Hess & Skinner Engineering Co. v. Turney

• Decision Date: 31 October 1918
• Docket Number: (No. 5811.)
• Parties: HESS & SKINNER ENGINEERING CO. et al. v. TURNEY et al.
• Court: Texas Court of Appeals

207 S.W. 171

HESS & SKINNER ENGINEERING CO. et al. v. TURNEY et al.

(No. 5811.)

Court of Civil Appeals of Texas. Austin.

October 31, 1918.

On Motion for Rehearing December 11, 1918.

Appeal from District Court, Bastrop County; Ed R. Sinks, Judge.

Suits by M. M. Turney and by the Lion Bonding & Surety Company and others against Bastrop County and others were consolidated and tried together. From a judgment therein rendered, the Lion Bonding & Surety Company appeals. Hearing, after answer, by Supreme Court to questions certified. 203 S. W. 593. Judgment reformed.

A. B. Wilson, of Houston, for appellant Lion Bonding & Surety Co.

Page & Jones and Maynard & Maynard, all of Bastrop, Duncan & Burleson, of La Grange, S. L. Staples, of Smithville, and N. A. Rector, of Austin, for appellees M. M. Turney and others.

Jno. T. Duncan and A. Burleson, both of La Grange, and S. L. Staples, of Smithville, for appellees Mrs. Tomlin and others.

Findings of Fact.

JENKINS, J.

1. On April 29, 1914, Hess & Skinner Engineering Company, hereinafter referred to as the contractors, entered into a contract with Bastrop county for the construction of a bridge across the Colorado river for the sum of $45,000, to be paid as the work progressed, 15 per cent. of which was to be retained by the county until the completion of the bridge. The bridge was completed according to contract, and the county paid therefor, except the sum of $6,854.23, which amount it tendered into court for the benefit of those who might be entitled to the same.

2. At the time of the execution of said contract the contractors gave bond as required by the Acts of the 33d Legislature, c. 99, p. 185 (Vernon's Sayles' Ann. Civ. St. 1914, art. 6394f et seq.), with the Lion Bonding & Surety Company, hereinafter referred to as the bonding company, as security. By the terms of this bond the bonding company bound itself for the completion of the bridge according to the contract, with the additional obligation that such contractors "shall promptly make payments to all persons supplying them with labor and (or) materials in the prosecution of the work provided for in such contract." The statute gives the right to sue on this bond to any person having such unpaid claim, and requires all such persons to intervene in any such suit when brought.

3. On April 30, 1914, the contractors, for the purpose of indemnifying the bonding company against any amount for which it might become liable on its bond, gave to said company a written assignment of the 15 per cent. of the contract price of the bridge to be retained by the county.

4. The Vincennes Bridge Company, hereinafter referred to as the bridge company, furnished the steel for the erection of the bridge. On August 25, 1914, the contractors, for the purpose of securing the bridge company for any amount that they then owed, or might thereafter owe, to said company, gave it a written assignment of its contract with the county.

5. In February, 1914, the contractors borrowed from the First National Bank of Smithville, hereinafter referred to as the bank, $1,500, and as security therefor gave the bank an order on the county for that amount to be paid out of the money to become due them on said contract. This order was properly presented to the county judge of Bastrop county, and was accepted by him. It would have been paid but for the fact that he was enjoined by appellant from making such payment.

6. At the time the assignment was given to the bank neither it nor Bastrop county, nor the county judge, had any notice of the assignment by the contractors to appellant.

7. During the progress of the work on the bridge certain local merchants, the contractors, and the laborers entered into an agreement whereby the merchants were to furnish the laborers goods. The contractors were to pay for the same out of wages due and to become due such laborers, and deduct the amount of such payments from the wages of said respective laborers.

8. Appellants brought suit to enjoin the county from paying out any of the funds due on the contract to the bank or to the bridge company. M. M. Turney brought suit to recover the amount due him from the county, and the bonding company and other appellees intervened in said suit. The two suits were consolidated and tried together.

9. The case was tried before the court without a jury. Judgment was rendered against appellant for Turney and for all of the interveners, 38 in number, for the respective amounts shown in the judgment of the court, except W. C. Moore, Falkenberg Drug Company, and Alamo Ironworks, and foreclosing their lien on the money in the registry of the court.

