Court Opinion

ID: 9772011
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:04:52.576225+00
Date Added: 2024-06-11T07:31:41.291100
License: Public Domain

HIGHTOWER, Justice,
dissenting.
I dissent because I disagree with the court’s opimon in at least three significant *805respects. First, the court misplaces the burden of proof for the affirmative defense of legal justification on the plaintiff. Second, the court has not decided the legal justification question and erroneously assumes, apparently -without deciding and absent any analysis, that a corporate officer or agent is legally justified in interfering with a contract between the corporation and a third party when the officer acts in good faith and believes that what he does is for the best interest of the corporation. Third, more than a scintilla of evidence exists to support the jury’s finding that Holloway tortiously interfered with the contract between Holli-gan, Inc. and Skinner.
I.
I believe that the court has misplaced the burden of proof for the affirmative defense of legal justification. It is undisputed that “the privilege of legal justification or excuse in the interference of contractual relations is an affirmative defense upon which the defendant has the burden of proof.” Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989); Victoria Bank & Trust Co. v. Brady, 811 S.W.2d 931, 939 (Tex.1991). However, the court states that in order to prove the second element of tortious interference, that the act of interference was willful and intentional, “the plaintiff must show that the defendant acted in a fashion so contrary to the corporation’s best interests that his actions could only have been motivated by personal interests ...” and apparently that a noncontract-ing “agent committed an act of interference for reasons personal to the agent....” 898 S.W.2d at 796. By requiring the plaintiff to prove the nonexistence of legal justification in order to prove the second element of tortious interference, the court is placing the continuing viability of Sterner v. Marathon Oil Co. and Victoria Bank & Trust Co. v. Brady in question and is effectively abolishing the affirmative defense of legal justification in this context.
II.
This court granted Graham Holloway’s application for writ of error to determine whether Holloway, the president, director and largest shareholder of Holligan, Inc., was legally justified in interfering with a contract between the corporation and a third party, Rick Skinner, as a matter of law.1 However, the court has not decided the legal justification question, but has instead determined that there is no evidence of tortious interference with the contract between Hooligan, Inc. and Skinner. My disagreement encompasses the court’s assumption, absent any analysis, of the standard for the affirmative defense of legal justification.
This court has not addressed directly whether the president, director and largest shareholder of a corporation is legally justified in interfering with a contract between the corporation and a third party. Consequently, before determining whether Holloway was legally justified, the court must ascertain the standard for determining when a corporate officer or agent is legally justified in interfering with a contract between the corporation and a third party. The court erroneously assumes, apparently without deciding and absent any analysis, that a corporate officer or agent is legally justified in interfering with a contract between the corporation and a third party when the officer acts in good faith and believes that what he does is for the best interest of the corporation. 898 S.W.2d at 795.
*806Texas law concerning the general liability of a corporate officer is relatively clear.2 However, Texas law concerning the liability of a corporate officer involving tortious interference with a contract between the corporation and a third party ⅛ unsettled. For example, Maxey v. Citizens Nat’l Bank, 507 S.W.2d 722, 726 (Tex.1974), cited and relied upon by the court, is occasionally mentioned for its statement that “[i]t has been held that an officer or director may not be held liable in damages for inducing the corporation to violate a contractual obligation, provided that the officer or director acts in good faith and believes that what he does is for the best interest of the corporation.” See Eloise Bauer & Assoc. v. Electronic Realty, 621 S.W.2d 200, 203 (Tex.Civ.App. — Texarkana 1981, writ ref'd n.r.e.); Eads v. American Bank, 843 S.W.2d 208, 210 (Tex.App. — Waco 1992, no writ); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 553 (5th Cir.1981). However, Maxey did not involve whether a corporate officer or director was immune from liability for tortiously interfering with a contract between the corporation and a third party. Maxey involved whether a corporation’s liability was derivative of its officers’ liability and the question of the officers’ liability was never addressed directly. The plaintiffs sued Citizens National Bank, several of its officers and several other corporations and individuals. After trial, all of the defendants except the Bank were granted instructed verdicts. After judgment was rendered in favor of the Bank’s officers and against the Bank, the Bank appealed and the judgment was reversed and remanded. No appeal was taken from the directed verdict for the Bank’s officers. On remand, the Bank filed a motion for summary judgment asserting that its liability was derivative of its officers’ liability (i.e., based upon the acts of its officers and agents) and since the Bank’s officers had been “exonerated” in the first trial, the claims against the Bank were precluded by res judicata and collateral es-toppel. This court concluded that the “liability of the bank was independent and direct and not derivative of the acts of the bank’s agents.” Maxey, 507 S.W.2d at 725. As a result, contrary to the court’s assumption, Maxey is not dispositive of when a corporate officer or agent is legally justified in interfering with a contract between a corporation and a third party.3
*807III.
