Skip to main content


Reset A A Font size: Print

District Court of Appeal, First District, Division 1, California.


Civ. 14579.

Decided: June 25, 1951

Mason Bailey, Madera, Walker Peddicord, San Francisco, Alfred Nelson, Piedmont, for appellants. William H. MacKay, San Francisco, for respondent.

Defendants appeal from an order denying a motion for change of venue.

Question Presented.

Under the contract, was payment to be made in San Francisco?


Plaintiff filed an action in San Francisco against defendant corporations alleging that plaintiff sold and delivered to defendants at a place near Madera certain quantities of agricultural mineral flue dust for which defendants agreed to pay a certain sum to plaintiff at his office in San Francisco. Defendants moved for change of venue either to the County of Madera or to the County of San Joaquin, on the ground that neither defendant resided or had its principal place of business in San Francisco, and that the alleged obligation was to be performed and the contract was entered into in Madera County and that the principal place of business of both defendants was San Joaquin County. The motion was based on the affidavit of the president of both companies. After stating that the principal place of business of each corporation is in San Joaquin County, he stated that the agreement for the delivery of the dust was entered into in Madera County, the place where the dust was in fact delivered; that the order for it was verbal. In opposition plaintiff filed the affidavit of one Snow who stated that plaintiff's office and place of business was in San Francisco; that defendants' officers knew that fact; that the shipment of the fertilizer mentioned in the complaint was specified and agreed upon by the parties in a letter written and mailed by plaintiff to and received by defendants. A copy of the letter is attached. It states in part: ‘For sake of office record I hereby confirm having last week booked your order to commence shipping Agricultural Mineral Flue Dust, the Calcium-Potassium product, to your peach orchard near Madera at $17.50 per 2000 lbs. in bulk.’ The part upon which plaintiff mainly relies for venue follows: ‘It is understood that you will pay for above at the latest in the course of next year as you market your peach crop, and that you may possibly send in a payment on account in the course of this winter.’ The trial court denied the motion.

Place of Performance.

Admittedly the sole ground for retaining the case is San Francisco is the italicized portion of section 16 of article XII of the Constitution: ‘A corporation or association may be sued in the county where the contract is made or is to be performed, or where the obligation or liability arises, or the breach occurs; or in the county where the principal place of business of such corporation is situated, subject to the power of the court to change the place of trial as in other cases.’ (Emphasis added.)

In considering the constitutional provision referring to the place of performance, the place where the obligation arises and the place where the breach occurs, we are concerned with that obligation of the contract the breach of which is the cause for the suit being filed. In this case ‘The defendant's breach of contract, if any, occurred at the place where payment was agreed to be made. * * *’ Burr v. Western States Life Ins. Co., 211 Cal. 568, 576, 296 P. 273, 276. It is contended and evidently the trial court found, that the last sentence of the letter required payment in San Francisco. ‘The motion was heard and determined on the allegations of the verified complaint and the affidavits and counter-affidavits of the respective parties; and under well settled rules, all conflicts must be resolved in favor of the prevailing party * * *’ C. H. Parker Co., Inc., v. Exeter Refining Co., 26 Cal.App.2d 610, 611, 79 P.2d 1114. The sworn complaint alleged that defendants promised to pay for the material at plaintiff's office in San Francisco. There is no denial of that allegation. The only showing made by defendants is in the affidavit of their president. He does not deny this allegation. He states that the order for delivery was ‘verbal and conditional,’ and that the contract was entered into and the dust in fact delivered in Madera County. Thus, we have a situation where a sworn complaint alleges an agreement to pay in San Francisco and no denial thereof. At this point, had the court passed on the matter, it would have been required to deny the change of venue. The plaintiff then filed the affidavit setting forth the letter which confirms the oral agreement, and which states that it is understood ‘that you may possibly send in’ a payment. Does this language sufficiently show an obligation to pay elsewhere than in San Francisco, so as to overcome the sworn, undenied allegation and the court's finding, that the defendants promised to pay plaintiff there? Obviously it does not. Defendants contend that the proper construction of the letter, when considered with the usual practice of doing business, is that payments were to be mailed, and that the place of performance of the obligation of payment would be wherever the payment was deposited in the post office; or, at least, ordinary business practice would expect a corporation resident of San Joaquin County and doing business in Madera County to mail its check from one of those counties. But such a construction is not compelled, and if a valid conclusion (see, however, section 1489, subdivision 2, Civil Code, as to place of offer of performance in the absence of a provision in the contract) it would, at most, result in the raising of a conflict as to the factual issue of where the moneys were to be paid. The trial court resolved this conflict against the defendants. Moreover, a more reasonable construction of the letter is that ‘send in a payment’ meant that the performance of the payment obligation was at plaintiff's office, which was in San Francisco. The trial court had the right to construe the letter in the light of defendants' president's statement that the agreement was oral, and in the light of the undenied, sworn allegation that payment was agreed to be made in San Francisco.

