Employers' Liability Assur. Corporation v. Trane Co.

• Decision Date: 01 July 1942
• Docket Number: No. 1908-7917.,1908-7917.
• Citation: 163 S.W.2d 398
• Parties: EMPLOYERS' LIABILITY ASSUR. CORPORATION, LIMITED, v. TRANE CO.
• Court: Texas Supreme Court

163 S.W.2d 398

EMPLOYERS' LIABILITY ASSUR. CORPORATION, LIMITED, v. TRANE CO.

No. 1908-7917.

Commission of Appeals of Texas, Section B.

July 1, 1942.

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

Action by the Trane Company against the Employers' Liability Assurance Corporation, Limited, as surety on a subcontractor's bond, to recover an amount due for materials sold to the subcontractor by plaintiff. A judgment for plaintiff was affirmed by the Court of Civil Appeals, 153 S.W.2d 848, and defendant brings error.

Reversed and rendered.

W. B. Handley, of Dallas, for plaintiff in error.

Ernest May and Virgil M. Blow, both of Fort Worth, for defendant in error.

SMEDLEY, Commissioner.

The suit is by the Trane Company against Employers' Liability Assurance Corporation, Limited, surety on subcontractor's bond to original contractor, for the recovery of $700 on account of materials sold and delivered by the Trane Company to L. Armstrong, subcontractor, who had agreed by written contract to furnish to R. F. Ball Construction Company, the original contractor, all labor and materials in the installation of plumbing, heating and gas piping in a nurses' home to be constructed for the City-County Hospital in Fort Worth. Judgment of district court in favor of the Trane Company for $700 was affirmed by the Court of Civil Appeals. 153 S.W.2d 848.

R. F. Ball Construction Company as general contractor made a contract with Tarrant County and the City of Fort Worth for the construction of the building and complied with Article 5160, Revised Civil Statutes of 1925 as amended by Chapter 226, Acts Regular Session, 41st Legislature, Vernon's Ann.Civ.St. art. 5160, by giving bond as required by that statute. The contract between R. F. Ball Construction Company, general contractor, and L. Armstrong, subcontractor, obligated the subcontractor substantially as follows: to furnish at his own expense all labor and material and to complete in workmanlike manner the installation of plumbing, heating and gas piping in the building; to pay promptly for all labor and material used and protect the owner and the original contractor from all claims, mechanic's liens and judgments; to protect the work and become liable for all loss or damages to materials incorporated therein; to make good all defects in the work; to keep the building and premises free from rubbish; to protect and indemnify the original contractor and owner from all claims and suits for damage or injuries to persons or property received or sustained through or on account of any act or default of the subcontractor; to carry workmen's compensation and public liability insurance satisfactory to the original contractor; to prosecute the work with diligence and complete it within the time specified.

The subcontractor was required by the contract to furnish to the original contractor "a bond guaranteeing the faithful performance of all the provisions of this contract, with surety satisfactory to R. F. Ball Construction Company in the sum of $10,000.00; the attached form of bond shall be executed and then become a part of this contract."

Pursuant to the contract the bond on which this suit is brought was executed by Armstrong as principal and plaintiff in error, Employers' Liability Assurance Corporation, Limited, as surety. By its terms the principal and surety acknowledge themselves held and bound to pay to R. F. Ball Construction Company the sum of $10,000, conditioned as follows:

"The condition of the above obligation is such that, whereas, R. F. Ball Construction Company, upon the faith and credit of this bond, has entered into the foregoing contract with the above named principal;

"Now, therefore, if the said principal shall well, truly and faithfully keep and perform all of the terms, provisions, covenants and conditions of the foregoing contract, including changes or additions, if such be made, not exceeding in extra cost fifty per cent of the original gross consideration, as named in the foregoing contract (the said Surety hereby expressly waiving all rights to be notified of, or by any further act to give assent to such changes and additions, within the limits of such cost aforesaid); and shall repay said R. F. Ball Construction Company all costs and expenses said R. F. Ball Construction Company may incur in the prosecution of any suit or suits which they may maintain against said Principal on account of any breaches of said contract or of this bond; then, this obligation shall be void; otherwise, the same shall remain in full force and virtue."

The Court of Civil Appeals held that the bond above quoted, when read in connection with the contract, contains, or in effect amounts to, a definite promise on the part of the principal and the surety to pay promptly when due for all labor and materials; that this promise is unnecessary for the protection of the original contractor; and that defendant in error, whose bill for material used in the work has not been paid, can sue and recover on the bond in its own name.

Application for writ of error was granted on account of conflict between the decision of the Court of Civil Appeals in this case and that of the Court of Civil Appeals in Metropolitan Casualty Ins. Co. v. Texas Sand and Gravel Company, 68 S.W.2d 551. In our opinion there exists the conflict of decision and opinion that gives this court jurisdiction of the case under Subdivision 2 of Article 1728 of the Revised Civil Statutes of 1925, as amended by Chapter 144, Acts Regular Session, 40th Legislature, Vernon's Ann.Civ.St. art. 1728, subd. 2. The decisions are based on practically the same state of facts and announce antagonistic conclusions. Sun Mutual Insurance Co. v. Roberts, Willis & Taylor Co., 90 Tex. 78, 37 S.W. 311; Garitty v. Rainey, 112 Tex. 369, 247 S.W. 825.

In Metropolitan Casualty Insurance Co. v. Texas Sand and Gravel Company , as in the instant case, the original contract was for public work, the original contractor had given the bond required by Article 5160, and the plaintiff, having furnished labor or material to a subcontractor, sought to recover on the bond given by the subcontractor to the original contractor. The condition of the bond in that case was that if the principal "shall in all things well and truly perform all the terms and conditions of the foregoing contract * * * and shall pay all claims for labor performed and materials furnished * * * then this obligation is to be void". The defeasance clause of...