First Nat. Bank v. O'Neil Engineering Co.

• Decision Date: 10 April 1915
• Docket Number: (No. 1396.)
• Parties: FIRST NAT. BANK OF PARIS v. O'NEIL ENGINEERING CO. et al.
• Court: Texas Court of Appeals

176 S.W. 74

FIRST NAT. BANK OF PARIS v. O'NEIL ENGINEERING CO. et al.

(No. 1396.)

Court of Civil Appeals of Texas. Texarkana.

April 10, 1915.

Rehearing Denied May 6, 1915.

Appeal from District Court, Lamar County; Ben H. Denton, Judge.

Action by the First National Bank of Paris against the O'Neil Engineering Company and others. From a judgment against two of the defendants personally, but denying the plaintiff's claim to the fund in controversy, and awarding it to two other defendants, the plaintiff appeals. Modified and affirmed.

A. P. Park, of Paris, for appellant. Burdett & Connor, of Paris, and J. J. Collins, of Dallas, for appellees.

HODGES, J.

The appellant, as plaintiff in the court below, brought this suit against the O'Neil Engineering Company, a corporation, M. Griffin O'Neil, Lamar county, the board of permanent road commissioners of justice precinct No. 1 of Lamar county, Tex., and Rube S. Wells, S. L. Bedford, T. J. Bridges, T. J. Record, S. B. M. Long, U. Edzards, and Buster Stephenson. The seven individuals last above mentioned are alleged to be the members of what is known as the "board of permanent commissioners" of precinct No. 1 of Lamar county, as constituted under the provision of a special act of the Legislature enacted in 1909. Enough of the act referred to is pleaded to show the authority of this board to expend a fund accumulated by the sale of bonds in the construction of good roads in that precinct, and authority on the part of the board to make contracts for the purpose of having such roads constructed.

For cause of action it is alleged that on the 26th day of June, 1912, the O'Neil Engineering Company, one of the above-mentioned defendants, entered into a contract with the board of permanent road commissioners of precinct No. 1 whereby the former undertook to construct a number of roads in precinct No. 1 of Lamar county according to certain specifications and details shown in the contract and the maps and profiles annexed thereto, the consideration being the sum of $200,000; that after the making of that contract the O'Neil Engineering Company, being in need of funds for the purpose of prosecuting the enterprise, applied to the appellant, the First National Bank of Paris, for a loan of money to be used by it for the purchase of material and the payment for labor in the prosecution of that work, and, in order to induce the bank to make such loan, verbally assigned to it all funds which were thereafter to become due under its contract with the board, to secure advances as the bank might make to enable the engineering company to carry out its contract. It was also agreed that all estimates and warrants for money issued by the board for work done in favor of the engineering company should be delivered to the bank, and by it collected. It is alleged that on the 24th day of August, 1912, and at other dates during the months of September and October following, the bank made advances to the engineering company for the purposes above mentioned, amounting in the aggregate to $9,500, and, as evidencing such advances, the O'Neil Company, together with O'Neil in person, executed three different notes, payable on demand, for the amounts so advanced. It is further alleged that all the money so advanced was used in the construction of the roads; that on August 4, 1913, there was due to the engineering company from the board the sum of $13,347.97, on an estimate that day allowed, and for which a warrant had been ordered drawn for that sum upon the funds under the control of the board; that all similar warrants theretofore issued were turned over to the bank as per agreement, but the warrant for this last-mentioned sum was not delivered to O'Neil, who was president of the engineering company, because of his absence, and for that reason was not turned over on that day to the bank; that because of a claim set up by the sureties on the bond of the engineering company to the warrant it was never delivered to the bank. It is also alleged that the appellant notified the board in open session of its claim to the fund above referred to and demanded payment; that the board refused to turn over the warrant to the appellant bank, but delivered it to the surety company upon its giving an indemnity bond.

