Indemnity Ins. Co. v. W. L. Macatee & Sons

• Decision Date: 17 February 1937
• Docket Number: No. 1655-6754.,1655-6754.
• Citation: Indemnity Ins. Co. v. W. L. Macatee & Sons, 101 S.W.2d 553 (Tex. 1937)
• Parties: INDEMNITY INS. CO. OF NORTH AMERICA v. W. L. MACATEE & SONS.
• Court: Texas Supreme Court

101 S.W.2d 553

INDEMNITY INS. CO. OF NORTH AMERICA v. W. L. MACATEE & SONS.

No. 1655-6754.

Commission of Appeals of Texas, Section B.

February 17, 1937.

Error to Court of Civil Appeals of First Supreme Judicial District.

Suit by W. L. Macatee & Sons against Fred B. Chambers and the Indemnity Insurance Company of North America. Judgment for the plaintiffs, for less than the amount prayed, was reversed by the Court of Civil Appeals [69 S.W.(2d) 486], which rendered judgment in favor of the plaintiffs for an increased amount, and the Insurance Company brings error.

Judgment of the Court of Civil Appeals affirmed.

Baker, Botts, Andrews & Wharton and Homer L. Bruce, all of Houston, and S. H. German, of Austin, for plaintiff in error.

E. R. Campbell and H. L. Nicholson, both of Houston, for defendants in error.

SMEDLEY, Commissioner.

Fred B. Chambers as principal and plaintiff in error as surety executed a bond to secure the performance by Chambers of his contract for the construction of a school building for the Houston Independent School District. The bond bound the makers to perform the building contract and to pay all subcontractors, workmen, laborers, mechanics, and furnishers of material as their interests might appear. Being financially unable to meet the weekly pay rolls for labor, Chambers made an agreement with defendants in error, W. L. Macatee & Sons, under which Macatee & Sons advanced each week for nineteen weeks during the progress of the work the funds necessary to pay the laborers. The agreement was that Macatee & Sons should pay to Chambers each week the amount due the laborers as wages, that the money paid should be used for that purpose, and that Chambers should procure the execution by the workmen of written assignments to Macatee & Sons of their several claims for such wages. In performance of the agreement Chambers prepared each week a pay roll containing the names of the laborers and the amount due each, with lines opposite the names and amounts for the laborers' signatures. These pay rolls were delivered to the credit man of Macatee & Sons, who firmly attached to and in front of each of the pay rolls a sheet of paper on which was typewritten the following: "The money covering the wages set out on the attached sheets having been paid to us by W. L. Macatee & Sons, we hereby assign to W. L. Macatee & Sons our respective claims for such services and subrogate them to all our rights under such claims." The pay roll and the attached assignment sheet, together with a check for the amount shown by the pay roll to be due the laborers, were delivered to Chambers, who used the proceeds of the check to pay the laborers in cash and procured their signatures to the pay roll when payment was made to them.

Chambers was unable to complete the building, and it was taken over and finished by plaintiff in error, the surety. All claims for labor and material arising out of the construction of the building were paid, except that the surety company declined to pay to defendants in error, Macatee & Sons, the claims assigned to them by the laborers. Thereupon defendants in error filed this suit against Chambers and plaintiff in error, the surety company for the recovery of $30,320.15, alleged to be the aggregate amount of the claims assigned to them by the laborers, and for interest and attorney's fees.

On trial before the court without a jury judgment was rendered in favor of Macatee & Sons against Chambers and the surety company for $790.78, with interest, representing the amount of the claims assigned by one laborer, Treloar. Macatee & Sons appealed, and the Court of Civil Appeals reversed the judgment, which awarded to them $790.78, and rendered judgment in their favor against the surety company for $22,804.60, together with interest and attorney's fees. W. L. Macatee & Sons v. Chambers, 69 S.W.(2d) 486. The surety company's application for writ of error was granted.

The trial court filed no formal findings of fact, but it is shown by a statement made by the court at the conclusion of the trial, appearing in the transcript of the evidence, that the basis of the trial court's judgment was the conclusion that the acts of the laborers in signing the pay rolls with the assignment sheets attached did not constitute assignments of their claims, because, with the exception of Treloar, they did not know the contents of the attached assignment sheets and therefore did not intend by signing the pay rolls to assign their claims. The Court of Civil Appeals treated the pay roll and the attached assignment as in effect one instrument and held that valid assignments of their claims were made by the laborers, there being no evidence showing that they were induced to sign the pay rolls by any false or fraudulent representation or concealment.

The original nineteen weekly pay rolls with the attached assignment sheets were introduced in evidence and sent up with the record. The pay rolls are upon printed ruled sheets of paper seventeen by eleven inches in size. One column contains the names of the workmen written one under the other on separate lines. In other columns opposite the names are written under printed headings the number of hours of work done each day of the week, the total time, the rate of pay, and the amount due. In the last column and opposite each name are the signatures of the workmen under the printed heading, "Received payment in full to date." The sheet attached to each weekly pay roll upon which the assignment appears is an ordinary white sheet of paper eleven by eight and one-half inches in size. The words of assignment hereinbefore quoted are typewritten, double spaced, in the center of the page. Three of the weekly pay rolls consist each of one sheet, four of them each of two sheets, and the remaining twelve each of three sheets. The sheet on which the assignment is written is attached at the top to and in front of the sheet or sheets containing the pay roll.

Treloar, who paid the workmen for Chambers, stood inside a house at a window from which a ledge projected. The men formed in line outside the house and came, one at a time, to the window to sign the pay roll and receive their pay. The pay roll with the assignment sheet attached rested upon the ledge in front of Treloar. As the workman came to the window, Treloar folded back the top sheet containing the assignment so that the workman could see his name and the amount due him and sign opposite his name. The money due was delivered to him in an envelope when he had signed his name. If the pay roll covered more than one sheet and the workman's name appeared on the second or third sheet, the first or the first and second sheets of the pay roll, as well as the assignment sheet, were turned or folded back so that the workman could sign the payroll opposite his name. Treloar did not explain the assignment to any of the men and did not direct their attention to it. He did nothing to conceal from them the contents of the assignment sheet or to prevent them from knowing that it was attached to the front of the pay roll. The words constituting the assignment were concealed from the workmen when the sheet on which they were written was turned or folded back, but the assignment sheet was in plain view of the men before it was folded back and, when they signed the pay roll, whether on the first, second, or third page, they saw that one, two, or three attached sheets in front of the page on which they had signed had been turned back.

None of the men who signed the pay roll testified except Treloar and Horn. Treloar knew that the pages containing the assignments...