Knox v. Ball

• Decision Date: 28 November 1945
• Docket Number: No. A-506.,A-506.
• Citation: 191 S.W.2d 17
• Parties: KNOX v. BALL et al.
• Court: Texas Supreme Court

191 S.W.2d 17

KNOX v. BALL et al.

No. A-506.

Supreme Court of Texas.

November 28, 1945.

Rehearing Denied January 9, 1946.

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

Suit by Will G. Knox, as receiver of the United Employers Casualty Company, against R. F. Ball, W. F. Warfield & Company, Inc., and others for unpaid premiums on certain workmen's compensation and public liability insurance policies. A judgment, sustaining special exceptions to petitioner's pleadings and dismissing the suit as against all defendants except named corporation, and a judgment against it only, were affirmed by the Court of Civil Appeals, 185 S.W.2d 124, and plaintiff brings error.

Reversed and remanded in part, and otherwise affirmed.

Devereaux Henderson, of Houston, for petitioner.

Cole, Patterson, Cole & McDaniel and Robt. L. Cole, Sr., all of Houston, for Standard Accident Ins. Co. and R. F. Ball et al.

Albert J. DeLange, of Houston, for Housing Authority of Houston.

FOLLEY, Justice.

This suit was filed by the petitioner, Will G. Knox, as receiver of United Employers Casualty Company, against R. F. Ball individually and his successor in business, R. F. Ball Construction Company, as general contractors, the Housing Authority of the City of Houston, W. F. Warfield & Company, Inc., as subcontractor, and the respective sureties on the contractors' and subcontractors' bonds, namely, the National Surety Corporation of New York and Standard Accident Insurance Company of Detroit, seeking recovery for unpaid premiums on certain workmen's compensation and public liability insurance policies which were issued by United Employers Casualty Company to the subcontractor, W. F. Warfield & Company, Inc., in connection with the construction of certain housing projects in the City of Houston under the correlated Federal and State Housing laws. 40 U.S. C.A. § 290; 42 U.S.C.A. §§ 1416, 1701 et seq.; Art. 1269k, Vernon's Ann.Civ.St.

The trial court sustained certain special exceptions to petitioner's pleadings and, upon his refusal to amend, entered an interlocutory order dismissing the suit against all adverse parties except W. F. Warfield & Company, Inc. The cause proceeded to trial between petitioner and the latter company and judgment was rendered against it for the insurance premiums, and other items not here material, but no recovery was allowed against the other defendants. The subcontractor, W. F. Warfield & Company, Inc., became insolvent and no appeal was prosecuted from the judgment against it. The petitioner appealed from that portion of the decree adverse to him, and the court of civil appeals affirmed the judgment, thus holding the pleadings insufficient to state a cause of action against any of the other defendants. There is no statement of facts in the record and the factual matters hereinafter stated are from the pleadings only.

From the allegations of petitioner it appears that at the inception of this controversy R. F. Ball was a general contractor operating under the firm name of R. L. Ball Construction Company, which business was later incorporated under the same name, and the corporation succeeded to the rights, duties and liabilities of its predecessor in business. On August 25, 1939, the Housing Authority entered into a written contract with R. F. Ball for the construction of a low-rent housing project in the City of Houston known as the Cuney Homes. The contract was financed by the Federal Agency, the United States Housing Authority, through the purchase of bonds issued by the Housing Authority of the City of Houston. The plans, specifications, conditions and requirements of the contract were prescribed by the Federal Agency. The contract required the contractor to furnish a satisfactory performance and payment bond and a surety bond as security for the faithful performance of the contract and for the payment of all persons performing labor and furnishing materials in connection with the contract.

The following additional provisions were embodied in the contract:

"The contractor shall furnish all labor, materials, equipment, appliances, services and things required for the execution, performance and completion of all work or improvement or development necessary to the completion of the project in accordance with the drawings and the specifications.

"It is understood that except as otherwise specifically stated in the contract documents, the contractor shall provide and pay for all materials, labor, tools, equipment, water, light, power, transportation, superintendence, temporary construction of every nature, all other services, facilities, and costs of every nature, whatsoever necessary to execute and complete the entire work to be done under the contract documents and deliver it complete in every respect."

