Standard Accident Ins. Co. v. Knox, 9443.

• Decision Date: 21 June 1944
• Docket Number: No. 9443.,9443.
• Citation: 181 S.W.2d 863
• Parties: STANDARD ACCIDENT INS. CO. v. KNOX et al.
• Court: Texas Court of Appeals

181 S.W.2d 863

STANDARD ACCIDENT INS. CO. v. KNOX et al.

No. 9443.

Court of Civil Appeals of Texas. Austin.

June 21, 1944.

Rehearing Denied July 12, 1944.

Appeal from District Court, Travis County; Roy C. Archer, Judge.

Action by Will G. Knox, receiver of United Employers Casualty Company, and others against Standard Accident Insurance Company to recover, from defendant named as a building contractor's surety, the premiums on workmen's compensation and public liability insurance. From a judgment for plaintiffs, defendant appeals.

Affirmed.

Eskridge & Groce, of San Antonio (Walter Groce, of San Antonio), for appellant.

Devereaux Henderson, of Houston, and Renne Allred, Jr., of Austin, for appellees.

BLAIR, Justice.

This appeal involves the construction of the performance bonds furnished by Vincent Falbo & Sons, a partnership, in connection with its contracts to construct the "White," the "Mexican," and the "Negro" housing projects in Austin, to determine the liability of the surety on the bonds for premiums earned on workmen's and public liability insurance policies, which the contracts obligated the contractor to carry and to pay the premiums due thereon. The construction work was done under the correlated Federal and State Housing laws. U.S.C.A., Vols. 40-42; Art. 1269k, Vernon's Civ.Sts. A separate but identical in form and substance contract for each housing project was executed by the contractor with the Housing Authority of the City of Austin, a public corporation created under Sec. 4 of Art. 1269k. The contracts were financed by the United States Housing Authority, the agency created under the Federal law, through the purchase of bonds issued by the Austin Housing Authority. The forms, plans and specifications, and all conditions and requirements of the contracts were prescribed by the Federal Agency. Each contract required the contractor to furnish a "General Contractor's Bond" for the performance of the contract, and to furnish a separate bond, if necessary under state law, for the protection of labor and material claimants; and provided that the contract be attached to and made a part of the bond obligation, the form and substance of which were prescribed by the contract and the rules and regulations of the Federal Agency. Pursuant to the requirements of the contracts, the rules and regulations of the Federal Agency, and the applicable laws, the contractor executed three separate but identical in form and substance bonds, as principal, to the Austin Housing Authority, with appellant, Standard Accident Insurance Company, as surety, the respective contracts being attached to the related bond. Since the contracts and bonds are similar, one contract and one bond will be considered herein. The bond was titled "Performance Bond," and the material portions obligated the principal and surety as follows:

"* * * unto the Housing Authority of the City of Austin, * * * and to the subcontractors, workmen, laborers, mechanics and furnishers of materials, as their interest may appear, all of whom shall have the right to sue upon this bond * * * for the payment of which, well and truly to be made, we hereby bond ourselves, * * * jointly and severally * * *."

Other portions of the bond read:

"The condition of this bond is such that — whereas, the above bounden Vincent Falbo and Sons has on the 3rd day of November, 1938, entered into a contract with the Housing Authority of the City of Austin for furnishing all materials, equipment, labor, supervision and other accessories necessary for the construction of certain improvements, as more particularly designated in said Agreement, Plans, and Specifications hereto attached.

"Now, therefore, if the above bounden Vincent Falbo and Sons shall faithfully perform said Agreement, and shall and will in all respects duly and faithfully observe and perform all and singular the covenants, conditions and agreements in and by said contract agreed and covenanted by the said Vincent Falbo and Sons to be observed and performed, and according to the true intent and meaning of said Agreement and the Plans and Specifications hereto annexed, and as well during any period of extension of said contract that may be granted on the part of the Housing Authority of the City of Austin as during the original term of same, and shall promptly, well and truly pay all subcontractors, workmen, laborers, mechanics and furnishers of materials all moneys to them owing by said Vincent Falbo and Sons for sub-contracts, work, labor, and material done and furnished for the construction of such improvements for the Housing Authority of the City of Austin, and shall pay to the Housing Authority of the City of Austin all penalties provided for under the laws of this State for the violation of any provisions of law and/or of the provisions of said contract, then this obligation shall be and become null and void; otherwise to remain in full force and effect.

* * * * *

"This bond is made for the use and benefit of all persons, firms, and corporations who may furnish any materials, or perform any labor for or on account of said work, buildings, or improvements, and they and each of them are hereby made obligees hereunder the same as if their own proper names were written herein as such, and they and each of them may sue hereon.

"It is further understood and agreed that this bond is given under and by virtue of the provisions of Articles 5160 to 5164, inclusive, Texas Revised Civil Statutes of 1935, and as amended [Vernon's Ann.Civ. St. arts. 5160-5164], and the provisions of Chapter 45, General Laws Regular Session Forty-third Legislature [Vernon's Ann.Civ.St. art. 51, 59a], and said Statutes and each of them are expressly made a part hereof."

The contract expressly required the contractor to carry workmen's compensation and public liability insurance for the protection of the employees, and to pay the premiums therefor. Several policies of such insurance were issued to the contractor by United Employers Casualty Company, which policies were approved by the Austin Housing Authority as provided for in the contract. Later the insurance company became insolvent, and appellee, Will G. Knox, was appointed receiver. The contractor and each member of the partnership also became insolvent, and each was adjudged a bankrupt. Appellee receiver then sued appellant, Standard Accident Insurance Company, as surety on the performance bond, to recover the unpaid premiums on the insurance policy, aggregating $4,902.42, and recovered judgment for that amount.

We think the trial court correctly construed the bond as obligating appellant surety company to pay the premiums due on the insurance policies in question; and correctly held that such bond obligation inured to the benefit of the insurance company; and that the insurance company, or its receiver, could maintain this suit to recover the premiums due against appellant surety company on the performance bond. The bond obligation or liability for the payment of the premiums is found in the bond and the contract attached to and made a part of the bond. When these instruments are considered together, the bond has a twofold purpose. First, it is a general performance bond guaranteeing and securing...