Associated Indemnity Corp. v. Walnut Hill Corp.

• Decision Date: 15 December 1948
• Docket Number: No. 4603.,4603.
• Citation: 220 S.W.2d 301
• Parties: ASSOCIATED INDEMNITY CORPORATION v. WALNUT HILL CORPORATION et al.
• Court: Texas Court of Appeals

220 S.W.2d 301

ASSOCIATED INDEMNITY CORPORATION v. WALNUT HILL CORPORATION et al.

No. 4603.

Court of Civil Appeals of Texas. El Paso.

December 15, 1948.

Rehearing Denied January 5, 1949.

Appeal from District Court, Dallas County, 101st District; Wm. M. Cramer, Judge.

Suit by the Associated Indemnity Corporation against the Walnut Hill Corporation, H. T. Robb, and others to recover certain sum as an earned premium due on workmen's compensation insurance policy and public liability insurance policy, allegedly issued for benefit of defendants. From a judgment for defendants other than H. T. Robb, the plaintiff appeals.

Judgment affirmed.

Irion & Cain, Dallas, Margaret A. Brand, Dallas, for appellant.

Holman Jenkens, Andrew Thuss, Jr., Lively, Alexander, George & Thuss, Dallas, for appellees.

SUTTON, Justice.

The appellant sued H. T. Robb, Carl C. Mays, Robert F. Thompson and Walnut Hill Corporation, a corporation, to recover $2916.67 as an earned premium due on two policies of insurance, one for workmen's compensation and one for public liability, alleged to have been issued for the benefit of the defendants. The trial was to the court and judgment was rendered for the plaintiff against H. T. Robb for the amount sued for, but in favor of the other defendants and from the judgment in favor of the other named defendants the plaintiff has appealed.

On request the trial court filed findings of fact and conclusions of law.

The record does not disclose an answer by H. T. Robb. The other defendants answered but no questions are raised on the pleadings and a statement of the pleadings is unnecessary.

The appellant on this appeal seeks relief only against Walnut Hill Corporation and as to it presents five points. They are:

That the trial court erred in holding as a matter of law that Robb, the contractor, was an independent contractor; in holding as a matter of law that the insurance premiums involved constituted a debt made on the credit of Robb; in holding as a matter of law that there was no express or implied promise on the part of Walnut Hill Corporation to become liable for the premiums; in holding as a matter of law that plaintiff did not look to Walnut Hill Corporation, as the owner, for payment of the premiums; and in holding that Walnut Hill Corporation is not liable for the premiums. 1, 4 and 5 are grouped as are 2 and 3.

Predicated on its points the appellant makes two contentions, first that the letter, which made the contract a "cost-plus" contract constituted the contractor the agent of the owner and rendered it liable for the premiums, and secondly, the owner having accepted the benefits and protection of the policies can not avoid liability for the premiums.

Walnut Hill Corporation, described as the "Corporation", (and we will so designate it here) on April 23, 1946, as the owner of a described tract of land of about 150 acres, entered into a contract with Robb & Company, a co-partnership, here referred to as "Robb", to construct on said land a pressure sewer system, a water distribution system and a sanitary sewer system, all satisfactory to the City of Dallas, and a storm sewer for drainage purposes, and a system of paved streets, concrete curbs and gutters, all to meet the specifications of the City of Dallas, for a consideration of $350,000.00. On April 25, 1946, Robb addressed a letter to the corporation wherein the contract is identified and the following proposition submitted:

"Irrespective of the fact that these contracts and agreements call for stated sums as consideration for the construction of this work and the profit and fee to be received by Robb & Company it is understood and agreed that you have the continuing option to pay the actual cost of labor, material and insurance in connection with this work plus a fee of 2½% of such cost in lieu of the figures mentioned in the contracts, notes and agreements which are today being executed and delivered."

The Corporation accepted the option in this language:

"The option contained above is hereby exercised and Walnut Hill Corporation will pay cost plus 2½% as mentioned hereinabove."

Based upon the quoted provisions of the letter and the acceptance the appellant contends as heretofore noted in its first contention, that the contract became a "cost plus contract" and by reason thereof constituted the contractor the agent of the owner and rendered the corporation liable for the premiums sued for.

In support of such contention it relies upon and cites Gilbert Mfg. Co. v. Connelle, Tex.Com.App., 265 S.W. 375; Smith v. Sanders, Tex.Civ.App., 128 S.W.2d 160; Smith v. Spencer-Sauer Lbr. Co., Tex.Civ. App., 129 S.W.2d 384; Moody, Seagraves Ranch Co. v. Brown, Tex.Civ.App., 69 S. W.2d 840; Dallas Nat. Bank v. Peaslee-Gaulbert Co., Tex.Civ.App., 35 S.W.2d 221.

A so-called "cost-plus contract" is just another contract to be determined by its terms and its provisions will determine whether or not a contractor is the agent of the owner. The original contract between the parties, after describing the several types of construction to be undertaken, as heretofore indicated, provided:

"Now, Therefore, in consideration of the obligation of the corporation, as hereinafter set forth, the Contractors have agreed and by these presents do agree with the corporation that they will make, erect, build, place on and...