First Trust Co. v. Good Land Lumber Co.

• Decision Date: 13 December 1956
• Docket Number: No. 3410,3410
• Citation: 297 S.W.2d 312
• Parties: The FIRST TRUST COMPANY et al., Appellants, v. GOOD LAND LUMBER COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 312

297 S.W.2d 312

The FIRST TRUST COMPANY et al., Appellants, v. GOOD LAND LUMBER COMPANY et al., Appellees.

No. 3410.

Court of Civil Appeals of Texas, Waco.

Dec. 13, 1956.

W. B. Mallette, Victoria, Dan Moody, Dan Moody, Jr., Austin, for appellants.

Guittard & Henderson, Victoria, for appellees.

McDONALD, Chief Justice.

This is a venue case. Parties will be referred to as in the Trial Court. Plaintiff Good Land Lumber Company brought suit in Victoria County against four defendants: G. J. Swafford, a resident of Victoria County; The First Trust Company, a corporation with principal office and place of business in Travis County; W. T. Mayne, a resident of Travis County; W. R. Mayne, a resident of Travis County. The three Travis County defendants filed pleas of privilege to be sued in Travis County. Plaintiff filed controverting affidavits to such pleas of privilege, contending for venue in Victoria County, under Article 1995, Subdivisions 4, 10, 12, 14, 29a, 23, and in order to avoid a multiplicity of suits, as against The First Trust Company, and under Article 1995, Subdivisions 4, 10, 12, 14, 29a, and in order to avoid a multiplicity of suits, as against defendants W. T. Mayne and W. R. Wayne. The Trial Court, after hearing, overruled defendants' pleas of privilege, and defendants appeal.

A statement is necessary. The Claircrest Corporation was organized as a Texas corporation and the defendants, G. J. Swafford, W. T. Mayne, and W. R. Mayne were organizers and directors. Its principal office was the same office as that of defendant, The First Trust Company. Defendants W. T. Mayne and W. R. Mayne were officers and directors of The First Trust Company. Prior to 19 March 1953, the Claircrest Corporation, with financial aid from The First Trust Company, desired to build houses in Victoria County, Texas. Claircrest Corporation approached plaintiff for a line of credit, which was arranged only after The First Trust Company guaranteed the account in writing up to $25,000. Later Claircrest Corporation executed its note payable to The First Trust Company for $25,000, which was in turn endorsed to plaintiff with recourse as collateral security for the account of Claircrest Corporation with plaintiff up to the maximum amount stated. In reliance upon the guarantee and collateral security, plaintiff delivered large amounts of lumber and materials to Claircrest Corporation in Victoria County, Texas, which were used to build houses in Victoria County, Texas. Thereafter Claircrest Corporation owed plaintiff for lumber and materials far in excess of $25,000, and plaintiff contacted all of the defendants about payment of the account and was advised that Claircrest Corporation was insolvent. Defendants offered to renew and rearrange the prior note. Accordingly, Claircrest Corporation was caused to execute a new note for $25,000, payable to defendant The First Trust Company at its offices in Travis County, Texas, in annual installments of $6,250 at 6% interest. The note was signed, 'The Claircrest Corporation by W. T. Mayne, President', and attested to by the corporation's Secretary. Following the signature above defendant G. J. Swafford in writing 'individually guaranteed the payment of the within note;' and on the back thereof appears the following endorsement: 'Pay to the order of Good Land Lumber Company, Victoria, Texas, with full recourse', signed by 'The First Trust Company by W. T. Mayne'; signed, 'W. T. Mayne, Individually', and also signed, 'W. R. Mayne, Individually.' Thereafter G. J. Swafford and W. T. Mayne and W. R. Mayne and The First Trust Company, recognizing the insolvency of the Claircrest Corporation, entered into a written agreement whereby they undertook to liquidate the assets of Claircrest Corporation. As previously noted, Swafford and the two Maynes were officers and directors of the Claircrest Corporation. Thereafter the parties named proceeded to take over and dispose of the assets of Claircrest Corporation, consisting of real and personal property situated in Victoria County, Texas, and elsewhere. They even rented and appropriated rentals from real property located in Victoria County, Texas. At the time of trial, W. T. Mayne did not know the status of the liquidation. Likewise there was still real and personal property belonging to Claircrest Corporation in Victoria County, Texas. No accounting of any kind was made to plaintiff concerning the liquidation of Claircrest Corporation by defendants. Defendant W. T. Mayne could not give the facts about disposition of the proceeds of the sale of over 30 houses situated in Victoria County, Texas. At least seven houses were foreclosed by The First Trust Company without even a credit to Claircrest Corporation's account, of the stated consideration in the Trustee's deeds of $5,000 and $6,000 per house. These houses were later sold for $8,350 or $8,175. In the foregoing setting plaintiff prayed for: 1) Judgment to require a full accounting from defendants of their liquidation of Claircrest Corporation; 2) judgment setting aside foreclosures on Claircrest properties by The First Trust Company; 3) judgment for all personal and real property in the hands of defendants belonging to Claircrest Corporation; and 4) judgment against defendants for debt of $25,000, together with interest as provided therein.

Plaintiff seeks to maintain venue in Victoria County under Subdivisions 4, 10, 12, 14, 23, and 29a of Article 1995, R.C.S., Vernon's Ann.Civ.St. art. 1995, subds. 4, 10, 12, 14, 23, 29a. Defendants contend that venue is not maintainable in Victoria County under any of the foregoing and that the Trial Court erred in not transferring the cause as to them to Travis County. We will briefly consider each of these subdivisions as applicable to the facts in the case at bar.

Subdivision 23, Article 1995, R.C.S. provides, in part, that suits against a corporation may be brought 'in the county in which the cause of action or part thereof arose.' Plaintiff in the instant case has alleged and proved several causes against defendant The First Trust Company, a corporation. One cause of action is based on the endorsement of a note, another is for an accounting; another is for the recovery of certain real or personal properties situate in Victoria County, Texas, or the value thereof; another is to establish an equitable lien on properties situated in Victoria County, Texas. The record before us shows that all of the activities complained of took place in Victoria County, and had to do with real and personal property located in Victoria County, Texas. The original consideration for the endorsement of The First Trust Company sued on was for lumber and material delivered to Claircrest Corporation in Victoria County, Texas. The acts of the defendants under their contract for liquidation of Claircrest Corporation related to real and personal property in Victoria County, Texas, and plaintiff's real injury occurred when these properties were disposed of by defendants for their own benefit and without a proper accounting. In United States Pipe & Foundry Co. v. City of Waco, Tex.Civ.App., 100 S.W.2d 1099, at page 1109, affirmed 130 Tex. 126, 108 S.W.2d 432, the court says:

'A cause of action consists not alone of the genesis of the right but of the breach of the right, and in order to maintain the suit in some county other than that in which the corporation's principal...