*1 intended) probable meaning, and decreases certainty process.
title dissent. HOLLOWAY, Petitioner,
Graham Ord’s, and Alvin
Rick SKINNER
Inc., Respondents.
No. D-4374.
Supreme Court of Texas.
Argued May 1994. May
Decided 1995.
Rehearing June Overruled *2 previously shop
Skinner owned a sandwich franchise, 1981, Holloway Alvin In Ord’s. father-in-law, Culligan, ap- and his Tom proached purchasing Skinner about the fran- negotiating outright chise. Rather than purchase, parties upon plan settled joint ownership agreed to form a ration, Holligan, to control their hold- ings. Corpora- Skinner contributed to the stores, company-owned tion his Alvin Ord’s agreements, franchise the Alvin Ord’s trade name, Holloway and trade secrets. and Cul- ligan management contributed their services capital. part agree- and additional As of this ment, $63,000 promissory Skinner received a Corporation, note from percent a six royalty gross receipts on from Alvin Ord’s stores, stock, managerial position and a Corporation.1 Holloway served as the Corporation’s president. Corporation
Between 1981 and payments failed to make some due under the royalty agreement. note and In Skin- Norman, OK, Scaperlanda, pe- Michael for position Corporation ner left his at the be- titioner. deteriorating personal relationship cause of a Holloway. Corporation defaulted Neal, Austin, respondents. Robert F. entirely obligations July on its to him in 1985. successfully Corporation Skinner sued the CORNYN, Justice, opinion delivered the obligations for breach of its the note under Court, PHILLIPS, which Chief royalty agreement, Corporation but the Justice, GONZALEZ, Justice, GAMMAGE, bankruptcy, judgment filed and that re- Justice, SPECTOR, Justice, join. mains unsatisfied. Skinner then filed the case, In this we consider whether Graham against Holloway, claiming, among suit other director, Holloway, president, largest things, tortiously that he interfered with the (the Holligan, Corpora- shareholder of Inc. royalty agreement by inducing note and tion), tortiously can be held liable for inter- Corporation obligations. to default on its fering Corpora- with a contract between the verdict, jury’s accord with the the trial court tion and a third Rick Skinner and judgment against Holloway rendered on the Ord’s, Skinner), (collectively, Alvin Inc. sued tortious interference claim. The court of for, Holloway among things, other affirmed, appeals holding Holloway’s interference with a contract between the corporate agent status as a did bar Skin- Corporation and Skinner. The trial court ner’s claim of tortious interference with the judgment jury’s rendered on the verdict contract, Corporation’s that some evidence against Holloway on the tortious interference jury’s supported finding appeals claim. The court of affirmed. 860 contract, induced a breach of the and that presented 217. Because no Holloway conclusively Skinner had not establish that Holloway, evidence that legally justified. in his ca- his conduct was pacity, willfully intentionally interfered I. contract, judgment we reverse the appeals recognized of the court of and render jurisprudence long Texas nothing. that Skinner take that a to a contract has a cause of During negotiations, Culligan Corporation's Skinner unsuccessful- on the obli- ly attempted personal guarantees gations obtain to Skinner. any proved grounds v. Mara on other in Sterner action for tortious interference contract) (a (Tex.1989).2 stranger who thon Oil reason, wrongly contracting party another “an induces we held that officer For this Ray generally contract. See corporation] may not be held [of or director Yarrington, 96 mond v. Tex. 73 S.W. corpora damages inducing the liable *3 (Tex.1903) 800, 802-04 history (reciting the of obligation, pro a tion to violate contractual recognizing this its viabil cause of action that the officer or director acts vided Texas). definition, ity By person who is for that what he does faith and believes contracting cannot induces the breach be a Maxey corporation.” v. best interest recognize tortious we to Were 722, Bank, Nat’l 507 726 Citizen’s identity claim of inter interference when this (Tex.1974). and directors “Even the officers exists, any party est who breaches a contract ordinary corporation, an while as of could be said to have induced his own breach such, personally though even are not liable be tortious would therefore liable for a of a valid con recommend breach every logic interference. Such would convert Edge v. (quoting at 725 Russell tract.” Id. claim tort claim. In breach of contract into a 249, Dist., Indep. Sch. 406 S.W.2d 252 wood cases, however, this qualification most 1966, (Tex.Civ.App. Antonio writ refd —San alleged tortfeasor issue because n.r.e.)). reason rule has for this been clearly stranger a to the contract. explained as follows: Here, allegedly the act of interference was Doing through struc- business by an individual also the committed who was recognized necessary is a inci- tures contracting par lawful of representative party usually A dent of business life. ty. gener Such a case tests the limits of the disadvantageous but val- able to abandon barring al rule tortious claims interference responsible be id contract and inducing breaching party when the and the only. Corporations would sub- of contract Copperweld Corp. are and the same. one Cf. stantially prevented similarly 752, Independence Tube 771- 467 U.S. abandoning disadvantageous but valid con- 72, 2731, 2741-42, 104 L.Ed.2d 628 S.Ct. tracts, securing and from related business (1984) (holding that the identical economic advice, employees if the who officers parent and its interests of had and carried out the breach advised wholly-owned subsidiary legally render them personal responsibility of run the risk another); incapable conspiring with one personal action for interference Stores, Corp. Dep’t Deauville v. Federated contract. (5th (hold Cir.1985) 1183, 756 F.2d Palmerton, 65, 439 Wampler v. 250 Or. P.2d parent that a cannot be liable (1968). 601, same ratio- Based on this prospective nale, emphasized clear that “a dis- we relationships wholly-owned business of its between indi- tinction should be maintained subsidiary). The inducement and the breach from that distinguished vidual allegedly were committed the same Maxey, corporate employer.” See functioning distinctly different at 726. legal capacities. cause of action for nature, The elements of a Corporations, very their (1) are: a contract tortious interference with agents.