Defendants contend that the oral agreement, not the letter, was the contract, and that, as their affidavit shows the oral agreement was made in Madera County and was silent on the subject of payment, it must be presumed that payment was to be made there. Assuming such a presumption, nevertheless it was for the trial court to determine whether the letter brought the case under the provisions of section 1489, subdivision 1 of the Civil Code as a ‘place appointed by the creditor’ for the payment to be made.

Defendants make a further contention. They say that section 1 of article XII of the Constitution provides that the Legislature shall have power by general laws to provide, among other things, for the regulation of corporations and to prescribe their powers and rights, duties and liabilities. Section 16, say they, took away from the Legislature certain powers with reference to designating the place of trial for corporation defendants. Then they urge an ingenious construction of section 395 of the Code of Civil Procedure. This section is a general section on venue, which provides, among other things, that the county where the obligation is incurred ‘shall be deemed to be the county in which it is to be performed unless there is a special contract in writing to the contrary.’ Defendants argue that this applies to corporation defendants, as being a legislative enactment under the authority of section 1 of article XII. They say that such a construction is the prescribing of a corporation right. This argument overlooks the fact that as to venue of corporations the Constitution has an express provision (art. XII, § 16). Any desired limitation on section 16 would have been done therein, rather than by a broad grant, in section 1, to the Legislature to regulate corporations and to prescribe their rights.

The limitation in section 395 of the Code of Civil Procedure is not contained in section 16 of article XII and if applied to corporations places it in conflict with the constitutional provision. As said in Hale v. Dolly Varden Lumber Co., —— Cal.App.2d ——, 230 P.2d 841, 848: ‘The constitutional provisions are self-executing. Buck v. James McClatchy Pub. Co., 105 Cal.App. 248, 254, 287 P. 364; Miller & Lux v. Kern County Land Co., 134 Cal., 586, 587, 66 P. 856. Notwithstanding that a constitutional prvision is self-executing, legislation may still be enacted to facilitate its operation and may be desirable by way of providing convenient remedies for the protection of the rights secured “or of regulating the claim of the right so that its exact limits may be known and understood; but all such legislation must be subordinate to the constitutional provision, and in furtherance of its purpose, and must not in any particular attempt to narrow or embarrass it.” Chesney v. Byram, 15 Cal.2d 460, 463–464, 101 P.2d 1106, 1108. To apply the particular provision of Section 395 we are discussing to corporations would certainly result in narrowing and embarrassing the purpose of the constitutional provision. We fail to see how the legislation under discussion in any way furthers the purpose of the constitutional provision with respect to corporations and the venue of actions against them. The constitutional provision is clear and needs no legislation in its aid either in the way of interpretation of its meaning or the application of it to cases as they arise. We further think that to give this particular legislation application to corporations would tend to narrow and embarrass the exercise of the constitutional privilege. We believe it was never intended by the legislature that this particular provision should apply to corporations. This is not to say that the section may not in other respects so apply, but is to say that so long as the Constitution gives the right to a plaintiff in a suit against a corporation to sue it where the obligation is to be performed the right must be fully accorded.’

In Heffernan v. Bennett & Armour, 63 Cal.App.2d 178, 146 P.2d 482, 486, it was contended that the words in section 16, article XII of the Constitution, ‘subject to the power of the court to change the place of trial as in other cases', made section 395 of the Code of Civil Procedure applicable to corporations. (The point involved was not the same as here). The court held that such was not a proper construction of the language of the constitutional section, and that it meant “not merely that an action against a corporation may, at the option of the plaintiff, be commenced in one of the designated counties other than the one in which the defendant has its principle place of business, but that it may be prosecuted to final judgment where commenced, unless the defendant can allege and show some sufficient ground for a change of the place of trial distinct from the fact that the residence of the corporation is in another county. (Citing cases.)” 63 Cal.App.2d at pages 186–187, 146 P.2d at page 486. ‘This is a personal or transitory action wherein the sole defendant is a California corporation, therefore, section 395 of the Code of Civil Procedure does not apply and resort must be had to the provision of the Constitution which governs the venue in such actions.’ Koing v. Associated Almond Growers, 37 Cal.App.2d 360, 363, 99 P.2d 678, 679.

