Omne Financial, Inc. v. Shacks, Inc.

• Decision Date: 07 July 1999
• Docket Number: Docket No. 111232, Calendar No. 15.
• Citation: 596 N.W.2d 591,460 Mich. 305
• Parties: OMNE FINANCIAL, INC, Plaintiff-Appellant, v. SHACKS, INC, doing business as Shacks Lounge I and II, c/o its resident agent, Lee Shacks, Jr., jointly and severally, Defendants-Appellees.
• Court: Michigan Supreme Court

596 N.W.2d 591

460 Mich. 305

OMNE FINANCIAL, INC, Plaintiff-Appellant, v. SHACKS, INC, doing business as Shacks Lounge I and II, c/o its resident agent, Lee Shacks, Jr., jointly and severally, Defendants-Appellees.

Docket No. 111232, Calendar No. 15.

Supreme Court of Michigan.

Argued March 10, 1999.

Decided July 7, 1999.

Enid Livingston, Birmingham and John D. Alli, Berkley, for the plaintiff-appellant.

Henry G. Marsh, Saginaw, for defendants-appellees.

Opinion

MARILYN J. KELLY, J.

We granted leave in this case to determine the enforceability of contract provisions establishing venue for causes of action that could arise after the contract is executed. Affirming the Court of Appeals, we conclude that such provisions are unenforceable.

I. FACTUAL AND PROCEDURAL BACKGROUND

Defendant Shacks, Inc., a Saginaw bar owner, leased two pool tables and two jukeboxes from plaintiff's assignor, North American Interstate, Inc. Although the equipment was leased through defendant corporation, defendant Shacks personally guaranteed the rental payments. The lease agreement contained the following provision dictating venue for any future causes of action:

This lease shall not be effective until signed by the Lessor at our offices. This lease shall be construed to have been executed in the State of Michigan and shall be interpreted in accordance with the law and regulations of the State of Michigan. Lessee hereby agrees to jurisdiction in Michigan in the case of any action, suit or proceeding arising out of this lease and venue shall be in the district court for the 45A Judicial District (if the damages involved are in excess of $10,000 then the circuit court for the county of Oakland). Lessee hereby acknowledges that Lessee has transacted business in the State of Michigan by entering into the lease and that the jurisdiction, choice of law and venue provisions of this lease are specifically negotiated terms of this lease. [Emphasis added.]

In August 1995, plaintiff filed a claim for damages and return of the equipment in Oakland County, alleging breach of the lease agreement and failure to make the required payments. Defendants filed a motion for change of venue to Saginaw County, alleging that venue in Oakland County was improper. The trial court denied the motion without explanation.

The Court of Appeals reversed and concluded "a contractual agreement that seeks to establish the venue of potential causes of action that might accrue after the execution of the agreement is [not] enforceable." 226 Mich.App. 397, 399, 573 N.W.2d 641 (1997). Recognizing that venue is controlled by statute, the majority on the panel noted that "[t]here is no statutory provision that specifically permits parties to agree contractually" to venue. Id., at 401, 573 N.W.2d 641. It declined to create a rule that permits parties to contractually agree to venue because: (1) "it would be improper to create such a rule on [its] own accord,"¹ (2) permitting parties to avoid statutorily mandated rules regarding venue would undermine the authority of the Legislature, and (3) enforcement of contract agreements regarding venue would conflict with MCR 2.223(A)(2). Id., at 405-407, 573 N.W.2d 641.

The majority also criticized the dissent for failing to recognize that the Legislature has the power to establish venue. It explained that "the right of freedom of contract does not compel the recognition of a private right to fix venue any more than it compels recognition of a private right to establish subject-matter jurisdiction." Id., at 407, 573 N.W.2d 641.

The majority conceded that the few cases² touching on this issue suggested that parties may agree to venue when "there is an existing cause of action." However, it explained that its decision could be harmonized with these cases because: (1) they were decided before passage of the Revised Judicature Act, (2) they failed to address whether the venue agreements were proper under existing venue statutes, (3) they failed to address the tension between the parties' right to contract and the power of the Legislature to establish venue, and (4) they failed to expressly hold that such provisions were enforceable. Id., at 401-402, 407-408, 573 N.W.2d 641. Therefore, the Court concluded that "contractual venue provisions are not binding on Michigan courts." Id., at 407, 573 N.W.2d 641.³

The dissenting judge would have held that "the trial court acted within its authority when it found that venue was proper in Oakland County on the basis of the parties' freely negotiated agreement." Id., at 416-417, 573 N.W.2d 641. He opined that neither the court rules nor venue statutes precluded courts from effectuating the intent of parties as expressed in contracts regarding choice of venue. Id., at 410, 573 N.W.2d 641. Given that the Legislature failed expressly to prohibit parties from contractually agreeing to venue, he asserted that no such prohibition should be imposed. Id., at 411-412, 573 N.W.2d 641.