cannot function without human
As
subject to
of a contract
inter
rule,
the existence
actions of corporate
(2)
ference,
the occurrence of an act
inter
on behalf of the
are deemed the
intentional, (3)
See,
that was willful and
corporation’s
e.g., Terry
acts.
v. Za
ference
plain
proximate
cause of
chry,
(Tex.Civ.App.— the act was
272 S.W.2d
(4)
n.r.e.),
damage or
disap
damage, and
actual
loss
San Antonio
writ refd
tiffs
legal justification
under
facts
was an affir-
dence of actionable interference
Sterner held
case,
disapproved
Terry only
mative defense and
we do
not reach
Terry
the extent that
proof
held that the burden
Holloway conclusively established his
Sterner,
plaintiff.
767 S.W.2d
was on
legal justification.
defense
affirmative
we hold
no evi-
at 690. Because
that there is
itself,
Browning-Ferris
Rey
occurred.
Indus. v.
“it is immaterial that
the actor also
na,
(Tex.1993);
865 S.W.2d
Victoria
profits
the advice or that he dislikes that
Brady,
Bank & Trust Co. v.
pleasure
and takes
in the harm
(Tex.1991).
The second element of this
advice”).
caused to him the
Were this not
particular
cause of action
importance
rule, virtually every
pay
failure to
when the defendant serves the dual roles of
prima
debt would constitute a
facie
corporate agent
and the third
who
case of tortious interference
the cor-
allegedly
corporation’s
induces the
breach.
porate
pay
officer who decided not to
prima
To establish a
facie case under such
debt.
circumstances,
alleged
act of interference
suggests
The dissent
that we have shifted
performed
must be
in furtherance of the
proof
the burden of
on the affirmative de-
defendant’s
pre
interests so as to
justification.
legal
fense of
disagree.
We
*4
logically necessary
serve the
par
rule that a
Although
acknowledge
we
that whether to
ty
tortiously
cannot
interfere with its own
part
treat
this issue as
of the defendant’s
contract.
proof
place
burden of
or to
the burden on the
We hold that to meet this burden in
plaintiff
question,
is a close
on balance we
nature,
plaintiff
case of this
the
must show
prove
conclude that the burden to
that an
that
the defendant acted in a fashion so
agent committed an act of
contrary
corporation’s
to the
best interests
personal
reasons
placed
the
is better
only
that his actions could
have been motivat
See,
plaintiff.
on the
e.g., Wampler, 439 P.2d
by personal
ed
interests.3 See Thomas G.
(stating
“might
at 606
that this issue
well be
Fischer, Annotation, Liability
Corporate
duty
viewed as a lack of
of non-interference
Director, Officer,
Employee
Tortious
part
corporate agent”).
on the
of the
Once
Corporation’s
Contract
met, liability
Interference
that burden is
for tortious inter-
Another,
492,
72 A.L.R.4th
527-30 ference with contract is established unless
(1989) (cases cited).
Inasmuch as it is the
corporate agent
establishes the affirma-
duty
corporate
protect
officers to
the in
legal justification.
tive defense of
corporation,
terests of the
Southwestern
Resources,
Sovereign
States Oil & Gas
v.Co.
II.
Inc.,
417,
(Tex.Civ.App.—
Holloway’s arguments boil down to two
n.r.e.),
Dallas
writ ref d
the mere exis
legally
contentions:
that there is not
suffi-
outcome,
personal
tence of a
stake
support
jury’s finding
cient evidence to
especially
any personal
benefit is deriv
tortiously
that he
interfered with Skinner’s
improved
ative of the
financial condition of
agreement
Corporation,
contractual
or consists of the continued
and, alternatively,
conclusively
that he has
salary,
entitlement
to draw a
cannot alone
proven
legal justi-
the affirmative defense of
proof
constitute
that the defendant commit
agree
fication. Because we
did
Skinner
ted an act of willful or intentional interfer
proving
not meet his burden of
each element
ence. See 3 LenoRE M.
Zajdel,
FletcheR
interference,
of tortious
we need not address
Cyclopedia
of the Law of PRIVATE CORPORA
Holloway’s affirmative defense.
