General Motors Acceptance Corp. v. Howard

• Decision Date: 18 October 1972
• Docket Number: No. B--3195,B--3195
• Citation: 487 S.W.2d 708
• Parties: GENERAL MOTORS ACCEPTANCE CORPORATION et al., Petitioners, v. Hugh HOWARD et al., Respondents.
• Court: Texas Supreme Court

Page 708

487 S.W.2d 708

GENERAL MOTORS ACCEPTANCE CORPORATION et al., Petitioners, v. Hugh HOWARD et al., Respondents.

No. B--3195.

Supreme Court of Texas.

Oct. 18, 1972.

Liddell, Sapp, Zivley & Brown, Glen E. Clover, Houston, for petitioners.

John L. Fulbright, Beaumont, for respondents.

DANIEL, Justice.

This appeal involves venue questions in a libel suit filed in the county of plaintiffs' residence under Subdivision 29 of Article 1995. ¹ The principal question is whether plaintiffs, in making prima facie proof of the accrual of the cause of action, were required on the plea of privilege hearing to meet and negate an affirmative defense that the defamatory publication was conditionally privileged. The trial court made no such requirement in overruling the plea of privilege, and the Court of Civil Appeals affirmed. 474 S.W.2d 929. We affirm.

Hugh Howard and Howard Motor Company, Inc., instituted this libel suit in Tyler County, alleging the publication of defamatory statements against them by the defendants, General Motors Acceptance Corporation (G.M.A.C.) and J. F. Young, manager of the G.M.A.C. office in Lufkin, on a date when plaintiffs resided in Tyler County. G.M.A.C. filed a plea of privilege to be sued in Harris County and Young filed a plea to be sued in Angelina County.

There was proof at the venue hearing that at the time in question Howard was a resident of Tyler County and President of Howard Motor Company, Inc., a Texas Corporation with its principal place of business in Woodville, Tyler County; that the company was an authorized local dealer under written contracts with the Chevrolet and Oldsmobile Divisions of General Motors; that G.M.A.C. was engaged in the financing or 'floor planning' of the company's new automobiles under an arrangement by which G.M.A.C. took title to the cars under trust agreements and notes which were released as the dealer made sales and arranged for payments; that the dealership contracts provided for termination by the dealer upon thirty days written notice, in which event it was agreed that the respective General Motors Divisions would repurchase the dealer's inventory of new cars at dealer's net cost. Howard, on behalf of the company, gave the required written notice of termination effective January 8, 1970. On January 9, 1970, Howard voluntarily delivered possession of $150,000 worth of new automobiles to Young, who moved them to another location in Woodville and ultimately transferred the titles as directed by the appropriate General Motors Divisions. No claim or notice of any indebtedness was given to plaintiffs at the time. However, upon discovering that Citizens State Bank of Woodville held and had filed with the Secretary of State a security agreement which purported to cover Howard Motor's inventory, Young, on behalf of G.M.A.C., mailed a letter to the bank on January 21, 1970, in which he made the statements complained of in this lawsuit. The letter is copied in full in the opinion of the Court of Civil Appeals. 474 S.W.2d 929, 931. The gist of the complained of language is contained in the following excerpts:

'This is to notify you, in connection with our repossession of the collateral under the above account (Howard Motor Company, Inc.), that: 1. You may redeem said collateral any time during the period ending on January 28, 1970, by payment of $150,080.04, said amount being the sum of the items comprising (a) your unpaid obligation for principal and interest . . ., (b) reasonable expenses of retaking and storing said collateral . . .. 2. In the event the repossessed collateral is not redeemed in accordance with the foregoing, we will dispose of it in such manner as is permitted by law . . ..'

Plaintiffs alleged and Howard testified that the statements in the letter indicating that Howard Motor was in default on a $150,000 debt and that the cars were repossessed to satisfy such debt were false. Young testified that he believed the statements to be true, and he and G.M.A.C. contend that in any event the letter was a conditionally privileged communication from the holder of a first lien to the holder of a second lien on mortgaged property. They further contend that since plaintiffs offered no evidence of malice, plaintiffs failed to make a prima facie showing that a cause of action had accrued. The trial court refused to permit full development of the evidence on conditional privilege, relying upon the holding in Dealers National Insurance Company v. Rose, 396 S.W.2d 535 (Tex.Civ.App.1965, no writ) that this affirmative defense is not available to defeat venue in the county of suit.