Other jurisdictions have recognized several theories concerning the liability of a corporate officer or agent involving tortious interference with a contract between the corporation and a third party. First, a corporate officer or agent is not liable for interfering with a contract between the corporation and a third party if the officer or agent acts within the scope of his employment or duties.4 Second, a corporate officer or agent is not liable for interfering with a contract between the corporation and a third party if the officer or agent acts within the scope of his corporate authority and for the benefit of the corporation.5 Third, a corporate officer or agent is not liable for interfering with a contract between the corporation and a third party if the officer or agent acts in good faith and in the best interest of the corporation.6 Fourth, a corporate officer or agent is not liable for interfering with a contract between the corporation and a third party unless the officer or agent acts outside the scope of his employment and acts with malice.7 Fifth, a corporate officer is not liable for interfering with a contract between the corporation and a third party if the officer interferes with the contract for corporate, as opposed to personal, interest and uses no improper means.8
I believe that the better reasoned standard for a corporate officer or agent’s legal justification in interfering with a contract between the corporation and a third party is described in Forrester v. Stockstill, 869 S.W.2d 328 (Tenn.1994):
A corporation can act only upon the advice of its officers and agents, and its officers and directors have a duty to serve the corporation. Important societal inter*808ests are served by corporations having the clear and candid advice of their officers and agents. Fear of personal liability would tend to limit such advice. Consequently, when an officer, director, or employee of a corporation acts within the general range of his authority, and his actions are substantially motivated by an intent to further the interest of the corporation, in claims of intentional interference with employment, the action of the officer, director, or employee is considered to be the action of the corporation and is entitled to the same immunity from liability.
Id. at 334-35. Consequently, I would hold that a corporate officer or agent is legally justified in interfering with a contract between the corporation and a third party if the officer or agent acts within the general scope of his corporate authority and for the benefit of the corporation.
IV.
I now consider whether Holloway, as the president, director and largest shareholder of Holligan, Inc., was legally justified in interfering with the contracts between Holligan, Inc. and Skinner as a matter of law. However, it is unclear whether Holloway is arguing that his status as the president, director and largest shareholder of Holligan, Inc. legally justifies his interference with the contracts between Holligan, Inc. and Skinner as a matter of law and/or that he is attempting to overcome an adverse fact finding as a matter of law. As a result, I will address both issues.
At trial, the jury found that Holloway was not “legally justified in interfering with Holli-gan, Inc.’s payment of royalties or note payments which accrued and were payable in favor of [Skinner]_” The instruction accompanying this question stated:
A party is “legally justified” in interfering with another’s contract if (1) he acts in the bona fide exercise of his rights, or (2) he has an equal or superior right in the subject matter to that of the other party. An officer, director, employee, or substantial shareholder of a corporation may legally induce the corporation to breach a contractual obligation, provided he acts in the good faith belief that what he does is for the best interest of the corporation. The decision by a corporate officer or director to litigate (and thereby refuse to pay) a disputed claim against the corporation is legally justified.
First, under either theory — whether Holloway was acting in the good faith belief that what he did was for the best interest of the corporation which was included in the jury instruction and which the court erroneously assumes is the standard, or whether he was acting within the general scope of his corporate authority and for the benefit of the corporation which is the standard I would adopt — Holloway’s mere status as the president, director and largest shareholder of Holligan, Inc. does not legally justify his interference with the contracts between Hol-ligan, Inc. and Skinner as a matter of law.
Second, “[a] party attempting to overcome an adverse fact finding as a matter of law must surmount two hurdles_ [T]he record must be examined for evidence that supports the jury’s finding, while ignoring all evidence to the contrary.... [I]f there is no evidence to support the fact finder’s answer, then, the entire record must be examined to see if the contrary proposition is established as a matter of law.” Sterner v. Marathon Oil Co., 767 S.W.2d at 690. Under either theory — whether Holloway was acting in the good faith belief that what he did was for the best interest of the corporation, or whether he was acting within the general scope of his corporate authority and for the benefit of the corporation — there was some evidence that Holloway was not “legally justified in interfering with Holligan, Inc.’s payment of royalties or note payments which accrued and were payable in favor of [Skinner]....” Consequently, I would conclude that Holloway, as the president, director and largest shareholder of Holligan, Inc., was not legally justified in interfering with the contracts between Holligan, Inc. and Skinner as a matter of law.
Y.
I also believe that there is more than a scintilla of evidence to support the jury’s finding that Holloway tortiously interfered *809■with the contract between Holligan, Inc. and Skinner. Holloway was the president, director and largest shareholder of Holligan, Inc. and controlled what happened at Holli-gan, Inc. During 1984-85, Holligan, Inc. was suffering a severe cash flow problem. As a corporate officer, Holloway was required to prioritize between competing claims because Holligan, Inc. was unable to meet all obligations when they came due. In July 1985, Holligan, Inc. defaulted on Skinner’s note and royalty agreements. However, in 1984-85, Holloway raised his salary from $24,000 to $33,750, and in 1985-86, Holloway raised his salary from $33,750 to $44,500. This evidence supports Skinner’s contention that Holloway induced the corporation to favor his “claim” for an increased salary over Skinner’s claim for past due note and royalty agreement payments. Although Holloway attempted to justify his increased salary by the termination of several employees and assumption of their duties, I believe that there is more than a scintilla of evidence to support the jury’s finding that Holloway tor-tiously interfered with the contract between Holligan, Inc. and Skinner.
Consequently, I dissent.