§
(perm.rev.ed.1986);
see also
TIONS
Advisors,
legal insufficiency
To succeed on the
chal-
Bancorp Management
Welch v.
(1983)
lenge,
Holloway must
296 Or.
show
there is
P.2d
than
(holding
corporate
support
more
a scintilla of evidence to
agent’s
even a
“mixed
motives” to benefit
one or more of the elements of tortious inter-
himself as well as the
Calvert,
ference.
are insufficient to establish liabil
See Robert W.
“No Evi-
ity); Restatement
dence” and
Evidence” Points
(Second)
of the Law
“Insufficient
(1979)
Error,
§
(stating
772 cmt. c
ToRTS,
(1960).
In
38 TexL.Rev.
holding today
3. Our
corporation's
is consistent with the stan-
ain fashion so
best
Maxey:
prevail
dard we enunciated in
that to
interests that his actions could
have been
good
defendant must act in
interests,
faith
believe the
by personal
motivated
definition
act to be in the
best interest of
does not act in
faith.
Maxey,
On this we Holligan’s president, conclude that there is ner then sued Graham no evidence that Holloway, the decision to breach the who was also a director of the contrary Corporation’s contract was forty per- so and owned more than only Holloway best interests that it could have been cent of its stock. was the pursuit Holloway’s per- Holligan try motivated for who decided what bills to to noted, already sonal pay go unpaid interests. As we have and what bills would have to funds, benefit limited to the consequently continued en- for lack of he made salary titlement to draw a or Holligan pay- derivative the decision for to discontinue not. really principal his had decision benefited Although to Skinner merits Skinner. law burden guaranty I do not should Holloway’spersonal believe failed to obtain liability third him, for to obligations potential with this Holligan’s to Skinner has certainly principal not when by making parties, his Holloway, that decisions claimed complaint. with the Holligan, tortiously interfered for Holligan and between Skinner. contracts problem illustrates case Holloway complained benefited Skinner There is approach. Court’s no evidence Holligan’s his annual from default because Holligan position— taken has ever $24,000 year salary was raised from be- officers, directors, through shareholders breach, $33,750 year to fore the Holloway act in employees failed —that $45,000 following breach, year. and to this Yet does take its best Skinner interest. judgment jury on a trial court rendered The course, doing, of Skinner position. In so $78,631.61 Holloway against verdict Holli- trying the interests of not to advance $100,000 punitive damages actual owners; advancing own gan or its he is his damages. appeals The court of affirmed. interests. contends that Skinner money Holligan paying not used the saved salary. his own The Court’s Skinner raise This Court reverses Hol- response to this contention is that Holloway. The for its decision is its weak basis exactly with loway’s did not coincide holding that an interferes with a con- raises default, Holligan’s equal did principal per- his tract between money The Court way in a both withheld Skinner. son acts impression that but his interests leaves distinct problems, two minor factual Skinner empha- furtherance of own. The Court these importance would case. To Court’s sizes the of both these ele- pronouncement no evidence An acts to better ments. who his own contraiy Holligan’s best cannot be for tortious inter- acted interests liable interests, might respond if in his at least princi- his actions are also Skinner ference pal’s otherwise, Holloway got interests. it sued. best Were rule, exposed point is this: under Court’s Skinner would whenever Holli- argue Holloway did act in also can his decisions benefit case, gan’s not share happened to benefit himself. interests when Skinner does example, Holloway’s salary Holligan those and when itself evidence that interests *7 though di- minimizing complaint, it was more was raised to reward him for no even rectly Holloway’s than obligations support by decisions Holligan’s would the trial affected judgment. court’s Skinner was. of flaw in the agree I with Another illustration
While the Court Stanley by Morgan liability is afforded no for tortious interference in this Court’s rule - —Co., case, adopts reaching Co. v. Texas Oil I believe rule it & (Tex.App. writ [14th Dist.] It allows a third that conclusion flawed. —Houston denied), involving challenge agent’s a case tortious to whether an actions relations, in which principal’s prospective to business in his best interests and were application of for writ they were the Court denies obtain a factual determination today’s deci- not, contemporaneously with irrespective principal thinks. error what There, Stanley Morgan hired Tenneco rule must be sion. This result Court’s subsidiary, wholly-owned The rule a third to sell Tenneeo’s stressed. allows made Minerals. Texas Oil agent’s to Houston Oil and that an conduct show Minerals, interest, buy Houston Oil and principal if the an offer to principal’s even offer it would increase its certainly if and indicated that opposite position, asserts to sell necessary. if Tenneco decided position takes on the contro- When principal instead, Seagull Further, showing Minerals may be Houston Oil and versy at all. offer, higher Tenne- hindsight, Texas Oil made a which so that an made with benefit of Tenneco, rejected. then second-guessed co Texas Oil sued about whether his agent is Morgan Stanley Seagull, claiming proof clearly imposes greater dard of bur- Morgan Stanley tortiously agents interfered with its den on than the standard would prospective by contract with