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District Court of Appeal, Third District, California.


Civ. 7827.

Decided: May 08, 1951

Kenneth D. Sevier, Eureka, McEnerney & Jacobs, San Francisco, for appellant. Stanley Woodman, Eureka, for respondent.

Plaintiff, respondent here, brought this Superior Court action in the County of Humboldt. The defendant is a corporation, with its principal place of business in the County of San Mateo. Defendant moved for a change of place of trial from the County of Humboldt to the County of San Mateo, which motion was denied. This appeal followed.

Respondent's complaint alleged in substance as follows: That on April 1, 1947, the parties hereto entered into a written contract, a copy of which is annexed to the complaint and by reference made a part thereof; that under the terms of the contract appellant agreed to pay respondent compensation for services and also to pay the purchase price of certain personal property consisting in the main part of logging equipment; that certain moneys had become due for services and remained unpaid; that the purchase price of the personal property had become due and was unpaid. The complaint prayed for a judgment for such amounts. The written contract, after reciting the ownership of timber lands by appellant and the right to log other lands, provided for the employment of respondent, under the direction of appellant's president, as superintendent of the prospective logging operations of respondent. Attached to the contract as an exhibit thereto was a long list of materials, equipment and supplies appropriate for such operations, owned by respondent. By the contract he sold this property to appellant. Payment for the personal property so sold to appellant was to be made at the rate of 20% of the net profits earned by the appellant, during the existence of the agreement. The contract contains detailed and extensive provisions for determination of net profit.

In support of its motion the appellant presented the affidavit of its president. Therein he averred that the principal place of business of the appellant was, at all times material here, in the County of San Mateo. It may be said that this is not controverted. Respondent filed an affidavit in opposition to the motion, wherein he stated that he was at all times a resident of the County of Humboldt, that the contract sued upon was orally made and agreed to between himself and the corporation in Humboldt County, that it was to be performed in that county by both parties thereto, that the obligations and liabilities of the parties thereunder arose in said county, that such moneys as had been paid him under the contract were paid to him in Humboldt County, and that the breach of the contract for which the action was brought occurred in said county. Appellant filed a supplemental affidavit of its president, wherein he asserted to be untrue the respondent's averment that the contract had been orally made in the County of Humboldt. He further averred that, although a portion of the provisions of the contract were discussed and partially negotiated between himself, as president of appellant, and respondent, in Humboldt County, the contract was not completely negotiated or agreed to therein; that many of the provisions of the contract were not discussed or agreed to in Humboldt County and that subsequently, and for the purpose of completing negotiations and executing such contract as might be finally agreed to, a meeting was had in San Mateo County at the office of appellant, where at first a tentative draft of the proposed contract was made, discussed and changed in certain particulars, and then the contract was completely typewritten and executed by the parties thereto. He averred somewhat in detail that the extensive inventory of personal property attached to the written agreement was there presented by respondent and upon his assurances that the same was true and correct the same was accepted by the corporation as correct and made a part of the agreement. He said further that at that meeting copies of the signed contract were delivered by each party to the other. Respecting moneys paid, he denied the averments of respondent in respect thereto and stated that the sums were paid under the contract by eleven checks drawn and signed by the appellant at its office in San Mateo County on bank accounts maintained by it in Humboldt County; that with the exception of one check personally given to respondent in San Mateo County, all were mailed to him from San Mateo County to his address at Arcata in Humboldt County. It was further averred that for a period of a year prior to the making of the contract respondent had been employed by appellant as its logging superintendent under a previous arrangement and all moneys paid under that arrangement were handled in the same way and that no objection was ever made by respondent to this method of performance by the corporation. The affidavit contained denials of appellant's averments as to the place of performance and the place where the obligations arose, the place where the alleged breach occurred, terming such averments inconsistent with fact and bare, unsupported conclusions of respondent. Respondent also filed a supplemental affidavit. Therein he reiterated his statements that there had been a complete oral contract made in Humboldt County ‘with only a written memorandum made and signed in the County of San Mateo’. He averred that the meeting in San Mateo County was not called for the purpose of completing an incomplete contract, but that he was merely present thereat on an unrelated matter and while there a written record of the prior oral contract was made. He then said ‘that the essential terms of the contract shown as Exhibit ‘A’ to the complaint in this action were orally agreed to by the plaintiff and David D. Bohannon, the president of the defendant corporation in Humboldt County and only leaving minor and incidental matters and the embodying of the terms of the contract in written form which were by convenience done in the County of San Mateo.' He averred that any changes made in the written draft were to make it conform to the previous oral agreement. He said that there had been an understanding that the oral agreement entered into previous to the date of the written agreement would be embodied in a written instrument drawn by the attorney of the appellant and then brought to Humboldt County for his signature, which latter was not done merely because of his presence in San Mateo County for other purposes. He re-alleged his statements that the place of performance was in Humboldt County ‘by means of payment of the money due to the plaintiff’ and that the breach took place therein; that the parties intended the performance of both should be in Humboldt County. He concluded by stating that the checks sent to him had not been accepted as ‘absolute payment of the amount due’ for services or property sold and that there had never been any special agreement that they were to be so accepted but that he had accepted them ‘in the ordinary course of business.’

