Continental Oil Co. v. P. P. G. Industries

• Decision Date: 27 December 1973
• Docket Number: No. 16241,16241
• Citation: 504 S.W.2d 616
• Parties: CONTINENTAL OIL COMPANY, Appellant, v. P.P.G. INDUSTRIES, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 616

504 S.W.2d 616

CONTINENTAL OIL COMPANY, Appellant, v. P.P.G. INDUSTRIES, Appellee.

No. 16241.

Court of Civil Appeals of Texas Houston (1st Dist.).

Dec. 27, 1973.

Rehearing Denied Jan. 17, 1974.

Vinson, Elkins, Searls, Connally & Smith, John C. Snodgrass, Harry M. Reasoner, John E. Kennedy, John L. Carter, Houston, Liskow & Lewis, Austin W. Lewis, Gene W. Lafitte, James B. St. John, Jr., New Orleans, La., for appellant; Gus M. Hodges, Austin, Keith W. Blinn, John M. Berlinger, Joseph C. Johnson, Van Langley, Houston, of counsel.

Andrews, Kurth, Campbell & Jones, Raymond A. Cook, Alfred H. Ebert, V. Camp Cuthrell, III, Thomas L. Schubert, Houston, Stockwell, St. Dizier, Sievert & Viccellio, Oliver P. Stockwell, Fred H. Sievert, of Lake Charles, La., for appellee; David A. Cort, Richard C. Packard, of Pittsburgh, Pa., of counsel.

COLEMAN, Chief Justice.

This is an appeal from an order of dismissal based on forum non conveniens, and the discretionary power of a trial judge to refuse to hear a petition for declaratory judgment.

Continental Oil Company filed suit for declaratory judgment against Olin Corporation and P.P.G. Industries, Inc. in the District Court of Harris County, Texas, seeking relief from contractual obligations to deliver natural gas. Continental operates a natural gas pipeline system in the State of Louisiana. Olin and P.P.G., together with Firestone Tire and Rubber Co., Dow Chemical Company, and Big Three Industries, Inc., are commercial customers of the system, each having a long term contract calling for the delivery of gas. Continental claims that because of its inability to obtain sufficient gas, it is, under the applicable law and its contracts, partially excused from liability under such contracts; that it will be unable to continue delivering the full amounts of natural gas called for by the contract and is equitably required to allocate the available gas among these customers.

After this case was filed Olin filed a suit on the contract in a Louisiana State court. The Louisiana court stayed the proceeding in deference to the previously filed Texas case. P.P.G. also filed suit on the contract in Louisiana. To protect its jurisdiction, the Texas trial court enjoined P.P.G. from proceeding in the Louisiana court, and his action in so doing was affirmed by this court. P.P.G . Industries, Inc. v. Continental Oil Co., 492 S.W.2d 297 (Tex.Civ.App.--Houston (1st Dist.) 1973 writ ref., n.r.e.). P.P.G. also filed suit in the United States District Court for the Western District of Louisiana. That court stayed the proceedings before it in deference to pending Texas action.

On January 3, 1973, the trial court severed Olin over the objection of Continental. Thereafter Continental joined Firestone, Big Three and Dow, and sought a rehearing on the Olin severance. The motion for rehearing was denied and the Supreme Court of Texas denied Continental's motion for leave to file a petition for writ of mandamus contending that the trial court abused its discretion in severing Olin.

Some ten months after the filing of this case, P.P.G. filed its plea in abatement. On April 30, 1973, Olin filed its plea. P.P.G. moved for a severance of the cause of action asserted against it. Dow and Firestone opposed the motion to sever and moved to reconsolidate Olin. A joint trial on the pleas in abatement and the motion for severance was held although the proceedings were not consolidated. The trial court entered orders staying both the P.P.G . case and the Olin case. It granted P.P.G.'s motion for severance, overruled the motions of Dow and Firestone to consolidate. On the objection of Continental that the order of stay was not a proper order to enter on a forum non conveniens theory and would deprive Continental of an appeal, the trial court, in the interest of justice, dismissed the causes involving Olin and P.P.G. This appeal resulted.

Continental has attacked both the dismissal and the stay orders asserting that as a matter of law a foreign corporation having a permit to do business in Texas cannot be denied a trial on a theory of forum non conveniens and that there is insufficient evidence to support either a stay or a dismissal for such reason.