In the "General Conditions" of the "Contract Documents" it was further provided that the general contractor should carry workmen's compensation insurance for all employees engaged in the work on the project and also carry public liability insurance to protect the contractor against claims for personal injuries and death which might occur on the project. It was further stipulated that if any part of such contractor's contract was sublet the contractor should require his subcontractor to maintain such compensation and public liability policies. The contractor also agreed to be as fully responsible to the local authority for the acts and omissions of subcontractors as he was for acts and omissions of persons directly employed by him.

In accordance with the terms of the general contract the original contractor as principal, and the National Surety Corporation of the City of New York as surety, entered into a bond, the material portions of which are as follows:

"Know all men by these presents that we, R. F. Ball, of Fort Worth, Tarrant County, Texas, operating under the firm name R. F. Ball Construction Company, hereinafter called Principal and National Surety Corporation of the City of New York, State of New York, hereinafter called Surety, are held and firmly bound unto the Housing Authority of the City of Houston, Texas, of Houston, Harris County, Texas, hereinafter called Owner, and unto all person—, firms and corporations who may furnish materials for, or perform labor upon the building or improvements hereinafter referred to, in the penal sum of Five Hundred Seventy-four Thousand, Two Hundred Fifteen Dollars ($574,215.00) in lawful money of the United States, to be paid in Harris County, Texas, for the payment of which sum, well and truly to be made, we bind ourselves, our heirs, executors, administrators and successors, jointly and severally, firmly by these presents.

"The condition of this obligation is such that whereas, the Principal entered into a certain contract with Housing Authority of the City of Houston, Texas, the owner, dated the 25th day of August, A. D. 1939, a copy of which is hereto attached and made a part hereof, for the construction and completion of a low-rent housing project identified as Project Tex 5—1, to be located in the City of Houston, Harris County, Texas, and consisting principally of one (1) Administration-Social Center Building and three hundred sixty (360) dwelling units contained in sixty-two (62) dwelling buildings, and including the construction and completion of all structures, plumbing, heating, electrical, site development, and landscaping incident thereto.

"Now, therefore, if the principal shall well, truly and faithfully perform all the undertakings, covenant, terms, conditions and agreements of said contract during the original term thereof and any extensions thereof which may be granted by the Owner, with or without notice to the Surety, and if he shall satisfy all claims and demands incurred under such contract, and shall fully indemnify and save harmless the Owner from all costs and damages which it may suffer by reason of failure to do so, and shall fully reimburse and repay the owner all outlay and expenses which the owner may incur in making good any default, and shall promptly make payment to all persons, firms, subcontractors, and corporations furnishing materials for or performing labor in the prosecution of the work provided for in such contract, and any authorized extension or modification thereof, then this obligation shall be void; otherwise to remain in full force and effect.

"Provided further that no final settlement between the owner and the contractor shall abridge the right of any beneficiary hereunder, whose claim may be unsatisfied."

On September 8, 1939, the general contractor entered into a subcontract with W. F. Warfield & Company, Inc., whereby the subcontractor was hired to perform for the general contractor, and under his supervision, all the obligations of the general contract respecting items of paving, underground utilities and miscellaneous accessories. The subcontractor agreed to furnish all labor, material, tools, equipment, and all other incidentals necessary to complete its part of the work. The subcontract specifically bound the subcontractor for all the terms and provisions of the general conditions and specifications in the same manner that the general contractor was bound to the Housing Authority. It further provided that the subcontractor should carry workmen's compensation and public liability insurance and furnish the general contractor with a bond guaranteeing the faithful performance of all the provisions of the subcontract.

In accordance with the terms of both contracts the W. F. Warfield & Company, Inc., as principal, and the Standard Accident Company, as surety, entered into a bond, the material portions of which are as follows:

"Know all men by these presents, That W. F. Warfield & Company, as Principal, the same being designated as Contractor in the foregoing contract, and Standard Accident Insurance Company, as surety, are held and firmly bound unto R. F. Ball Construction Company...