In Bohn v. Better Biscuits, Inc., 26 Cal.App.2d 61, 78 P.2d 1177, 80 P.2d 484, cited by defendants, there is language to the effect that section 395 of the Code of Civil Procedure applies to corporations. However, the point under consideration here is not discussed, nor was it considered. There the action was brought against the defendant corporation in San Francisco on the theory that it, being a foreign corporation, had no place of residence in California. The corporation moved for a change of venue to Alameda County, the county designated by it in accordance with the law as its principal office within the state. The contract sued on was not made, or to be performed in San Francisco, nor did the obligation or liability arise or the breach occur there. At that time section 395 of the Code of Civil Procedure did not contain, so far as actions in excess of $300 were concerned, the sentence under consideration here. The court held that for purposes of venue, under section 395 the residence of a foreign corporation, like that of a domestic corporation, is its principal place of business. Later, in De Campos v. State Compensation Ins. Fund, 75 Cal.App.2d 13, 170 P.2d 60, 61, in which it was contended that the defendant, ‘a political subdivision of the State of California’, should be considered on a motion for change of venue as a private corporation, the court approved the holding in the Bohn case that the provisions of section 395 as to residence applied to corporations. With reference to the sentence in question here the court said (although it was unnecessary to the decision as it was conceded that if section 16 of article XII did not apply to the defendant political subdivision—and the court held it did not—the defendant was entitled to a transfer to the county of its residence): ‘In the case before us there is no provision in the policy of insurance designating the county in which obligations thereunder are to be performed. While, as above stated, respondents have not made any argument regarding the proper construction to be given section 395, they do assert that the contract was to be performed in Placer County, and that ‘the liability arose’ there—which might be construed as an allegation that the obligation was incurred there. Appellant meets both of these statements by pointing out that this contract was in fact entered into in the City and County of San Francisco, and that its obligations were to be performed in San Francisco.' 75 Cal.App.2d at page 21, 170 P.2d at page 65.

Thus, the decisions in the Heffernan and Bohn cases are not a holding that that portion of section 395 of the Code of Civil Procedure requiring a special contract in writing modifies section 16 of article XII of the Constitution.

In defendants' closing brief they raise a new contention, namely, that the complaint does not state a cause of action, and based on that contention they claim a right to a change of venue. Defendants' demurrer to the complaint was overruled. A claimed deficiency in the complaint is that it does not allege non-payment. After alleging that plaintiff sold and delivered to defendants a certain quantity of flue dust and that defendants promised to pay plaintiff therefor a certain sum when defendants marketed their next peach crop and that they marketed said crop on a certain date, the complaint alleges that defendants are indebted to plaintiff in said sum, and that although plaintiff has requently demanded payment thereof, defendants have refused and neglected to pay said sums or any part thereof. While these allegations might be subject to special demurrer (none was filed herein) they sufficiently show non-payment as against a general demurrer and hence the complaint states a cause of action. Lincoln County Bank v. Fetterman, 170 Cal. 357, 149 P. 811; see also Fancher v. Brunger, 94 Cal.App.2d 727, 211 P.2d 633.

Defendants further contend that the complaint does not state a cause of action because it fails to show compliance in detail with certain sections of the Agricultural Code from section 1023 through section 1044.5. The complaint alleges that plaintiff has complied in all respects with all the provisions of law contained in division 5, chapter 7 of the Agricultural Code. This chapter contains all of the sections referred to by defendants. The allegations are sufficient for the purposes of venue. Defendants rely on Meadows v. Emett & Chandler, 99 Cal.App.2d 496, 222 P.2d 145; Clary v. Basalt Rock Co., 99 Cal.App.2d 458, 222 P.2d 24, and Crofts & Anderson v. Johnson, 101 Cal.App.2d 418, 225 P.2d 594, for their contention that the complaint must state a perfect cause of action in order to prevent a change of venue to the county of a defendant's residence. Those cases do not so hold. They hold only that it must clearly appear from the complaint that plaintiff's cause of action is of the type which entitles the action to be tried in a county other than that of defendant's residence. The compliant in the case at bar definitely alleges that the defendants agreed to pay the purchase price at plaintiff's office in San Francisco and meets the requirements of those cases.

The order is affirmed.

BRAY, Justice.

PETERS, P. J., and AGEE, J. pro tem., concur.

Copied to clipboard