Article XII, Section 16, of the Constitution of this State provides: ‘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.’

Since admittedly the principal place of business of appellant is in San Mateo County, appellant was entitled to have the cause moved unless the action is upon a contract made or to be performed in Humboldt County or unless an obligation or liability arose or breach occurred therein. Clary v. Basalt Rock Co., 99 Cal.App.2d 458, 222 P.2d 24; Hammond v. Ocean Shore Dev. Co., 22 Cal.App. 167, 133 P. 978. Since the motion was made and determined on the allegations of the verified complaint and the affidavits and counter-affidavits of the respective parties, 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. C. H. Parker Co., Inc. v. Exeter Refining Co., 26 Cal.App.2d 610, 611, 79 P.2d 1114; Gordon v. Perkins, 203 Cal. 183, 263 P. 231; Marston v. Watson, 20 Cal.App. 465, 129 P. 611.

It has been noted that the parties are in disagreement as to where the contract was made. It is undisputed that the formal written contract, dated April 1, 1947, and made a part of respondent's complaint, was executed in San Mateo County, but respondent takes the position that this was a mere reduction to writing of a previous oral contract made in Humboldt County and did not constitute the making of a new contract. We think this position of respondent cannot be sustained. The bare averment of respondent that the contract was made in Humboldt County is but a conclusion. The detailed facts of the preparation, discussion and execution of the formal written instrument are not denied by the respondent and he destroys his position when he says that the essential terms of the contract embodied in the written instrument were orally agreed to and minor and incidental matters were left to be embodied in the terms of the written instrument thereafter to be prepared and executed. He makes no attempt to define what is meant by ‘the essential terms of the contract’ but he admits, in effect, that the contract was not a completed one when the oral negotiations of the parties in Humboldt County had ended.

“It may be conceded that where the minds of the parties have met respecting the terms and conditions of the more formal writing that is to be executed by them, and the agreed terms of the contract thereafter to be executed are certain and in all respects definitely understood and agreed upon in advance, either orally or by informal writing, there is in such case an obligatory contract dating from the making of the earlier agreement. 13 C.J. p. 290 et seq. But it also is elementary law that, unless the agreement to execute the future contract be definite and certain upon all the subjects to be embraced, so that nothing is left for future negotiation, it is nugatory. * * *'

‘The principle, which respondent claims is here decisive, is aptly expressed in the following language taken from Dillingham v. Dahlgren, 52 Cal.App. 322, 329, 198 P. 832, 835:

“It is essential to the validity of a contract that the parties should have consented to the same subject-matter in the same sense. They must have contracted ad idem.' * * * ‘To be final, the agreement must extend to all the terms which the parties intend to introduce, and material terms cannot be left for future settlement”. Toms v. Hellman, 115 Cal.App. 74, 77, 1 P.2d 31, 32.

‘There can be no contract unless the minds of the parties have met and mutually agreed. Consent is not mutual unless all the parties agree upon the same thing in the same sense. The minds of contracting parties must draw together and become as one touching the subject matter and the terms and conditions before a contract can be consummated.’ 6 Cal.Jur., sec. 24, pp. 43, 44.

The end result of respondent's own affidavit in this respect is that the parties had no made a complete oral agreement or any oral agreement and that no contract existed between them until the written contract was executed in San Mateo County.