adopt. Tenneco con- The effect of the Court’s rule is to vincing Seagull. Tenneco to sell to Texas agent’s exposure Oil increase the Morgan Stanley asserts that motivated for his breaches and allow hope doing recovery more business with damages of tort when a claimant Seagull than it would have done with Texas would otherwise be limited contract dam- Morgan Stanley, Oil. case, in its ages. motion for sum- In present example, mary judgment, averred it acted at all attempting by Skinner is this suit for tortious times in principal, the best interests of its interference to obtain what to Hol- amounts Tenneco. Texas loway’s personal Oil countered that an guarantee Holligan’s obli- agent’s privileged interference is not gations, something Skinner could not obtain acts, princi- interferor “not to negotiation. further the Holloway would have been business, pal’s primarily but to further personally guaranteed its better off if he had own interests or out Holligan’s of malice.” The trial note to Skinner: at least then he granted court Morgan Stanley summary punitive damages. would be liable for judgment, reversed, appeals but the court of An action for tortious interference should not holding that a fact regarding issue subsisted be used as an run person- end around bars to Morgan Stanley liability, acted faith al recasting or as a means and in Tenneco’s best interests. The court escape breach of contract as a tort reached despite this conclusion recovery. the absence limits on contractual any complaint by Morgan Tenneco about recognizes, person As the Court cannot Stanley’s conduct. interfere with his own contract. When a Morgan Stanley’s another, Court’s denial of is authorized to act for application for view, error is consistent my action’s are the other’s. present its decision in Although case. authorized to cause his there is no Morgan Stanley terminate a contract should not be liable for acted at all times within the course and interference when that decision Tenneco, principal, its turns out agent’s to be best interests although complain Tenneco does not principal’s; not the he should be liable any Morgan actions, Stanley’s only Texas Oil if authority. he acted outside his damages against can recover Morgan Stanley Court seems to fear that this rule would persuade jury if it Morgan Stanley can agents shield circumstances when acted its own best interests and not Ten- should not responsibility, be free of but it neco’s. The Court’s rule allows Texas Oil to imagine single example. cannot even If mutate its against any, they breach of contract claim certainly there are do not raise the Tenneco into a tort Morgan claim same threats as are raised the flaws Stanley, and to recover not contract Court’s rule.
damages damages, including punitive but tort *8 emphasis on whether the was damages. acting authority within the of his two
These cases show how the Court’s rule consistent with the in Court’s discussion places an employee Maxey Bank, in the awkward v. Citizens National 507 position answering (Tex.1974), principal not to his S.W.2d 722 we which concluded parties but to third principal with whom the the duties a bank owed the with dealing. point The Court misses the whole by which it contracted were not shared when it asserts that an employees. must account to bank’s We cited several cases principal may concerning agent’s for its behavior liability also be an for tortious liable to a third for tortious interfer- interference with a contract between his 797, One, ence. Ante at n. 4. The issue is not and a third Russell v. District, whether an can liable Edgewood Independent be for tortious School 406 interference, proved but must (Tex.Civ.App. what be to 249 S.W.2d Antonio —San 1966, n.r.e.), liability. such establish The Court’s stan- writ ref d held that even assum-
801
apparently
actual malice was
ing
a
district
its con- which even
school
breached
subject
corporate
a
as
to
plaintiff
tract with the
a result
deemed insufficient
direction,
superintendent’s
authority to
agent acting
within his
individual
school
advice
individually
superintendent
liability
his
was not
ha-
for
Maxey
quoted
ble. The
Court
from Bussell
The court reasoned:
contract.
approval:
and di-
“‘Even
officers
arbitrary
pay
unliquidated
An
refusal to
an
ordinary corporation,
of an
while act-
rectors
for a
disputed
claim is not
basis
such,
personally
not
hable
are
even
Espe-
aof
suit.
suit for malicious defense
though they
of a vahd
recommend
sol-
cially
true
the debtor is
is this
”
(citations
contract.’
but
otherwise,
rule
an officer of
corporation,
Were the
the breach is that of
therefore,
corporate
and,
corporation would induce a
offi-
it
hence
alone is answerable
further,
invoking
cer to
a claim at the risk of
that to hold
would
resist
otherwise
tend
action unless
to hinder directors of
absolutely
A
to
was
correct.
wilful refusal
acting
on
the interest of
their
not
they
pay
unliquidated
an
claim is
the basis
their
and that
should be
independent
suit
separate
for a
possible
left free from
of that
officers who induced
kind.”
Torts,
C.J.,
§
86
such action.
Maxey,
(citing
at 726
S.W.2d
3 William
45;
Am.Jur.,
C.J.S.,
§
Interfer-
Torts
Cyclopedia
Fletcheb,
M.
FletcheR
ence,
§
more
states the rule even
Corporations
(perm,
§
Law of Private
held,
example,
broadly:
“It
been
ed.)).
person
a third
to a debtor
notice
Maxey properly
The cases cited in
focus
pay
his creditor
reason of which
was
on whether the
within the
compelled to sue
the latter is
to recover
authority.
scope of his
In Southwestern
him
the sum due
does not constitute suffi-
Resources,
Sovereign
States Oil &
Co. v.
