City of Los Angeles v. Pacific Tel. & Tel. Co.

• Citation: 330 P.2d 888,164 Cal.App.2d 253
• Court: California Court of Appeals
• Decision Date: 16 October 1958
• Parties: The CITY OF LOS ANGELES, a Municipal Corporation, Plaintiff and Respondent, v. The PACIFIC TELEPHONE & TELEGRAPH COMPANY, a Corporation, Defendant and Appellant. Civ. 23211.

Page 888

330 P.2d 888

164 Cal.App.2d 253

The CITY OF LOS ANGELES, a Municipal Corporation, Plaintiff and Respondent, v. The PACIFIC TELEPHONE & TELEGRAPH COMPANY, a Corporation, Defendant and Appellant.

Civ. 23211.

District Court of Appeal, Second District, Division 1, California.

Oct. 16, 1958.

John A. Sutro, Francis N. Marshall, Noble K. Gregory, Pillsbury, Madison & Sutro, San Francisco, Leslie C. Tupper, Lawler, Felix & Hall, Los Angeles, for appellant.

Roger Arnebergh, City Atty., Bourke Jones, Asst. City Atty., Ralph J. Eubank, Deputy City Atty., Los Angeles, for respondent.

LILLIE, Justice.

Plaintiff, city of Los Angeles, filed an action in the Superior Court of Los Angeles County against defendant, The Pacific Telephone and Telegraph Company, a corporation, to recover the value of street occupancy. Its answer was filed and after plaintiff's demand for a jury defendant noticed its motion for a change of place of trial under section 394, Code of Civil Procedure. Defendant sought a change of venue to either Alpine or Mono County where it claimed it does not do business. From the minute order denying the motion, defendant appeals.

Section 394, Code of Civil Procedure, reads in pertinent part as follows: 'Whenever an action or proceeding is brought by a * * * city, against a resident of another county, city and county, or city, or a corporation doing business in the latter, the action or proceeding must be, on motion of either party, transferred for trial to a county * * * other than that in which the plaintiff is situated * * * and other than that in which the defendant resides, or is doing business, or is situated.'

The factual situation controlling the issue whether The Pacific Telephone and Telegraph Company is entitled to the benefit of a change of venue under this section is a simple one. It is conceded that the corporate defendant does business in the county of Los Angeles as well as in other counties of the state. Its principal place of business is the city and county of San Francisco. The city of Los Angeles has sued the defendant in the Superior Court of Los Angeles County, a proper forum.

Appellant contends that since it is doing business in more than one county, and section 394 is silent concerning the corporate defendant also doing business in the county in which it is sued, it is entitled to a literal interpretation of the section to invoke a mandatory application requiring a change of place of trial from the county of Los Angeles. On the other hand, respondent claims that under the section a corporate defendant doing business in a county other than that in which the action is brought by a municipality situated therein is not entitled to the benefit of the change of venue therein provided if it is also doing business in the county in which the action is brought.

It is apparent from the phraseology employed in the controlling portion of section 394 that an ambiguity arises because of the nature of a corporate entity and its business operations, which if literally applied would be neither reasonable nor in keeping with the purpose and intent of the statute. This situation is the result of the difference in factors determining the mandatory application of the section. In the case of an individual the determining factor is his 'residence'; in the case of a corporation it is the fact of 'doing business.' When an individual defendant is a 'resident of another county' (other than that in which the action is brought), it is clear from the statutory language that he may invoke the benefit of the change of venue--because legally he has only one county of residence. But since a corporate entity may do business in more than one county of the state, the use of the phrase 'doing business in the latter' creates an indeterminate meaning, particularly when the corporate defendant is also doing business in the county in which the action has been properly brought. The meaning and language of this section is not as 'clear-cut' as appellant would have us believe. Does the terminology employed, 'doing business in the latter,' mean that, if a corporation is doing business in more than one county, it is entitled to a change of venue regardless of whether it also does business in the county in which it is sued by a city located therein, as contended by appellant; or does it mean, as urged by respondent, that a corporate defendant doing business in a county in which an action is brought against it by a city located therein, regardless of where else in the state it is also doing business, is not entitled to a change of venue?

