Grant v. Alfalfa Lumber Co.

• Decision Date: 01 May 1915
• Docket Number: (No. 771.)
• Citation: 177 S.W. 536
• Parties: GRANT v. ALFALFA LUMBER CO. et al.<SMALL><SUP>†</SUP></SMALL>
• Court: Texas Court of Appeals

177 S.W. 536

GRANT v. ALFALFA LUMBER CO. et al.^†

(No. 771.)

Court of Civil Appeals of Texas. Amarillo.

May 1, 1915.

Rehearing Denied June 5, 1915.

Appeal from District Court, Hale County; L. S. Kinder, Judge.

Action by the Alfalfa Lumber Company against J. W. Grant, the Fidelity & Deposit Company of Maryland, and another. Judgment for the plaintiff and for the defendant Grant as against the surety company, and the defendant Grant appeals, and the surety company assigns cross-error. Judgment affirmed.

Madden, Trulove, Ryburn & Pipkin, of Amarillo, for appellant. Baker, Botts, Parker & Garwood and John C. Townes, Jr., all of Houston, and Graham & Graham, Fred C. Pearce, and Randolph & Randolph, all of Plainview, for appellees.

HENDRICKS, J.

The appellant, J. W. Grant, with another, entered into a building contract with one W. T. McRae, a building contractor, for the erection of a certain building on lots 19 and 20, block 26, situated in the town of Plainview, Hale county, Tex., owned by said Grant, said building to be constructed according to plans and specifications prepared by certain architects. The Alfalfa Lumber Company, a corporation, one of the appellees herein, furnished the said McRae, the contractor, certain material, which entered into the construction of said building, of the alleged amount of $2,408.85, and the Fidelity & Deposit Company of Maryland, the other appellee herein, became the guarantor of McRae, the contractor, for the faithful compliance of the terms and conditions of said building contract, executing a bond in the sum of $5,000 to that end. Before the completion of the building, McRae, the contractor, abandoned the work, and the owner, Grant, assumed control of the building in its unfinished condition, completing the same at an alleged cost of $4,793.85, Grant claiming that at the time of the abandonment of the work by the contractor he had paid to the latter the sum of $4,877.59 upon the amount of $7,000, for which latter amount the contractor agreed to build and finish said building. The Alfalfa Lumber Company sued McRae, the contractor, and Grant, the owner, also the Fidelity & Deposit Company of Maryland, the guarantor, to recover the said sum of $2,408.85, alleged to be due upon an open account, which was verified in the cause as representing the cost of the material furnished. The appellee Alfalfa Lumber Company also sought judgment against Grant, the owner of the premises, for the amount of the open account, claiming an independent promise made by Grant, to the representatives of the lumber company, to pay the amount of said account, in consideration that the lumber company would forbear and refrain from suing said Grant at the next approaching term of the district court of Hale county, convening in February, 1914, alleging a compliance with said contract. Grant pleaded that as between him and the contractor, there was only $2,187.41 due the latter when the latter abandoned the work, and which balance was applied on the amount incurred by him in completing the building. The lumber company alleged that Grant had wrongfully paid to the contractor before the latter had ceased his work certain sums of money, in violation of the building contract, aggregating the sum of $1,303.53, and that, if at the time the owner, Grant, was served with written notice of the items of lumber and material furnished to the contractor, said owner did not have sufficient funds to pay plaintiff's account and complete the building, the lack of funds was due to improper payments made by the owner to the contractor. The guaranty company answered in the same spirit; in effect, that under the contract the owner agreed to make payments to the contractor as required, to pay for brick, sand, plaster, metal lath, roofing material, and the weekly pay roll, used in the erection and completion of the building, and that the owner departed from the terms of said contract without the consent and knowledge of the bonding company, and paid certain sums of money, not specified to be paid by him by said contract, in violation of its terms. The jury, upon the submission of special issues, found against Grant and in favor of the lumber company, upon the independent promise to pay the debt, for the whole amount of the open account, but found in favor of Grant on his cross-action against the bonding company the sum of $754.85, reducing the cross-action of Grant, however, by a finding of $1,448.79, as an aggregate amount which Grant paid McRae, in violation of the terms of the contract as to the rights of the surety.

The following is the important paragraph of the building contract germane to this controversy:

"Art. 4. It is hereby mutually agreed between the parties hereto that the sum to be paid by the owners to the contractor for said work and material shall be seven thousand ($7,000.00) dollars, subject to additions and deductions as hereinbefore provided, and that such sum shall be paid by the owners to the contractor in current funds, as follows: The owners agree to make payments to the contractor as required to pay for the brick, cement, plaster, metal lath and roofing material, also payment to cover the weekly pay roll for labor used in the erection and completion of the work included in this contract; the sum of all payments so made, not to exceed the amount of this contract ($7,000.00)," etc.

A special issue, submitted by the trial court, whether the owner paid the contractor, prior to the time the latter abandoned the work, "any sums of money, except for brick, cement, plaster, metal lath, roofing material, and weekly pay roll for labor used in the erection of the building," was answered affirmatively by the jury, itemizing the amount improperly paid by Grant, and aggregating the sum of $1,448.79, as stated. The appellant says:

"One of the most important questions presented in this case * * * is the question as to whether or not * * * the owner of the building * * * advanced funds to the contractor in violation of the terms of the builder's contract, and thereby released the surety to the extent of such payments and advancements"

— contending that:

"The language does not restrict the payments to be made by the owner to the contractor at such times as the latter is required to pay for brick, cement," etc.

In the case of Ryan v. Morton, 65 Tex. 260, the defendant surety pleaded that the owner of the building paid to the contractor, without notice to him, the full contract price, in violation of the terms of the contract, before the completion of the building, the contract providing for an installment payable in advance, "and the balance in four equal installments as the work progressed." Justice Stayton said:

"There was a privity between Morton and the sureties which required him to preserve all his rights against Giraud [the contractor] unimpaired, if he intended to look to the sureties. By a fair construction of the contract, the builder was to have payment [the balance] in four equal installments, which, as to time of payment, were to be regulated by the progress of the work. * * * This was a part of the contract for the protection of the owner of the property, but it gave a guaranty to the sureties that the work would not be paid for until it was done. * * * This he did not do, but on the contrary, he paid to their principal, in violation of the contract, the full price to which he would have been entitled had he performed the entire work."

And Justice Stayton, quoting from another authority, further said:

"A surety has the right to require that the obligee shall do his duty. * * * The owner should have advanced only what the contract bound him to advance."

See, also, Lonergan v. San Antonio Trust Co., 101 Tex. 63, 104 S. W. 1061, 106 S. W. 876, 129 Am. St. Rep. 803.

In principle, we can see no difference between the case cited and the instant case. In this case the owner agreed to make...