Lion Bonding & Surety Co. v. First State Bank

• Citation: 194 S.W. 1012
• Decision Date: 03 April 1917
• Docket Number: (No. 1774.)
• Parties: LION BONDING & SURETY CO. v. FIRST STATE BANK OF PARIS et al.
• Court: Court of Appeals of Texas

Page 1012

194 S.W. 1012

LION BONDING & SURETY CO. v. FIRST STATE BANK OF PARIS et al.

(No. 1774.)

Court of Civil Appeals of Texas. Texarkana.

April 3, 1917.

Rehearing Denied May 17, 1917.

Appeal from District Court, Lamar County; A. P. Dohoney, Judge.

Action by the First State Bank of Paris against the Lion Bonding & Surety Company and others. From the judgment the defendant named appeals. Judgment reformed.

Thomas, Milam & Touchstone, of Dallas, and Long & Wortham, of Paris, for appellant. Wright & Patrick, M. H. Baughn, Fred Dudley, and A. Park, all of Paris, Head, Dillard, Smith, Maxey & Head, of Sherman, and Coke & Coke, and Burgess, Burgess, Chrestman & Brundidge, all of Dallas, for appellees.

HODGES, J.

In February, 1914, R. D. Moxley & Co., a partnership composed of R. D. Moxley and T. J. O'Donnell, entered into a contract with the city of Paris by which they agreed to pave Pine Bluff street, in that city, with asphalt macadam, according to certain detailed plans and specifications. At the time this contract was signed Moxley & Co. also executed a bond in the sum of $22,787, with the appellant, Lion Bonding & Surety Company, as its surety, by which the city of Paris was to be indemnified against any loss resulting from the failure of Moxley & Co. to perform their contract according to its terms. The bond also contained stipulations which bound the surety company for the payment of certain claims held by third parties who had furnished material or labor to Moxley & Co. in the prosecution of the work. In April, 1914, the contractors began the work of construction, and continued till October following, when the street was turned over to the city for use. During the progress of the work numerous debts were contracted by Moxley & Co. for labor and material furnished, some of which were left unpaid when the work was terminated. Soon after executing their contract and bond Moxley & Co. applied for and received from the appellee the First State Bank a loan of $7,500, for which they executed their note. Moxley & Co. at the same time, and as security for the loan, executed to J. W. Hardison, cashier of the bank, a power of attorney authorizing him to collect from the city of Paris all of the sums of money then due or thereafter to become due to Moxley & Co. under the terms of their contract. This power of attorney was promptly filed with the city secretary. Some time later other loans were made to Moxley & Co. by the bank, a portion of which was repaid. This suit was instituted by the bank against Moxley & Co. and appellant as its surety on the bond above mentioned to recover the sum of $9,793.31, which, it is alleged, is the balance due upon the indebtedness held by the bank. The city of Paris was afterwards made a party to the suit, upon the ground that it still had in its hands funds belonging to Moxley & Co. in which the bank had an interest by assignment. Various other parties having small claims against Moxley & Co. for labor and material were also impleaded. The bank pleaded the contract of Moxley & Co. with the city to do the street paving, and the bond given to secure the performance of that contract, and especially those provisions by which Moxley & Co. and the surety company obligated themselves to pay all claims of any character against Moxley & Co. growing out of the prosecution of the work; it also pleaded the execution of the notes for the loans made to Moxley & Co., and the balance due upon those obligations. The city of Paris pleaded its contract with Moxley, and alleged that the contract had not been fully complied with, that the paving was defective, and that it would require $1,000 to complete the work according to the original contract. The city admitted that it still had in its hands $3,093.25 due Moxley & Co. upon the final estimate, and the further sum of $3,430.87 held under the terms of its contract as a reserve fund. The city also pleaded certain stipulations of the contract with Moxley & Co. whereby it had the option of retaining 10 cents for each square yard of paving as a maintenance fund for a period of five years in lieu of a maintenance bond. It was further alleged that the pavement covered 14,100 square yards, and a judgment was asked for the $1,000 damages, and that the city be permitted to retain $1,410 as a maintenance fund for the term of five years. The balance held by the bank was tendered into court to be disposed of as the court might deem proper. Judgment was rendered in favor of the bank against Moxley & Co. and the appellant surety company for the full amount of its claim, and in favor of the city for $1,000 as damages, and for $1,410 as a maintenance fund. Judgments were also rendered against Moxley & Co. and the appellant for numerous small claims held by...