South Texas Icee Corp. v. John E. Mitchell Co.

• Decision Date: 18 December 1969
• Docket Number: No. 481,481
• Citation: 449 S.W.2d 786
• Parties: SOUTH TEXAS ICEE CORPORATION et al., Appellants, v. JOHN E. MITCHELL COMPANY, Inc., Appellee. . Corpus Christi
• Court: Texas Court of Appeals

Page 786

449 S.W.2d 786

SOUTH TEXAS ICEE CORPORATION et al., Appellants, v. JOHN E. MITCHELL COMPANY, Inc., Appellee.

No. 481.

Court of Civil Appeals of Texas Corpus Christi.

Dec. 18, 1969.

Rehearing Denied Jan. 15, 1970.

Rankin, Kern, Martinez & Van Wie, H. H. Rankin, Henry John Roelofs, McAllen, John W. Stayton, Austin, for appellants.

Carter, Stiernberg, Skaggs & Koppel, Harlingen, Storey, Armstrong & Steger, William Bedard, Dallas, for appellee.

OPINION

NYE, Justice.

This is an appeal by the plaintiffs from the order of the trial court sustaining the plea of privilege of the defendant corporation. No findings of fact or conclusions of law were requested or filed.

South Texas Icee Corporation and Gulf Coast Icee Corporation, hereinafter called plaintiffs, sued John E. Mitchell Company, Inc. for damages allegedly resulting from a breach of contract. The defendant, a foreign corporation, filed a plea of privilege to be sued in Dallas County where it maintains its principal office and place of business. The plaintiffs duly controverted such plea, whereupon the court heard the evidence without the intervention of a jury and entered its order sustaining the plea of privilege.

The plaintiffs, claiming their exception under subdivision 27 of Article 1995, Vernon's Ann.Civ.St., contend that Valley Icee, Inc. is an 'agency or representative' of defendant corporation that furthers the business of the defendant in Hidalgo County, Texas. Valley Icee, Inc. is a Texas corporation having its principal office and place of business in Harlingen, Cameron County, Texas.

Subdivision 27 of the venue statute provides that a foreign corporation may be sued 'in the county where such company may have an agency or representative.' The defendant, in its affidavit setting forth its plea of privilege admitted that it is a foreign corporation. Basis for the venue facts were two written agreements admitted into evidence outlining the duties and obligations of Valley Icee, Inc. who is called the 'developer.' Therefore, the question is whether Valley Icee, Inc. is an agent or representative that furthers the business of defendant in Hidalgo County.

The agreements reflect that the defendant corporation is the owner of certain United States patents used in the manufacturing of a cold drink machine and dispenser. The defendant operates under the trade name of 'Icee'. The agreement contemplates the leasing of these machines to the developer upon certain terms and conditions. The developer in turn sub-leases the machines to retailers through the use of an Icee retailer agreement. This agreement is a three-way contract between the retailer, the developer and the defendant. It provides for the retailer to pay the developer a certain specified amount as royalty for each machine. Most of this royalty is remitted to the defendant. The developer retains the balance. The retailer, in addition, pays to the developer a royalty for each cup of cold drink that is dispensed by each machine . The developer pays the defendant a fixed, annual rental on each machine whether in use or not, and in addition pays a much smaller percentage royalty on each cup of cold drink dispensed by the machine.

Valley Icee, Inc., the developer, is charged with the duty of installing and servicing the machines placed with the retailer. The Valley Icee, Inc. conducts the advertising program of the 'Icee' product, and bills the defendant one half of the advertising expense . The title to the machine remains in the defendant throughout the term of its use.

Appellants' first three points of error are that the trial court erred in sustaining the defendant's plea of privilege and in thereby holding that Valley Icee, Inc. was not an agent or representative of defendant in Hidalgo County within the meaning of subdivision 27 of Art. 1995, and that the evidence was legally and factually insufficient to support the theory that Valley Icee, Inc. was the agency or representative of the defendant.

The defendant corporation is engaged in the business of manufacturing and leasing cold drink dispensers. The defendant's operation is keyed to the manufacture of the machines under its patent and by leasing them out to developers on a royalty-rental basis. This is how it hopes to derive a profit. The defendant could, of course, manufacture and sell the machines to wholesalers or retailers who would be privileged to do with them as they pleased . However, defendant retains the title to the machines, and retains control of their use through its agent and representative (the developer). The developer promotes the products that the machines produce, and receives therefor a fee and royalty as income.

The defendant contends that the employees of Valley Icee, Inc. are mere servants and do not conduct a regular business on a more or less permanent basis; that their duties are only transitory and temporary in nature; they have no power to contract; and do not qualify as an agent or representative.

A foreign corporation doing business in Texas may be sued in any county...