Southern Surety Co. v. W. E. Callahan Const. Co.

• Decision Date: 17 April 1926
• Docket Number: (No. 7550.)
• Citation: 283 S.W. 1098
• Parties: SOUTHERN SURETY CO. et al. v. W. E. CALLAHAN CONST. CO. et al.
• Court: Texas Court of Appeals

283 S.W. 1098

SOUTHERN SURETY CO. et al. v. W. E. CALLAHAN CONST. CO. et al.

(No. 7550.)

Court of Civil Appeals of Texas. San Antonio.

April 17, 1926.

Rehearing Denied May 19, 1926.

Appeal from District Court, Dallas County; T. A. Work, Judge.

Suit by the W. E. Callahan Construction Company against the Southern Surety Company, the B. F. & C. M. Davis Company, and others, in which the Davis Company filed a cross-action, and in which numerous interventions were filed. From the judgment, defendants Surety Company and Davis Company appeal. Affirmed in part, and in part reversed and rendered.

Thompson, Knight, Baker & Harris, of Dallas, and John T. Suggs, of Denison, for appellants.

Huvelle & Atwell, of Dallas, Capps, Cantey, Hanger & Short, of Fort Worth, Church, Read & Bane, M. M. Plowman, Geo. K. Holland, Leake, Henry, Wozencraft & Frank, Coke & Coke, and Thomas G. Murname, all of Dallas, Bullington, Boone & Humphrey, John B. King and Raymond M. Myers, all of Wichita Falls, J. O. Hughes and Beall Worsham, Rollins, Burford & Ryburn, all of Dallas, and Bryan, Stone, Wade & Agerton and A. M. Scott, all of Fort Worth, for appellees.

FLY, C. J.

This court has been compelled to consult the transcript containing over 800 pages, of which 563 pages are devoted to petitions, amended and supplemental, pleas of privilege, controverting affidavits, pleas in intervention, and answers. We ascertain from the first amended original petition that the W. E. Callahan Construction Company instituted this suit by a complaint against the Southern Surety Company, B. F. & C. M. Davis Company, and some 40 other corporations and individuals, as well as "generally of all persons, firms, and corporations claiming an indebtedness against B. F. & C. M. Davis Company, a corporation, by reason of the performance or attempted performance, by said B. F. & C. M. Davis Company of its contract with the plaintiff herein." It was alleged that the plaintiff, in the suit on November 29, 1921, made a contract with the Wichita county water improvement district No. 1 to perform certain work in connection with an irrigation scheme such as the erection of certain concrete structures and bridge construction. It was alleged that the plaintiff executed and delivered to the water improvement district a certain bond in the sum of $500,000 signed by the Southern Surety Company, as surety, and conditioned for the full and faithful performance of the contract. It was further alleged that the construction company had, under the provisions of the contract, entered into a contract with B. F. & C. M. Davis Company to do and perform certain of the work it had contracted to perform, but which the contract with the water improvement district permitted the construction company to subcontract, provided written consent was obtained from the water improvement district and that subcontractors' bonds were made directly payable to the district. The work subcontracted to the Davis Company covered the concrete work and certain bridge construction. The Davis Company proceeded to work under that contract, but afterwards ceased work, and then, on October 5, 1922, the construction company, Davis Company, improvement district, and the surety company entered into a contract. After that contract was made, creditors of the Davis Company sued it, and caused writs of garnishment to be served on the construction company, all of whom were made parties by the construction company, and it tendered into court all sums admitted by it to be due the Davis Company. There were numerous interventions in the suit and the Davis Company filed a cross-action seeking a judgment for $150,000 against the construction company in excess of the sum paid into court. The court sustained a general demurrer to the cross-action of Davis Company, and it was dismissed in view of a refusal to amend. The trial was had without a jury, and judgment rendered denying any recovery to Davis Company in excess of the amount tendered by the construction company; injunctions previously issued were perpetuated; awards were made to the interveners as against the Davis Company on their claims, and also against the surety company on the bond of Davis Company on which it was the surety. To the surety company a sufficient amount of the money tendered by the construction company was awarded to reimburse it for any amounts paid to the creditors of the Davis Company. The Davis Company and the surety company appealed, and are the appellants in this suit. They have filed separate bonds and briefs. At the request of the surety company, the trial judge filed his conclusions of fact and law, and a statement of facts accompanies the record.

