Gehl Bros. Mfg. Co. v. Price's Producers, Inc.

• Court: Texas Civil Court of Appeals
• Writing for the Court: ABBOTT
• Citation: Gehl Bros. Mfg. Co. v. Price's Producers, Inc., 319 S.W.2d 955 (Tex. Ct. App. 1958)
• Decision Date: 31 December 1958
• Docket Number: No. 5326,5326
• Parties: GEHL BROS. MANUFACTURING CO., a corporation, Appellant, v. PRICE'S PRODUCERS, INC., a Texas corporation d/b/a Price's El Paso Dairy, Appellee.

Page 955

319 S.W.2d 955

GEHL BROS. MANUFACTURING CO., a corporation, Appellant, v. PRICE'S PRODUCERS, INC., a Texas corporation d/b/a Price's El Paso Dairy, Appellee.

No. 5326.

Court of Civil Appeals of Texas, El Paso.

Dec. 31, 1958.

Rehearing Denied Jan. 28, 1959.

Pinkney Grissom, David M. Kendall, Jr., Jerry L. Buchmeyer, Dallas, Thompson, Knight, Wright & Simmons, Dallas, of counsel, for appellant.

Scott, Hulse, Marshall & Feuille, James Moore, Schuyler B. Marshall, El Paso, for appellee.

ABBOTT, Justice.

This is an appeal by Gehl Brothers Manufacturing Company, appellant herein, from an order of the district court of El Paso County, Texas overruling plea of privilege of appellant to be sued in Dallas County, Texas, where its principal place of business and agent for service were located. The facts are as follows:

R. B. Price, Jr., Vice President and Manager of appellee, plaintiff below, Price's Producers Inc., d/b/a Prices' El Paso Dairy, a Texas corporation, doing business in El Paso County, indicated to a number of El Paso retail dealers of farm equipment that he was interested in a forage harvester for use at his dairy farm. Ray Noah, owner and manager of the Tractor Implements Supply Company of El Paso, solicited the business for his company which sold farm machinery manufactured by a number of companies, one of these being appellant Gehl. Noah had at one time been a contract dealer for Gehl, but at the time in question was under no such contract. At the request of Noah, appellee Price came to Noah's place of business to discuss the purchase of the required machine, and, at that time (April of 1956) Lloyd Endsley, an employee and salesman of the Magnolia Seed Implement and Hardware Company of Dallas, made certain statements concerning the operation of the forager and displayed a motion picture produced by Gehl, appellee. It might be well to note here that Magnolia Seed Implement and Hardware Company was the exclusive wholesale distributor for Gehl products in Texas, and was also the distributor for a number of other manufacturing companies. About a month following the above described conference, appellee placed an order for the machine with Tractor Implement Supply Company. About the first of June 1956, appellee canceled this order, notifying Tractor Implement that because of weather conditions he did not have use for the machine. Subsequently, in November of 1956, appellee placed his second order with Tractor Implement for the machine and purchased it on November 16, 1956. Appellee began to use this machine in February 1957. Certain parts of the machine began to give trouble, and a Gehl mechanic was sent to El Paso to check the machine. A representative, Young, of Magnolia Seed, also checked the machine, as did Robb, Gehl's agent in Texas. Repairs and alterations were made to the machine, and it appears from the testimony that appellant Gehl was furnishing at least a portion of the parts and labor free of charge. On August 24, 1957 the trnasmission housing and cover on the machine broke and, at the request of appellee, Tractor Implement called Gehl Brothers factory to order replacement parts. The parts were delayed in transit, and appellee purchased another machine of another make. On September 3, 1957 appellee notified appellant that he was dissatisfied with the original machine and wanted to return it for credit. Appellant refused to issue credit for the machine, but did offer to send another representative to check the machine. On September 24, 1957 appellee made formal demand upon appellant for rescision of the purchase contract and return of the purchase price. Appellee filed suit in El Paso County against Gehl Brothers, not joining Tractor Implement of El Paso, the retailer, or Magnolia Seed, the distributor. Appellee asserted two causes of action: (1) requested rescision of the sales contract and return of the purchase price plus reasonable cost of repairs on grounds of, (a) fraudulent misrepresentation inducing the purchase contract; and (b) material breach of the contract by virtue of the failure of the harvester to do the work for which it was purchased. In the alternative, appellee sought damages for breach of warranty expressed and implied, in an amount allegedly the difference in the market value of the harvester as represented, and its actual value as delivered, plus reasonable costs of repairs.

Appellant filed a plea of privilege, alleging that it was a foreign corporation, duly organized and existing under the laws of Wisconsin, and was entitled to be sued in Dallas County, Texas, where its principal place of business and statutory agent for service were located, in compliance with Rule 86, Texas Rules of Civil Procedure. Appellee's controverting affidavit asserted that since its alleged causes of action, or parts thereof, arose or accrued in El Paso County, venue should be sustained in such county, on the basis of subdivisions 23 and 27 of Article 1995, Texas Revised Civil Statutes; and, further, that venue was also maintainable in El Paso County under subdivision 7 of that Article, since one of the grounds for rescision was the alleged fraudulent misrepresentations of Endsley (Magnolia salesman), which induced the contract.

The jury was waived and the district court overruled appellant's plea of privilege, not filing any findings of fact or conclusions of law. This is the appeal from that order.

The judgment was assailed and appellant's points of error relied on are:

1. The trial court erred in overruling of appellant's plea of privilege on the basis that appellee's cause of action, or a part thereof, arose or accrued in El Paso County within the meaning of subdivisions 23 and 27 of Article 1995, Texas Revised Civil Statutes.

(a) Appellee has no cause of action against appellant for rescision or breach of warranty because no privity of contract exists between a manufacturer of an object and the ultimate purchaser thereof.

(b) Notwithstanding the absence of privity of contract, appellee failed to prove the existence of a cause of action for either the recision or breach of warranty against appellant.

(c) Appellee's cause of action, assuming such exists, did not arise or accrue in El Paso County.

(d) Venue may not be maintained in El Paso County on the basis of subdivisions 23 and 27 of Article 1995, Tex.Rev.Civ.Stat., because such provisions are unconstitutional in that they discriminate between domestic and foreign corporations for venue purposes.

2. The trial court erred in overruling appellant's plea of privilege on the ground that appellee's cause of action was based upon fraud or defalcation occurring in El Paso County, within the meaning of subdivision 7 of Article 1995, Texas Revised Civil Statutes.

(a) Appellee failed to adduce any evidence that fraud or defalcation occurred.

(b) Appellee failed to prove that the fraud or defalcation which allegedly occurred was perpetracted by an agent or representative of appellant, or by any one for whose conduct appellant was legally responsible.

(c) ...