There is another reason why respondent's claim that he sues upon a preexisting oral agreement made in Humboldt County and merely integrated in San Mateo County by the execution of the written instrument cannot be maintained. That document contains the following stipulation of the parties: ‘This instrument contains the entire agreement between the parties hereto and shall supersede and control any and all prior understandings, whether written or oral.’ Supersede means: ‘To make void or useless; to make unnecessary or superfluous; to cause to be set aside * * * to render obsolete; to cause to be abandoned.’ Webster's International Dictionary. It means ‘to set aside, to displace, to make void, inefficacious, or useless.’ Dick v. King, 73 Mont. 456, 236 P. 1093, 1095. The word means ‘obliterate,’ ‘annul,’ ‘make void,’ ‘repeal.’ City of Los Angeles v. Gurdane, 9 Cir., 59 F.2d 161, 163. It means ‘To replace or set aside and put another in the place of; To supplant; To make void, useless or unnecessary by superior power, or by coming in the place of.’ Willbanks v. Montgomery, Tex.Civ.App., 189 S.W.2d 337, 339. Assuming that there was a completed oral understanding or agreement made in Humboldt County, it was competent for the parties when they embodied it in a subsequent written contract to agree that the prior oral agreement should have no force or effect and should stand as cancelled and abandoned. This they did by the plain stipulation they inserted in the written instrument and it cannot now be said that the contract here sued upon was made in the county wherein that previous, but now abandoned and voided oral understanding, was made, if it was made.

But regardless of the fact that the contract sued upon was made in San Mateo County, the venue may still be retained in Humboldt County if plaintiff can bring his case within any of the provisions of the Constitution authorizing suit in that county. Respondent contends, and appellant resists the contention, that the contract was to be performed in Humboldt County. It appears to have been held that the constitutional provision under discussion, when it refers to the place of performance, the place where the obligation arises and the place where the breach occurs, is concerned with that obligation of the contract the breach whereof is the cause for the action's being filed. Union Oil Co. v. Basalt Rock Co., Inc., 30 Cal.App.2d 317, 86 P.2d 139. See, also, Burr v. Western States Life Ins. Co., 211 Cal. 568, 576, 296 P. 273, 276, wherein the court said: ‘The defendant's breach of contract, if any, occurred at the place where payment was agreed to be made.’

Respondent does not contend that the law is otherwise than above stated, but says that the action upon the contract is to recover moneys due and owing to respondent, that the contract contains no specific provision as to where these sums were to be paid, that the trial court, therefore, was at liberty to find that it was the intention of the contracting parties that the moneys should be paid at the residence of respondent in Humboldt County. It is true that when the contract is thus silent the determination by the trial court on motion for change of venue is a determination of fact and that upon appeal the trial court's ruling will be upheld, unless there is a lack of evidence to support it.

‘It is the rule that the question of where the contract was to be performed is one of fact, and the determination by the trial court of that question will not be disturbed if there is any substantial evidence in the record to support it, and all conflicts must be resolved in favor of the prevailing party. If, therefore, the facts upon which the present motion was heard and determined reasonably support the inference that the contract was to be performed in Stanislaus county, the order must be affirmed. Parker Co., Inc., v. Exeter Refining Co., 26 Cal.App.2d 610, 79 P.2d 1114.’ Gallo v. Boyle Manufacturing Co., Inc., 35 Cal.App.2d 168, 169, 170, 94 P.2d 1010, 1011.

In Swartz v. California Olive Growers' Packing Corp., 56 Cal.App.2d 168, 170, 171, 133 P.2d 20, 22, the court said: ‘Such a wide degree of latitude is allowed the trial court in deciding this ever-recurring controversy that the appellate courts will not disturb the order made upon conflicting evidence unless it is clear that the order was the result of arbitrary action. [Citing cases.] It follows that in case of such a conflict the averments of the affidavits of the prevailing party may be deemed to be the findings of the court below upon the issue of change of venue. [Citing cases.] Inasmuch as the contract specifies no place of performance it was performable in the county in which the circumstances attendant upon the execution of the writing indicate that the parties intended as the theater of its performance.’

See, also, Civil Code, Sections 1488 and 1489, and Bank of Yolo v. Sperry Flour Co., 141 Cal. 314, 315, 316, 74 P. 855, 65 L.R.A. 90. In the Bank of Yolo case the court said: ‘But, if the contract was to be performed in Yolo county, the action was rightly commenced there, wherever it was made, and we think the place of performance was in Yolo county. The plaintiff is a banking corporation doing business at Woodland, the county seat of Yolo, and a promise to repay money advanced by it—no other place of payment being stipulated—must be deemed a promise to pay at its bank, the only place where it can be found. This, we think, is a reasonable deduction from the provisions of the Civil Code (sections 1488, 1489) in regard to the place where an offer of performance may be made; * * *. In a suit upon the contract of a corporation, where no place of performance is expressly stipulated, it ought to be held performable in the place where the circumstances, viewed in the light of pertinent code provisions, indicate that the parties expected or intended it to be performed.’

