Central State Bank v. United States Fidelity & G. Co.

• Decision Date: 25 November 1925
• Docket Number: No. 4640.,4640.
• Parties: CENTRAL STATE BANK OF CORSICANA, TEX., v. UNITED STATES FIDELITY & GUARANTY CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

9 F.2d 326 (1925)

CENTRAL STATE BANK OF CORSICANA, TEX., v. UNITED STATES FIDELITY & GUARANTY CO. et al.^*

No. 4640.

Circuit Court of Appeals, Fifth Circuit.

November 25, 1925.

Jos. Manson McCormick and Paul Carrington, both of Dallas, Tex. (J. S. Callicutt, of Corsicana, Tex., Etheridge, McCormick & Bromberg, of Dallas, Tex., on the brief), for appellant.

Walter F. Seay and Thos. T. Holloway, both of Dallas, Tex. (Seay, Seay, Malone & Lipscomb, of Dallas, Tex., on the brief), for appellees.

Before WALKER, BRYAN, and FOSTER, Circuit Judges.

BRYAN, Circuit Judge.

The board of school trustees of the city of Corsicana, Tex., let a contract for the erection of a high school building, and the contractor erected the building, but upon its completion he owed $38,089.15 for material used in its construction, and was insolvent. The school board withheld a balance of $32,313.18, which was accumulated by the retention of 15 per cent. of the contract price pursuant to the following provisions of the contract:

"The owner school board, for and in consideration of the faithful performance of said work as aforesaid, agrees and is bound to pay unto the contractor the sum of two hundred thirty-seven thousand ($237,000) and no/100 dollars in installments, as follows, to wit: Eighty-five per cent. (85%) of the contract to be paid on the architect's certificate in writing that the work entitled to such payment has been done to his satisfaction; and fifteen per cent. (15%) upon the completion and delivery of said work, after the same has been accepted by the architect, and after all receipts of subcontractors for work and material furnished to said building have been produced to the architect, should he see fit to require such production, and provided said work shall have been done in all respects in compliance with the terms and provisions of this contract and the aforesaid drawings and specifications, and all payments of additional moneys that may become due to the contractor hereunder may be made in the same manner and proportions: Provided, that the wages of artisans and laborers, and all those employed by or furnishing material for said work, shall have been paid and satisfied, and in case the contractor shall fail so to pay and to satisfy all and every claim and demand against said building as aforesaid the owner may apply the moneys due and coming to the contractors towards paying and satisfying such claims and demands: * * * Provided that nothing herein contained, nor any variation from the amounts of the installments or from the manner and times of their payments shall be construed as impairing the right of the owner, or of those to whose benefit the bond given herein shall inure, to hold the contractor or surety liable on said bond for any breach of the conditions of the same, nor as imposing upon the owner any obligation to laborers, materialmen, subcontractors, or sureties, to pay or to retain for their benefit any moneys coming to the contractor hereunder."

The real parties at interest are the United States Fidelity & Guaranty Company and the Central State Bank of Corsicana, Texas, each of which claims to be entitled to the entire fund retained by the school board. The claim of the former is based upon the facts that it was surety for the contractor, and that the contract with the school board, which it as well as the contractor signed, contains the following provision: "No assignment of this contract nor of any interest shall be...