Two Brothers Farm, Inc. v. Riceland Foods, Inc.

TWO BROTHERS FARM, INC.; Sylvester Holloway
and Donnell Holloway, In Their Individual
Capacities v. RICELAND FOODS, INC.

CA 96-800                                          ___ S.W.2d ___

                  Court of Appeals of Arkansas
                           Division IV
                 Opinion delivered April 2, 1997


1.   Appeal & error -- reversal of lower court's findings of fact. -- Under
     ARCP Rule 52(a), an appellate court will not reverse a courtþs
     findings of fact unless they are clearly against the
     preponderance of the evidence. 

2.   Venue -- whether venue is appropriate in particular county is matter of
     law. -- Whether venue is appropriate in a particular county is
     a matter of law.    

3.   Venue -- business enterprise subject to venue of counties in which it
     maintains office or place of business. -- The legislature enacted
     Ark. Code Ann.  16-60-105 (1987) for the purpose of allowing
     plaintiffs to sue any of the entities listed in that section
     in either the county in which its principal place of business
     is located or in a county in which one of the branches is
     located; the legislature clearly intended that when a business
     enterprise, regardless of its form, maintains an office or
     place of business in counties other than its principal place
     of business, the business enterprise should be subject to the
     venue of those other counties.
4.   Venue -- agricultural cooperative association -- venue proper in county in
     which principal place of business is located or in county in which branch
     office is located. -- Corporation laws apply to agricultural
     cooperative associations, and venue is proper in either the
     county in which the associationþs principal place of business
     is located or in the county in which one of its branch offices
     is located.

5.   Venue -- trial court erred in granting motion to dismiss for lack of venue
     -- order reversed and case remanded. -- The appellate court held
     that the circuit court erred when it found that venue was not
     appropriate in Pulaski County and granted appelleeþs motion to
     dismiss for lack of venue; the appellate court reversed the
     order granting the motion to dismiss, remanding the case to
     the circuit court for further proceedings.

     Appeal from Pulaski Circuit Court, Third Division; John Ward,
Judge; reversed and remanded.
     Bowden Law Firm, by: David O. Bowden; and Walker, Campbell,
Ivory & Dunklin, by: George S. Ivory, Jr., for appellants.
     Williams & Anderson, by: G. Alan Perkins, for appellee.

     Sam Bird, Judge.
     Plaintiffs, Sylvester Holloway and Donnell Holloway, appeal
from a decision of the Pulaski County Circuit Court granting a
motion to dismiss their complaint for lack of venue pursuant to
Ark. R. Civ. P. 12(b)(3).  The Holloways are the owners, operators,
and officers of Two Brothers Farm, Inc., a corporation licensed
under Arkansas law and located in Prairie County, which is also the
residence of the Holloways.  The appellants brought suit in Pulaski
County Circuit Court against Riceland Foods, Inc., an agricultural
cooperative association created under Ark. Code Ann.  2-2-101
through 249 (Repl. 1996), which has its main office in Arkansas
County and a branch office in Pulaski County.  Two Brothers alleged
breach of contract, intentional interference with contractual
relations and business expectancies, race discrimination, and
unfair trade practices.  
     Two Brothers argues that venue is proper in Pulaski County
because Riceland is a corporation or at least an association;
therefore, the venue provision under Ark. Code Ann.  16-60-105
(1987) applies; and that since this provision applies, venue is
appropriate in any county in which the þperson, firm,
copartnership, or association maintains any office, branch office,
suboffice or place of business.þ  However,  Riceland argues that
venue is improper in Pulaski County because Riceland is an
agricultural cooperative association; therefore, none of the
specific venue provisions apply.  Riceland argues that it is not a
corporation or an association and venue would be established under
Ark. Code Ann.  16-60-116 (1987), which is a general venue
provision stating that if other venue provisions are not
applicable, then venue is proper in the county in which the
defendant resides or is summoned.  Therefore, appellee argues venue
would be proper only in Arkansas County, its principal place of
business.
     A hearing was conducted on March 1, 1996, and the judge
granted appelleeþs motion to dismiss because þ[n]one of the alleged
causes of action are addressed in any of the specific statutory
venue provisions codified in ACA 16-16-101 [sic] to -115. ...  The
Arkansas Supreme Court has said repeatedly that its underlying
policy is to fix venue in the county of defendantsþ residence
unless there is a statutory exception.þ  We reverse and remand for
further proceedings.     

     An appellate court will not reverse a courtþs findings of fact
unless they are clearly against the preponderance of the evidence,
Ark. R. Civ. P. 52(a); however, whether venue is appropriate in a
particular county is a matter of law.  In this case, the court
erred in finding that venue was not appropriate in Pulaski County. 
     The appellants argue that venue is appropriate in Pulaski
County, and they cite Ark. Code Ann.  16-60-105, which reads:
     An action other than those mentioned in  16-60-101, 16-
     60-102, 16-60-106 - 16-60-108, 16-60-110, against a
     person, firm, copartnership, or association engaged in
     business in this state which has or maintains more than
     one (1) office or place of business in this state, may be
     brought in any county in which the person, firm,
     copartnership or association has or maintains any office,
     branch office, suboffice, or place of business, and
     service of process upon an agent of any person, firm,
     copartnership, or association at any such office, branch
     office, suboffice, or place of business shall be service
     upon such person, firm, copartnership, or association.

