Roylex, Inc. v. Langson Bros. Const. Co., Inc.

• Citation: 585 S.W.2d 768
• Decision Date: 17 May 1979
• Docket Number: No. 17328,17328
• Parties: ROYLEX, INC., Appellant, v. LANGSON BROS. CONSTRUCTION CO., INC., Don K. Langson, Richard K. Langson, Bruce K. Langson and Fidelity and Deposit Company of Maryland, Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 768

585 S.W.2d 768

ROYLEX, INC., Appellant, v. LANGSON BROS. CONSTRUCTION CO., INC., Don K. Langson, Richard K. Langson, Bruce K. Langson and Fidelity and Deposit Company of Maryland, Appellees.

No. 17328.

Court of Civil Appeals of Texas, Houston (1st Dist.).

May 17, 1979.

Rehearing Denied July 12, 1979.

George M. Bishop, Houston, for appellant.

Bailey & Black, David B. Black, Fulbright & Jaworski, William L. Maynard, Houston, for appellees.

PEDEN, Justice.

Roylex, Inc. (Roylex) appeals from a judgment denying recovery against individual defendants and awarding Roylex a recovery of $10,764.26 against only Langson Brothers Construction Co., Inc. (Langson, Inc.) plus attorney's fees. Roylex alleges that the trial court erred in failing to award prejudgment and post-judgment interest, in failing to find that Langson, Inc. was the alter ego of the three Langson brothers, and in entering summary judgment in favor of Fidelity and Deposit Company. On crosspoint, the appellees assert that Roylex's cause of action was barred by limitations. We amend to provide prejudgment interest and affirm.

On June 21, 1973, Langson, Inc. and Roylex entered into a construction contract on a project known as Pool & Patio Townhomes (Townhomes). Roylex was to supply the material and labor necessary to lay concrete for a street, Boardwalk Lane, curb and lane markers and curb inlets, the preparation for the street, and the hauling away of dirt. On August 20, 1973, the parties entered into a second contract for flat concrete work on the Garden Homes project, and they had entered into an oral contract on August 8, 1973, for concrete work on the Townhomes.

Mr. Royce Teel, president of Roylex, explained that while there were only two written contracts and two projects, there were the three "jobs" mentioned above. The only job not paid for is the construction of Boardwalk Lane under the June 21 contract, and by amendments filed as the trial began, Roylex sued on that contract alone, admitting that payment had been received on the other agreements theretofore sued upon.

Mr. Teel testified that each time concrete was poured, the yardage was measured and a draw or bill was sent by Roylex. Mrs. Teel, the bookkeeper for Roylex, stated that on September 21, 1973, the date of completion, $18,030.61 was owed to Roylex on the Townhomes project and $164.20 on the Garden Homes project. When Roylex received a check for Garden Homes in the amount of $7,266.35 in October, Mrs. Teel credited $164.20 of it to the Garden Homes project and the remainder to Townhomes. When asked why she had credited to Townhomes more than seven thousand dollars from a check that was marked for Garden Homes, she replied:

Well, I had to put it somewhere. Well, I because it said it said Garden Homes, but they so I credited the rest of it to the other job, because that's the only place to put it.

The only testimony offered by the Langsons was a small portion from a deposition.

Roylex's first two points of error complain of the trial court's failure to award prejudgment and post-judgment interest on its recovery. Roylex contends that since this is a suit on a written contract, it is entitled to the statutory prejudgment interest rate of 6% As provided by Article 5069-1.03, Vernon's Texas Civil Statutes. The Langsons point out that because of the confused state of Roylex's pleadings, Langson did not know until the time of trial which contract was being sued upon or what amount Roylex was claiming.

It is the general rule in Texas that prejudgment interest cannot be allowed Eo nomine (under that name) unless provided for by contract or statute. There are instances, however, where the courts have not been consistent or rigid in applying the rule in a manner that would deny a party legal compensation for the use or detention of his money. Phillips Petroleum Co. v. Stahl Petroleum, 569 S.W.2d 480 (Tex.1978).