. On March 30, 1994, the court granted the following points of error in Mr. Holloway’s application for writ of error:
POINT OF ERROR NO. 2:
The trial court erred in entering judgment and the Court of Appeals erred in affirming that judgment for appellee's on the tortious interference claims because as a matter of law appellant, Graham Holloway, the president, director and largest shareholder of Holligan, Inc. cannot interfere with contracts between Holli-gan, Inc. and appellees.
POINT OF ERROR NO. 6:
The trial court erred in accepting jury question 2 with respect to appellant Graham Holloway because, assuming arguendo that appellant, Graham Holloway, could interfere with the contracts between Holligan, Inc. and ap-pellees, such interference was privileged as a matter of law because as president, director and largest shareholder of Holligan, Inc., Graham Holloway had an equal or superior right and interest in the contracts and was making a bona fide exercise of such rights.
37 Tex.Sup.CtJ. 609-10 (March 30, 1994).

. "The general rule ... is that officers of a corporation are insulated from personal liability arising from their activities performed in the scope of their duties for the corporation.” Portlock v. Perry, 852 S.W.2d 578, 582 (Tex.App.— Dallas 1993, writ denied) (wrongful death). See Delaney v. Fidelity Lease Limited, 526 S.W.2d 543, 546 (Tex.1974) (breach of contract). "If a corporate officer commits wrongful acts while conducting the corporation’s business, he will be held personally liable for the consequences of those acts.” Rio Grande Land & Cattle Co. v. Light, 749 S.W.2d 206, 212 (Tex.App. — San Antonio), rev’d in part on other grounds, 758 S.W.2d 747 (Tex.1988) (breach of contract); Medallion Homes, Inc. v. Thermar Investments, 698 S.W.2d 400, 403 (Tex.App. — -Houston [14th Dist.] 1985, no writ) (breach of contract and violations of Deceptive Trade Practices Act); Guilbeau v. Anderson, 841 S.W.2d 517, 519 (Tex.App. — Houston [14th Dist.] 1992, no writ) (negligence and violations of Deceptive Trade Practices Act); Equinox Enterprises v. Associated Media, 730 S.W.2d 872, 878 (Tex.App. — Dallas 1987, no writ) (breach of contract and slander).

. In addition, the various opinions of courts of appeal concerning the liability of a corporate officer involving tortious interference with a contract between the corporation and a third party are also inconclusive. "The agent does not interfere with his principal’s business relationships so long as he acts within the agency's scope, rather than pursues purely personal objectives.” American Medical Intern. v. Giurintano, 821 S.W.2d 331, 335-36 (Tex.App. — Houston [14th Dist.] 1991, no writ) (citations omitted). See Gonzalez v. Gutierrez, 694 S.W.2d 384, 388-89 (Tex.App.— San Antonio 1985, no writ); Russell v. Edgewood Indep. School Dist., 406 S.W.2d 249, 252 (Tex. Civ.App. — San Antonio 1966, writ ref'd n.r.e.); Southwestern States Oil & Gas Co. v. Sovereign Resources, 365 S.W.2d 417, 422 (Tex.Civ.App.— Dallas 1963, writ ref'd n.r.e.); B., Inc. v. Miller Brewing Co., 663 F.2d at 553). "[A]gents are generally not personally liable for interfering with the principal’s business relations. The agent and the principal are treated as one because the agent is the principal's alter ego; their financial interest is the same.” American Medical Intern, v. Giurintano, 821 S.W.2d 331, 335 (Tex.App. — Houston [14th Dist.] 1991, no writ) (citations omitted). See John Masek Corp. v. Davis, 848 S.W.2d 170, 175 (Tex.App. — Houston [1st Dist.] 1992, writ denied); Baker v. Welch, 735 S.W.2d 548, 549 (Tex.App. — Houston [1st Dist.] 1987, writ dism'd); Lone Star Ford, Inc. v. McCormick, 838 S.W.2d 734, 743 (Tex.App.— Houston [1st Dist.] 1992, writ denied) ("Evidence adduced at trial showed that Smith owned 90 percent of Sonic, which owned all of the stock Lone Star. Further, Smith is the chief operating officer of Lone Star and testified that he acted as *807owner and officer of Lone Star in terminating McCormick's and Drury's contracts."). "It is well established [that] an agent cannot be liable for tortious interference with its principal’s contracts.” John Masek Corp. v. Davis, 848 S.W.2d 170, 175 (Tex.App. — Houston [1st Dist.] 1992, writ denied); Central Savings & Loan Ass’n v. Stemmons Northwest, 848 S.W.2d 232, 241-42 (Tex.App. — Dallas 1992, no writ) (“Where a ... principal agent relationship exists, there can be no tortious interference with a contract as a matter of law”); Baker v. Welch, 735 S.W.2d 548, 549 (Tex.App. — Houston [1st Dist.] 1987, writ dism’d).