See, also, Nakanishi v. Policy Holders' Life Ins. Ass'n, 129 Cal.App. 747, 19 P.2d 287, and Clark v. Policy-Holders' Life Ins. Ass'n, 138 Cal.App. 505, 32 P.2d 653, 655. In the last case cited an insurance contract made in Los Angeles County resulted in money being payable to the assured who lived in Tulare County where he began action to collect moneys alleged to be due under the policy. After quoting 48 Corpus Juris, pages 592, 593, as to the general rule governing the place of payment, in the absence of any agreement or stipulation to the contrary, as stated above, and after referring to the code sections hereinbefore referred to, the court said: “Having failed to make tender of payment at the creditor's place of residence, a breach of the debtor's promise to pay occurred at that place, and under section 16 of article 12 of the Constitution the defendant could be sued at that place, no other place of payment being stipulated.” See also 70 C.J.S., Payment, § 6.

In this case the contract is silent as to the place where the money, which from his performance of the contract would become due to the respondent, was to be paid. Then we must determine where, from the circumstances viewed in the light of pertinent code provisions, the parties expected or intended this obligation of the contract to be performed. The trial court must be held to have found as a fact that this was in Humboldt County. We think that upon the record here this finding must be sustained. The contract itself fixes the main theater of performance clearly in Humboldt County, where the timber lands and timber rights of the appellant were situated. There was the place of operation, as indicated clearly by the contract, and there, under the undisputed averments of the affidavits, was where plaintiff was to perform his managerial services; there also was the operation out of the net profits of which the purchase price of the personal property was to be paid to respondent; there was the residence of respondent, and there it had been for a considerable period of time before the contract was made. When moneys became due under the contract, as it is alleged in the complaint they did, the relation of debtor and creditor in respect of the sums so due arose between appellant and respondent, and the contract not otherwise providing, it was incumbent upon appellant, in order to discharge that obligation, to seek the respondent and make payment or tender of the same where he might be found and where he was known to reside. If the payment was to be made in Humboldt County, then of course the breach alleged—the failure to make such payment—also occurred in that county. Clark v. Policy Holders' Life Ins. Ass'n, supra. We conclude that the trial court was justified in holding that the obligation, the breach of which caused this action to be filed, was performable in the county of original venue and that in that county also the breach thereof occurred.

Appellant contends that the practice of appellant, acquiesced in by respondent, of making payment of sums coming due to respondent by mailing checks in payment thereof from the office of the appellant in San Mateo County to the residence of respondent in Humboldt County compels a finding that payment was to be made in San Mateo County. Respondent counters by insisting that the mailing of the checks did not constitute payments of the debts and same were not made until and unless the checks were accepted by respondent as payment. We think it unnecessary to discuss these contentions since, assuming those of the appellant to be correct, no more would result than the raising of a conflict as to the factual issue of where the moneys were to be paid.

Appellant contends that if, as we have held, the contract was made in the County of San Mateo, then the obligation here sued upon was incurred there and by the force of certain provisions in Section 395 of the Code of Civil Procedure it must follow that the obligation was to be performed there and hence the motion of appellant for change of venue ought to have been granted.

Section 395 declares that when a defendant has contracted to perform an obligation in a particular county then such defendant can be sued either in the county where the obligation was to be performed or in the county in which the contract was entered into or in the county of the residence of the defendant. Thus far the section is in accord with the Constitution, for the Constitution says that a corporation defendant may be sued where a contract is made or where it is to be performed or where the principal place of business is situated and the principal place of business of a corporation has been held to be its residence within the meaning of venue statutes. The section then further declares that the county in which the obligation is incurred, and that is the county where the contract is made, Campbell v. Clifford, 52 Cal.App.2d 615, 618–619, 126 P.2d 887, 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. The Constitution does not contain such language and we think this provision of the section cannot be applied to corporations. To give it such application would place it in conflict with the Constitution. 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 provision 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.

The order is affirmed.

VAN DYKE, Justice.

ADAMS, P. J., and DEIRUP, Justice pro tem., concur.

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