Gas
action
ground
support
cient
for dam-
(Tex.Civ.App.—
given
ages
though
notice is
mali-
even
such
n.r.e.),
Dallas
ref d
the court
brief-
ciously. The
on the debt is held
interest
ly explained
corporation’s president
that the
delay
pay-
compensation
for the
interlopers”
and a director were “not mere
ment.”
parties
and were
to be considered third
omitted).
(citations
at
legal
alleged
had no
who
interest
Terry,
rule
the court noted that
any way
“[i]t
contract:
is not shown that
subject
exception
they
beyond
powers
went
their
officers, quoting authority that a servant who
as officer and director of their
of master’s contract with
causes a breach
duty
protect
It
their
interests of
stranger,
alter
a third
is not
but the
corporation. There
is no evidence of
ego of
are
the acts
Thus,
his master: his acts
law
part.”
their
fraud on
could not be
employer,
so that
it
the master
individually
causing
liable for
held
himself, agent, breaking the contract.
ration
refuse to consummate
deal.
*9
reason,
against
Id. at
For this
an action
Maxey
case, Terry Zachry,
cites another
v.
just
fail
agent fails
an action would
as
(Tex.Civ.App.
802
agents
tortiously
demonstrates,
can be
induc-
that
liable for
As this review the cases
if,
they
upon
ing
example,
scope
agent’s
a breach
for
act
rule
outside
based
of the
See,
scope
hardly
agency.
e.g.,
authority
departure
of their
John
is
estab-
from
Davis,
law,
Corp.
170,
v.
lished Texas
as the Court
Masek
848
175
contends.
S.W.2d
797,
1992,
(Tex.App.
n. 4.
propose
Ante at
The rule I
and the
[1st
writ de-
Dist.]
—Houston
nied)
(affirming
adopted
yield
the son-in-law one
Court will often
for
concern, however,
My
withdrawing
individual
same
is for
of an
who controlled a
result.
liability
partner,
unjustly
those cases when
will
corporate
concluding that there was
anything
imposed
always
an
who
within
no evidence the son-in-law was
oth-
on
acted
agent);
scope
authority,
of his
the in-
er than
Victor M. Solis Under-
and for
Laredo,
ground
City
places
such
Paving
Util. &
v.
creased burden the Court
on
Co.
582,
agents
liability.
avoid
(Tex.App.
Antonio
S.W.2d
—San
1988,
denied);
Gutierrez,
v.
Gonzalez
propose
supported by
caselaw
rule
384,
(TexApp.
Antonio
S.W.2d
—San
Palmerton,
In Wampler
outside
v.
Texas.
writ)
1985, no
(reversing judgment because
65,
(1968),
court
250 Or.
P.2d 601
showing
there was no
that
the defendant
other
shield
noted that
courts had tended to
beyond
airport director’s actions went
corporate employees
for induc-
scope
authority
city,
as an
contract,
corporate
of the
often
city’s airport
and because the
committee and
stating
action
are not liable if the
city
obliged
accept
council
not
were
di-
“good
in
faith”
benefit
was taken
and for the
recommendations).
rector’s
same
corporation.
Id.
But
the burden demonstrate that the however, m acknowledging not errs that its officer should not be treated the contract- analysis inquires agent’s scope also into the ing party, and instead should be treated as a authority. stranger plaintiff to the contract. The must first Under the element of the tortious present proof that tMs acted outside action, interference with contract cause of authority. its subjected there must a contract that was If party, interference. is a interferer II. subjected then no there was contract to in- plaintiff satisfy The can Ms burden in one terference because a cannot interfere 1) ways: plaintiff two can show lack of Baker, with himself. at 549. I directly, authority by showing that the defen- part company with the Court when it holds authority dant did not have the to undertake SMnner satisfied the element first 2) taken; the acts plaintiff can show merely showing that there not a was com- what amounts to a lack of indirect- plete identity of Holloway interests between ly, showing the defendant was corporation. identity” and the “Complete corporation’s so best inter- “corporate authority” not at is. The issue— ests that Ms actions could have been in completing analysis Court further errs by personal motivated (whether interests. by turning to the second element there was act of willful intentional inter- method, As the first presented Skinner ference). places S.W.2d at TMs no absolutely direct that Holloway, evidence square peg into a round hole. Court determining corporation’s unnecessarily complicates body of law Skinner, agreement loan acted outside surrounding tortious interference claims fact, corporate authority. of Ms contraetmg made par- an officer of a undisputed that Holloway evidence was ty- corporate president, was there was My proof route is more direct. Absent showmg president no evidence offered Holloway corporate authority lacked the was not authorized to make the decisions he corporate breach, to imtiate Skinner can- method, made. As the second the Court prevail as matter of law in his correctly *12 viability First, continuing v. Marathon of Sterner respects. misplaces court the bur- the v. of Bank & Trust Co. proof of for the affirmative defense Co. and Victoria den Oil Second, effectively abolish- justification plaintiff. Brady question in and is legal on the justifica- justifica- legal legal of ing the affirmative defense the court has decided the assumes, ap- question erroneously in this context. tion and tion deciding any absent parently -without and analysis, is corporate that a officer II. a legally justified interfering in with contract Holloway’s ap- granted court Graham corporation party a third between the and determine writ of error to plication for good officer acts in faith and be-
