Huddleston & Work v. Kennedy

• Decision Date: 20 February 1931
• Docket Number: No. 804.,804.
• Parties: HUDDLESTON & WORK et al. v. KENNEDY et al.
• Court: Texas Court of Appeals

57 S.W.2d 255

HUDDLESTON & WORK et al. v. KENNEDY et al.

No. 804.

Court of Civil Appeals of Texas. Eastland.

February 20, 1931.

Rehearing Denied February 10, 1933.

Appeal from District Court, Throckmorton County; Bruce W. Bryant, Judge.

Suit by Earl Kennedy against Huddleston & Work, a copartnership composed of G. E. Huddleston and H. Work, and another, wherein several parties intervened. From the judgment rendered, the defendants appeal.

Affirmed in part, reformed and affirmed in part, and reversed and remanded in part.

Questions certified by the Court of Civil Appeals answered in 53 S.W.(2d) 1009.

McCormick, Bromberg, Leftwich & Carrington, of Dallas, Coombes & Andrews, of Stamford, T. R. Odell, of Haskell, and E. A. Watson, of Throckmorton, for appellants.

B. F. Reynolds and Jeff A. Fowler, both of Throckmorton, Murchison & Davis, of Haskell, and J. Fred Wright, of Throckmorton, for appellees.

HICKMAN, Chief Justice.

Huddleston & Work, a copartnership composed of G. E. Huddleston and H. Work, were the general contractors under a contract with the state of Texas, acting through the state highway department, for the construction and improvement of a certain state highway in Throckmorton county. The contractors furnished an indemnity bond for the faithful performance of said contract, as provided in article 5160, R. S. 1925, as amended by Acts 1929, c. 226, § 1 (Vernon's Ann. Civ. St. art. 5160). Subsequent to the making of the contract with the state the contractors sublet certain portions of the work to W. M. Harrison as subcontractor, and also sublet portions thereof to Douglas & Sons as subcontractors. The subcontractors entered upon and commenced the performance of the work, but after a period of a few weeks each subcontractor became involved in financial difficulties and finally each abandoned the contract. After the abandonment by the subcontractors, various of the appellees filed claims with the state highway department for labor performed and material furnished by them to the subcontractors. Certain of the appellees filed claims for money loaned to one of the subcontractors which was used to pay labor and material bills. These claims so filed with the highway department were asserted as liens upon the amount due by the state to the general contractors by virtue of articles 5472a and 5472b, Vernon's Ann. Civ. St. The highway department withheld funds due the general contractors on account of the claims so filed by appellees, whereupon the general contractors executed a release bond, as provided by the Acts of 1929, Forty-First Legislature, 2d Called Sess., p. 154, c. 78, brought forward in Vernon's Annotated Revised Civil Statutes of Texas as article 5472b—1. The appellant Union Indemnity Company was the surety on this release bond. The bond was payable to Ed L. Merriman, Earl Kennedy, Thompson Hardware Company, Bachman Bros., Joe Ingram, Eugene Pickard, Clifford Stewart, First National Bank of Throckmorton, and Throckmorton Milling Company, and was conditioned as required by the above-cited statute. Upon the filing of the bond the impounded funds were paid by the state highway department to the general contractors. Thereafter, the instant suit was instituted by Earl Kennedy against Huddleston & Work and Union Indemnity Company. Each of the payees named in said bond, except Thompson Hardware Company, intervened in the suit, and in addition thereto the appellees C. A. Hughes and W. H. Everett, not made payees in said bond, also intervened. Thompson Hardware Company never made itself a party to the suit and its claim is not before us.

In their several pleadings the appellees undertook to set up a twofold cause of action. They first sought to recover upon the general contractors' original bond, given in compliance with amended article 5160, R. S. 1925 (Vernon's Ann. Civ. St. art. 5160). They sought secondly to recover on the release bond, given by the general contractors under the terms and provisions of article 5472b—1. Special exceptions of appellants were sustained to each of the petitions in so far as recovery was sought on the first bond, because the petitions wholly failed to allege the filing of a sworn itemized account with the county clerk or the general contractors within the time required by amended article 5160. The appellees refused to amend, but elected to prosecute their respective suits on that portion of their pleadings seeking a recovery on the release bond, given under article 5472b— 1. Various other exceptions and demurrers were interposed by appellants, all of which were overruled.

