American Employers' Ins. Co. v. Roddy

• Decision Date: 09 June 1932
• Docket Number: No. 1562-5901.,1562-5901.
• Citation: 51 S.W.2d 280
• Parties: AMERICAN EMPLOYERS' INS. CO. et al. v. RODDY et al.
• Court: Texas Supreme Court

51 S.W.2d 280

AMERICAN EMPLOYERS' INS. CO. et al. v. RODDY et al.

No. 1562-5901.

Commission of Appeals of Texas, Section A.

June 9, 1932.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Suit by the E. Nelson Manufacturing & Lumber Company against S. E. Roddy, American Employers' Insurance Company, and others, in which interventions were filed. Judgment for plaintiff and interveners was reversed and rendered in part and affirmed in part by the Court of Civil Appeals, 34 S.W.(2d) 624, and the defendant insurance company and others bring error.

Judgment of trial court and that of Court of Civil Appeals reversed, and cause remanded, with instructions.

Will C. Thompson and Thompson, Knight, Baker & Harris, all of Dallas, Tom P. Scott, Trippet, Richey & Sheehy and Sleeper, Boynton & Kendall, all of Waco, and J. B. Talley and John B. Daniel, both of Temple, for plaintiffs in error.

A. L. Curtis, of Belton, and Walker Saulsbury and Cox & Brown, all of Temple, for defendants in error.

HARVEY, P. J.

On May 30, 1928, S. E. Roddy and wife, as parties of the first part, entered into a certain building contract with Ray Phillips, as party of the second part, under which contract the latter became bound to construct a building to be used by the Roddys as a home, on a lot in the city of Temple belonging to the Roddys. The agreed contract price of the work was $31,250, and Phillips agreed to furnish all labor and material for said work. It was provided in the building contract that the Roddys were to execute to Phillips a note of even date, for said contract price, and that same was to mature and be payable in installments as follows:

"(a) Eighty per cent of the value of the work and material actually incorporated in the building in accordance with estimates thereon by J. H. Davis, or his representative, as the parties of the first part, on every second Saturday morning after the work is begun, until the full sum of $11,500.00 has been paid;

"(b) The balance of said note, that is, $20,000.00, shall mature and be paid when said building and improvements are completed in accordance with said plans and specifications and in a manner satisfactory to the parties of the first part, the said J. H. Davis, architect, or his representative, and upon the furnishing by the party of the second part unto the parties of the first part as owners, or said J. H. Davis, as architect, or his representative, of proofs satisfactory to said owners, said Davis or his representative, that all labor and material bills incurred for labor and material entering into said work have been paid in full. * * * Said party of the second part may assign said note, together with all liens securing the same."

Contemporaneously with the execution of said building contract, the Roddys executed to Phillips a note for the contract price of $31,250, which note was made payable in installments as provided in the building contract. The note expressly refers to the building contract, and the above-quoted provisions of said contract are embodied in the note.

In the building contract the Roddys, for the purpose of securing the payment of said note, in accordance with its terms, gave a mechanic's lien on said lot and improvements. Said contract was duly filed for record on June 6, 1928, and duly recorded in the mechanic's lien records of Bell county, where said property was situated. The building contract provided that Phillips should give a bond, payable to the owners, in the sum of $15,000, conditioned that he (Phillips) "will well and truly and faithfully perform each of the covenants and conditions in this contract agreeably to said plans and specifications." In connection with the said building contract, Ray Phillips, as principal, and the American Employers' Insurance Company, as surety, executed a bond which, after reference to said building contract, provides as follows:

"Now, therefore, for the purpose of securing the said S. E. Roddy and Mrs. Dora Roddy, their heirs or assigns, in the true and faithful performance of said contract, together with all of the covenants and obligations of the said Ray Phillips, as contractor, therein set forth, and to guarantee the true and faithful performance of said contract and the payment of all claims of each and every subcontractor, workman, laborer, mechanic and furnisher of material unto the said Ray Phillips, as contractor, arising or growing out of said contract, their heirs or assigns as their interest may appear, we, the said Ray Phillips, as principal, and the other subscribers hereunto as surety acknowledge ourselves indebted to and bound to pay to the said S. E. Roddy and his wife, Mrs. Dora Roddy, owners, their heirs, executors, administrators or assigns, the sum of Fifteen Thousand Dollars ($15,000.00) for the payment of which well and truly to be made we bind ourselves, our heirs, executors and administrators, jointly and severally by these presents.

"The conditions of this bond, however, are such that if the said Ray Phillips, as contractor, shall truly and faithfully do and perform all and every the covenants and conditions of said contract herein promised by him to be done, kept and performed, and shall truly and faithfully pay all claims of each and every subcontractor, workman, laborer, mechanic and furnisher of material, growing or arising out of said contract, then and in such event this obligation is to become null and void and of no further force or effect, otherwise to remain in full force and effect.

"This obligation or any claim arising hereon may be enforced at Temple, Texas.

"Witness our hands on this the 30th day of May, A. D. 1928."

At the time the above bond was executed, Phillips executed to the insurance company an assignment in writing, reading partly as follows:

"And for the better protection of said Corporation, the undersigned, as of the date hereof, hereby assigns and transfers and conveys to it, the said American Employers Insurance Company, all right, title and interest of the undersigned in and to all the tools, plant, equipment and materials of every nature and description that may now or hereafter be upon said work, or in, or about the site thereof, including as well all materials purchased for or chargeable to said contract which may now be in process of construction, or storage elsewhere, or in transportation to said site, hereby assigning and conveying also all rights of the undersigned in and to all subcontracts which have been or may hereafter be entered into, and the materials embraced therein, and authorizing and empowering said Corporation, its authorized agents or attorneys, to enter upon and take possession of said tools, plant, equipment, materials and subcontracts, and enforce, use and enjoy the possession upon the following conditions, to-wit: This assignment shall be in full force and effect, as of the date hereof, should the undersigned fail, refuse or be unable to complete the said work in accordance with the terms of the contract covered by said bond, or in event of any default on the part of the undersigned under the said contract.

"In further consideration of the execution of the said bond, the undersigned does hereby agree, as of this date, that the said American Employers Insurance Company shall, as surety on said bond, be surrogated to all rights, privileges and property of the undersigned as principal and otherwise in said contract, and does hereby assign and transfer and convey to said Corporation all the deferred payments and retained percentages, and any and all moneys and properties that may be due and payable at the time of such breach or default, or that may thereafter become due and payable to said undersigned on account of said contract, or on account of extra work and materials supplied in connection therewith, hereby agreeing that all such moneys and the...