United States Fidelity & Guaranty Co. v. Henderson County , 1923 Tex. App. LEXIS 416 ( 1923 )

WALKER, J.

In 1919, Henderson county entered into a written contract with Williams, Burk & Co., for the improvement of one of its public roads. The following provisions of the contract are material to the facts of this appeal:

“This agreement made this 29th day of December, 1919, by and between Henderson, county, Tex., represented by the commissioners’ court, party of the first part, and Wiliams, Burk & Co., composed .of J. P. Williams, T. J. Burk and W. W. Scarborough of Jaekson-viller Tex., his their executor, administrators, heirs, successors or assigns, party of the second part; and subject to the approval of the Texas State Highway Commission:

“Whereas, the said county, known as the party of the first part, desires to enter into a contract with the above-mentioned firm for the improvement of the road bridge highway No. 19, Job No. 108 ‘A’ in the said county, commencing at station 264 100 near six miles north of Athens, Tex., and extending thence to station 1003 1 20 or as far as the money available will construct in accordance with the provisions of the state statutes and of the notice to contractors, specifications, proposal, and plans marked- annexed hereto, and made part hereof, and

“Whereas, the party of the second part has been engaged in and now does such work and is fully equipped, competent and capable of performing the above desired and outlined work, and is ready and willing to perform such work in accordance with the provisions of the attached notice to contractors, specifications, proposal and plans, marked --, now wit-nesseth:

“That for and in consideration of the prices and agreement mentioned in the proposal hereto attached and made part of this contract, the said contractor agrees to do at his own proper cost and expense, all the work necessary for the improvement of road bridge No. 19 in Henderson county, in accordance with the provisions of the attached notice to contractors, specifications, proposal and plans which are made part of this contract, and in full compliance with all of the terms of the specifications and requirements of the engineer.”

The plans and specifications contained the following .provisions material to this appeal:

“Contract. The agreement covering the performance of the work. It shall include the plans and specifications' and shall be held to cover any or all work, labor, implements, machinery, equipment and materials that áre required to complete the work indicated in a proper and satisfactory manner. Work shown on the plan^ and not mentioned in the specifications, or vice versa, shall be done the same as if shown by both, and in case of conflict the decision of the engineer shall be final and conclusive.”

“Contractors’ Bond. The contractor shall fine a guaranty of his faithful performance of said contract, a good and sufficient bond in compliance with article 5623a, Senate Bill No. 79, chapter 143 of the 34th legislature 1915, which requires that the contracts less than $1,000 a bond for full amount of contract be given, for those over $1,000 and not over $5,-000, three-quarters of contract price, and those over $5,000, and not over $100,000, one-half contract price, those over $100,000 one-third contract price he given. Said bond to be furnished by a surety company authorized to do business in the state of Texas, or responsible persons acceptable to party of the first part. In the latter instance, it is necessary that those signing bond be certified as financial solvent to full amount of bond.”

Williams, Burk & Co., as principal, and United States Eidelity & Guaranty Company, as surety, executed to Henderson county the following bond:

“Contractors’ Bond. ‘Know all men by these presents: that we, Williams, Burk & Co., of Jacksonville, Cherokee county, and state of Texas, principal, and United States Eidelity & Guaranty Company of Baltimore, Md., as surety, are held and firmly bound unto the county of Henderson, state of Texas, in the penal sum. of forty-three thousand two hundred twelve . and 32/ioo dollars ($43,212.32) lawful money to the United States, to be paid to said county or to its certain attorneys or assigns, for which sums of money, well and truly to be paid¡ we bind ourselves, our heirs, successors,. executors, and administrators, jointly and severally, firmly by these presents.

' “Sealed with pur seals and dated this eighth day of January, A. Í). 1920.

