and all doubts must be resolved in favor of the general venue rule. Goodrich v. Superior Oil Co., 150 Tex. 159, 237 S.W.2d 969 (1951).'

Consistent therewith, the exceptions relied upon by Grain Handling to maintain venue in Castro County are to be tested in the light of the appellate record.

Subdivision 5

Subdivision 5 permits the maintenance of a suit in the county where the defendant has contracted in writing, naming such county, or a definite place therein, to perform an obligation. So far as its suit against B & C is concerned, Grain Handling readily concedes that it was not a party to the written subcontract between B & C and United; but Grain Handling contends that it is a third-party beneficiary of that subcontract and, as such, is entitled to sue B & C in Castro County for its breach of that subcontract.

Indisputably, no privity of contract arises between Grain Handling and B & C as a consequence of B & C's subcontract with United. George v. Hall, 371 S.W.2d 874 (Tex.1963). Thus, if Grain Handling can maintain an action on the subcontract, it must show that the subcontract was made for its benefits either as a donee or a creditor beneficiary thereof as distinguished from an incidental beneficiary, who has no standing to sue on the contract. Republic National Bank of Dallas v. National Bankers Life Insurance Company, 427 S.W.2d 76 (Tex.Civ.App.--Dallas 1968, writ ref'd n.r.e.).

Not every contract will give one who is not privy thereto a right of action therein, even though such third party might have received a benefit from the completion of the contract. House v. Houston Waterworks Co., 88 Tex. 233, 31 S.W. 179 (1895). It is presumed that parties contract for themselves and a contract, which must be construed in accordance with the language of the entire instrument, will not be construed as having been made for the benefit of a third person unless it clearly appears that such was the intent of the contracting parties. Citizens Nat. Bank in Abilene v. Texas & P. Ry . Co., 136 Tex. 333, 150 S.W.2d 1003 (1941). In this connection, the intention that the contracting parties made the contract, or specific provisions thereof, for the benefit of a third party is of controlling importance. Banker v. Breaux, 133 Tex. 183, 128 S.W.2d 23 (1939).

The language of the subcontract between United and B & C is plain and unambiguous and it is not subject to construction to discover an intent at variance with that expressed by the agreement itself. The subcontract is clearly limited to setting forth the relationship between United and B & C; there is nothing in the instrument pertaining to, or stating that the building was being constructed for, Grain Handling. The obligation undertaken by B & C runs only to United. B & C assumed no direct obligation to Grain Handling under its subcontract. Thus, it does not clearly appear from the terms of the subcontract itself that the contracting parties intended it was made for the benefit of Grain Handling. Under these circumstances, Grain Handling was at most only an incidental beneficiary of the subcontract and, in that capacity, acquired no right to sue B & C for breach thereof. It follows that the subcontract conferred no standing on Grain Handling to invoke the subd. 5 exception against B & C's plea of privilege.

Subdivision 7

Grain Handling advocates the applicability of subd. 7, the exception which sanctions suit in the county where fraud was committed. Grain Handling asserts that B & C was guilty of fraud in concealing or in failing to disclose to it that materials used in the construction of the building...