Love v. Mon-O-Co Oil Corp. , 133 Mont. 56 ( 1958 )

THE HON. WILLIAM R. TAYLOR, District Judge,

sitting in place of MR. JUSTICE BOTTOMLY, because of the latter’s illness, delivered the opinion of the court.

Defendant, Mon-O-Co Oil Corporation, a corporation, appealed from, an order denying its motion for change of place of trial from Fallon County to Yellowstone County.

The defendant, Mon-O-Co Oil Corporation, entered into a written contract with Paul Havaland, Trustee, whereby an oil and gas lease covering forty acres in Fallon County was sold and assigned to Paul Havaland, Trustee, and defendant, MonO-Co Oil Corporation, agreed with the said Paul Havaland, Trustee, to drill an oil well on said land. In addition to the oil and gas lease sold and assigned, defendant, Mon-O-Co Oil Corporation, owned oil and gas leases covering an additional 6,120 acres in Fallon County, which, in said contract, and excepting therefrom eighty acres, it also agreed to sell and assign to Paul Havaland, Trustee, should a well be completed as a commercial produceer of oil and gas on the forty acres sold and assigned; that the terms and conditions of the sale of said lease by defendant, Mon-O-Co Oil Corporation, to Paul Havaland, Trustee, and for the drilling operation on said land, were set forth specifically in the agreement.

The defendant, Mon-O-Co Oil Corporation, then entered into a written lease agreement with plaintiff, I. W. Love, whereby the plaintiff Love agreed to drill the well that defendant, MonO-Co Oil Corporation, had contracted to drill for Paul Havaland, Trustee. In said agreement the Mon-O-Co Oil Corporation leased from the plaintiff, I. W. Love, certain rotary drilling equipment at a monthly rental, and employed plaintiff, I. 'W. Love, at a specified monthly wage to supervise the drilling operation. In addition, the defendant, Mon-O-Co Oil Corporation, agreed to deliver to plaintiff, I. W. Love, certain percentages of the royalty and working interests that it was to derive from its contract with Paul Havaland, Trustee.

All of the acts required to be performed by plaintiff, I. W. Love, as his part of the contract entered into with the defendant, Mon-O-Co Oil Corporation, were to be performed in Fallon County. The defendant, Mon-O-Co Oil Corporation, is a Montana corporation, and has its principal office at Billings, but had a division office at Baker, the county seat of Fallon County. At the time of contracting with the plaintiff, I. W. Love, the defendant, Mon-O-Co Oil Corporation, and as part of the consideration for said contract, agreed to pay for costs of transporting the plaintiff, I. W. Love’s, drilling equipment from Centraba, Washington, to the well-site, to insure such equipment, to pay certain taxes, licenses, and bens owed by plaintiff, I. W. Love, in the State of Washington, and, to make a note payment owed by plaintiff, I. W. Love, to a resident of Oregon, which was secured by a chattel mortgage on the drilling equipment. The royalty and working interests were to be delivered to plaintiff, I. W. Love. The contract did not provide where payment was to be made to plaintiff, I. W. Love, by defendant, Mon-O-Co Oil Corporation, for the monthly rental of the drilling equipment, and for the monthly salary earned by plaintiff, I. W. Love. Plaintiff, I. W. Love, in his affidavit filed in opposition to the motion for change of place of trial, stated that it was agreed that payments to be made by defendant, Mon-O-Co Oil Corporation, to him were to be made in Fallon County, and that payments accordingly were made by defendant, Mon-O-Co Oil Corporation, to him in Fallon County.

Plaintiff’s complaint states two causes of action. The first cause of action alleges that a well was completed as a producer on or about November 15, 1954, and that defendant is indebted to plaintiff for certain sums as rental of the drilling equipment, for expenses to be paid under the lease agreement, and that he is entitled to certain overriding royalty interests out of defendant’s overriding royalty interests reserved by the defendant in its contract with Paul Havaland, Trustee. Plaintiff prays judgment for a sum certain for the rentals and personal services, and that defendant be ordered to make and execute to him good and sufficient assignments of an overriding royalty and an interest in a working agreement, both of which were provided for in the contract entered into between defendant, Mon-O-Co Oil Corporation, and Paul Havaland, Trustee, and in the lease agreement entered into between the plaintiff and defendant. In the second cause of action, plaintiff alleges that the written lease agreement made by plaintiff and defendant was amended before completion of the test well whereby the defendant, Mon-O-Co Oil Corporation, agreed to, give to plaintiff, I. W. Love, the right to accept, do, and carry out all future drilling operations on all of defendant’s leased lands as described in its agreement with Paul Havaland, Trustee, on the same terms and for the same compensation as were offered by any other contractor; that in violation of said agreement, defendant, Mon-O-Go Oil Corporation, entered into drilling contracts on said lands with others, without giving plaintiff, I. W. Love, the right of refusal; and, that by so doing, plaintiff was damaged.