In H. Rouw Co. v. Railway Express Agency, 154 S.W.2d 143 (Tex.Civ.App.--El Paso 1941, writ ref), the court considered a cause of action based on tort instituted by a foreign corporation having a permit to do business in this state against another foreign corporation. The transactions out of which the cause of action accrued all occurred outside the State of Texas. The trial court sustained a motion to dismiss alleging that the court in its discretion should refuse to exercise its jurisdiction because (a) of the expense to be incurred by the state and county; (b) the inconvenience to the state; and (c) the financial burden entailed to the defendant to try the case in Texas rather than in Arkansas. In its opinion the court said:

'The statute, Art. 1532, R.C.S. (Vernon's) 1925, expressly confers upon foreign corporations doing business under a permit all the rights and privileges of a domestic corporation. In the absence of any other provision this alone would be sufficient to bestow the right to bring, maintain and prosecute to final conclusion this suit . Art. 1320, § 2, Vernon's Civil Statutes, 1925, expressly confers the power, 'To maintain and defend judicial proceedings.' No argument is needed to establish the right of a domestic corporation to maintian a suit such as this against either another domestic corporation or one doing business under a permit. Any other rule would be intolerable.

'The District Court, under the law, has jurisdiction of this case. The statutes, supra, make the exercise of that jurisdiction obligatory.'

The court was construing Art. 1320(2), Vernon's Ann.Civ.St. (Repealed Acts 1961 57th Leg., p. 458, Ch. 229 § 1), then applied to foreign corporations by virtue of Art. 1532, V.A.C.S. (Repealed, ibid.).

Art. 1532 provided: 'Such corporations, on obtaining such permit, shall have and enjoy all the rights and privileges conferred by the laws of this State on corporations organized under the laws of this State.'

Art. 1320 provided:

'Every private corporation as such has power:

'2. To maintain and defend judicial proceedings.'

These provisions were carried forward into the Texas Business Corporation Act. Art. 8.02 V.A.T.S. provides:

'A foreign corporation which shall have received a certificate of authority under this Act shall, . . ., enjoy the same, but no greater, rights and privileges as a domestic corporation organized for the purposes set forth in the application pursuant to which such certificate of authority is issued; . . .'

Art. 2.02 provides: 'A. . . . each corporation shall have power:

'1. . . .

'2. To sue and be sued, complain and defend, in its corporate name.'

While the language found in these sections of the Texas Business Code differs somewhat from that of the statutes superseded, these changes cannot be considered to have weakened the authority of Rouw. The court based its decision on the fact that the foreign corporation doing business under a permit had 'all the rights and privileges of a domestic corporation.' The court also pointed out in Rouw that the defendant was also a corporation with a permit 'enjoying, in the language of the statute, all the rights and privileges of a domestic corporation.' It characterized the result of the rule it was announcing in these words:

'. . . We are not unaware of the practical results that may follow a precedent or law that permits a foreign corporation with a permit to do business to come Indiscriminately and at will and bring its suits against another Similarly situated regardless of where the cause of action arose. It is an invitation to all to come for reasons of convenience or for advantages, real or imaginary, and is calculated to . . . make slower the already too slow process of securing the adjudication of legal rights and the settlement of legal controversies between litigants who have no choice, but must resort to Texas Courts . . .' (emphasis added).

We consider that the court in Rouw held that a foreign corporation having a permit to do business in Texas has a statutory right to sue in the Texas courts another foreign corporation having a permit to do business in Texas, and that such courts have no discretion to exercise in the matter of retaining the jurisdiction acquired, and are required to try such a case just as such courts would be required to try a case brought against a Texas corporation by another Texas corporation, or by a citizen of Texas against another Texas citizen, regardless of where the cause of action might have arisen. By refusing a writ of error in Rouw the Supreme Court has determined that the judgment of the Court of Civil Appeals is correct and the principles of law declared in the opinion are correctly determined. Hamilton v. Empire Gas & Fuel Co., 134 Tex. 377, 110 S.W.2d 561 (1937).

In Flaiz v. Moore, 359 S.W.2d 872 (Tex.1962), the Supreme Court said that the doctrine of forum non conveniens is invoked by a contention that the court should not exercise jurisdiction in an action based on a foreign tort either because the parties are nonresidents or because the applicable substantive law differs from the law of the forum. The court said that these are distinct and unrelated grounds, and that 'the dissimilarity problem when raised usually involves the relatively narrow inquiry as to whether the foreign law is so different from the Texas law as to be difficult or incapable of administration and enforcement by our courts.'

Both of these problems are raised in this case. The dismissal of the case cannot be sustained on the basis that the corporations are nonresidents. H. Rouw Co. v. Railway Express Agency, supra.

Neither can the judgment be sustained on the basis of a dissimilarity between the law of the State of Louisiana and...