First Nat. Bank v. Lyon-Gray Lumber Co.

• Decision Date: 22 March 1917
• Docket Number: (No. 1702.)
• Parties: FIRST NAT. BANK OF PARIS et al. v. LYON-GRAY LUMBER CO. et al.
• Court: Texas Court of Appeals

194 S.W. 1146

FIRST NAT. BANK OF PARIS et al. v. LYON-GRAY LUMBER CO. et al.

(No. 1702.)

Court of Civil Appeals of Texas. Texarkana.

March 22, 1917.

Rehearing Denied April 26, 1917.

Appeal from District Court, Lamar County; A. P. Dohoney, Judge.

Mechanic's lien action by the Lyon-Gray Lumber Company against the First National Bank of Paris and J. T. Finn, in which various parties intervened, and in which the United States Fidelity & Guaranty Company was made a party defendant. From a judgment fixing the rights of the various parties, the First National Bank of Paris, the United States Fidelity & Guaranty Company, and certain lien claimants appeal. Affirmed as modified.

Crane & Crane and Seay & Seay, all of Dallas, Hunt, Myer & Teagle and John Charles Harris, all of Houston, and Burdett, Connor & Dailey, Park, Moore & Hardison, and Long & Wortham, all of Paris, for appellants. Harris & Harris, of Houston, and Head, Dillard, Smith, Maxey & Head, of Sherman, for appellees.

HODGES, J.

On the 18th day of February, 1914, the First National Bank of Paris, Tex., entered into a contract with J. T. Finn for the construction of a six-story building on a lot owned by the bank. Finn was to furnish the necessary labor and material, and to receive a consideration of $111,231.63. The contract provided that the bank should have the privilege of adding a full basement at a further cost of $7,200. By the addition of the basement, which was afterwards called for, and some other extra features agreed upon, the contract price of the structure when completed would have amounted to the sum of $122,493.04. The contract also provided that payments were to be made to Finn in semimonthly installments to the extent of 80 per cent. of the value of the labor and material put into the building, upon estimates furnished by the supervising architect. In order to secure the faithful performance of this contract, Finn executed a bond in the sum of $55,615.81, with the United States Fidelity & Guaranty Company as surety. The conditions of this bond were that Finn, the contractor, would faithfully and satisfactorily construct the building in accordance with the plans and specifications, and would hold the bank harmless against all claims for labor performed or material furnished, and against all claims and demands of any person that might arise directly or indirectly from the prosecution of the work. Finn began the construction of the building about March 1, 1914, and continued till February 9, 1915, when he signified to the bank his inability to complete his contract. The bank then, acting under a clause of its contract which authorized it to do so, took charge of the work of construction and completed the building according to the specifications, at an additional cost of $21,050.38. Prior to the abandonment of the contract by Finn the bank had paid him, on estimates furnished by the architect and for material furnished by Finn's account with the consent of his surety, the sum of $116,422.34, of which $18,637.21 was a part of the reserved fund. These payments, added to the amount expended by the bank in completing the building, made an aggregate of $137,473.72, or $14,979.68 in excess of the contract price.

In January, 1916, the Lyon-Gray Lumber Company, a private corporation, began this suit against the bank and Finn, the contractor, to recover the principal sum of $12,433.98, and $355.80 as interest, and to foreclose a lien upon the building and lot for material furnished to Finn and used by him in the construction of the building. It was alleged by the Lyon-Gray Lumber Company that due notice had been given to the bank, and an itemized account filed in the office of the county clerk of Lamar county as required by statute. The bank answered, and specially pleaded its contract with Finn for the erection of the building at a stipulated price, the inability of Finn to complete the building, the taking over of the construction by the bank under the terms of the contract, and the completion of the building at the excess over the contract price. A number of other parties who claimed liens by reason of having furnished material to Finn for the construction of the building intervened, among whom were the following, who are parties to this appeal: The Atlanta Terra Cotta Company, H. S. Bettes Hardware Company, the Christopher & Simpson Iron Works Company, W. F. Dulaney & Sons, the Electric Appliance Company, the Gilbert Manufacturing Company, the Ingram Mill Work Company, the Texas Power & Light Company, the Otis Elevator Company, the Texas Glass & Paint Company, the Trussed Concrete Steel Company, the Wichita Falls Brick & Tile Company, and the Lecoutour Bros. Stair Manufacturing Company. The United States Fidelity & Guaranty Company, which will be hereafter referred to as the surety company, was made a party defendant at the instance of the bank. The case was tried before the court without a jury, and judgment rendered against the bank as follows: Judgment in favor of Lyon-Gray Lumber Company for $13,557.16; in favor of E. B. Ingram for $3,790.07; in favor of H. S. Bettes Hardware Company for $300.95; in favor of W. F. Dulaney & Sons for $781.35; and in favor of the Christopher & Simpson Iron Works Company of $396.15. In each instance there was a foreclosure of the lien upon the property. The two parties last mentioned secure judgments for only a part of their claims. Judgment was rendered in favor of the bank against all of the other parties intervening and claiming liens for labor and material furnished. Judgment was also rendered in favor of the bank over against the surety company for the sum of $14,979.68 and for the amount awarded against the bank in favor of the materialmen above referred to. Appeals have been perfected by the surety company, the bank, and all the lien claimants who failed to obtain judgment for the amount sued for.

