Hale v. Bohannon

• Decision Date: 21 February 1952
• Citation: 38 Cal.2d 458,241 P.2d 4
• Court: California Supreme Court
• Parties: HALE v. BOHANNON et al. Sac. 6096.

Page 4

241 P.2d 4

38 Cal.2d 458

HALE v. BOHANNON et al.

Sac. 6096.

Supreme Court of California, in Bank.

Feb. 21, 1952.

McEnerney & Jacobs, Garret McEnerney, II and Justin M. Jacobs, all of San Francisco, Kenneth D. Sevier, Eureka, James Shaughnessy, San Francisco, for appellants.

Woodman, Leddy & Sautter, Eureka, for respondent.

EDMONDS, Justice.

When sued in Humboldt county, Dolly Varden Lumber Company, a corporation, moved the court for a change of venue to the county of its principal place of business. The most important question presented for decision upon the appeal from an order denying that motion is whether section 395 of the Code of Civil Procedure is applicable to an action against a corporation.

Hale's verified complaint alleges that, by the terms of a written contract, the lumber company agreed to pay him compensation for his services and a stated amount for certain personal property. Judgment is asked for the sums which, it is claimed, became due under the contract and have not been paid.

The contract provides for Hale's employment by the lumber company as superintendent of logging operations in Humboldt county. Hale agreed to sell to the lumber company specified personal property. In payment for his services and the purchase price of the property sold, the lumber company promised to pay him 20 per cent of its net profits from operations during the existence of the agreement. Determination of profits is to be made in accordance with a detailed formula in the contract.

As stated in the contract, during its existence the lumber company will pay $1,000 per month to Hale as a drawing account, chargeable against the profits to which he may be entitled. Provision is made for a final settlement of accounts upon termination of the agreement.

The contract declares that it supersedes an oral agreement under which Hale had been serving as the lumber company's logging superintendent. Another provision reads: 'This instrument contains the entire agreement between the parties hereto and shall supersede and control any and all prior understandings, whether written or oral.' The place where the money to become due under the contract shall be paid is not specified.

In support of its motion for change of venue, the lumber company presented the affidavit of its president, David D. Bohannon. He avers that the company's principal place of business at all times material to this action was in San Mateo county. Furthermore, he says, the contract was executed and delivered at the company's principal office in San Mateo county.

Hale's affidavit in opposition to the company's motion states that he is resident of Humboldt county. He then avers that the contract was made orally between him and the company's agents in Humboldt county and was to be performed there by both parties. The obligations and liabilities of the parties arose in Humboldt county, he says. Payments under the contract were made at a bank in Humboldt county, and it was breached there.

By a supplemental affidavit, the corporation denies that the contract was made orally in Humboldt county. Although the contract was negotiated partially in Humboldt county, Bohannon states, it was not completely negotiated or agreed to at that place. Many of its provisions, he says, were neither mentioned nor agreed to until a meeting was held in San Mateo county for the purpose of finally negotiating the contract. At this meeting, according to the affidavit, Hale was present and a typewritten draft of the contract was discussed and altered by interlineation and initialing and by attaching thereto the inventory of personal property presented for the first time by Hale. This draft, as amended and supplemented, Bohannon avers, then was agreed to by the parties and executed by each of them.

Bohannon further asserts that Hale's affidavit is untrue in stating that payments to him under the contract were made at a bank in Humboldt county. According to Bohannon, the money was paid by eleven checks of the corporation which were drawn in San Mateo county on bank accounts maintained in Humboldt county. With one exception, these checks were mailed to Hale at his Humboldt county address.

Other averments of Bohannon are that payments to Hale under the prior oral contract were made in the same manner. At no time, it is said, did Hale object to the method of payment under either contract. Hale's statements as to the place where the obligations arose, the place of performance and the place where the breach occurred are characterized as 'bare, unsupported conclusions'.