Subdivision 29 of Article 1995 has been held to establish a policy in this State that citizens may litigate their rights in libel suits 'in the county where they vote, pay taxes, and have their residence among the people who know them best . . .' Houston Printing Co. v. Tennant, 120 Tex. 539, 39 S.W.2d 1089, 1091 (1931). It is not subject to the rule of strict construction which applies to other exceptions to the general venue provision of Article 1995. Evans v. American Pub. Co., 118 Tex. 433, 13 S.W.2d 358, 16 S.W.2d 516 (1929). In order to establish venue in Tyler County, plaintiffs had to make prima facie proof of three venue facts: (1) that a cause of action for libel accrued in their favor against defendants; (2) the date of its accrual; and (3) that plaintiffs resided in Tyler County on that date. Lyle v. Waddle,144 Tex. 90, 188 S.W.2d 770 (1945); A. H. Belo Corp. v. Blanton, 133 Tex. 391, 129 S.W.2d 619 (1939).

The accrual of a cause of action results when facts come into existence which entitle one to institute and maintain a suit. Luling Oil & Gas Co. v. Humble Oil & Refining Co., 144 Tex. 475, 191 S.W.2d 716, 721 (1945); A. H. Belo Corporation v. Blanton, 133 Tex. 391, 129 S.W.2d 619, 621 (1939); Shamrock Oil and Gas Corporation v. Price, 364 S.W.2d 260, 262 (Tex.Civ.App., 1963, no writ). The accrual of a cause of action is not negated by a showing that it may be subject to defeat on the merits by an affirmative defense. Thus, false statements indicating that a plaintiff is bankrupt have been held to be libelous per se, even though a suit for damages therefor may be defeated on the merits by an affirmative defense of conditional privilege. Denton Publishing Company v. Boyd, 460 S.W.2d 881 (Tex.1970); Dun and Bradstreet, Inc. v. O'Neil, 456 S.W.2d 896 (Tex.1970); Thorn v. Theo H. Blue Drilling, Inc., 472 S.W.2d 535 (Tex.Civ.App., 1971, no writ). The above cases indicate that malice is not an essential element of the original cause of action, although once the defendant establishes an affirmative defense of privilege, the burden is upon the plaintiff to show, if he can, that the privilege was lost because of malice. These defenses and counter-defenses go to the merits and often, as here, involve fact issues or mixed issues of law and fact. This Court held in Boyd, supra:

'Privilege is an affirmative defense in the nature of confession and avoidance; and, except where the plaintiff's petition shows on its face that the alleged libelous publication is protected by a privilege, the defendant has the burden of proving that the publication is privileged. A. H. Belo & Co. v. Looney, 112 Tex. 160, 246 S.W. 777 (1922); Dealers National Insurance Co. v. Rose, 396 S.W.2d 535 (Tex.Civ.App.1965, no writ) . . ..' (460 S.W.2d at 884)

The case of Dealers National Insurance Co. v. Rose, supra, cited by this Court for the above holding in Boyd, is directly in point on the present venue question. The defendant there, as here, contended that the alleged slander was conditionally privileged, and that since plaintiff failed to prove malice at the venue hearing, he therefore failed to prove the accrual of a cause of action as a venue fact under Subdivision 29. In a well reasoned opinion written by the late Justice Frank Wilson, the Court overruled this contention, saying:

'That a defamation is qualifiedly privileged is an affirmative defense in the nature of confession and avoidance . . .. It is a defense upon which defendant has the burden of proof. Cranfill v. Hayden, 97 Tex. 544, 80 S.W. 609, 614, 615; 53 C.J.S. Libel and Slander § 220, p. 332. When qualified privilege is shown, the burden is upon plaintiff to show actual malice. This is because the presumption of malice or want of good faith actuating the communication has been negatived by the showing of privilege. Cranfill v. Hayden, above; Simmons v. Dickson, 110 Tex. 230, 213 S.W. 612, 218 S.W. 365.

'The sole issue in the plea of privilege hearing is that of venue; not liability or the merits of the case. Stockyards Nat. Bank v. Maples, 127 Tex. 633, 95 S.W.2d 1300, 1304; Farmers' Seed & Gin Co. v. Brooks, 125 Tex. 234, 81 S.W.2d 675. The defense is not available on the hearing to defeat venue in the county of suit. Negativing the prima facie cause of action established by plaintiff does not negative the 'venue fact.' It simply does not affect venue.' (citation of cases omitted)

The Rose case was followed in a venue case involving a similar fact situation in Thorn v. Theo H. Blue Drilling, Inc., supra, in which the Court said:

'No malice was proved, but same was unnecessary because privilege is an affirmative defense and has no place in the venue trial . . .. Appellant's...