when the Holloway, president, the director does for the best lieves that what he is Inc., largest Holligan, of was and shareholder Third, the more interest of justified interfering a legally in with contract support a than scintilla of evidence exists party, corporation and a third the between tortiously jury’s finding the that However, Skinner, as a matter of law.1 Rick with between Holli- interfered the contract justifica- legal court the the has decided gan, Inc. and Skinner. question, determined tion but has instead interfer- no evidence of tortious is I. Hooligan, the contract between ence with misplaced the that the court has believe disagreement My encom- Inc. and Skinner. of proof the affirmative defense burden of any assumption, absent passes the court’s justification. undisputed It that “the legal is analysis, the standard for the affirmative legal justification privilege of or excuse justification. legal defense is an interference contractual relations directly upon which the defendant This court not addressed affirmative defense president, largest director and proof.” has the v. Mara- whether the burden Sterner (Tex.1989); justi- legally 767 of a thon Oil S.W.2d 690 shareholder interfering in a contract between Brady, Bank & Trust 811 fied with Victoria Co. (Tex.1991). However, party. the and a third Conse- S.W.2d determining quently, that in before whether Hollo- prove court states order second justified, interference, court must way legally act was element of tortious intentional, determining the standard interference was willful and ascertain justi- legally plaintiff corporate officer or “the must show that defendant a interfering a contract between corpora- acted in fashion fied with a so and third The court tion’s actions could the a best interests assumes, erroneously apparently without de- by personal inter- have been motivated any analysis, that a apparently ciding ...” and absent ests noncontract- legally justified in “agent committed an act of interference rate officer or between cor- agent....” contract for reasons officer plaintiff when the By requiring poration at 796. third justification that what he prove legal acts in faith and believes the nonexistence corpora- prove is for the best interest the second element does order interference, placing at 795. tortious court tion. 30, 1994, granted ERROR NO. 6: POINT OF
1. On March
court
jury
accepting
ques-
Holloway’s
The trial court erred
appli-
following points
of error Mr.
respect
appellant
Graham Hollo-
tion with
way
writ of error:
cation for
because, assuming arguendo
appel-
NO.
POINT OF ERROR
2:
lant,
Holloway, could interfere with
Graham
entering judgment
The trial court erred in
Holligan,
ap-
Inc. and
the contracts between
affirming
Appeals
and the Court of
erred
privileged as a
pellees,
interference was
such
judgment
appellee's on the
president,
tortious
director
matter of law because
law
Holligan,
claims because as a matter of
largest
Gra-
shareholder
president,
right
appellant,
Holloway,
equal
superior
di-
Graham
ham
had
making
largest
Holligan,
Inc.
rector and
shareholder
and interest in
contracts and
rights.
Holli-
exercise of such
cannot interfere with contracts between
bona fide
30, 1994).
(March
Tex.Sup.CtJ.
gan,
appellees.
Inc.
concerning
liability
liability
Texas law
and the
of the officers’ lia
of a
is relatively
bility
directly.
officer
clear.2
was never addressed
However,
concerning
Texas
plaintiffs
Bank,
law
sued Citizens National
sever
of a
involving
officer
inter
corpora
al of its
and several other
officers
trial,
ference
corpora
contract between the
tions and
After
all of
individuals.
n
tion
except
granted
unsettled.
For
defendants
the Bank were
Bank,
example, Maxey
v. Citizens Nat’l
instructed
After
verdicts.
*13
722,
(Tex.1974),
726
S.W.2d
cited and relied
rendered in
favor
Bank’s officers and
upon
court,
occasionally
the
against
Bank,
is
appealed
mentioned
the
the Bank
and the
for its statement
“[i]t
has been
held
was reversed and remanded. No
may
or
appeal
officer
director
not be held liable
was
from the
taken
directed verdict
inducing
in damages
corporation
remand,
for
for the Bank’s officers. On
obligation, provided
violate a contractual
summary judgment
that Bank filed a
for
motion
or
officer
director acts in
asserting
liability
faith and
was derivative of
(i.e.,
believes
what he does is for
liability
upon
the best
its officers’
based
the acts
of
See Eloise
corporation.”
interest
agents)
of its officers and
and since the
Realty,
Bauer
Assoc.
&
v. Electronic
621 Bank’s officers
been
had
“exonerated”
200,
trial,
(Tex.Civ.App.
S.W.2d
203
first
the claims
the Bank were
—Texarkana
1981,
n.r.e.);
Eads v. American
writ ref'd
precluded by
judicata
res
and collateral es-
Bank,
208,
(Tex.App.
843 S.W.2d
210
toppel. This court concluded that the “liabil
—Waco
writ); B.,
1992,
Brewing
v.
Inc. Miller
no
ity
independent
the bank
of
and direct
Co.,
(5th
545,
Cir.1981).
