Gulf Bitulithic Co. v. Nueces County

• Decision Date: 15 June 1927
• Docket Number: (No. 7751.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 297 S.W. 747
• Parties: GULF BITULITHIC CO. v. NUECES COUNTY.
• Court: Texas Court of Appeals

297 S.W. 747

GULF BITULITHIC CO. v. NUECES COUNTY.

(No. 7751.)^*

Court of Civil Appeals of Texas. San Antonio.

June 15, 1927.

Rehearing Denied July 30, 1927.

Appeal from District Court, Nueces County; W. B. Hopkins, Judge.

Action by the Gulf Bitulithic Company against the County of Nueces, in which the defendant filed a cross-action. From the judgment, plaintiff appeals, and defendant filed cross-assignments of error. Affirmed in part, and in part reversed and rendered.

Kleberg & North, of Corpus Christi, Vinson, Elkins, Sweeton & Weems, of Houston, and Robert W. Stayton, of Austin, for appellant.

Boone & Savage, of Corpus Christi, for appellee.

SMITH, J.

The appeal has to do with the nature and extent of the powers and discretion of county commissioners' courts in the expenditure of money derived from the sale of county bonds for the construction and maintenance of public roads.

At a county-wide election held in Nueces county on July 20, 1919, the commissioners' court of that county was authorized to issue bonds in the sum of $2,000,000 for the purpose of constructing, maintaining, and operating macadamized, gravel, or paved roads, etc., in the county. In pursuance of this authority the commissioners, on August 11 thereafter, issued said bonds in three series, the first of which, A, was in the sum of $100,000 appropriated to the retirement of bonds previously issued by one of the subdivisions of the county, and not involved in this litigation; the second series, B, aggregating in amount the sum of $1,000,000, and the third, C, $900,000. None of the bonds were sold at the time of issuance.

On September 14 in the same year a disastrous hurricane swept the county, and particularly the city of Corpus Christi, resulting in great loss of property and consequent depressed business conditions. The commissioners' court took prompt cognizance of these conditions and sought to use their power to alleviate them. They decided to postpone, indefinitely, the sale of series C of the bonds in order to reduce the necessary tax levy, which was done, and to sell only series B at that time. As a further step toward alleviation the commissioners also decided not to construct the proposed system of roads by letting the contract therefor upon competitive bids to outsiders, but to themselves construct them in order to give employment to local residents. They were also moved to this course by the high and still rising cost of materials prevailing at that time; they believed they could do the work cheaper than they could get it done by contract.

Some years prior to this time the city of Corpus Christi had engaged in a comprehensive program of street paving, under contracts with the Texas Bitulithic Company, a subsidiary of Warner Bitulithic Company and the parent of the Gulf Bitulithic Company, appellant herein. It appears impressively in the record that this work done on the streets of Corpus Christi greatly pleased those in authority in that city and in Nueces county. The paving laid by that company years before the storm survived, unscathed, the ravages not only of the intervening years, but of the hurricane as well. These evidences of the strength and durability of this paving seems to have been greatly impressed upon the members of the commissioners' court who were serving in 1919 and, together with their acquaintance with and confidence in the officials of the paving company, now officials of the Gulf Bitulithic Company, largely influenced them in entering into the contract now in controversy.