“The condition of this obligation is such that if the said bounden principal Williams, Burk & Qo. shall in all things well and truly perform all-the terms and conditions of the aforegoing' contract, to be by them him performed, and within the time therein mentioned, and shall pay all lawful claims for labor performed in and about the construction of said road bridge, and shall have paid and discharged all liabilities for injuries which have been incurred in and about the said construction, under the operation’ of the statutes of the state, then this obligation is to be void; otherwise to be and remain in full force and virtue.

“Done in the presence of: Williams, Burk & Co., by ’W'. W. Scarborough. [Seal.] United States Eidelity & Guaranty Company, by John Smallmon, Atty. in Fact. [Seal.]

“I certify that the above is a true and correct copy of the original. Chas. H. Kendall, Asst. State Hwy. Engr. [Seal.]”

• As the contractors did not complete the work to the satisfaction of Henderson county, it took charge of the work and had it completed by other contractors and then filed suit ^gainst the original contractors and their surety on the foregoing bond. After the suit was filed, a large number of claimants intervened upon the allegation that the contractors and their sureties were liable to them upon the bond for labor and material furnished in the construction of the road. Pending trial, the contractors and the surety company settled the claim of Henderson county under. a compromise agreement, by the terms of which they paid the county $8,000, which agreement was embodied in a judgment duly entered of record. W. R. Bishop, the regular district judge of Henderson county, was disqualified to try this case, and upon his certificate to that effect, the Governor designated Judge D. D. Guinn of the Second district, who proceeded to try the case on the 10th day of April, 1922, at a special term of the court called by Judge Bishop. This appeal is prosecuted by the contractors and their surety from a judgment entered against them in favor of the several interveners upon the answers of the jury to special issues. The transcript in this case contains about 1,000 pages, the statement of facts 260 pages, and the briefs about 500 pages. Appellants are urging 123 assignments of error, and appellees many cross-assignments. While under one style and number, this appeal, in effect, embodies about 30 different records, relating to the several interveners, many of them presenting questions peculiar to the several interventions. Manifestly, it is impracticable to take up appellants’ many assignments and discuss them as they relate to each intervention. We believe it is sufficient to dispose of this appeal by discussing the general propositions involved and then relate them to the several interventions, as hereinafter indicated.

The court did not err in overruling appellants’ plea of abatement, which they urged upon the proposition that under articles 6394f and- 6394j, Texas Complete Statutes (Vernon’s Sayles’ Ann. Civ. St. 1914, arts. 6394f, 6394j), this suit could not be tried until twelve months after the completion of the work. Wé could dispose of this proposition upon the ground that appellants have made no statement showing when the work was completed. The record shows that service was complete upon defendants at the August term, 1921,- and as the case was not tried until April 10, 1922, it may be the work had been completed more than twelve months when the case was tried. But, under the cited articles, the court did not err in refusing to abate the suit. These articles provide that claimants under the bond of a public contractor must institute their suit or intervene in the suit of the state or municipality within twelve months after the completion of the work. It is also provided that the suit cannot be tried until one week after the completion of three weeks’ publication of notice of the pendency of such suit. It is conceded that the notice was published and that more than one week had elapsed after such publication before the case was tried. The requirement that the lis pendens notice be published constitutes a limitation upon the time .within which interventions may be filed-While, in general terms, it is provided that such interventions may be filed within one year from the completion of the work, yet giving effect to all the provisions of the act, the statute requires that they be filed before the case is tried, and if the case is tried after due publication of lis pendens notice has been made, all interventions not filed are barred, though the one-year period of limitation has not matured. We have not been cited to any decision of this state construing the articles cited supra, but they are in identical terms, as to their conditions and obligations, with section. 6923, United States Compiled Statutes. We have given to our statute the same construction given by the federal courts to that article. Bank v. United States, 214 Fed. 200, 130 O. C. A. 548; Baker Contract Co. v. United States, 204 Fed. 390, 122 C. C. A. 560; United States v. Wells (D. C.) 203 Fed. 146; Illinois Surety Co. v. United States, 212 Fed. 136, 129 C. C. A. 584; United States v. Illinois Surety Co., 228 Fed. 304, 142 C. C. A. 596; Pederson v. United States, 253 Fed. 622, 165 C. C. A. 248.

