Houston General Ins. Co. v. Maples

• Decision Date: 03 October 1979
• Docket Number: No. 51347,51347
• Parties: HOUSTON GENERAL INSURANCE COMPANY, Hugh D. Null, Adams & Null Construction Company, Partnership v. Dudley MAPLES, d/b/a Maples Gas Company, United Tire Corporation, and Mississippi Road Supply Company, Inc.
• Court: Mississippi Supreme Court

Page 1012

375 So.2d 1012

HOUSTON GENERAL INSURANCE COMPANY, Hugh D. Null, Adams &amp Null Construction Company, Partnership v. Dudley MAPLES, d/b/a Maples Gas Company, United Tire Corporation, and Mississippi Road Supply Company, Inc.

No. 51347.

Supreme Court of Mississippi.

Oct. 3, 1979.

Rehearing Denied Oct. 31, 1979.

Joe Clay Hamilton, Meridian, for appellant.

Goldman & Goldman, Thomas L. Goldman, Snow, Covington, Temple & Watts, E. L. Snow, Meridian, Riddick & Carpenter, B. L. Riddick, Jackson, for appellee.

Before PATTERSON, SUGG and WALKER, JJ.

PATTERSON, Chief Justice, for the Court:

This appeal is from a decree of the Chancery Court of Lauderdale County wherein Houston General Insurance Company, surety, Hugh D. Null, individually, Billy J. Adams, individually, Adams & Null Construction Company, a partnership, and Adams Construction Company, Inc., were held liable for materials and labor furnished pursuant to a public contract.

The original complainant, Dudley Maples, d/b/a Maples Gas Company, filed his complaint for payment of debts incurred by Hugh D. Null and Billy J. Adams, partners, d/b/a Adams & Null Construction Company, and Adams Construction Company, Inc. for petroleum products used in a construction project for Meridian Junior College. United Tire Corporation intervened and prayed for relief from debts incurred by the above defendants in the purchase of supplies and materials, as did Mississippi Road Supply Company seeking rental payments for the use of heavy equipment on the college improvement project.

The issues concern the liability of Houston General Insurance Company pursuant to a performance bond entered with Adams & Null Construction Company, partnership, for materials and supplies used in performing the public contract.

The trial court held the surety and Hugh D. Null, individually, Billy J. Adams, individually, Adams & Null Construction Company, jointly and severally liable to Maples Gas Company, United Tire Corporation and Mississippi Road Supply Company for a portion of the amounts they sought plus interest and costs.

In the spring of 1975 Hugh D. Null, contractor, and Billy J. Adams, owner of Adams Construction Company, entered into a partnership agreement to bid on an upcoming construction project of Meridian Junior College. Their bid was accepted and a contract entered between the partnership and the Mississippi Building Commission for improvements to Meridian Junior College. The bid for the contract was approximately $198,000 which the partners agreed to "split" between themselves on a fifty-fifty profit or loss basis. A performance bond was required before construction began on this, as other state contracts; the bond was procured by Adams & Null Construction Company, partnership, from Houston General Insurance Company.

Adams Construction Company, Inc., of which Billy J. Adams was president, possessed several pieces of heavy construction equipment. Adams was also a partner in the newly-formed Adams & Null Construction Company. Adams Construction Company, Inc., through Billy J. Adams, agreed with the partnership to rent some of the heavy equipment to it on an hourly basis, including the cost of fuel and compensation to the operator, the partnership providing supervision only for its use on the project.

The equipment was in the possession of Adams Construction Company, Inc. through a lease-purchase agreement with Mississippi Road Supply, hereinafter Road Supply. However, the agreement was in jeopardy, because the construction company was unable to meet the financial terms of its lease-purchase agreement with Road Supply.

Adams and a representative of Road Supply entered into a new agreement whereby Adams Construction Company, Inc. would rent the equipment from Road Supply. This agreement was prompted by Adams & Null Construction Company's, partnership, securing the contract for the college project which engendered the hope of Road Supply that it could receive some financial return from the heavy equipment.

Construction on the project began in the last week of May 1975, and on July 5, 1975, the partnership received its first progress payment for work that had been completed; the payment was deposited in the partnership account. Thereafter, Null drew several checks on the account in payment of partnership debts. The checks were returned because of insufficient funds, and upon investigation, Null discovered the funds had been embezzled by Adams. Thereafter, apparently a precaution, Null required the signatures of two persons on all partnership checks and obtained a second deed of trust on Adams' personal residence to cover the embezzled funds.

Road Supply had difficulty in collecting the rent and insurance on its equipment. On August 26, 1975, a meeting was held between Road Supply, Null, Adams and others. An agreement was reached whereby Null was permitted to rent the equipment from Road Supply at the same price that it had previously been rented to Adams Construction Company, Inc.

The partnership of Adams and Null was in disarray, but nevertheless Null continued to use the heavy equipment on the project until November 5, 1975, when it was returned to Adams. The construction under the contract was completed in June 1976.

While construction was under way, certain materials and supplies were allegedly provided by the complainant and intervenors for use in the project. Maples Gas Company provided petroleum products for use in the construction work, Road Supply rented the equipment to the contractors for use on the construction site, and United Tire Corporation supplied tires for the heavy equipment and made repairs to them as necessary.

The partnership did not pay the accounts to the materialmen, and Adams Construction Company, Inc. was insolvent and the partnership dissolved. This resulted in the present suit of the materialmen against the debtors as well as the surety on their bond.

The chancellor found from a preponderance of the evidence that Maples Gas Company had supplied material, primarily fuel, valued at $6,465.73 which was used in performing the contract. He also found that United Tire, intervenor, furnished materials and repairs to Adams & Null Construction Company in the performance of the contract between the 27th day of June 1975, and the 29th day of August 1975, inclusive, valued at $3,951.40. Road Supply, intervenor, was found to be entitled to a reasonable rental of $4,029.12 for the use of the heavy equipment on the...