So, when the commissioners' court set about to consider the important matter of constructing a system of roads out of the money voted by the people, they put in mind the excellence of the street paving in Corpus Christi, and apparently sought to visualize a system of county roads of the same material. Having great confidence in the officials of the company which paved the streets of Corpus Christi, but who had in the meantime become the officials of appellant, Gulf Bitulithic Company, the commissioners consulted those officials very freely and fully as to the wisest course to pursue in the project before them. The cost of road materials and supplies, and freight charges thereon, was very high at that time and was still rising. It was considered that road contracting companies could not afford to and would not submit bids for road contracts except upon the basis of existing high prices of materials and supplies, with additional latitude for possible increases in those prices; that if the county let the work upon such contracts it could not avail itself of any reduction of prices likely to occur during the progress of the work; that if the commissioners themselves undertook the work they could avoid the inflation of existing prices upon which contractors would base their bids, and could also get the full benefits of any reduction in prices occurring during the progress of the work, which would run through a period of many months. In other words, it was decided by the commissioners, influenced largely by the counsel of the officials of the Gulf Bitulithic Company, that by doing the work themselves they could realize more for the county out of the bond money than they could get by letting the work by contract upon competitive bids. The question, also, of state and federal aid was considered. It was understood that if the work should be done by contract certain substantial aid, to wit, about $200,000, would be given the county by those authorities, but the commissioners, upon consideration, concluded that the benefits derivable from that aid would be more than offset by the restrictive interference of those authorities. So the decision was reached that the road program be carried out by the county doing its own work at direct expense, without the intervention of construction contracts.

It is obvious from the record that the commissioners were further influenced to the course stated by the assurance that they could get the supervisory services of the Gulf Bitulithic organization in constructing the proposed road system. As stated, the managing officials of that company were managing officials of the Texas Bitulithic Company when the Corpus Christi streets were paved, and the members of the commissioners' court knew them and had full confidence in their integrity and their skill as street and road makers. They fully consulted those officials with reference to the proposed road building program, and were assured of the friendly co-operation of those officials. As a result of numerous conferences, the commissioners' court entered into a contract with the Bitulithic Company, which contract was embraced in the following resolution passed by the commissioners' court (formal parts omitted):

"Whereas, in the judgment of the commissioners' court of Nueces county, Tex., it is expedient and to the best interest of the county and the taxpayers thereof that the roads and highways of this county, to be built and constructed out of and with the proceeds of the Nueces county special road bonds heretofore authorized by vote of the taxpaying voters on July 26, 1919, be built and constructed by the commissioners' court and under the direct supervision and control of the court, and not by general contract, and that such plan of construction will result in better and more permanent roads at a material saving in cost to the county:

"Therefore, it is ordered by the commissioners' court of Nueces county that the system of roads and highways, provided for by said Nueces county road bonds, issued the 11th day of August, 1919, be constructed by the county under the supervision of the commissioners' court, and that the said court employ the Gulf Bitulithic Company as its agent and representative to supervise and manage the construction of the said roads, subject to the following contract:

"The State of Texas, County of Nueces:

"Know all men by these presents, that this agreement, entered into by and between the county of Nueces, acting by and through its commissioners' court, hereinafter called the county, and the Gulf Bitulithic Company, acting by and through its president, James H. Pittman, hereinafter called the company, witnesseth:

"That in consideration of the premises and the services to be rendered by the company as hereinafter provided, the county does hereby employ the Gulf Bitulithic Company as its agent and representative to organize, assemble, and operate the necessary organization to manage and supervise the complete building and construction of all the roads and highways embraced in the present proposed Nueces county road system, and to procure, assemble, and operate for, and at the expense of, said county all of the necessary organization, labor, machinery, tools, teams, equipment, facilities, supplies, and foremen, and to do any and all things necessary and proper to enable the county to build and construct said roads in accordance with the plans, specifications, and drawings furnished by the county highway engineer, subject, however, to the supervision, direction, and instructions of the commissioners' court of said county. All of which said organizations, labor, material, freight, machinery, tools, teams, equipment, facilities, and supplies shall be paid for by the county under such terms and conditions as it may authorize and direct. In the organization, selection, and acquisition of same, and in the disposition and sale of unnecessary machinery and equipment the company shall render to the county its best advice, assistance, and aid in securing for the county the best and most advantageous price, terms, and conditions.

"The county shall also pay the cost of all deposits, rentals, employers' liability insurance, bonds, insurance premiums, royalties, office expenses, transportation charges, and all other expenses and charges which may be incurred and incident to the building of said roads under this agreement; provided, however,...