Defendant, Mon-O-Co Oil Corporation’s motion for change of place of trial is based on the following grounds:

1. That at the time of the commencement of this action, defendant was, and still is, a resident of the County of Yellowstone, State of Montana, and that the district court of said county is the proper court for the trial of the above-entitled cause.

2. That the contracts, if any, alleged in plaintiff’s complaint, and which purport to form the basis of plaintiff’s causes of action, fail to state or provide for any place where such contracts were to be performed and that at the time of the commencement of this action, defendant was, and still is, a resident of the County of Yellowstone, State of Montana, and that the district court of said county is the proper court for the trial of the above-entitled cause.

3. That one of the causes of action, as set forth and alleged in plaintiff’s complaint, is of an equitable and transitory nature and therefore governed in venue by the place of residence of the defendant, to-wit: Yellowstone County, Montana; that at the time of the commencement of this action, defendant was, and still is, a resident of the County of Yellowstone, State of Montana, and that the district court of said county is the proper court for the trial of the above-entitled cause.

The portions of section 93-2904, R.C.M. 1947, that are of concern in this decision are: “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 * * Actions upon contracts may be tried in the county in which the contract was to be performed * *

In the case of State ex rel. Interstate Lumber Co. v. District Court, 54 Mont. 602, 172 Pac. 1030 (hereafter referred to as the Interstate case), decided May 1, 1918, this court determined that the word “may” appearing in the last sentence in section 93-2904, It.C.M. 1947, should be given the force of “must.” In the ease of Hardenburgh v. Hardenburgh, 115 Mont. 469, 146 Pac. (2d) 151, decided in 1944, Justice Adair reviewed the history of the statute and the eases, determined under it, and repudiated the determination in the Interstate case that the word “may” should be given the force of “must.” Justice Albert Anderson concurred in Justice Adair’s opinion, and Justice Morris concurred in the result of the case, but not in all that was there said. Chief Justice Johnson and Justice Erickson wrote separate dissenting opinions in which they approved the conclusion reached in the Interstate case. In a later case, Johnson v. Ogle, 117 Mont. 419, 159 Pac. (2d) 337, decided in 1945, Justice Morris gave his reason for his decision in the Hardenburgh case, and stated his approval of the interpretation made in the Interstate case, even though it was not necessary to make such comment to determine the issue in the decision then rendered. Special concurring opinions by Justice Adair and Justice Angstman set forth their determination that error had been committed in the Interstate case in deciding that “may” should have the force of “must.” The cases referred to completely review the problem. The resulting confusion to the bench and bar is .apparent.

Upon the reasoning found in the opinion of Justice Adair in the ease of Hardenburgh v. Hardenburgh, and that of Justice Angstman in the case of Johnson v. Ogle, it is now decided that the word “may” should not be given the force of “must” in said statute, as was done in the Interstate case. and that the statute means that either the county of defendant’s residence, or the county where the contract was to be performed, is the proper county for the trial of the action, and if the plaintiff chooses either of those counties, defendant may not have it removed, except as stated in the last part of said section 93-2904, it is still subject to the power of the court to change the place of trial as provided by subdivisions 2, 3 and 4 of section 93-2906, R.C.M. 1947.

The law does not require that the parties to a contract agree upon a place for the performance of their contract, but it permits them to so agree. When, at the time of contracting, the parties have agreed upon a particular county wherein they mutually intended their contract was to be performed, such agreement will be respected and given effect, for it is a part of the freedom of contract to select the place where a contract shall be performed. In order to give full effect to the mutual intention of parties, the legislature has enacted, as a permissive exception to the general venue rule declared in the first sentence of section 93-2904 an additional provision, appearing in the second sentence of the section, designating the county wherein, at the time of contracting, the parties had agreed their contract was to be performed as a proper county for the trial of an action based thereon. This performance exception, however, applies only to such actions as are based upon contracts which plainly show, either (a) by their express terms, or (b) by necessary implication therefrom, that the contracting parties, at the time of contracting, did mutually agree upon a particular county, other than that of defendant’s residence, wherein they intended that their contract was to be performed.

The place of performance of the contract, entered into between plaintiff, I. W. Love, and the defendant, Mon-O-Co Oil Corporation, was Fallon County. Plaintiff had the choice of having his action tried in the county of defendant’s residence, or in the county where the contract was to be performed. He elected to have his ease tried in the county in which the contract was to be performed, and the judge of the district court properly denied defendant’s motion for change of place of trial to.Yellowstone County.

The judgment of the district court is affirmed.

MR. CHIEF JUSTICE HARRISON, and MR. JUSTICES CASTLES and ANGSTMAN, concur.