M & M Gaming , Inc. v. Storey

788 So. 2d 1230, 2001 La. App. LEXIS 1692, 2001 WL 670134
CourtLouisiana Court of Appeal
DecidedMay 30, 2001
DocketNo. 2001-C-0545
StatusPublished
Cited by5 cases

This text of 788 So. 2d 1230 (M & M Gaming , Inc. v. Storey) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M & M Gaming , Inc. v. Storey, 788 So. 2d 1230, 2001 La. App. LEXIS 1692, 2001 WL 670134 (La. Ct. App. 2001).

Opinions

|,ARMSTRONG, Judge.

STATEMENT OF THE CASE

In this action for injunctive relief, the relators, “Harrison” defendants,1 seek supervisory review of the trial court’s February 9, 2001 denial of their exception of improper venue.

FACTS

Plaintiff M and M Gambling, Inc. filed this suit for injunctive relief against Joseph Storey to prevent Storey from transferring M and M stock to the Harrison defendants, alleging that such stock transfer would be in derogation of stock transfer restrictions to which Storey had agreed when purchasing the stock. M and M alleged in its original petition that it was a Louisiana corporation with its principal place of business in St. Bernard Parish. M and M further alleged that on January 21, 1999, defendant Storey, a resident of Caddo Parish, executed, at the offices of M and M in St. Bernard Parish, a subscription agreement wherein Storey agreed to purchase shares of capital stock of M and M. Storey purportedly | ¡.represented to M and M that he was purchasing the stock for himself, and acknowledged in the subscription agreement that the stock was subject to certain transfer restrictions set forth in M and M’s articles of incorporation. Storey purportedly received money from the Harrison defendants that he used for the stock purchase. The Harrison defendants believed they were investing in a video poker company or in video poker machines. The Harrison defendants subsequently sued Storey in Caddo Parish district court and in federal court, eventually settling their litigation, with Storey purportedly agreeing to transfer to them some 82% of the M and M stock he purchased. M and M subsequently added the twelve Harrison defendants by a first supplemental and amending petition, asserting that nine of them resided in Caddo Parish, with one each residing in East Baton Rouge, Ouachita and South Lafourche Parishes. M and M alleged, among other things, that the transfer of its stock to the Harrison defendants (more specifically, their “entity”) would cause M and M to have it’s election as a subchapter “S” corporation disallowed. The trial court granted a temporary restraining order, which is still in effect. The Harrison defendants [1232]*1232filed the exception of improper venue to M and M’s suit, which was denied by the trial court.

ANALYSIS

The trial court issued a per curiam, indicating that it denied the Harrison defendants’ exception of improper venue on the basis that Storey was acting as an agent on behalf of them when he entered into the contract upon which M and M claims venue is based. The trial court also stated that the Harrison defendants were either an undisclosed principal or a third-party beneficiary to the contract between |aM and M and Storey. The Harrison defendants filed a second supplemental pleading in support of their writ application on May 7, 2001, to address the trial court’s per curiam.

An agent must have the express authority of his principal to acquire a thing on behalf of the principal. La. C.C. art. 2996. This is the controlling agency principal in the instant case.

Evidence may be introduced to support or controvert the declinatory exception of improper venue, when the grounds thereof do not appear from the petition, the citation or return thereon. The trial court stated in its per curiam that no evidence was introduced at trial of the exception. Accordingly, M and M’s petitions are dispositive of the venue question.

M and M’s original petition alleged that Storey executed a subscription agreement in St. Bernard Parish to purchase shares of M and M stock, and farther alleged:

IV.
That contained in the subscription agreement are the representations, warrants and agreements of the defendant that the shares purchased were being purchased only for his account and not for or on account of any other person; that the shares purchased were for the purpose of his investment and not with a view to any further sale or distribution thereof and that the defendant did not have an agreement, arrangement or understanding for the transfer of any shares or any interest therein to any other person or persons.
V.
That furthermore, the subscription agreement acknowledged and recognized that the capital stock was subject to certain transfer restrictions set forth in the Articles of Incorporation dated January 13th, 1992 (as amended on September 15th, 1998).
VI.
UThat the plaintiff has since learned that the representations of the defendant were false and in fact the purchase price of the stock was paid with funds supplied by others for their benefit and in connection therewith the defendant is currently involved in litigation with these individuals and entities.
VII.
That, on information and belief, the defendant is attempting to settle the collateral litigation by offering to transfer to these other individuals and entities approximately 1700 of the 1938 shares purchased by the defendant.

In its first supplemental and supplemental petition, M and M named the Harrison defendants as the persons to whom Storey allegedly was attempting to transfer the M and M stock. Nothing in M and M’s petitions directly sets forth factual allegations that Storey was acting as an agent on behalf of the Harrison defendants when he purchased the stock under the representation that he was purchasing it for himself.

[1233]*1233M and M clearly alleges in its petitions that the contract transferred ownership of the stock only to Storey. The trial court found that the Harrison defendants were undisclosed principals. However, M and M’s petitions cannot be construed to allege that Storey, even as he entered into the contract purchasing stock in his own title, intended at that time to transfer ownership of any portion of that stock to the Harrison defendants. While the Harrison defendants admit that they gave money to Storey to purchase M and M stock for himself and for them, it cannot be inferred from this admission that they expressly authorized Storey to obtain the stock in his own name, with the intent that he would later transfer ownership of most of it to them, in contravention of the stock purchase agreement and transfer restrictions set forth in M and M’s articles of incorporation. Nor are there any allegations in the petitions to this effect. The thrust of the allegations in | sthe petitions is that the Harrison defendants gave Storey money, which Storey used to purchase stock in his own name, and that, as a result, the Harrison defendants sued Storey, and he is attempting to settle that litigation by transferring most of the stock to them, in contravention of the terms of the stock purchase agreement/contract.

There is no indication that the Harrison defendants were third-party beneficiaries to the contract. The requirements to be met in order to establish that one is a third-party beneficiary of a contract were set forth by this court in Concept Design, Inc. v. J.J. Krebs & Sons, Inc., 96-1295 (La.App. 4th Cir.3/19/97), 692 So.2d 1203, as follows:

Under Louisiana law, a contract for the benefit of a third party is referred to as a stipulation pour autri. See, e.g. Whitney National Bank v. Howard Weil Financial Corp., 93-CA-1568 (La.App.

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788 So. 2d 1230, 2001 La. App. LEXIS 1692, 2001 WL 670134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/m-m-gaming-inc-v-storey-lactapp-2001.