Citizens' Trust & Guaranty Co. v. Peebles Paving Brick Co.

• Decision Date: 06 March 1917
• Citation: 192 S.W. 508,174 Ky. 439
• Parties: CITIZENS' TRUST & GUARANTY CO. v. PEEBLES PAVING BRICK CO. ET AL.
• Court: Kentucky Court of Appeals

192 S.W. 508

174 Ky. 439

CITIZENS' TRUST & GUARANTY CO. v. PEEBLES PAVING BRICK CO. ET AL.

Court of Appeals of Kentucky.

March 6, 1917

Appeal from Circuit Court, Jefferson County, Chancery Branch, First Division.

Action by the Peebles Paving Brick Company against the Citizens' Trust & Guaranty Company and another, together with an action by J. B. Speed & Co. against the same defendants. There were judgments for plaintiffs, and the named defendant appeals while the first-named plaintiff cross-appeals from that portion of the judgment denying interest on its claim. Affirmed on direct appeal, and reversed on cross-appeal.

Wehle &amp Wehle, of Louisville, for appellant.

Barret Allen & Attkisson, of Louisville, for appellee J. B. Speed & Co.

Furlong, Woodbury & Furlong, of Louisville, for appellee Peebles Paving Brick Co.

CARROLL J.

There are two appeals on this record by the Citizens' Trust & Guaranty Company, one being prosecuted from a judgment in favor of the Peebles Paving Brick Company, and the other from a judgment in favor of J. B. Speed & Co. There is also a cross-appeal by the Peebles Company against the Citizens' Trust & Guaranty Company.

In the spring of 1910 a firm of contractors, known as the Staebler Company, entered into a contract with the city of Louisville to build certain streets, and the Citizens' Trust & Guaranty Company, of West Virginia, was the surety of the Staebler Company for the performance of the contract. Shortly after the contract was let to the Staebler Company, but before it had constructed any streets, it went into bankruptcy, and it was then incumbent upon the guaranty company to meet its obligations as surety by constructing the streets that the Staebler Company had contracted to construct.

In September, 1910, the guaranty company, for the purpose of discharging its obligation to the city, entered into a contract with one Meredith, of Terre Haute, Ind., to build these streets and assume all the obligations of the Staebler Company under its contract with the city, and the National Surety Company became the surety for Meredith that he would perform his contract with the guaranty company. At the time the contract was made with Meredith, and perhaps for some time before that, one Gauvreau was the general agent in Kentucky of the guaranty company, and had charge of all its business in the city of Louisville, including the obligations incurred in the contract for the construction of the streets.

After Meredith had assumed the contract to construct for the guaranty company the streets, he purchased from the Peebles Paving Brick Company a lot of brick to be used in constructing the streets, and on March 29, 1911, for the purpose of paying the debt due by him to the Peebles Company, he wrote to the guaranty company the following letter:

"This is authority for you to pay to the Peebles Paving Brick Company, Portsmouth, Ohio, $3,980.98 balance due them, out of or from warrants received on work now in course of construction."

On April 27, 1911, Gauvreau, for the Guaranty Company, acknowledged the receipt of this order in the following letter written to the Peebles Paving Brick Company:

"I acknowledge receipt of an order signed by F. C. Meredith, directing me to pay your company the sum of $3,980.98 from the proceeds of apportionment warrants for improvement of streets in Louisville, which warrants I am collecting for Mr. Meredith.

I expect that the warrants for Stratton avenue will be issued the early part of next week, and I hope that within a week or ten days after I have these warrants in hand, I will be able to pay you a substantial amount on account."

On November 10, 1911, the Peebles Company brought suit against Meredith and the guaranty company to recover the amount Meredith had authorized the guaranty company to pay, and at the same time it secured a general order of attachment for the purpose of securing any property or funds owned by Meredith in the hands of the guaranty company.

