No. 12469 INTHE SUPREME COURT OF THE STATE OF MONTANA

JOHN SLOVAK, MARY K. SKOVAK, PAUL SLOVAK et al., Plaintiffs and Appellants,

KENTUCKY FRIED CHICKEN etal., Defendants and Respondents.

Appeal from: District Court of the Thirteenth Judicial District, Honorable Nat Allen, Judge presiding. Counsel of Record: For Appellants: Crowley

## ,Kilbourne, Haughey

## ,Hanson and Gallagher, Billings, Montana Jack Ramirez argued, Billings, Montana For Respondents: Poore, McKenzie and Roth, Butte, Montana Allen R. McKenzie argued, Butte, Montana

Submitted: November 30, 1973 Decided 

## 34 

## JAW3 1g7qMr. 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 forbreach 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 complaintwas filed inYellowstone County onApril 19, 1972. ~efendants' motion for change of venue was filed on June 2, 

### 1972. On January 

### 5, 1973,plaintiffs disqualified presiding Judge Robert H. Wilson and the causewas 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 jurisdictionand, 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 JudgeAllen would normally amount to circumvention of appeal by allowing collateral attack of an appealable order of a district court. However, as Judge Allen pointed out in his order setting aside Judge Luedke's order, therewere special circumstances in this case. An affidavit filed by defendants' counsel stated that due to the various disqualifications of judges,hewas unaware ofwho the presiding judgewas 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 appealno question is presented regarding the use of an affidavit of disqualification, howeverwe 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, 

## - Mont*-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 abovenamed 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 contractwas made, the Slovakswere residents of Yellowstone County,and Kentucky Fried Chicken Montana had its principal place ofbusiness in Silver Bow County, At the time of the commencement of the action Slovaks

were residents ofYellowstone County; Kentucky Fried Chicken of Montana and Montana Franchising, Inc,,had their principal place of business inCascade County,and Gerald Leavitt, the only other defendant servedwas a resident of Cascade County. The third paragraph of the contract between the parties states:"3. Contemporaneouslywith 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 conveyance to Corporation of ~lovak's right, title and interest in and to the July 16, 1956 Franchise Agreement,which A.ssignmentand conveyance shallbe held by the Midland Bank and Trust Company of Billings, Montana in escrow pending payment in full of the $35,000.00by the Corporation. All escrow fees and collection charges shall be shared equallyby the parties, and all payments made hereunder shallbe unto said Bank." The sole issue before this Court iswhether 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 shallbe tried in the county in which the defendants, or any of them,may reside at the commencement of the action,orwhere 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 inwhich they so residebe unknown to the plaintiff, the same may be tried in any countywhich the plaintiff may designate in his complaint;and if any defendant or defendantsmay 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 contractwas to be performed,and actions for torts in the countywhere the tort was committed; subject, however, to the power of the court to change the place of trial as provided in this code.11 According to the express terms of the contract, its place of performancewas Billings, Yellowstone County,Montana. We find that venue was proper inYellowstone County concerning the claim ex contractu. Hartford Accident and Indemnity Co. v. Viken, 157Mont. 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 individuallynamed defendants 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 concerningwhere, 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 individualand corporate defendants control and the alleged tort was conceived in or committed at a situs different from Yellowstone County, therefore the proper place of trialwould 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., 159Mont. 469, 499 P.2d 774.A careful analysis of Foley discloses that it could not be determined from the factswhere the tort occurred. Consequently, that issuewas not controllingnor discussed. The issue involved in Foleywas the residence of the foreign corporation,General Motors Corporation, and therefore offers no support in the solution of the instantproblem. An analogous issuewas resolved in Brown v. First Federa.1 Savings & LoanAssn., 

### 144Mont. 149, 156, 394 P.2d 1017. Brown involved a construction loan agreement between borrowers in Lewis and Clark County and lenders in Cascade County. Theborrowers filed a complaint in Lewis and Clark County sounding in contract and tort,and the lenders moved for change of venue to Cascade County. Inaffirming denial of the motion, this Court stated:

11

While we may not knowwhere the tortwas 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 companywhich 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 shadowbehind a home builder, it is reasonable to hold that the place of performance iswhere the home is built and the negligence in the management of the financing, if any, is committed there also.II Here, plaintiffswere accorded the option by section 93- 2904,

### R.C.M. 1947, to file either in the county of defendants' residence or in the countywhere the tort was committed. Seifert

v. Gehle, 133Mont. 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:

11The court or judgemust, 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 cannotbe had therein. "3. Idhen the convenience ofwitnesses and the ends of justicewould be promoted by the change. 

### "4. When the judge is disqualified from acting for any cause;but no change of the place of trial shall be made if:"(a) the parties agree inwriting upon another districtjudge, ormember of the bar asjudge pro tempore, or "(b) any qualified districtjudge is called in, and within thirty (30) days after the motion ismade, appears and assumes jurisdiction of the cause and of allmatters and proceedings therein. "If thejudge so appears he shallbe vested with, and shall exercise, allthe authority of thejudge of the district inwhich the action or proceeding may be pending, II Here, defendants' motion for change of venue contained these grounds: "A. That the County of Yellowstone isnot the proper County for the trialof said action. "B. That it appears from Plaintiffs' complaint and from the Affidavit of Defendants1counsel, Allen R. McKenzie, filedherein in support of ~efendants' Motion for change of place of trial to Cascade County, Montana, or inthe alternative to Silver Bow County, Montana, that the acts complained of occurred inButte and Great Falls, Montana, and that the County where the tort complained of inCount I1 of Plaintiffs' complatnt was committed inButte, Montana and that the principal place of business of the Defendants, KENTUCKY FRIED CHICKEN and MONTANA FRANCHISING, INC., was inGreat Falls, Montana atthe time of the commencement of the action and the residence of the Defendant, Gerald Leavitt, is Great Falls, Montana. II ~efendants' Ground A merely states a legal conclusion. Ground B contends that the acts constituting the alleged tortwere committed inButte or Great Falls. We cannot agree with defendants' contention, inlight of the ruling inBrown. In actions, such as this, where a complaint states a claim for breach of contract and

an interrelated and dependent claim in tort, the county of performance of the contract and the resulting damages to the plaintiff must necessarily be the countywhere the interrelated fraud, negligence, conspiracy, deceit, orwhatever tort, if any, was committed for purposes of section 93-2904, R.C.M, 1947, in determining venue. The order appealed from isreversed and cause remanded to the district court of Yellowstone County