Likewise, the dissenting judge stated that choice of venue agreements would not abrogate judicial authority under the court rules. Instead, they would advance their "primary goal" of minimizing costs of litigation by reducing the burdens on parties and the strains on the judicial system as a whole. Id., at 412, 573 N.W.2d 641. He asserted that there was "no principled excuse for distinguishing" between choice of venue agreements executed before and after a cause of action arose.⁴ Id., at 415, 573 N.W.2d 641. He concluded that choice of venue provisions should be enforced, unless such agreements were unreasonable, fraudulent, overreaching, or contrary to public policy. Id., at 410-411, 573 N.W.2d 641.

II. ANALYSIS

A. Statutory Venue Provisions

As explained by the Court of Appeals majority, venue is controlled by statute in Michigan. The statute regarding appropriate venue for contract claims provides:

Except for actions provided for in sections 1605, 1611, 1615, and 1629, venue is determined as follows:

(a) The county in which a defendant resides, has a place of business, or conducts business, or in which the registered office of a defendant corporation is located, is a[⁵] proper county in which to commence and try an action.

(b) If none of the defendants meet 1 or more of the criteria in subdivision (a), the county in which a plaintiff resides or has a place of business, or in which the registered office of a plaintiff corporation is located, is a proper county in which to commence and try an action.

(c) An action against a fiduciary appointed by court order shall be commenced in the county in which the fiduciary was appointed. [MCL 600.1621; MSA 27A.1621.]

Likewise, the statute regarding appropriate venue for recovery of tangible personal property claims provides:

The county in which the subject of action, or any part thereof, is situated, is a proper county in which to commence and try the following actions:

(a) the recovery of real property, or of an estate or interests therein, or for the determination in any form of such right or interest;

(b) the partition of real property;

(c) the foreclosure of all liens or mortgages on real property; and

(d) the recovery of tangible personal property. [MCL 600.1605; MSA 27A.1605 (emphasis added).]⁶

Statutory interpretation is a question of law, subject to de novo review. Oakland Co. Bd. of Rd. Comm'rs v. Michigan Property & Casualty Guaranty Ass'n, 456 Mich. 590, 610, 575 N.W.2d 751 (1998). Its primary purpose is to ascertain and effectuate legislative intent. Frankenmuth Mut. Ins. v. Marlette Homes, Inc., 456 Mich. 511, 515, 573 N.W.2d 611 (1998). Courts may not speculate regarding legislative intent beyond the words expressed in a statute. Lansing v. Lansing Twp., 356 Mich. 641, 649, 97 N.W.2d 804 (1959); In re Schnell, 214 Mich.App. 304, 310, 543 N.W.2d 11 (1995). Hence, nothing may be read into a statute that is not within the manifest intent of the Legislature as derived from the act itself. In re SR, 229 Mich.App. 310, 314, 581 N.W.2d 291 (1998); 73 Am.Jur.2d, Statutes, § 198, pp. 394-395.

We believe it is unnecessary to look beyond the language of the statutes to address the question whether parties may contractually agree to venue.⁷ Since the Legislature declined to provide that parties may contractually agree to venue in advance, we decline to read into the statute a provision requiring enforcement of such agreements. Ramsey, supra at 314, 581 N.W.2d 291. Otherwise stated, we need not, and consequently will not, speculate regarding legislative intent beyond the plain words expressed in the statute. Schnell, supra at 310, 543 N.W.2d 11.

Although it is unnecessary to look beyond the language of the statutory venue provisions, we note that examination of the personal jurisdiction statutes supports our conclusion. Statutes in pari materia are statutes sharing a common purpose or relating to the same subject. They are construed together as one law, regardless of whether they contain any reference to one another. State Treasurer v. Schuster, 456 Mich. 408, 417, 572 N.W.2d 628 (1998). Such construction should effectuate each statute without repugnancy, absurdity, or unreasonableness. People v. Harrison, 194 Mich. 363, 370-371, 160 N.W. 623 (1916).

Given that statutes that treat venue and personal jurisdiction share the common purpose of determining a particular forum, we conclude that they are in pari materia. Unlike the statutory provisions regarding venue, personal jurisdiction statutes expressly permit individuals⁸ and corporations⁹ to consent to personal jurisdiction. In addition, M.C.L. § 600.745(2); MSA 27A.745(2) expressly permits parties to contractually agree, in advance, to personal jurisdiction:

If the parties agreed in writing that an action on a controversy may be brought in this state and the agreement provides the only basis for the exercise of jurisdiction, a court of this state shall entertain the action if all the following occur:

(a) The

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