After various motions had been made, pleadings filed, and the evidence taken, the lower court in February, 1915, after finding that the order given by Meredith to the Peebles Company in March, 1911, was an assignment to the Peebles Company of the amount mentioned in the order and a direction to the guaranty company to pay the Peebles Company that amount, and after also finding that it accepted the assignment in the letter of April, 1911, and assumed the duty of paying the amount, and that the attachment secured by the Peebles Company constituted a lien upon the property, which consisted of money and apportionment warrants due Meredith in the hands of the guaranty company, and that there was in the hands of the guaranty company at the time this assignment was accepted, and when the attachment was executed, money and property more than sufficient to pay the $3,980.98 due the Peebles Company, entered a judgment against the guaranty company directing it to pay the Peebles Company this sum. From that judgment the guaranty company prosecutes this appeal.

The Peebles Company also prosecutes a cross-appeal because the lower court refused to give it judgment for interest on this sum from the date of the assignment by Meredith, and its costs.

In July, 1911, J. B. Speed & Co., who had furnished cement, stone, and sand to Meredith on his contract for the construction of the streets, brought suit against him on an account for $2,043.60, and obtained an attachment against his property and garnisheed funds and city improvement warrants in the hands of the guaranty company. Meredith, being a nonresident, was proceeded against by a warning order, the attachment against the guaranty company being served on its local agent, Gauvreau. In this case various motions were made, pleadings filed, and evidence taken, and finally in February, 1915, there was a judgment against the guaranty company in favor of J. B. Speed & Co. From this judgment the guaranty company prosecutes an appeal.

It may be here noticed that the evidence shows that there were in the hands of the guaranty company at the date of its acceptance of Meredith's order for the benefit of the Peebles Company, and at the time the suit was brought and the attachment obtained by Speed & Co., or came into its hands soon thereafter, funds and city apportionment warrants amply sufficient to satisfy the claims of the Peebles Company and Speed & Co., and no question is raised as to the justness or correctness of these claims.

It may also be here stated, as a matter of controlling importance in determining the rights of the parties to this appeal that when the Staebler Company went into bankruptcy and abandoned the contract it had entered into with the city to construct the streets, the guaranty company as the surety of the Staebler company assumed, as it was obliged to do, the performance of this contract. In other words, it took the place of the Staebler Company and agreed to do what it had agreed to do. Meredith was really a subcontractor employed by the guaranty company to do for it the work that the Staebler Company under its contract with the city had agreed to do. This is clearly shown by the stipulations in the contract made in September, 1910, between the guaranty company and Meredith. In this contract, in which the gauranty company was the party of the first part and Meredith, a citizen of Indiana, party of the second part, it was set out, among other things, that:

"Whereas, the party of the first part was surety for said Staebler Company on said contracts, thereby guaranteeing the performance thereof by said Staebler Company, and said Staebler Company has failed to perform its said contracts, and the party of the first part is entitled to all the rights of said Staebler Company under said contracts, and also has all of the liabilities of said Staebler Company under said contract, and said Staebler Company has assigned all its said rights to the party of the first part, which assignment has been recognized and approved by the city of Louisville through its authorized officials:

For value received, the party of the first part hereby assigns to the party of the second part, subject to and excepting the rights of the party of the first part as hereinafter set out, all its interest and rights under said contracts with the city of Louisville, and hereby agrees that it will indorse and transfer to the party of the second part the apportionment warrants to be issued by the city of Louisville under said contracts, subject, however, to the provisions hereinafter made.

In consideration of the promises and the agreements herein of the party of the first part, the party of the second part hereby agrees and undertakes to complete in every particular and perform the said contract above referred to made by the Staebler Company. * * *

The party of the first part will take prompt and all necessary steps to procure the issue by the city of Louisville of the warrants in payment for said work, and it will make the deposit of 10 per cent. of the total contract prices provided for by said contracts with the city of Louisville, to be deposited before the warrants herein referred to are issued; and the party of the first part agrees that during the progress of the work herein referred to it will advance to the party of the...