. See Nordling v. Northern States Power Co., 478 N.W.2d 498, 505-06 (Minn. 1991); Bradburn v. Colonial Stores, Inc., 273 S.C. 186, 255 S.E.2d 453, 455 (1979); Georgia Power Co. v. Busbin, 242 Ga. 612, 250 S.E.2d 442, 444 (1978); Bleich v. Florence Crittenton Serv., 98 Md.App. 123, 632 A.2d 463, 475 (1993); Nix v. Temple University, 408 Pa.Super. 369, 596 A.2d 1132, 1137 (1991); Cronk v. Intermountain Rural Elec. Ass’n, 765 P.2d 619, 623 (Colo.App.1988); Cedar Hills Properties v. Eastern Federal, 575 So.2d 673, 676 (Fla.App.1991); Fields v. R.S.C.D.B., Inc., 865 S.W.2d 877, 879 (Mo.App.1993); Martin v. Platt, 179 Ind.App. 688, 386 N.E.2d 1026, 1027 (1979); Murray v. Bridgeport Hosp., 40 Conn.Supp. 56, 480 A.2d 610, 613 (1984).

. See Forrester v. Stockstill, 869 S.W.2d 328, 334-35 (Tenn.1994); 9 to 5 Fashions, Inc. v. Spurney, 538 So.2d 228, 231 (La.1989); Davenport v. Epperly, 744 P.2d 1110, 1114 (Wyo.1987); Olympic Fish Products, Inc. v. Lloyd, 93 Wash.2d 596, 611 P.2d 737, 739 (1980); May v. Santa Fe Trail Transportation Co., 189 Kan. 419, 370 P.2d 390, 395 (1962); Bradley v. Philip Morris Inc., 194 Mich.App. 44, 486 N.W.2d 48, 51 (1991); Olivet v. Frischling, 104 Cal.App.3d 831, 164 Cal.Rptr. 87, 92 (1980); DeHorney v. Bank of America Nat. Trust and Sav., 879 F.2d 459, 464 (9th Cir.1989) (applying California law). See also HPI Health Care v. Mt. Vernon Hosp., 131 Ill.2d 145, 137 Ill.Dec. 19, 24, 545 N.E.2d 672, 677 (1989).

. See Embree Const. Group v. Rafcor, Inc., 330 N.C. 487, 411 S.E.2d 916, 925 (1992); Welch v. Bancorp Management Services, 296 Or. 208, 675 P.2d 172, 177 (1983); Phillips v. Montana Educ. Ass’n, 187 Mont. 419, 610 P.2d 154, 158 (1980); Nickens v. Labor Agency of Metro. Wash., 600 A.2d 813, 820 (D.C.App.1991); Murtha v. Yonkers Child Care Ass’n, Inc., 45 N.Y.2d 913, 411 N.Y.S.2d 219, 220, 383 N.E.2d 865, 866 (1978); Shaw v. Burchfield, 481 So.2d 247, 255 (Miss. 1985); Griswold v. Heat Incorporated, 108 N.H. 119, 229 A.2d 183, 188 (1967). See also Alfred Avins, Liability for Inducing a Corporation to Breach Its Contract, 43 CORNELL L.Q. 55, 56-60, 65 (1957).

. See Perlman v. Shurett, 567 So.2d 1296, 1297 (Ala.1990); Wright v. Shriners Hosp., 412 Mass. 469, 589 N.E.2d 1241, 1246 (1992) (defining malice as "for a spiteful, malignant purpose, unrelated to the legitimate corporate interest."); Roy v. Woonsocket Institution for Savings, 525 A.2d 915, 919 (R.I.1987) (defining legal malice as “an intent to do harm without justification.").

. See Eggleston v. Phillips, 838 S.W.2d 80, 82-83 (Mo.App.1992); Lay v. St. Louis Helicopter Airways, Inc., 869 S.W.2d 173, 178 (Mo.App.1993); Wagenseller v. Scottsdale Memorial Hosp., 147 Ariz. 370, 388, 710 P.2d 1025, 1043 (1985). See also Meyer v. Enoch, 807 S.W.2d 156, 159 (Mo. App.1991).