American Surety Co. v. San Antonio Loan & Trust Co.

• Decision Date: 14 November 1906
• Citation: 98 S.W. 387
• Parties: AMERICAN SURETY CO. OF NEW YORK et al. v. SAN ANTONIO LOAN & TRUST CO. (RAPP et al, Interveners).<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

98 S.W. 387

AMERICAN SURETY CO. OF NEW YORK et al. v. SAN ANTONIO LOAN & TRUST CO. (RAPP et al, Interveners).^*

Court of Civil Appeals of Texas.

November 14, 1906.

Rehearing Denied December 19, 1906.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Bexar County; J. L. Camp, Judge.

Action by the San Antonio Loan & Trust Company against Thos. Lonergan & Co., American Surety Company of New York and others. From a judgment for plaintiff, defendants appeal, and from a judgment for defendants against intervenors, intervenor John W. Rapp appeals. Judgment for plaintiff affirmed, and judgment for intervenors reversed.

Newton & Ward, Thos. W. Bullitt, P. H. Swearingen, and Stayton & Berry, for appellants. Denman, Franklin & McGown, for appellee.

NEILL, J.

This suit was brought by the San Antonio Loan & Trust Company, a domestic corporation, against Thos. Lonergan & Co., a firm composed of Thos. Lonergan and P. S. Larkin, and the American Surety Company of New York, a private corporation chartered by that state, as surety upon the contractor's bond of the said Lonergan & Co., to recover the sum of $45,000, with interest, for an alleged breach of a contract entered into between Thos. Lonergan & Co. and the San Antonio Loan & Trust Company by which it is alleged the former agreed to erect and finish a certain building for the latter, and for the performance of which contract on part of Lonergan & Co. the American Surety Company of New York became the surety on their bond.

The plaintiff, as its cause of action, alleged in its petition substantially:

That on the 21st day of February, 1899, it entered into a contract in writing with Thos. Lonergan & Co. whereby they obligated themselves at their own cost and expense to erect and build for plaintiff, according to the plans and specifications made by Alfred Giles, architect, at the southwest corner of Navarro and Commerce streets, of the city of San Antonio, a five-story building above the ground with a cellar, fronting north on Commerce and east on Navarro streets, fronts on said streets to be of terra cotta set and pointed up in the best manner, the entire work to be strictly in accordance with said drawings and specifications, and to be done under the directions of and to the entire satisfaction of said architect, whose decision was to be final and conclusive on all points, and to be complete in every respect within seven months from the date of the execution of the contract; for which the plaintiff agreed to pay them $47,500 at the time and on the terms and conditions provided by the plans and specifications and stipulations therein. Copies of the contract, specifications, and plans were attached to and made a part of plaintiff's petition, which alleged that they were all executed and delivered as parts of the entire contract. That in accordance with the requirements of the contract, and at the time of its execution and delivery as a part thereof, Thos. Lonergan & Co., as principals, and the American Surety Company of New York, as surety, executed and delivered to plaintiff their certain bond, binding themselves, heirs, legal representatives or successors, to pay plaintiff, its successors or assigns, $45,000 lawful money in San Antonio, Tex., and that the bond was conditioned as follows:

"The condition of this bond is that, whereas, said Thos. Lonergan & Co. have contracted in writing with said San Antonio Loan & Trust Co. to build for said San Antonio Loan & Trust Co. a certain building at the corner of Navarro & Commerce streets in city of San Antonio, Bexar county, Texas, according to certain plans, drawings and specifications prepared by Alfred Giles, architect, of San Antonio, Texas, to which reference is hereby made. Now, if the said Thos. Lonergan & Co. shall strictly and faithfully carry out and perform the said contract, so entered into with said San Antonio Loan & Trust Co. in all particulars as required by the terms thereof and to the full approval of said architect, shall complete said works in the time required by this contract, shall save said San Antonio Loan & Trust Company harmless from all damages growing out of a negligent or unskillful performance of work under said contract, or resulting from any violation of any of the provisions contained in said specifications, or from a failure to comply with the same, from any cause whatever, which specifications and drawings are hereby specially referred to, and made a part hereof, shall at the completion of said building, pay all mechanics, laborers, or workmen for services rendered upon the same, all materialmen's bills for stone, lumber and other materials furnished for and put into said building, shall save said San Antonio Loan & Trust Co. harmless from all claims, from others, for work done, or materials furnished on said building, and from all liens upon said contract, and will pay, or see paid, all just claims on said building, then this instrument to be null and void. Otherwise to remain in full force and effect." A copy of this bond was attached to and made a part of plaintiff's petition.