A person includes a corporation.  Ark. Code Ann.  16-55-
102(11)(1987).
     Appellants argue that Pulaski County is an appropriate venue
in this action against Riceland because Riceland is either an
association or a corporation.  Even under prior law, a corporation
or an association may be sued in the county in which it has its
principal place of business, the county where its chief executive
officer resides, or the county where it has any branch offices. 
Duncan Lumber Co. v. Blalock, 171 Ark. 397, 284 S.W. 15 (1926),
overruled on other grounds, Anheuser-Busch, Inc. v. Manion, 193
Ark. 405, 100 S.W.2d 672 (1937).
     The legislature enacted Ark. Code Ann.  16-60-105 for the
purpose of allowing plaintiffs to sue any of the entities listed in
that section in either the county in which its principal place of
business is located or in a county in which one of the branches is
located.  The preamble to Act 74 of 1935, which is now section 16-
60-105, reads:
     WHEREAS, large and numerous business enterprises of
     various kinds are being operated in the State of Arkansas
     by individuals, firms, co-partnerships and association of
     persons and under the law as it now exists the venue for
     suits against them is fixed in the county of their
     residence or where such person or member of the firm, co-
     partnership or association may be found, and in many
     instances this works to the disadvantage of those who
     deal with such person, firm, co-partnership or
     association by requiring the person so desiring to sue to
     go to the place of residence of such person, firm, co-
     partnership or association and it is the purpose of this
     Act to relieve against this situation.

See Zolper v. AT&T Infor. Systems, Inc., 289 Ark. 27, 709 S.W.2d 74
(1986).  In Zolper, the court considered the question of whether a
corporation may be sued only in the county of its principal place
of business or whether it may be sued in a county in which one of
its branch offices is located.  The court quoted the preamble of
Act 74 and further wrote, þThe Legislature clearly intended that
when a business enterprise, regardless of its form, maintains an
office or place of business in counties other than its principal
place of business, the business enterprise should be subject to the
venue of those other counties.þ  Zolper, 289 Ark. at 30, 709 S.W.2d 
at 76. 
     However, appellee argues that neither the statute nor its
purpose applies to Riceland because it is not a corporation, but an
agricultural cooperative association, a  distinct legal entity
created by statute, which is codified at Ark. Code Ann.  2-2-101
through 249 (Repl. 1996).  Therefore, the appellee cites the
general rule that a defendant should be sued in the county of its
residence, unless there is a statutory exception, Atkins Pickle v.
Burrough-Uerling-Brasuell, 275 Ark. 135, 628 S.W.2d 9 (1982).
     We do not find appelleeþs arguments persuasive. First,
Riceland is a business enterprise, as described in Zolper.  Second,
an agricultural cooperative association is considered a unique form
of a corporation þand courts have traditionally applied general
corporate law principles to cooperative issues.þ  Mary Elizabeth
Matthews, Corporate Statutes -- Which One Applies?, 13 U.A.L.R.
L.J. 69, 83-84 (1990). And finally, Ark. Code Ann.  2-2-428 (Repl.
1996) provides that general corporation laws shall apply to the
associations organized under subchapter 2 of Title Two, which sets
out the requirements for an agricultural cooperative association. 
Therefore, corporation laws apply to agricultural cooperative
associations, and venue is proper in either the county in which the
associationþs principal place of business is located or in the
county in which one of its branch offices is located.  
     Appellee also argues venue was improper because the case has
no relationship to Pulaski County; that the acts alleged to have
been committed occurred in Arkansas County and not Pulaski County;
and that most, if not all, of the documents, witnesses, and records
are located in Arkansas County. For this argument, the appellee
cites  Fraser Bros. v. Darragh Co., 316 Ark. 297, 871 S.W.2d 367
(1994), which held that if the plaintiff has failed to allege that
the defendant has its principal office in Woodruff County, is
situated there, or that its chief executive officer resides in the
county, then the plaintiff has failed to establish venue and a
motion to dismiss for lack of venue should be granted.  However, in
the case at bar, the plaintiffs alleged that Riceland has a branch
office in Pulaski County and argued that some witnesses will be
coming from Russellville, which is closer to Pulaski County than it
is to Arkansas County; and that both partiesþ attorneys are located
in Pulaski County.
     Because an agricultural cooperative association is governed by
general corporation laws, venue for an agricultural cooperative
association may be established under Ark. Code Ann.  16-60-105;
therefore, Riceland may be sued in either the county in which its
principal place of business is located or in the county in which it
maintains a branch office.  Therefore, the court erred when it
granted appelleeþs motion to dismiss for lack of venue. The order
granting the motion to dismiss is reversed, and this case is
remanded to the circuit court for further proceedings.
     Reversed and remanded.
     Jennings and Griffen, JJ., agree