Hale's supplemental affidavit reiterates that a completed oral contract was made in Humboldt county 'with only a written memorandum made and signed in' San Mateo county. He describes the meeting in San Mateo county as being wholly unrelated to the contract and being called for the purpose of executing it. But while he was there, he says, it was decided to obtain a written record of the oral contract. According to this affidavit, the essential terms of the contract were orally agreed to in Humboldt county, 'leaving minor and incidental matters' only to be embodied in the writing. As stated by Hale, any alterations in the draft of the contract had been agreed to in Humboldt county.

It was understood by the parties, he says, that their oral agreement was to be embodied in a written instrument drawn by the lumber company's attorney and forwarded to Humboldt county for execution and delivery. His explanation of why this was not done is that, before the contract was prepared, he happened to be in San Mateo county on other business. The one check which he received in San Mateo county was delivered to him as a matter of convenience. At no time, he adds, did he accept the lumber company's checks 'as absolute payment of the amount due', nor was there any agreement that they were so to be accepted. All checks were 'accepted in the ordinary course of business'.

As grounds for reversal of the order denying the motion for change of venue, the lumber company contends that under the evidence, as a matter of law, the contract was made in San Mateo county, its performance was to be rendered there, and the breach, if any, occurred there. In addition, it says, section 395 of the Code of Civil Procedure requires that San Mateo county be deemed the place of performance in the absence of a special contract in writing to the contrary.

Hale declares that the court's order is supported by evidence that the contract was performable in Humboldt county and the breach occurred there. He also construes section 395 of the Code of Civil Procedure as not applicable to an action against a corporation.

By its express terms, the written contract superseded any and all prior understandings. Assuming that a prior oral contract identical in all respects to the writing existed between the parties, it was replaced by the specific provisions of the written contract. In adddition, Hale's own affidavits show that a complete agreement had not been reached between the parties in Humboldt county. He admits that the negotiations in Humboldt county left certain matters to be disposed of and embodied in a written contract.

Hale now argues that 'the written instrument was an integration'. As defined be section 228 of the Restatement of Contracts, an 'integration' is 'the final and complete expression of the agreement'. In interpreting a written contract, the writing 'supersedes all the negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument'. ( § 1625, Civil Code.) It is argued that section 1625 of the Civil Code and section 1856 of the Code of Civil Procedure are not applicable to the question of venue. However, as was said in Estate of Ganies, 15 Cal.2d 255, 264-265, 100 P.2d 1055, 1060, 'The parol evidence rule * * * is not a rule of evidence but is one of substantive law. * * * The rule as applied to contracts is simply that as a matter of substantive law, a certain act, the act of embodying the complete terms of an agreement in a writing (the 'integration'), becomes the contract of the parties.'

That this is the effect intended by the parties is apparent from the terms of the written contract itself. The situation is not comparable to that where the contract itself is oral but, for the purposes of the Statute of Frauds, has been confirmed by written memorandum. In such case, the oral contract governs and the writing, which does not purport to be an integration, serves only to prevent the contract from being unenforceable. Taylor v. J. B. Hill Co., 67 Cal.App.2d 581, 154 P.2d 926. Concededly, the written contract was executed and delivered in San Mateo county, and in legal effect it was made there.

However, Hale argues that his action may be maintained in Humboldt county under the provisions of section 16 of article XII of the Constitution of California. As the basis for this position, he relies upon evidence which he says is sufficient to support the trial court's finding that the contract was performable and the breach occurred in Humboldt county.

The motion for change of venue was made and determined upon the allegations of the verified complaint and the affidavits of the respective parties. Therefore, 'all conflicts must be resolved in favor of the prevailing party * * *; and all reasonable inferences which are to be drawn must be in support of the trial court's order'. Parker Co., Inc., v. Exeter Refining Co., 26 Cal.App.2d 610, 611, 79 P.2d 1114; Gordon v. Perkins, 203 Cal. 183, 186, 263 P. 231.

The contract does not provide where the lumber company was to make its payments. This being the obligation the breach of which is pleaded as the cause of action, under the constitutional provision, the place where it was to be performed is the decisive factor insofar as venue is concerned. Burr v. Western States Life Ins. Co., 211 Cal. 568, 574, 296 P. 273; Union Oil Co. v. Basalt Rock...