Judge Bishop’s disqualification to try this case did not disqualify him to call the special term of court at which it was tried. The call for the special term was general, for the trial of all cases on the docket, and was not limited to' this ease, nor any other particular case or cases. The call for the special term was not an order or judgment in this case, but was an exercise of a constitutional and statutory authority inherent in him as the regular judge of Henderson county in relation to terms of court for that county. No other judge had authority to call a special term of court for Henderson county.

While article 5623a (Vernon’s Ann. Civ. St. Supp. 1918, art. 5623a) was referred to in the plans and specifications, which required that the bond be executed under its provisions, we think the reference to that article was merely incidental and obvious error. When the conditions of the contract and bond are examined in the light of the several statutes of this state, we think it clearly appears that article 6394f was meant, because that article alone has relation to public contracts. Article 5623a refers to private contracts. The conditions of the bond and contract, as executed, are the conditions of article 6394f, and not of article 5623a. Therefore, in construing the contract and bond, the reference to article 5623a should be disregarded and the contract construed in the light of and by the terms of article 6394f. Trinity Portland Cement Co. v. Lion Bonding Co. (Tex. Com. App.) 229 S. W. 483.

As we have said, our statutes (articles 6394f-6394j) are identical in their conditions and requirements with section 6923, ■United States Compiled Statutes, which deal with the same subject in its relation to the federal government. Having adopted the federal statute, the construction given it by the federal courts should be persuasive, if not conclusive, of the proper construction of our statute. In Brogan v. National Surety Co., 246 U. S. 257, 38 Sup. Ct. 250, 62 L. Ed. 703, L. R. A. 1918D, 776, the Supreme Court of the United States held that the conditions of a contractor’s bond executed under section 6923 . protected one who furnished supplies to a contractor when the work was done under conditions which imposed upon him the duty and necessity of furnishing board and lodging for his employees, but also clearly held that such supplies were not .included in the bond unless that necessity existed. Speaking for the court, Mr. Justice Brandéis said:

“The Circuit Court of Appeals deemed immaterial the special circumstances under which the supplies wpre furnished and the findings of fact by the trial court that they were necessary to and wholly consumed in the prosecution of the work provided for in' the contract and bond. In our opinion these facts are not only material, but decisive. They establish the conditions essential to liability on the bond. The bare fact that the supplies were furnished to the contractor and were consumed by workmen in its employ would have been immaterial. A boarding house might be conducted by the contractor (like some company stores concerning which states have legislated. Keokee Consol. Coke Co. v. Taylor, 234 U. S. 224, 58 L. Ed. 1288, 34 Sup. CR Rep. 856) as an independent enterprise undertaken solely in or-; der to utilize the opportunity for separate and additional profit afforded by the congregation of many laborers in the particular locality where the public work is being performed. The laborers might resort to such a boarding house in the exercise of individual choice in the selection of an eating place. Under such circumstances the furnishing of supplies would clearly be a matter independent of the work provided for in the contract, and would not entitle him who had furnished the groceries used in the boarding house to recover on the bond. But here, according to the undisputed facts and the findings of the trial court, the furnishing of board by the contractor was an integral part of the work and necessarily involved in it. Like the supplying, of coal to operate engines on the dredges, it was indispensable to the prosecution of the work, and it was used exclusively in the performance of the work. Groceries furnished to a contractor under such circumstances and consumed by the laborers, are materials supplied and used in -the prosecution of the public work. The judgment of the Circuit Court of Appeals is therefore reversed and that of the District Court áfiirmed.”