That on the 26th day of April, 1899, plaintiff and Thos. Lonergan & Co. entered into a certain supplemental contract by which Thos. Lonergan & Co. agreed, in consideration of the sum of $4,450, to erect and build for plaintiff, as per plans and specifications made by Alfred Giles, architect, a certain west wall of the building in process of construction under the preceding or main contract between said parties, which wall was to be strictly in accordance with drawings and specifications prepared therefor by said architect, and to be of skeleton construction with brick filling and to be 8 inches thick to the fifth floor, and the fifth floor to be 12 inches thick; and that by this supplemental contract a month's additional time was allowed on the original contract. That upon the execution and delivery of said supplemental contract the American Surety Company of New York executed and delivered to plaintiff its certain agreement thereto, in substance, as follows: "It is hereby agreed that the terms of this bond [referring to bond hereinbefore set out] shall include the building of the west wall on the terms and agreement entered into April 26th, 1899, between the San Antonio Loan & Trust Company and Thomas Lonergan & Company, a copy of which is attached hereto, and that said contract shall also be fully covered by this bond." And that such agreement and stipulation was indorsed upon the original bond. That after the execution and delivery of said contract and bond Thos. Lonergan & Co. began work thereunder upon said building, and continued to work thereunder until about the 7th day of May, 1900, when the same fell down and was utterly destroyed, being still in the possession and under the control of Thos. Lonergan & Co., not having been completed or delivered plaintiff when they ceased to work thereon, since which time they have taken no steps to complete the building or carry out their contract or any part thereof, but have failed and refused so to do. And that, though the American Surety Company of New York was demanded by plaintiff to comply with the terms and provisions of said contract and bond, it has failed to do so.

That plaintiff, prior to the falling of said building and abandoning of said contract, in strict compliance with its obligations specified therein, paid to Thos. Lonergan & Co. for work done by them under the contract in attempting to construct the building the sum of $25,720. That the payments of the several amounts constituting said sum were made in compliance with the provisions of the contract which stipulated they should be made as the work progressed; it being provided that such payment or payments should not be construed as acceptance of the work, but that Thos. Lonergan & Co. should be liable for all conditions of the contract until all the work should be finished and completed. That said contracts provided that all labor and material in the building should be first class in every respect, and that the building should be erected in a thorough manner, and that the contractor should perform the whole of the work in the best manner with the best and most approved materials, and provide, fix, and erect all works which are specified, represented, or included in or by said specifications or drawings, or either of them, which may be required for rendering every particular of said work complete and perfect. That it further provided that the contractors should be held responsible for all losses, whether from fire or otherwise, and that they should save the owners harmless from any and all liens and hold the owner free from any and all liability, and that the contractors should fully insure the building, and in the policy specify "San Antonio Loan & Trust Company interest to be fully protected," so that it will be at no loss. That Lonergan & Co. failed and refused to insure said building, especially against injury from winds, storms, lightnining, etc., during construction, as they agreed to do. That they also failed in their agreement to keep the same free from liens, and that on account of such failure liens were fixed thereon by third parties for material furnished in its construction aggregating $4,454.11, which plaintiff may be compelled to pay, in order to free the lot upon which it was being constructed from said liens. That after the building fell plaintiff demanded of Thos. Lonergan & Co. and the American Surety Company of New York that they proceed in the construction thereof, and also to know whether they would so proceed or had abandoned the contract, but they refused to proceed with the construction, and expressly disclaimed having abandoned the contract. That the building in falling filled the adjacent streets of the city with débris, which Lonergan & Co. failed and refused to remove, and that the city of San Antonio, in the exercise of its police power, in order to...