Shell Oil Co. v. Sealy-Smith Foundation ex rel. John Sealy Hospital

624 S.W.2d 643, 1981 Tex. App. LEXIS 4209
Court of Appeals of Texas·Decided October 1, 1981·No. No. A2704·Published·Cited by 2 cases

Opinion

JUNELL, Justice.

This is an appeal from an order overruling a plea of privilege filed by appellant [644] Shell Oil Company, defendant in the court below, in a suit filed by The Sealy-Smith Foundation for the John Sealy Hospital, alleging underpayment of natural gas royalties under the terms of an oil and gas lease on lands located in Winkler and Ward Counties. In its Second Amended Controverting Affidavit and in this appeal The Foundation asserts proper venue in Galveston County on the basis of Tex.Rev.Civ. Stat.Ann. art. 1995, §§ 23, 27 (Vernon 1964) & § 5 (Vernon 1980). In overruling the plea of privilege, the trial court did not state the ground on which it retained venue in Galveston County and did not file findings of fact or conclusions of law.

Appellant presents six points of error to this court. Since briefs were filed in this appeal, appellee has waived claim of venue under section 23; therefore we have no reason to consider appellant’s third point of error based on that claim. We overrule appellant’s points of error 4, 5 and 6 for the reasons discussed herein. Because we find that venue is properly sustained on the basis of article 1995, section 27, we find it unnecessary to discuss appellee’s first and second points of error and whether venue may be sustained under section 5.

We have reviewed the record in accordance with the standard set out in James v. Drye, 159 Tex. 321, 320 S.W.2d 319 (1959), resolving every reasonable intendment in favor of the trial court’s judgment that The Foundation met the burden of proving the essential venue facts by a preponderance of the competent evidence. Compton v. Elliott, 126 Tex. 232, 88 S.W.2d 91 (Tex.Comm’n App. 1935, holding approved). We affirm.

Section 27 of article 1995 provides, in pertinent part, that a foreign corporation doing business within this state may be sued “in any county where such company may have an agency or representative.”

Appellant argues that venue cannot be sustained under section 27 because none of the agencies or representatives advanced by appellee have any relation to the cause or action. In support of this contention, appellant cites several cases in which the agency or representative involved did indeed have a relation to the cause of action. Milligan v. Southern Express, Inc., 151 Tex. 315, 250 S.W.2d 194 (1952); Vines v. Harry Newton, Inc., 445 S.W.2d 260 (Tex.Civ.App.-Houston [1st Dist.] 1969, writ dism’d). The cited cases do not hold that such a relationship is required for venue purposes, and the statute makes no such requirement. In order to sustain venue under section 27, The Foundation must show only (1) that Shell is a foreign corporation doing business within this state and (2) that Shell has an agency or representative in Galveston County. Mobil Oil Corp. v. Cook, 494 S.W.2d 926, 932 (Tex.Civ.App.-Amarillo 1973, no writ). The parties stipulate that at all material times to this action Shell has been a Delaware corporation holding a permit to do business in Texas.

Shell contends that the trial court erred in sustaining venue in Galveston County under section 27 because there is no evidence that Shell had an agent or representative in Galveston County within the meaning of article 1995, section 27.

For venue purposes the Supreme Court of Texas defines agency or representative as used in section 23 as referring to “a situation in which the business of the defendant is, in more or less regular and permanent form, actually conducted in the county of suit, or one in which a party possessing broad powers from the defendant resides in the county, the one instance being that of ‘agency’ and the other of ‘representative’.” Milligan v. Southern Express, Inc., 250 S.W.2d at 198. The same construction is properly given to identical language in section 27. Colorado Interstate v. Mapco, Inc., 570 S.W.2d 164 (Tex.Civ.App.-Amarillo 1978, no writ).

There is evidence in the record as to the existence of several agents or representatives of Shell.

First, Shell’s industrial lubricants jobber in Galveston County, Grasso Marine Service Station, Inc., purchases and distributes Shell industrial products pursuant to contracts which require that Grasso assume [645] “primary responsibility for promoting and increasing sales” of Shell industrial products in the Galveston area. Grasso sells and distributes the products in containers bearing Shell identification, and Shell provides Grasso with manuals and charts for use in promoting sales of those products. Grasso’s relationship to Shell is similar to that of Maddux Oil Company and Skelly Oil Company in Skelly Oil Co. v. Medart, 488 S.W.2d 175 (Tex.Civ.App.-Waco 1972, no writ), in which the court found Maddux to be an agent or representative within the meaning of section 27. Maddux bought and sold Skelly gasoline and promoted the sale of Skelly gasoline by soliciting stations to handle Skelly products. The fact that Grasso also distributes products of other oil companies does not detract from its status as agent or representative for venue purposes. The statute does not require an exclusive agency or representative. In Milligan the Supreme Court of Texas recognized that Northeastern Motor Lines (the agency or representative) was conducting much private business of its own in addition to that of the defendant Southern Express, Inc. The Court noted that “the same result was accomplished here as if the defendant had maintained a salaried employee resident in the county.” Milligan v. Southern Express, Inc., 250 S.W.2d at 198. Rather than sell its products directly to industrial consumers in Galveston County, Shell relies on Grasso alone to promote and sell Shell industrial products pursuant to contractual agreement. The preponderance of the evidence supports a finding that Grasso Marine Service Station, Inc., is the agency or representative of Shell for venue purposes within the meaning of article 1995, section 27.

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Shell Oil Co. v. Sealy-Smith Foundation ex rel. John Sealy Hospital, 624 S.W.2d 643, 1981 Tex. App. LEXIS 4209 (Tex. Ct. App. 1981).

624 S.W.2d 643 (Shell Oil Co. v. Sealy-Smith Foundation ex rel. John Sealy Hospital) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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