No. 12469
I N THE SUPREME COURT O THE STATE O MONTANA
F F
J O H N SLOVAK, MARY K. SKOVAK,
PAUL SLOVAK e t a l . ,
P l a i n t i f f s and A p p e l l a n t s ,
KENTUCKY FRIED CHICKEN e t a l . ,
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
Honorable N t A l l e n , Judge p r e s i d i n g .
a
Counsel of Record:
For Appellants :
Crowley , Kilbourne, Haughey , Hanson and G a l l a g h e r ,
B i l l i n g s , Montana
J a c k Ramirez argued, B i l l i n g s , Montana
For Respondents:
Poore, McKenzie and Roth, B u t t e , Montana
A l l e n R. McKenzie argued, B u t t e , Montana
Submitted: November 30, 1973
Decided 34 JAW 3 1g7q
Mr. Justice Gene B. Daly delivered the Opinion of the Court.
This is an action alleging claims couched in terms of a
tort arising from a contract and for breach of that contract.
Plaintiffs bring this appeal from an order of the district court
of Yellowstone County granting defendants' motion for change of
venue to Cascade County, Montana.
The complaint was filed in Yellowstone County on April
19, 1972. ~efendants'motion for change of venue was filed on
June 2, 1972. On January 5, 1973, plaintiffs disqualified pre-
siding Judge Robert H. Wilson and the cause was transferred to
Judge C.B. Sande, who deemed himself disqualified. The cause
was then transferred to Judge Charles Luedke on January 11, 1973.
On January 12, 1973, Judge Luedke entered an order denying the
motion for change of venue. Defendants then disqualified Judge
Luedke by affidavit dated January 5, 1973. Judge Nat Allen
assumed jurisdiction and, by order dated February 19, 1973, set
aside Judge Luedke's order of January 12, 1973, and changed the
venue to Cascade County.
This action by Judge Allen would normally amount to cir-
cumvention of appeal by allowing collateral attack of an appeal-
able order of a district court. However, as Judge Allen pointed
out in his order setting aside Judge Luedke's order, there were
special circumstances in this case. An affidavit filed by de-
fendants' counsel stated that due to the various disqualifications
of judges, he was unaware of who the presiding judge was on
January 12, 1973, the date of Judge Luedke's order, and hence had
no opportunity to file an affidavit of disqualification of Judge
Luedke prior to entry of that order. On appeal no question is
presented regarding the use of an affidavit of disqualification,
however we call attention of counsel to,In the Matter of the
Application of Jan S. Stewart for a Writ of Supervisory Control
or Other Appropriate Writ, - t
Mon *
9
- P.2d , 31 St.
Rep. 1.
Plaintiffs are John Slovak, Mary K. Slovak, Paul Slovak,
Mary J. Slovak, Andrew Slovak and Anne E. Slovak, hereinafter
referred to as the Slovaks; defendants are Kentucky Fried Chicken
of Montana, Montana Franchising, Inc., Gerald Leavitt, Fred C.
Haas,Jr., Raymond C. Whitaker; and all persons whose names are
unknown who are now or who have been stockholders of the above-
named corporation, hereinafter referred to as Kentucky Fried
Chicken of Montana,
The ~lovaks'complaint in contract and in tort are related
to a contract of sale of a Kentucky Fried Chicken franchise.
The record indicates that, at the time the contract was made, the
Slovaks were residents of Yellowstone County, and Kentucky Fried
Chicken Montana had its principal place of business in Silver
Bow County, At the time of the commencement of the action Slovaks
were residents of Yellowstone County; Kentucky Fried Chicken of
Montana and Montana Franchising, Inc,, had their principal place
of business in Cascade County, and Gerald Leavitt, the only other
defendant served was a resident of Cascade County.
The third paragraph of the contract between the parties
states:
"3. Contemporaneously with the execution of this
agreement, Slovak shall execute and deliver to
Kentucky Fried Chicken of Montana, at Billings,
Montana, a good and sufficient assignment and con-
veyance to Corporation of ~lovak'sright, title and
interest in and to the July 16, 1956 Franchise Agree-
ment, which A.ssignment and conveyance shall be held
by the Midland Bank and Trust Company of Billings,
Montana in escrow pending payment in full of the
$35,000.00 by the Corporation. All escrow fees and
collection charges shall be shared equally by the
parties, and all payments made hereunder shall be
unto said Bank."
The sole issue before this Court is whether the district
court erred in changing the venue of this action from Yellowstone
County to Cascade County.
Section 93-2904, R.C.M. 1947, the pertinent venue statute,
provides :
"In all other cases the action shall be tried
in the county in which the defendants, or any
of them, may reside at the commencement of the
action, or where the plaintiff resides, and the
defendants, or any of them, may be found; or,
if none of the defendants reside in the state, or,
if residing in the state, the county in which they
so reside be unknown to the plaintiff, the same
may be tried in any county which the plaintiff
may designate in his complaint; and if any de-
fendant or defendants may be about to depart from
the state, such action may be tried in any county
where either of the parties may reside, or service
be had. Actions upon contracts may be tried in
the county in which the contract was to be per-
formed, and actions for torts in the county where
the tort was committed; subject, however, to the
power of the court to change the place of trial
as provided in this code. 1 1
According to the express terms of the contract, its
place of performance was Billings, Yellowstone County, Montana.
We find that venue was proper in Yellowstone County concerning
the claim ex contractu. Hartford Accident and Indemnity Co. v.
Viken, 157 Mont. 93, 483 P.2d 266.
Concerning the claim ex delicto, Slovaks' complaint
alleges that under the contract's terms they were to receive six
percent of the gross receipts of Kentucky Fried Chicken of Montana.
