Northwestern Cas. & Surety Co. v. First Nat. Bank

• Citation: 36 S.W.2d 535
• Decision Date: 26 February 1931
• Docket Number: No. 1017.,1017.
• Parties: NORTHWESTERN CASUALTY & SURETY CO. v. FIRST NAT. BANK OF MADISONVILLE et al.
• Court: Court of Appeals of Texas

36 S.W.2d 535

NORTHWESTERN CASUALTY & SURETY CO. v. FIRST NAT. BANK OF MADISONVILLE et al.

No. 1017.

Court of Civil Appeals of Texas. Waco.

February 26, 1931.

Rehearing Denied March 26, 1931.

Appeal from District Court, Madison County; S. W. Dean, Judge.

Separate suits by the Northwestern Casualty & Surety Company and by the First National Bank of Madisonville against the Board of Trustees of Madisonville Independent School District, consolidated for trial, wherein others filed pleas of intervention. From the judgment, the Northwestern Casualty & Surety Company appeals, opposed by the First National Bank of Madisonville and others.

Reversed and rendered.

M. E. Gates, of Huntsville, Baker, Botts, Andrews & Wharton, and S. H. German, all of Houston, and Tom Scurry, of Dallas, for appellant.

Brownlee & Brownlee, and J. L. Broadway, all of Madisonville, and M. L. Bennett, of Normangee, for appellees.

BARCUS, J.

In November, 1928, the Thomas-Sable Construction Company, hereinafter called contractor, made a contract with the board of trustees of the Madisonville independent school district, hereinafter called trustees, to construct a school building for an agreed price of $49,000. The contractor furnished a bond, signed by appellant, hereinafter called surety company, under the terms of which the contractor was obligated to pay all claims, debts, or judgments, whether for materials furnished or labor performed; and said bond provided specifically that same was made for the benefit of all subcontractors, persons, firms, or corporations who might furnish any material or perform labor for or on account of the construction of said building. In the application for the bond and as a part thereof, the contractor specifically transferred and conveyed to the surety company all the deferred payments and retained percentages and any and all moneys and properties that might be due and payable to him at the time of any breach or default in said contract, or that might thereafter become due under the contract, and agreed that in such event all of said money and property should become the sole property of the surety company. Under the terms of the contract the trustees were to pay the contractor 85 per cent. of each estimate as approved by the architect and retain 15 per cent. until the building was completed. Under said arrangements the trustees paid the contractor approximately $39,600.

On May 10, 1929, the contractor, not having sufficient funds to pay the laborers and materialmen for labor and material used in the construction of said building, applied to the First National Bank of Madisonville, hereinafter called bank, for an advancement of $5,000 with which to pay said laborers and materialmen. The bank furnished said $5,000, and, in order to comply with its conception of the banking law, took from the contractor a demand note for said amount. At the same time and as part of the same transaction, the contractor assigned to the bank all of the future estimates due or to become due from the trustees to him until the $5,000 was paid, which assignment was duly accepted by the trustees. Thereafter three separate estimates, totaling $10,587.52, payable to the contractor and bank jointly, were issued and paid by the trustees to said bank. Out of this fund the bank credited $3,000 on the $5,000 note and permitted the contractor to, and he did, use the remaining $7,587.52 to pay for additional labor and material used on said building. The last of the above estimates was issued July 8, 1929, and shortly thereafter the contractor abandoned the contract and the trustees notified the surety company thereof. It took over the contract and completed the building, and same was accepted by the trustees. In completing the building the surety company spent approximately $7,800, and in addition thereto it paid approximately $7,000 for material and labor that had been incurred by the contractor.

After the building was completed and accepted, the bank filed suit against the school district and its trustees, individually, for the $2,000 and accumulated interest still due on the money it advanced or loaned to the contractor. The surety company filed a separate suit against the trustees to recover the balance of the unpaid purchase price due by the trustees under the contract, amounting to approximately $10,368. The two suits were consolidated and several individual laborers and materialmen filed pleas of intervention. The cause was tried to a jury and resulted in judgment...