663 F.2d
553
How
not
of the acts
derivative
of
bank’s
ever, Maxey did
Maxey,
corpo
agents.”
not involve
whether a
III. interfering between with a contract liable for recognized several jurisdictions have Other party a unless the corporation and third a concerning the theories scope of his officer or acts outside inter- agent involving or rate officer Fifth, a acts with malice.7 employment and corpora- a ference with contract between interfering corporate liable officer First, corporate tion and a third corporation and between the with a contract officer or liable if interferes with party a third the officer corporation and with a contract between the person- corporate, opposed to contract for agent acts if the officer or third al, improper means.8 and uses no interest employment within the standard that the better reasoned believe Second, duties.4 officer justifi- agent’s legal officer or interfering with contract is not liable for interfering with a contract between cation in if between *14 party a is de- corporation and agent of the officer or acts within the Stockstill, v. in Forrester S.W.2d 869 scribed authority corporate for benefit of his and (Tenn.1994): 328 Third, corporate corporation.5 officer only upon the corporation can act interfering with a A or is not liable for agents, and its of officers and corporation a third advice its contract between and duty to serve and good if the or acts in faith officers directors officer Important inter- corporation. societal corporation.6 and in the best interest of 831, Cal.Rptr. Frischling, Cal.App.3d terminating v. 164 Star 104 owner officer Lone 87, contracts."). (1980); DeHorney Drury's Nat. "It v. Bank America 92 McCormick's 459, (9th Cir.1989) Sav., be liable F.2d 464 [that] well established cannot 879 Trust law). con also Health (applying tortious interference with See HPI California Davis, 145, Corp. Hosp., tracts.” John Masek v. 848 131 Ill.2d 137 Care v. Mt. Vernon 1992, 170, (Tex.App. 19, 672, (1989). 24, [1st Dist.] 175 545 N.E.2d 677 Ill.Dec. —Houston denied); Savings writ Central & Loan Ass’n v. Northwest, 232, 241-42 Stemmons 848 S.W.2d Inc., Rafcor, Group v. 330 6. See Embree Const. 1992, writ) (“Where (Tex.App. a ... —Dallas 487, 916, (1992); Welch v. 411 S.E.2d 925 N.C. exists, principal agent relationship can be 208, Services, Bancorp Management 296 675 Or. no tortious interference with a as a contract 172, (1983); Phillips v. Educ. P.2d 177 Montana Welch, 548, law”); matter of Baker v. 735 S.W.2d 419, 154, Ass’n, (1980); P.2d 158 187 Mont. 610 1987, (Tex.App. [1st Dist.] 549 —Houston Wash., Agency 600 v. Metro. Nickens Labor dism’d). 813, (D.C.App.1991); v. Yonk- 820 Murtha A.2d Ass’n, 913, Inc., 45 411 ers Care N.Y.2d Child Co., Nordling 4. See v. Northern States Power 478 219, 220, 865, (1978); 383 N.E.2d 866 N.Y.S.2d 498, (Minn. 1991); v. N.W.2d 505-06 Bradburn 247, (Miss. Burchfield, 481 So.2d 255 Shaw v. Stores, Inc., 186, S.C. 255 S.E.2d Colonial 453, 273 1985); Incorporated, 108 N.H. Griswold v. Heat (1979); Busbin, Georgia 455 Power Co. v. 183, 119, (1967). Alfred A.2d 188 See also 229 612, 442, (1978); 242 Ga. S.E.2d 444 Bleich 250 Avins, Inducing Corporation Liability 123, Serv., Md.App. v. Florence Crittenton 98 632 55, Contract, L.Q. 43 56- Its CORNELL Breach 463, (1993); Temple University, 475 v. A.2d Nix 60, (1957). 369, 1132, 65 (1991); Pa.Super. 408 596 A.2d 1137 Ass’n, 765 Cronk v. Intermountain Rural Elec. 619, (Colo.App.1988); Prop P.2d 623 Cedar Hills 1296, Shurett, So.2d 1297 7. Perlman v. 567 See 673, Federal, So.2d 676 erties v. Eastern 575 (Ala.1990); Hosp., Wright v. 412 Mass. Shriners Inc., R.S.C.D.B., (Fla.App.1991); Fields v. 865 1241, (1992) 469, (defining 1246 589 N.E.2d 877, Platt, (Mo.App.1993); Martin v. 879 malignant purpose, spiteful, malice "for 1026, 688, (1979); Ind.App. 179 386 N.E.2d 1027 interest."); corporate legitimate unrelated 56, Conn.Supp. Murray Bridgeport Hosp., v. 40 Savings, Roy 525 v. Woonsocket Institution for 610, (1984). 480 613 A.2d 915, (R.I.1987) (defining legal malice as A.2d 919 justification."). harm without “an intent do 328, Stockstill, 869 S.W.2d 334- See Forrester v. Fashions, (Tenn.1994); Spurney, to 5 Inc. v. 35 9 80, Phillips, Eggleston 838 S.W.2d 8. See v. 228, (La.1989); Davenport Ep v. 538 So.2d 231 Helicopter Lay Air- (Mo.App.1992); v. Louis St. 1110, Olympic (Wyo.1987); perly, 744 1114 P.2d 173, Inc., (Mo.App.1993); ways, 178 Products, 596, 869 S.W.2d Lloyd, 611 Fish Inc. v. 93 Wash.2d Hosp., Memorial 147 737, Wagenseller Scottsdale (1980); v. May v. Fe Trail Santa P.2d 1025, 370, (1985). 388, 390, See 710 P.2d Ariz. Transportation 189 Kan. 370 P.2d (Mo. Enoch, Meyer (1962); Philip also Bradley v. Morris (1991); App.1991). Mich.App. Olivet 486 N.W.2d by corporations ests having good are served faith belief that what he does is for clear and candid advice their officers the best interest of the agents. Fear of decision officer or director (and would tend limit such advice. litigate Conse- thereby pay) refuse to officer, director, quently, disputed corporation em- claim ployee a corporation acts within legally justified. general range authority, and his First, theory either under Hollo- —whether substantially actions are motivated an way acting faith belief that intent corpo- to further the interest of the what he did was for the best interest of the
ration, in claims of intentional interference
corporation which
jury
was included
employment,
officer,
the action
instruction and which
erroneously
the court
director,
employee
is considered to be
standard,
assumes is
or whether he was
the action
and is entitled
general scope
within the
his
immunity
liability.