They further allege that Montana Franchising, Inc., was created
as a sub-franchising entity by the three individually named de-
fendants for the purpose of reducing the gross income of Kentucky
Fried Chicken of Montana and thus reducing the Slovaks' six percent
royalty payments.
There is a dispute concerning where, for the purposes of
venue under section 93-2904, R.C.M. 1947, the commission of the
alleged tort occurred. In this connection it has been suggested
that residence of the individual and corporate defendants control
and the alleged tort was conceived in or committed at a situs
different from Yellowstone County, therefore the proper place of
trial would be Silver Bow or Cascade County. In support defendants
cite,with considerable emphasis, the recent decision of this Court
in Foley v. General Motors Corp., 159 Mont. 469, 499 P.2d 774.
A careful analysis of Foley discloses that it could not be
determined from the facts where the tort occurred. Consequently,
that issue was not controlling nor discussed. The issue involved
in Foley was the residence of the foreign corporation, General
Motors Corporation, and therefore offers no support in the solu-
tion of the instant problem.
An analogous issue was resolved in Brown v. First Federa.1
Savings & Loan Assn., 144 Mont. 149, 156, 394 P.2d 1017. Brown
involved a construction loan agreement between borrowers in Lewis
and Clark County and lenders in Cascade County. The borrowers
filed a complaint in Lewis and Clark County sounding in contract
and tort, and the lenders moved for change of venue to Cascade
County. In affirming denial of the motion, this Court stated:
11
While we may not know where the tort was committed,
we do know that the defendant has not sustained
the burden of proof necessary to overturn the prima
facie case of proper venue.
"A finance company which extends itself to contract
in several counties in this state cannot be said to
be contracting to perform at its principal place of
business. If a savings and loan association serves
as the financial shadow behind a home builder, it
is reasonable to hold that the place of performance
is where the home is built and the negligence in the
management of the financing, if any, is committed
there also. I I
Here, plaintiffs were accorded the option by section 93-
2904, R.C.M. 1947, to file either in the county of defendants'
residence or in the county where the tort was committed. Seifert
v. Gehle, 133 Mont. 320, 323 P.2d 269.
Section 93-2906, R.C.M. 1947, provides a defendant the
right to change venue only in the following limited instances:
11
The court or judge must, on motion, change
the place of trial in the following cases:
"1. When the county designated in the
complaint is not the proper county.
"2. When there is reason to believe that
an impartial trial cannot be had therein.
"3. Idhen the convenience of witnesses and
the ends of justice would be promoted by the
change.
" . When the judge is disqualified from acting
4
for any cause; but no change of the place of trial
shall be made if:
"(a) t h e p a r t i e s agree i n w r i t i n g upon
another d i s t r i c t judge, o r member of t h e b a r
a s judge pro tempore, o r
"(b) any q u a l i f i e d d i s t r i c t judge i s
c a l l e d i n , and w i t h i n t h i r t y (30) days a f t e r
t h e motion i s made, appears and assumes j u r i s -
d i c t i o n of t h e cause and of a l l matters and
proceedings t h e r e i n .
"If t h e judge so appears he s h a l l be vested w i t h ,
and s h a l l e x e r c i s e , a l l t h e a u t h o r i t y of t h e judge
of t h e d i s t r i c t i n which t h e a c t i o n o r proceeding
may be pending, I I
Here, defendants' motion f o r change of venue contained
t h e s e grounds:
"A. That t h e County of Yellowstone i s n o t t h e
proper County f o r t h e t r i a l of s a i d a c t i o n .
"B. That i t appears from P l a i n t i f f s ' complaint
and from t h e A f f i d a v i t of Defendants1 counsel,
Allen R. McKenzie, f i l e d h e r e i n i n support of
~ e f e n d a n t s 'Motion f o r change of p l a c e of t r i a l
t o Cascade County, Montana, o r i n t h e a l t e r n a t i v e
t o S i l v e r B w County, Montana, t h a t t h e a c t s
o
complained of occurred i n Butte and Great F a l l s ,
Montana, and t h a t t h e County where t h e t o r t com-
plained of i n Count I1 of P l a i n t i f f s ' complatnt
was committed i n Butte, Montana and t h a t t h e
p r i n c i p a l place of business of t h e Defendants,
KENTUCKY FRIED CHICKEN and MONTANA FRANCHISING,
I N C . , was i n Great F a l l s , Montana a t t h e time
of t h e commencement of t h e a c t i o n and t h e resi-
dence of t h e Defendant, Gerald L e a v i t t , i s Great
F a l l s , Montana. I I
~ e f e n d a n t s ' Ground A merely s t a t e s a l e g a l conclusion.
Ground B contends t h a t t h e a c t s c o n s t i t u t i n g t h e a l l e g e d t o r t were
committed i n Butte o r Great F a l l s . W cannot agree with defendants'
e
c o n t e n t i o n , i n l i g h t of t h e r u l i n g i n Brown. I n a c t i o n s , such a s
t h i s , where a complaint s t a t e s a claim f o r breach of c o n t r a c t and
an i n t e r r e l a t e d and dependent claim i n t o r t , t h e county of per-
formance of t h e c o n t r a c t and t h e r e s u l t i n g damages t o t h e p l a i n t i f f
must n e c e s s a r i l y be t h e county where t h e i n t e r r e l a t e d f r a u d ,
negligence, conspiracy, d e c e i t , o r whatever t o r t , i f any, was
committed f o r purposes of s e c t i o n 93-2904, R.C.M, 1947, i n d e t e r -
mining venue.
The order appealed from i s reversed and cause remanded
t o t h e d i s t r i c t c o u r t of Yellowstone County