But it was held in Hastings Co. v. Lowrance, 252 Fed. 122, 164 C. C. A. 234, that feed for mules was covered by such.a bond. The court said, referring to the case last cited:

“In that case the location of the work made it necessary for the contractor to provide board and lodging for the men on the ground. He did so under an arrangement by which he was to deduct a stated amount monthly frdm their wages. Protection under the statutory bond was given one who furnished him with groceries and provisions. It was held that the supplies had a proximate relation to performance of the contract work. Though the circumstances of the case before us are not fully stated, we do not think it can be said from the face of the complaint that the furnishing of the feed for the teams was a casual transaction, but indirectly related to the performance of the levee contract. It is averred that the feed was ‘used and consumed * * * in the prosecution and execution of the earthwork.’

“The judgment is reversed, and the cause is remanded for further proceedings in conformity with this opinion.”

See, also, City of Portland v. New England Casualty Co., 96 Or. 48, 189 Pac. 211.

In this case, it was not made to appear, either by pleadings or proof, that any necessity existed such as was reflected in the Brogan Case, supra, requiring the contractors ánd subcontractors to furnish board and lodging for their employees. Therefore, under the authority of that case, the court erred in overruling appellants’ exceptions to the interventions based on grocery bills, and having overruled all exceptions, he again erred, when the facts developed, in submitting such issues to the jury. But we think the evidence fully sustains a necessity for the use of mules upon the work, and that the item of feed bills comes within the rule announced in Hastings Co. v. Lowrance, supra. The court correctly overruled all exceptions against such items, and permitted them to go to the jury. However, on the whole record, as presented to us, we are unable to say what part of the claims of LaRue & Barron Company, L. E. Cook, and J. F. Ash as an assignee of L. E. Cook, were for groceries and how much for feed bills. The judgments then in favor of these parties will have to be reversed and their claims remanded for a new trial, with instructions to the trial court to exclude all items listed on their interventions except those for feed. It appearing that the interventions of Athens National Bank, Jeff Lewis, and W. C. Maxwell are wholly for groceries, the judgment of the trial court in their favor is here reversed and judgment rendered against them. And it appearing that the interventions of B. F. Garlington and Robinson Bros, are entirely composed of feed items, it is ordered that the judgment of the trial court in their favor be affirmed; and it further appearing that J. F. Ash intervened setting up an - account for feed sold by him on which there was a balance due of $2,070.60, as found by the jury, and on which judgment was entered in his favor, it is ordered that such judgment be affirmed.

Unless excepted to, an, allegation that certain interveners were assignees of claims for material sold by other parties to the contractors was sufficient. If the defendants desired a more particular statement of the nature and character of the assignments, their date, and whether oral or in writing, they should have demanded it by proper exceptions. We overrule all of appellants’ assignments of error on this point. But though the allegation was not excepted to, when it developed upon the trial that certain assignments were in writing, the, court committed reversible error in receiving parol evidence of the contents of such assignments, in the absence of a-proper excuse for not offering the originals. In Warren v. Sigmond Rothschild Co. (Tex. Civ. App.) 240 S. W. 1031, it was said:

“In order to recover upon an assignment of a chose in action, it is essential that plaintiff establish: First, that there was a cause of action; second, that it' was such a cause of action as could be assigned; and, third, that it has been assigned.”

And in Standifer v. Bond Hardware Co. (Tex. Civ. App.) 94 S. W. 144, it was said:

“After having disclosed that the transfer was in writing, however, oral proof of the assignment would be rejected, on the ground that it was not the best evidence.”

We have reversed the interventions by our order supra to which this assignment relates, ■ but upon a new trial this portion of the evidence should be given effect.

The contractors and their surety were primarily liable to all who furnished material “required to complete the work” within the terms of the contract and bond. It follows then that the court did not err in giving holders of such claims judgment against appellants without' requiring them first to exhaust their remedy against the subcontractors who purchased such material.

The issue was raised that A. W. Per-due did -the work and furnished the material which formed the basis of his intervention as a contractor and not as an employee of B. B. Johnson. While it appeared that Johnson was the owner of the teams and tools and was to receive from Perdue, as rent for such teams, all above a certain sum, yet Per-due was to have charge of the teams, do the work, pay all the expenses, collect for the service, and pay Johnson the balance, if any, above the agreed amount. Under this contract, he did the work, expended the money, and purchased the material which formed the basis of his intervention. No error was committed in submitting his claim to the jury, nor in its trial.' Therefore the judgment in-his favor is affirmed.