10. The court filed its findings of fact herein, which we approve; but as they are very lengthy, rendered so by the number of the parties herein and the finding as to each claim, we do not deem it necessary to set out such findings of fact. We think that our findings of fact as herein set out, together with such additional facts as are stated in the opinion herein, are all that are necessary to an understanding of the issues here involved.

11. Appellant, Lion Bonding & Surety Company, only appealed from the judgment rendered.

Opinion.

This case was tried before the court without a jury. Appellant filed a motion for a new trial. It did not copy any part of its motion for a new trial as assignments of error, but filed assignments independent of such motion. Appellees objected to the consideration of these assignments. We certified to the Supreme Court the question whether or not the assignments herein should be considered, and that court answered in the affirmative. The question was certified under the style of Hess & Skinner Engineering Company v. M. M. Turney et al.

R. E. Hoppe recovered judgment for goods sold to laborers, under the circumstances, as local merchants, mentioned in our seventh finding of fact, supra, for the amounts due him, with the right of pro rata participation of the funds in the registry of the court. In this there was no error. The transaction mentioned in said finding of fact amounted to an equitable assignment to him of the claims of the laborers. McIlhenny v. Binz, 80 Tex. 20, 13 S. W. 655, 26 Am. St. Rep. 705.

One of the appellees herein is the bridge company. At one of the periodical settlements between the county and the contractors it was found that the county was due the contractors $16,149.80. There were present at this settlement one of the contractors, the county judge, an agent of the bridge company, and a representative of all of the local merchants. There was then due the local merchants, under the agreement referred to in the seventh finding of fact, supra, the sum of $6,499.80. The representative of the local merchants objected to any of this sum being paid to the contractors. It was then agreed by all parties that the county should issue to the contractors two warrants, one for the sum of $6,499.80, which should be immediately indorsed by the contractors to the representative of the local merchants, and the other for the balance, $9,650. This was done, and the warrant for $6.499.80 was collected by the representative of the merchants, and the proceeds was paid to them.

In connection with these facts, appellant submits the following proposition:

"Where a creditor releases the securities held by him for the payment of an obligation for which a surety is liable, the release of said securities operates to discharge and release the surety, at all events to the extent of the value of the securities released."

This proposition, under the facts ordinarily existing in suits against sureties, is too well established to require citation of authorities in its support. The bridge company, by its agreement and indorsement of the $6,499.80 warrant to the merchants, released security which it had the right to retain by virtue of the assignment to it, as stated in our fourth finding of fact, supra.

To the above proposition there should be added, under the facts of this case, the following:

Where, however, a surety is engaged in the business of suretyship for profit, and it appears that he was not injured by such release, he will not be discharged thereby, in whole or in part. Rule v. Andrews, 160 Mo. App. 347, 142 S. W. 358; U. S. Fidelity Co. v. United States, 191 U. S. 416, 24 Sup. Ct. 142, 48 L. Ed. 242; People v. Bowen, 187 Mich. 257, 153 N. W. 672.

It is stated in the note to Hormel v. Bonding Co., 33 L. R. A. (N. S.) 513, that the overwhelming weight of authority supports the proposition that the rule of strictissimi juris, by which the rights of uncompensated sureties are determined, is not applicable to the contracts of surety companies, which make the matter of suretyship a business for profit. See the numerous authorities cited in this note in support of the proposition.

Under the assignment stated in the fourth finding of fact, supra, the bridge company had the right to have all of the $16,149.80 due by the county to the contractors paid to it. Had it done so the debt of the contractors to it would have been reduced by the amount of $6,499.80, which it consented to have paid to the local merchants. But in that event the debt of the contractors to the merchants for that amount would have remained unpaid, and by virtue of their equitable assignment from the laborers they could have recovered that amount against appellant in this suit. The appellant suffered no injury by said transaction, as its liabilities were not lessened thereby. It can make no difference that in this suit it was the bridge company instead of the local merchants that recovered against it.

Among the recoveries in this case against appellants was one for $1,612.60, in favor of the bank, the same being the principal and interest of the loan made to the contractors, as stated in our fifth finding of fact. In this we think there was error.

The contractors at the time they borrowed this money represented to the bank...