the same
rate
and for
benefit
Id. at
Consequently,
334-35.
would hold
which is the standard I would
that a
legally
adopt Holloway’s
officer or
presi-
mere status as the
—
justified
dent,
with a contract
largest
be-
director and
shareholder of
tween
Holligan,
and a third
if the
Inc. does
legally justify
officer or
acts within the
contracts between Hol-
corporate authority
ligan,
the benefit
Inc. and Skinner as a matter of law.
*15
Second,
party attempting
“[a]
to overcome
finding
fact
adverse
as a matter of law
IV.
hurdles_
must surmount two
[T]he rec-
I
Holloway,
now consider whether
as the
ord must
examined
sup-
be
for evidence that
president,
largest
director and
shareholder of ports
jury’s finding,
ignoring
while
all
Inc.,
Holligan,
legally justified
was
in inter-
contrary....
[I]f
evidence to the
there is no
fering
Holligan,
with the contracts between
support
answer,
evidence to
the fact finder’s
Inc. and
as a
Skinner
matter
law. Howev-
then, the
record
entire
must
examined to
er, it
Holloway
is unclear whether
arguing
contrary proposition
see if the
is established
president,
his status as the
director and
as a
matter
law.” Sterner Marathon
largest
of Holligan,
legally
shareholder
Inc.
Oil
officer, director, employee, or substantial Y. may legally shareholder of a I also believe that there is more than a induce the support jury’s contrac- scintilla of evidence to obligation, provided tortiously tual finding Holloway he acts in the interfered n withthe contract between Holligan, Inc. Holloway president, di-
Skinner. was the largest Holligan, shareholder of
rector and happened at
Inc. and controlled what Holli- 1984-85,
gan, During Holligan, Inc. Inc. was problem.
suffering a severe cash flow As a officer, required Holloway was
prioritize competing claims because between Inc. meet all
Holligan, was unable to obli-
gations July came due.
Holligan, Inc. defaulted on Skinner’s note However, in royalty agreements. 1984- $24,000 Holloway salary raised from $33,750, 1985-86, Holloway raised $33,750 $44,500. salary supports contention that
evidence Skinner’s corporation to induced the favor salary
his “claim” for an increased over Skin- past royalty
ner’s claim for due note and
agreement payments. Although Holloway justify
attempted salary by his increased employees termination several duties,
assumption of their I believe that is more than a scintilla evidence jury’s
support finding tor-
tiously interfered with the contract between
Holligan, Inc. and Skinner.
Consequently, dissent. Clark, Galligan A.
Robert L. and Todd Weslaco, petitioner. McALLEN, Petitioner, OF CITY Gonzales, A. H. Jr. and Ricardo Servando Ramos, McAllen, respondents. Angel DE LA and Alma GARZA Justice, OWEN, opinion of delivered the Garza, Respondents. De La PHILLIPS, Court, in Chief which No. 94-1139. HIGHTOWER, Justice, GONZALEZ, HECHT, GAMMAGE, ENOCH,
Supreme Court of Texas. Justices, join. May presents case pit duty to make caliche
the owner of a are not pit for or to warn those who safe ad- traveling upon the with reasonable care duty. joining hold highway. We May Robert On Garza sixteen-year De La passenger Aaron old notes there was more than against Holloway. action a scintilla of evidence that acted to Therefore, judgment. I concur the Court’s individual serve Ms interests the detri- law, ment of a matter As HIGHTOWER, Justice, dissenting. prevail Skinner on Ms cannot tortious inter- against Holloway disagree ference action I because dissent because significant opimon evidence that court’s at least three