Sherman v. Cage

• Decision Date: 12 November 1925
• Docket Number: (No. 8882.)
• Citation: 279 S.W. 508
• Parties: SHERMAN et al. v. CAGE et al.
• Court: Texas Court of Appeals

279 S.W. 508

SHERMAN et al. v. CAGE et al.

(No. 8882.)

Court of Civil Appeals of Texas. Galveston.

November 12, 1925.

Appeal from District Court, Harris County; W. E. Monteith, Judge.

Suit by D. S. Cage and others against L. A. Sherman and others, in which Chester H. Bryan intervened. Judgment for plaintiffs, and defendants appeal. Reversed and rendered.

King & Battaile, of Houston, for appellants.

Amerman & Sears, of Houston, and Dan Moody, Atty. Gen., and Ernest May, Asst. Atty. Gen., for appellees.

PLEASANTS, C. J.

This suit was brought by D. S. Cage and six other named plaintiffs, all resident taxpayers of Harris county, against Frank Lanham, Joseph Burkett, and John H. Bickett, composing the state highway commission of the state of Texas, E. S. Atkinson, engineer of the highway commission, and L. A. Sherman and F. C. Youmans, composing the firm of Sherman-Youmans Construction Company.

The main, if not the sole, purpose of the suit is to have a contract made by the highway commission with the Sherman-Youmans Company declared invalid and set aside for fraud in its procurement, and to recover for the use and benefit of the state the amount alleged to have been unlawfully received by defendant company under its contract.

By leave of court, Chester H. Bryan, a resident and taxpayer of Harris county, intervened in the suit as a plaintiff, and adopted as his own all of the allegations and the prayer of the original petition.

Plaintiffs' petition, for cause of action, alleges in substance: That on or about March 2, 1925, the highway commission entered into a written contract with defendant Sherman-Youmans Company for the improvement of state highways in Harris county; that by the terms of this contract the contractor agreed to furnish all of the shell, gravel and rock necessary for the improvements designated at actual cost price plus 10 per cent., and to apply an asphalt topping to the designated highways at a price of 32 cents per square yard; that shortly after the execution of this contract the defendant company began the work of improving the highways designated in the contract, and from time to time thereafter filed with Mr. Kelly, the engineer then representing the highway commission, for approval and payment bills for the work done by it under the contract; that in filing these bills the defendant company filed false and fictitious bills, in that the bills placed the actual cost of the material furnished by defendant company upon which the amount due it under the contract was based at a much larger amount than the true, actual cost of such material, and in most cases the bills so filed asked payment for the material furnished at the rate of $3 per ton without stating the actual cost thereof, which amount was largely in excess of the actual cost plus 10 per cent. that the defendant was entitled to receive under its contract; that these false and fictitious bills were approved and paid by the defendant highway commission. It is then alleged:

"These plaintiffs respectfully show the court that the amounts paid the defendants Sherman and Youmans Construction Company were excessive to such an extent as to lead to the plain inference of fraud, or that said contractors have overreached the highway commission as hereinafter set out."

It is further alleged that the price of 32 cents per square yard fixed by the contract for the asphalt topping of the highways was grossly in excess of the reasonable cost of such improvements; that the same work was being done upon other roads in Harris county under contracts with the commissioners' court, made at the time the contract involved in this suit was executed, at prices ranging from 16 to 17½ cents per square yard. It is then alleged:

"That the amount paid said contractors was at least 50 per cent. more than the real value of the work had the same been let in a fair, honest, and competent manner, and that in so letting the contracts said highway commission acted in reckless disregard of their duties and in reckless disregard of the true price to be paid for the work, or were actuated by fraudulent motives, or were overreached by the contractors, all as hereinafter more definitely set out.

