Cemco, Inc. v. World Wide Investors

487 S.W.2d 833, 1972 Tex. App. LEXIS 2830
CourtCourt of Appeals of Texas
DecidedNovember 9, 1972
Docket5148
StatusPublished
Cited by4 cases

This text of 487 S.W.2d 833 (Cemco, Inc. v. World Wide Investors) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cemco, Inc. v. World Wide Investors, 487 S.W.2d 833, 1972 Tex. App. LEXIS 2830 (Tex. Ct. App. 1972).

Opinion

OPINION

JAMES, Justice.

This is a venue matter, the disposition of which turns on Subdivision 4 of Article 1995, Vernon’s Annotated Texas Civ. Statutes. Plaintiff-Appellant Cemco, Inc., brought this action in Dallas County against 26 individual Defendants 1 alleged to be partners or joint venturers, in which 17 of the Defendants filed Pleas of Privilege, all of which were duly controverted by Plaintiff-Appellant Cemco. The trial court after an extensive hearing sustained the pleas of privilege of 12 of the Defendants, and held in abeyance the pleas of privilege of the remaining 5 Defendants. Plaintiff Cemco appeals from this order sustaining the pleas of privilege of the 12 Defendants on three points of error, the first point being that the “trial court erred in sustaining Defendant-Appellees’ pleas of privilege since it was shown that venue is proper in Dallas County under Subdivision 4 of Article 1995, V.A.C.S.” We sustain Plaintiff-Appellant’s first point and reverse and render the trial court’s order.

Although the record is voluminous, we will discuss only those facts which we deem pertinent to explain the reasons for our judgment.

*835 The organizer or promoter of the business venture out of which this suit arose was Defendant-Appellee Don Pierson who was formerly Chairman of the Board of Abilene National Bank in Abilene, Texas. The venture called for the securing of a ship and the equipment to install two radio broadcasting stations therein for the purpose of carrying on the business of commercial radio broadcasting off the coast of England. This is what is called a “pirate radio ship” or “pirate radio station.” Prior to the instant venture, Pierson had had recent experience in promoting a similar venture called “Radio London.” The Defendants are primarily business and professional men, most of whom lived in various counties of Texas, many of whom were strangers to each other in the early phases of the venture. Pierson sought to raise $750,000.00, and under his leadership and mainly through his promotional efforts each of the individual Defendants either put up money or rendered services, and some did both, in behalf of the venture. The Defendants were told that the money they put up would be used to purchase a ship and the necessary radio broadcasting equipment so as to get the commercial broadcasting business under way; that three corporations would be organized as follows: Lassiez-Faire, Ltd., a Bahamian Corporation; Vizcaya Inc., a Panamanian Corporation; and Pier-Vick, Ltd., an English Corporation. Vizcaya would own the ship from which the radio stations would operate, Pier-Vick would sell the advertising and operate the broadcasting business, and Lassiez-Faire would be the parent corporation and would own all the stock in the other two corporations. The Defendants who put up money were told that they would be given notes bearing 4% per an-num interest, to be issued by Lassiez-Faire, the parént corporation, when it was organized, and all profits of the business would be applied toward payment of the notes until they were paid in full. Then the holders of the promissory notes were to receive shares of stock in Lassiez-Faire in the ratio of 1% of the outstanding stock in the corporation for each $15,000.00 put up. This would result in those putting up money ultimately owning 50% of the shares of Lassiez-Faire. The remaining 50% of stock would be owned by Pierson and others of the Defendants who provided services or were directly engaged in the operation of the business. This latter group who provided services were called the “talent group,” and included such Defendants as Dan Fergus, an attorney, and Darrell Knight, a certified public accountant, each of whom rendered professional services. Also Bill Vick (who was not a party to the suit) conducted the operations of the broadcasting business in England, and was a member of the “talent group.”

Pierson caused the money put up to be deposited in an Abilene, Texas, bank in an account called “World Wide Investments,” and most of the disbursements of the put-up money was made from this account.

Pierson, accompanied by his attorney and others of Defendants, made a trip to Miami, the Bahamas, and London, for the purpose of purchasing a ship and radio broadcasting equipment, and for organizing the three foreign corporations which had been contemplated. He first bought a ship at Miami. Then he caused to be purchased the radio broadcasting equipment from Plaintiff-Appellant Cerneo, Inc. His financial arrangements to purchase the radio equipment consisted of having four of the Defendants (Polk, Barnard, Westmoreland and Plummer) to sign a promissory note payable to Cerneo dated February 10, 1966, in the principal amount of $237,000.00. The radio equipment cost a total of $348,180.00 which was secured by a written conditional sale contract dated February 10, 1966, executed by the same four Defendants who signed the promissory note. The note was designed to cover a portion of the purchase price of the equipment. Pierson paid $78,000.00 cash down on the equipment (including one $14,000 “insufficient funds” check which was never paid), and the balance of the purchase price was payable in semi-annual installments.

Pierson refused to tell Plaintiff-Appellant Cemco the names of the people he rep *836 resented, when he purchased the equipment, and refused to sign the note and conditional sale contract personally. Cem-co was furnished financial statements on Polk, Barnard, Westmoreland and Plum-mer, and sold the equipment on the strength of the note and contract signed by these four individual Defendants, together with the cash down payment made by Pierson. 2

After the radio equipment was installed by Cemco in the ship, it sailed for England to commence operations. The ship’s mast fell down on the way from Miami to the Azores, there were some problems with the radio equipment, as well as other problems. As a result, Pierson remained in England for several months. From the record it does not appear that any of the three corporations were ever chartered or organized; however, be that as it may, it is definite that no notes were ever delivered to any Defendants who put up money, nor was any corporate stock ever issued to any of the Defendants.

Pierson had used up practically all the money that had been put up during the months he was in England, and no payments were ever made to Plaintiff-Appellant Cemco as called for by the note and conditional sale contract (other than the down payment hereinabove described). The venture being thus in financial difficulties, Pierson returned from England and a meeting was held of the persons interested in the venture at Abilene, Texas, beginning October 7, 1966. At this time those who had not been involved in management learned that the venture was in financial difficulty, and that the business could not be continued without more money being put up. As a condition to advancing additional capital, certain of the participants insisted on changes, including, among other things, a reduction of the interests of those who had not advanced cash, and other changes 'not necessary to mention here. Some of the participants tried to negotiate with Cemco in an effort to postpone the due date of the first installment for a year; however, this was never worked out.

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Cite This Page — Counsel Stack

Bluebook (online)
487 S.W.2d 833, 1972 Tex. App. LEXIS 2830, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cemco-inc-v-world-wide-investors-texapp-1972.