The case was submitted to a jury on special issues. All of the issues submitted were answered favorably to appellees, and on the verdict of the jury judgment was entered in favor of the plaintiff Earl Kennedy and each of the interveners, for the respective amounts found by the jury. Huddleston & Work and Union Indemnity Company have appealed from that judgment and file in this court a joint brief.

Since none of the appellees complied with the provisions of amended article 5160, R. S. 1925, with reference to the filing of their claims with the county clerk or the general contractors, no liability existed under and by virtue of the original bond given in accordance with that article, and the trial court did not err in sustaining special exceptions to the petitions in so far as recovery was sought thereon. Indemnity Ins. Co. of North America v. South Texas Lbr. Co. (Tex. Com. App.) 29 S.W.(2d) 1009; Fidelity & Deposit Co. of Md. v. Prassel Sash & Door Co. (Tex. Civ. App.) 24 S.W.(2d) 539.

The answer to the question presented of whether liability to appellees, as furnishers of labor and material to the subcontractors, exists on the release bond executed in accordance with article 5472b—1, must be arrived at by a construction of articles 5472a and 5472b. These articles read as follows:

Art. 5472a. "That any person, firm or corporation, or trust estate, furnishing any material, apparatus, fixtures, machinery or labor to any contractor for any public improvements in this State, shall have a lien on the moneys, or bonds, or warrants, due or to become due to such contractors for such improvements; provided, such person, firm, corporation, or stock association, shall, before any payment is made to such contractor, notify in writing the officials of the State, county, town or municipality whose duty it is to pay such contractor of his claim."

Art. 5472b. "That no public official, when so notified in writing, shall pay all of said moneys, bonds or warrants, due said contractor, but shall retain enough of said moneys, bonds or warrants to pay said claim, in case it is established by judgment in a court of proper jurisdiction."

The principal contentions of appellants with regard to the construction of these articles are: (1) That the lien therein provided for is available to those only who give written notice of their claims before any payment is made to the general contractor; and (2) that the lien therein given inures to the benefit only of those who furnish labor and material to the general contractor, and not to those who furnish labor and material to subcontractors. In support of their contentions the argument is presented in appellants' brief in this manner: Legislative intent is available by resorting to the statutes in effect at the time articles 5472a and 5472b were passed, and to the emergency clause (section 3) attached to chapter 17, Acts 1925, which constitutes articles 5472a and 5472b. It is asserted in the argument that, at the time these articles were passed, article 5160 contained this provision: "Provided further, that no person or persons, firm or corporation shall be secured in the payment of any claim contracted prior to the execution of the contract that said bond is given to secure."

From this premise the argument is developed that, when articles 5472a and 5472b were enacted, full provision was afforded by article 5160 to all people and concerns who furnished labor and material that went into construction work, whether furnished to the general contractor or subcontractor, but that the statute excluded those persons whose claims were incurred prior to the making of the contract with the state highway department.

To quote from the brief: "Thus were left unprotected those who sold machinery and apparatus to the general contractor before he actually made the contract, and those who performed labor for him on the equipment that he had to enable him to bid for and secure the contract. To remedy this situation the Legislature in 1925 enacted what is referred to as articles 5472a and b, * * *."

It is further argued that this view finds confirmation in the emergency clause. These considerations lead appellants to conclude as follows: "So, the Legislature created a complete plan of protection for all parties: on one hand by article 5160 it required a bond for the protection of the people furnishing labor and material that actually went into the job and was contracted for after the State Highway Commission had let the original contract to the general contractor, whether such labor and material were furnished to a sub-contractor or a general contractor; and on the other hand, by lien given in articles 5472a and b, it protected people who sold machinery, apparatus and material to the contractor before he made the contract to enable himself to qualify to take the contract with the state."

We were impressed by this argument until we discovered same was built upon an incorrect premise. In 1925, when articles 5472a and 5472b were enacted, article 5160 did not contain the proviso, above quoted, excluding from its application those whose claims were based upon contract made prior to the execution of the general contract with the state. That provision entered into the statute first in 1927, when article 5160 was amended by the Fortieth Legislature, First Called Session, p....