Lamar county, one of the defendants named above, demurred to the plaintiff's petition, and also filed pleas in abatement and in answer to the merits. The board pleaded in abatement, and also answered by making the Fidelity & Deposit Company of Maryland and the Title Guaranty & Surety Company parties, asking judgment over against them in the event plaintiff recovered against the board. The Fidelity & Deposit Company of Maryland and the Title Guaranty & Surety Company, in response to the answer of the board, and by way of intervention, filed demurrers and answers asserting rights to the fund by reason of certain assignments set out in their pleadings and by reason of certain provisions contained in the application made by the engineering company for bonds, and also claiming the right to the fund in controversy by reason of subrogation.

The cause was tried before the court without a jury, and a judgment rendered in favor of the appellant bank against the O'Neil Engineering Company and M. Griffin O'Neil for the amount claimed by the bank, but against the bank upon its claim to the fund in controversy, and affirmatively holding that the Fidelity & Deposit Company and the Title Guaranty & Surety Company were entitled to that fund, and judgment entered accordingly.

The First National Bank alone has appealed, and presents practically but one assignment of error, and that is that the court erred in not adjudging that it was entitled to so much of the fund in controversy as was sufficient to pay the indebtedness held by it against the engineering company.

The court filed findings of fact and conclusions of law. These are quite lengthy, and only the substance of what is regarded as material will be here reproduced. The court finds that the special act referred to in the pleadings was enacted in 1909, providing for a special election by which the resident property taxpayers, qualified voters of Lamar county or any political subdivision thereof, might, at an election held for that purpose, vote for the issuance of bonds to an amount not exceeding one-fourth of the assessed value of the real property of such county or political subdivision, and also providing for the levy and collection of taxes sufficient to pay the interest and to create a sinking fund for the amount of such bonds; that such bonds were to be voted for the purpose of constructing and maintaining macadamized, graveled, or paved roads and turnpikes. See Special Laws of 1909, p. 457. Such portions of this law as may be necessary to be considered, and which are incorporated in the findings of the court, will be hereafter more specifically referred to. On April 22, 1912, an election was held in justice precinct No. 1 of Lamar county, as provided for by the special law, resulting in favor of the issuance of bonds to the amount of $300,000 for road purposes, and the election of T. J. Record, S. B. M. Long, U. Edzards, and Buster Stephenson, who, together with Rube S. Wells, as county judge, S. L. Bedford, county auditor, and T. J. Bridges, commissioner for precinct No. 1, were to constitute a board of permanent road commissioners for precinct No. 1. Thereafter the bonds to the amount of $_____ were issued and sold at par, and the sum realized from such sale was deposited, as required by the special law, with the county treasurer, and by him kept as a special fund to be paid out only on the order of the board in the construction of the roads contemplated. For brevity the board of permanent road commissioners will be hereafter referred to as "the board." On June 26, 1912, the board, acting under the authority conferred by the special law, entered into a contract with the O'Neil Engineering Company, a private corporation, by which the latter agreed, in consideration of $200,000, to furnish the labor and material and construct a system of good roads according to the terms of certain written specifications then agreed upon. These roads were to consist of eight different routes leading out of the city of Paris, aggregating about 40 miles in length. On the same date the O'Neil Engineering Company, which will be hereafter referred to simply as the engineering company, executed two bonds for $100,000 each, conditioned, as required by the special law and by the terms of its contract with the board, for the faithful performance of the obligations which it assumed in the construction of the roads. One of these bonds was signed by the Fidelity & Deposit Company of Maryland, and the other by the Title Guaranty & Surety Company. The contract entered into between the board and the engineering company provided, among other things, that at certain stated intervals during the progress of the work the engineering company was to be paid 85 per cent. of the value of the work done and material furnished, upon estimates made by the supervising engineer. The remaining 15 per cent. was to be retained till the contract for the construction of the roads had been fully completed to the satisfaction of the board. After the execution of the contract and bonds above referred to the engineering company, on their application for same, obtained from the appellant, the First National Bank of Paris, certain loans of money aggregating $9,500, to be used in the prosecution of the work undertaken by the engineering company. The court finds that the money so obtained was, in fact, used for that purpose. These loans were evidenced by three different notes executed by the engineering company and M. Griffin O'Neil to the appellant, and were payable on demand. They bore dates as follows: 24th day of August, 1912; 18th day of September, 1912; 10th day of October, 1912. At the times these...