In addition to the facts previously stated, we gather the following from the findings filed by the trial court: Under the terms of a verbal agreement with Finn, the Lyon-Gray Lumber Company sold him material used in the construction of the bank building. Those sales and deliveries were upon different dates between March 1, 1914, and November 9th following. Notices were served upon the officers of the bank as the material was delivered to Finn; and on the 28th of January, 1915, the Lyon-Gray Lumber Company filed in the office of the county clerk of Lamar county an itemized account of its claim as required by statute. There was then due it from the contractor the sum of $12,789.78, including some accrued interest. On November 17, 1914, Finn gave the Lyon-Gray Lumber Company an order upon the bank for the payment of the sum of $12,656.28, that being the amount then due, and directed that it be paid as follows: $4,656.28 out of the estimate due December 1st; $4,000 out of the estimate due December 15th; and $4,000 out of the estimate due January 1, 1915. This order was presented to the cashier of the bank and filed by him, but was not formally accepted. After the delivery of that order the bank paid Finn $11,785.13, none of which was a part of its 20 per cent. reserved fund. From March 28, 1914, to December 30th following the bank paid to Finn, upon estimates furnished at different times by the architect, the aggregate sum of $97,785.13. On the several dates when material was delivered to Finn by the lumber company and notice served on the bank it had in its hands due Finn, under the terms of the contract, funds considerably in excess of the claim held by the Lyon-Gray Lumber Company.

W. F. Dulaney & Sons sold to Finn, between September 7, 1914, and November 25th following, hardware amounting to the sum of $5,352.57; but notice of the sales was not given to the bank till December 17, 1914. Between December 17th and 29th of the same year other material was sold to Finn by Dulaney & Sons amounting to about $350, and notice thereof given to the bank. Christopher & Simpson Iron Works Company sold Finn material between the dates of September 3, 1914, and December 22d following, amounting to $2,944.77, and on the last date above mentioned a written notice was served upon the bank. At the time notices were served by W. F. Dulaney & Sons and the Christopher & Simpson Iron Works Company the bank had in its hands and due Finn the sum of $1,177.50. Both of the above-named creditors filed their accounts in the office of the county clerk within the time prescribed by the statute. E. B. Ingram sold to Finn material aggregating $3,790.07. H. S. Bettes Hardware Company sold him material amounting to $300.95. Each of these last-named creditors gave timely notice to the bank, but failed to file their accounts in the office of the county clerk. Some of the remaining parties to this appeal failed to comply with any of the provisions of the statute, and others gave notice at a time when there were no funds in the hands of the bank due Finn under the terms of his contract.

It appears from the conclusions of law filed by the trial court that the judgment rendered in favor of the Lyon-Gray Lumber Company is based upon a finding that the lumber company had fully complied with all the statutory requirements for fixing and securing its lien upon the building at a time when there were funds in the hands of the bank due Finn in excess of the claim of the lumber company; that the judgments in favor of W. F. Dulaney & Sons and of the Christopher & Simpson Iron Works Company for a part only of the sums claimed by them were thus limited, because only $1,177.50 were in the hands of the bank at the time it was served with notice by those claimants. It further appears that the judgments in favor of H. S. Bettes Hardware Company and E. B. Ingram were based upon the conclusion that compliance with the statute as to filing itemized accounts in the office of the county clerk was not required in order to fix and secure their liens.

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