"Plaintiffs allege that it is the plain duty of the state highway department to familiarize itself, by the compiling of statistics and otherwise, of the cost of construction of the different classes of roads in the various counties, including Harris county, and that if it failed to so familiarize itself with said costs, and was not familiar with the prevailing cost of road work in Harris county, and did not know what such costs were at the time of the letting of the contract, then plaintiffs charge that the members of said board acted in reckless disregard of the rights of the state and the taxpayers in letting said work, and either made a contract that was excessive and exorbitant, or permitted the contractors to overreach them and to secure their acceptance of a bid that was known to the contractors to be excessive and exorbitant, and was either known to be excessive and exorbitant to the highway commissioners or that they made the same without any fair competition or any investigation whatever as to the cost of construction. Plaintiffs say that these allegations apply in like manner to the cost of furnishing shell as well as the furnishing of asphalt, and that either the highway commissioners were ignorant of the prices to be charged for road materials in Harris county or that they knowingly permitted an excessive contract for shell and asphalt to be made, or if they were ignorant of the price that the contractor deliberately overreached the board in having them approve the contract grossly excessive and exorbitant. * * *

"Plaintiffs would further show to the court that there are on file at the present time with the highway commission, either in the office of E. S. Atkinson, its district or resident engineer, in Houston, Tex., or in the office of the state highway commission at Austin, Tex., certain bills submitted by the Sherman-Youmans Construction Company for payment for shell furnished and for asphalt surface laid in accordance with the terms of its pretended contract, and plaintiffs allege that the bills so filed for payment are not only for an excessive price but for a price greater than that provided for in the contract, and that the bill for asphalt treatment is based upon the excessive figures provided for in the contract, and for large amount of yardage never furnished. Plaintiffs allege that they are unable to furnish the court an itemized list of the bills now on file and pending for payment, for the reason that one of the plaintiffs, R. H. Spencer, has repeatedly requested not only Mr. Atkinson, the resident engineer, but also the members of the commission and their engineer at Austin to exhibit to him said bills in order that he could be apprised as to whether or not the same are excessive, but that he has repeatedly been refused access to said bills; that said bills are now in Harris county, Tex., in the control of E. S. Atkinson, or in the control of persons known to R. S. Atkinson, and that the said highway department has consistently denied persons representing these plaintiffs the right to examine said bills to determine whether or not the same are excessive, in spite of the fact that the same constitute public records, and are by law available to proper inspections in the hands of their proper custodians at all reasonable times. Upon information and belief, plaintiffs allege that said bills for shell and asphalt surface are excessive in amount in like manner as the bills previously filed, approved, and paid, as above set out."

It is also alleged that plaintiffs have been denied access to the books and papers of the highway commission for the purpose of ascertaining the amount of excess in the bills filed with and approved by the engineer for payment to defendant company.

Further allegations and prayer of the petition are as follows:

"That the plaintiffs, represented by R. H. Spencer, acting for himself and other taxpayers, have exhausted any hope of redress through the highway commission, and are compelled, as taxpayers, to sue on behalf of themselves and all other taxpayers of Harris county and of the state similarly situated for redress and for cancellation of said illegal contract.

"Wherefore plaintiffs pray the court for relief as follows: That a temporary restraining order issue restraining the defendants, Frank Lanham, Joseph Burkett, John H. Bickett, Sr., and E. S. Atkinson, from removing any of the records of the highway department affecting the contracts of Sherman-Youmans Construction Company in this county from the jurisdiction of this court, and that a mandatory injunction issue requiring them, and each of them, to permit an inspection of said records by the plaintiffs, or their representatives, upon such terms as the court may prescribe, and that the members of said highway board, their agents, employees, and servants be restrained from approving, allowing or paying any bills due Sherman-Youmans Construction Company for any work done in Harris county until the final determination of this suit, and that such temporary orders be issued as will maintain the integrity of said records, and to restrain further payments to Sherman-Youmans Construction Company; that citations issue, and that upon final hearing the plaintiffs, as such state and county taxpayers, for the use and benefit of the state of Texas, and the taxpayers thereof, recover of and from L. A. Sherman and F. C. Youmans any amounts shown to have been paid in excess of the legal and proper amount for work performed, and that said...