'* * * (I)t is a cardinal rule of construction that words must be given such interpretation as will promote rather than defeat the general purpose and policy of the law * * *.' Department of Motor Vehicles of California v. Industrial Accident Commission, 14 Cal.2d 189, 195, 93 P.2d 131, 134; People v. Centr-O-Mart, 34 Cal.2d 702, 214 P.2d 378; In re Lynwood Herald American, 152 Cal.App.2d 901, 313 P.2d 584. It is well settled that 'where the language of a statute is reasonably susceptible of two constructions, one of which in application will render it reasonable, fair and harmonious with its manifest purpose, and another which would be productive of absurd consequences, the former construction will be adopted.' Department of Motor Vehicles of California v. Industrial Accident Commission, 14 Cal.2d 189, at page 195, 93 P.2d 131, at page 134.

For many years our courts have freely acknowledged the purpose of the legislature in passing section 394. In City of Stockton v. Wilson, 79 Cal.App. 422, 249 P. 835, in interpreting the second sentence of section 394 in its application to an individual defendant, the court stated at page 424, of 79 Cal.App., at page 836 of 249 P.: 'The question to be determined is whether it (request for transfer) comes within the spirit and intent of that section. The evidence purpose is to guard against local prejudices which sometimes exist in favor of litigants within a county as against those from without and to secure to both parties to a suit a trial upon a neutral ground.' The statute as applied to an individual defendant is clear in its meaning and although the court therein did not transfer the cause because it was pending in a neutral county, it pointed up the purpose of the statute--to protect against local bias which might exist in favor of litigants within a county 'as against those from without.' Obviously, if both parties, whether defendant be an individual or corporation, are 'within' the same county either as a resident or doing business therein 'local prejudice' or bias is not likely to exist; and if in a given case there is probability that a disadvantage will result, defendant is entitled to invoke the remedy under section 397, Code of Civil Procedure, which provides for a change of venue upon the ground of inability to obtain a fair trial.

The Supreme Court in Finance and Construction Co. of California v. City of Sacramento, 204 Cal. 491, 269 P. 167, 168, voiced its approval of City of Stockton v. Wilson, 79 Cal.App. 422, at page 493, 249 P. 835, at page 836: 'It is apparent from the terms of this section of the Code that the Legislature was of the opinion that a person doing business in a county would have an unfair advantage over a city situated without said county, in the trial of an action in which such person and such city were arrayed against each other.' (Emphasis added.) The opinion discloses that the plaintiff therein designated as a 'person' actually was a corporation. From this it appears entirely reasonable that if a corporation, doing business in a county in which a city is located, brings suit against it in that county, that no 'unfair advantage' would result. The converse would also seem to be true.

Of interest also is City of Oakland v. Darbee, 102 Cal.App.2d 493, at page 498, 227 P.2d 909, at page 912: 'The purpose of the statute is that of protecting either party from local bias,' and Nevada County v. Phillips, 111 Cal.App.2d 428, 244 P.2d 495, in which an individual was sued. The court therein said at page 429 of 111 Cal.App.2d at page 496 of 244 P.2d: 'We construe the foregoing section (394) as providing that an action such as this, brought by a county against defendants who, for aught that appears, are residents of the same county, is properly triable in that county, and that it is only when the defendants or one of them is a resident of another county that the court is obligated to change the place of trial * * * .'; and again at page 430 of 111 Cal.App.2d, at page 496 of 244 P.2d: 'The intent of the foregoing statute is, apparently, to permit the trial of an action brought by a county to be tried in that county when the defendants reside therein, on the assumption that where all parties are in effect residents therein no disadvantage to either would result.'

We believe that this reasoning applies as well to a corporate defendant also doing business in the county in which an action is brought against it by a city located therein. An interpretation of the statute imparting a right to a corporation which it denies to an individual is not, in the absence of good reason, justifiable. Common sense dictates that it is not the 'resident' individual or the corporation 'doing business' in the county of the forum that the section seeks to protect against 'local' bias or prejudice, but the person residing in, or a corporation doing business in, another county than that in which the defendant has been sued. The purpose of the section is to provide a change of place of trial where local bias may be presumed to arise because the defendant is wholly from 'without the county.' A corporate defendant can be wholly from 'without the county' only if it is not doing business therein. In the instant case defendant is doing business in Los Angeles County.

Appellant has cited Yuba County v. North America Consol. Gold Min. Co., 190...