"Interest" is defined as "the compensation allowed by law for the use of forebearance or detention of money." Article 5069-1.01(a) Vernon's Tex.Civ.Stat. (1971). Where a written contract is silent as to rate of interest the law provides that "interest at the rate of six percent per annum shall be allowed on all written contracts ascertaining the sum payable, from and after the time when the sum is due and payable." Article 5069-1.03 (1971).

In our case, the contract in question called for payment of $29,500. It provided that Roylex would submit a payment schedule to Langson, Inc. for its approval. Ten percent of the total contract price was to be deducted before the calculation of any progress payments, with the 10% To be due and payable 45 days after completion of the contract. In addition, the contract provided that payment was to be made as follows: 30% When steel was installed, 60% When concrete was installed and 10% Upon completion. The payment procedure outlined in this contract is one that is commonly employed. At any given stage of the contract not only the project's progress but also the obligor's payment liabilities can be readily ascertained. Clearly, Langson, Inc. was furnished the means of ascertaining with reasonable certainty the extent of its liability. It is true that there was some confusion as to whether the payments were credited to the correct accounts, but the only questionable bookkeeping entry did not adversely affect Langson, Inc.

The Texas Supreme Court has twice ruled since entry of judgment in our case that prejudgment interest may be awarded under Art. 5069-1.03 if a plaintiff proves a written contract ascertaining a sum payable on a date certain. Phillips Petroleum Co. v. Stahl Petroleum Co., supra; Republic National Bank v. Northwest National Bank, 578 S.W.2d 109 (1978).

We sustain the appellant's first point.

As to the lack of a specific award in the judgment of 9% Post-judgment interest, "(a)ll judgments of the courts of this State shall bear interest at the rate of nine percent per annum from and after the date of the judgment." Article 5069-1.05 Tex.Rev.Civ.Stat.Ann. (Supp.1975). The award of $10,764.26 plus attorney's fee bears interest at the rate of 9% Even though the judgment is silent as to post-judgment interest. See Broadway Drug Store of Galveston, Inc. v. Trowbridge, 435 S.W.2d 268 (Tex.Civ.App.1968, no writ).

Points of error 3, 4, 7, 8, and 9 concern the theory of alter ego. Roylex maintains that Don K. Langson, Bruce K. Langson, and Richard K. Langson treated Langson, Inc. as their alter ego and that the trial court erred in refusing to submit a special issue and an instruction on alter ego. The court expressly stated in the judgment that "(n)o evidence exists nor was any presented which would support plaintiff's assertion of an alter ego ground of recovery against the LANGSON BROTHERS, Individually or in their partnership capacity."

" Courts will not disregard the corporation fiction and hold individual officers, directors or stockholders liable on the obligations of a corporation except where it appears that the individuals are using the corporate entity as a sham to perpetrate a fraud, to avoid personal liability, avoid the effect of a statute, or in a few other exceptional situations." Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340, 351 (1955). Generally, the corporate form will be disregarded (1) where it is used as a means for perpetrating fraud; (2) where the corporation is organized and operated as the mere tool or business conduit of another corporation; (3) where resort is made to the corporate fiction in order to avoid an existing legal obligation; (4) where the corporate form is used to achieve or perpetuate monopoly; (5) where the corporate structure is used as a vehicle for circumventing a statute; or (6) where the fiction is invoked in order to protect crime or justify wrong. Sutton v. Reagan & Gee, 405 S.W.2d 828, 837 (Tex.Civ.App.1966, writ ref. n. r. e.); Pacific American Gasoline Co. of Texas v. Miller, 76 S.W.2d 833 (Tex.Civ.App.1934, writ ref.). "Whether or not a shareholder will be insulated from personal liability should depend on the use or misuse which that shareholder is making of the corporate form. The only shareholders who should be held personally liable are those who have used the corporation to bring about results which are condemned by the general statements of public policy which are enunciated by the courts as 'rules' which determine whether the courts will recognize their own child." Sutton v. Reagan & Gee, supra.

Texas courts emphasize failure to follow corporate formalities in deciding whether to impose shareholder liability. Those...