The contract, construed in connection with the plans and specifications which were made a part thereof, provided that the original contractors could not sublet the work without the written consent of the state highway engineer. The fact that this consent was not secured, and that a large part of the work was done by subcontractors without that consent, did nrft release the United States Fidelity & Guaranty Company from its suretyship. This provision was for the protection of Henderson county and was not a condition of the suretyship of the United States Fidelity & Guaranty Company. By accepting the work of the subcontractors without protest, this provision was waived by Henderson county. The testimony, therefore, of J. M. Royal, one of the “special commissioners of the road bond,” and his two associates, to the effect that they did not require the subcontractors to secure the written consent of the state highway commissioner, was not prejudicial to any interest or right of the surety company.

While as an abstract proposition the court erred in permitting interveners to offer in evidence the compromise judgment between the contractors and Henderson county, it was an immaterial error, and on the facts of this case, as a matter of law, did not prejudice the rights of appellants. The court correctly instructed the jury that appellants were liable for all material required to complete the construction of the road. The only issue for the jury was the amount or balance due on each intervention for such material. On that issue, the admission of the compromise judgment could not have prejudiced appellants,

What we have just said disposes of appellants’ criticism of the following paragraph of the court’s charge:

“You are charged that under the contract introduced in evidence signed by the county and Williams, Burk & Oo. and the bond made by the United States Fidelity & Guaranty' Company, is such a contract and bond as a cause of action can be maintained upon, and that if Williams, Burk & Co. failed to complete the road in accordance with such contract or failed to pay off the labor or material in the completion of such road, that both Williams, Burk & Co. and the surety company are liable to any party furnishing labor or material for building, or constructing such road.”

This charge was not upon the weight of the evidence, nor open to the construction that the jury were authorized to find in favor of an intervener even though his claim may have been paid in full. .In this connection, we overrule all of appellants’ exceptions to the issues as submitted to the jury. They were not upon the weight of the evidence.

Appellants specially plead that a novation was made in the contract qfter the execution of the bond, whereby a large amount of work within the corporate limits of the city of Athens was added to the original contract. This issue was properly submitted to the jury and found by it against appellants’ contention. The finding is fully supported by the evidence.

Of course, appellants advance a sound proposition—and the court so charged the jury— when they say that the burden rested upon each intervener to show that the items sued for by him were actually used in the construction of the road. They attack the judgment in favor of many of the interveners on the ground that the evidence does not show that their supplies were used in the construction of the road. This assignment is directed against those interveners whose judgment we have reversed and remanded and those we have reversed and rendered, .as well as the Hawn Lumber Company and the personal claim of J. F. Ash, whose judgment we affirmed. It is not necessary to discuss the evidence as to these interventions which we have reversed and remanded and reversed and rendered. We think the testimony is sufficient, without quoting it, to raise that issue in favor of J. F. Ash. Appellants ‘make the statement that no evidence was offered connecting the claim of Hawn Lumber Company with the construction of the road. This statement is not controverted by the appel-lees, though they have filed a long brief herein. Therefore the judgment in its favor must be reversed and remanded, because without support.

We sustain the cross-assignments of J. F. Ash, Hawn Lumber Company, LaRue & Barron Company, Williford Lumber Company, and Dean Jackson, whereby they complain of the action of the court in refusing to submit certain of their claims to the jury. While the evidence was not conclusive on the issue that the items furnished by them were used in the construction of the road, we believe the issue was raised.

What we have said disposes of all of appellants’ assignments of error, and propositions thereunder, and appellees’ cross-assignments, in so far as we understand them in their relation to the several interventions. The judgment of the trial court is affirmed as,to all interventions not discussed byname.

Affirmed in part, in part reversed and rendered, and in part reversed and remanded.