On November 29, 1921, the Wichita county water improvement district and the W. E. Callahan Construction Company entered into a written contract by which the latter bound itself to construct certain storage dams and other improvements, furnishing all necessary material. The construction company executed to the water improvement district a bond in the sum of $146,000 with the Southern Surety Company as surety for the performance of all work and the furnishing of all material necessary for the construction of a diversion dam named in a certain contract. The bond was dated November, 1921, and on the same date another bond for the erection of a storage dam was executed in the sum of $113,000 between the same parties, and a third bond for $140,000 between the same parties, of the same date, in regard to the same contract for dams.

On December 3, 1921, a lengthy contract was entered into between the construction company and the Davis Company whereby the latter undertook to perform that part of the contract between the improvement district and the construction company in relation to certain items about the storage dam, the diversion dam, and the south canal and south canal laterals according to certain schedules mentioned in the original contract. For the faithful performance of this subcontract the Davis Company, as provided in the original contract, gave a bond with the Southern Surety Company, as surety, in the sum of $175,000, directly to the improvement district as well as the construction company. The Davis Company did not complete its contract at the time specified in its contract with the construction company, and, said contract being canceled, the Davis Company entered into an agreement with the district, the surety company, and the construction company that the latter should take over all the equipment belonging to the Davis Company, and use it as might be deemed best to perform the contract with the district. There were a number of other matters set out in the contract which was of date October 5, 1922. An auditor was appointed by the court, who reported on the different claims against the Davis Company and the construction company. The following facts were found by the court, which are adopted by this court:

"The work contracted to be done by defendant B. F. & C. M. Davis Company, Inc., was to be done and performed at a place isolated, and where there were no boarding facilities for the employees of said company while doing such work, and no place in such vicinity where supplies could be had, and that, in order to properly do such work, it was necessary for said company to provide a boarding and lodging house for its employees, and to establish a supply house where its employees could procure supplies and provisions and the things necessary to be used in the prosecution of such work, and that, because of such necessity, said company established and maintained a place to furnish board and lodging to its employees, and a supply house or commissary to furnish provisions, clothing, materials, and equipment to the men engaged in such work, and that the establishment and maintenance of such board and lodging house and supply house or commissary were necessary for the proper prosecution of such work.

"B. F. & C. M. Davis Company, Inc., boarded employees of other contractors or subcontractors at such boarding house in addition to their own employees.

"The goods, wares, and merchandise purchased and kept in such supply house or commissary were all exposed to sale to the general public, except the merchandise purchased from Swift & Co. and Armour & Co.

"None of the interveners had any notice of B. F. & C. M. Davis Company, Inc., boarding other employees than their own.

"None of interveners had any notice of B. F. & C. M. Davis Company, Inc., offering any of the goods so furnished for sale, and had no notice that any of such goods were used by said B. F. & C. M. Davis Company, other than for the use of their own employees."

We approve the other findings of fact made by the trial judge.

We are of the opinion that it can be reasonably concluded as matters of fact, from the statement of facts, that the construction company, with the consent of the improvement district, assigned its contract to the Davis Company, and the contract between the Davis Company and the construction company was to all intents and purposes a contract by and between the Davis Company and the improvement district, which accepted the same together with a bond made by the Davis Company directly to it. The acceptance of the contract and the bond by the improvement district caused the Davis Company to become the active party to carry the contract for the performance of the work desired by the improvement district into effect, and the construction company was liable only secondarily for performance of the contract. That conclusion is inevitably reached from the facts in the case, and all of the parties seemed to have proceeded upon that theory. Under that contract the Davis Company bound itself to perform the original contract between the district and the construction company, and the plans and specifications of the original contract were specifically made a part of the Davis Company contract, and it was agreed that such plans...