Texarkana Water Supply Corp. v. L. E. Farley, Inc.

• Decision Date: 25 January 1962
• Docket Number: No. 13869,13869
• Citation: 353 S.W.2d 885
• Parties: TEXARKANA WATER SUPPLY CORPORATION, Appellant, v. L. E. FARLEY, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 885

353 S.W.2d 885

TEXARKANA WATER SUPPLY CORPORATION, Appellant, v. L. E. FARLEY, INC., et al., Appellees.

No. 13869.

Court of Civil Appeals of Texas, Houston.

Jan. 25, 1962.

Raffaelli & Keeney, John D. Raffaelli, Texarkana, for appellant.

Liddell, Austin, Dawson & Sapp, W. Robert Brown, Houston, for appellees.

WERLEIN, Justice.

This is an appeal from an order overruling appellant's plea of privilege. Appellees, L. E. Farley, Inc., a corporation with its principal office and place of business in Houston, Harris County, Texas, and C. M. Ham, d/b/a Ham Construction Company, a resident of Harris County, filed suit against Texarkana Water Supply Corporation, a corporation formed and owned by the City of Texarkana, Texas, with its principal office and place of business in Bowie County, Texas, the American National Bank & Trust Company of Chicago, a national banking corporation having its residence and domicile in Chicago, Cook County, Illinois, and the Texarkana National Bank, a national banking corporation having its residence and domicile in Texarkana, Bowie County, Texas, to recover from appellant certain damages alleged to have been incurred in connection with a contract between appellant, Texarkana Water Supply Corporation, as owner, and appellees as contractors, covering the construction of a raw water supply line to serve the municipally owned water system of Texarkana, Texas. Each of the defendants filed a plea of privilege, but only appellant's plea was set for hearing since the co-defendant banks waived their pleas by filing motions for summary judgment which were overruled.

The co-defendants are trustees under a deed of trust relating to the property in question, and are agents and attorneys in fact for the beneficiaries and bond holders under the deed of trust. Appellees also seek foreclosure of their constitutional and statutory mechancis' and materialmen's liens together with a determination that same are prior and superior to any right or claim of co-defendants to the property in question. It will be unnecessary to discuss this phase of the case in view of our holding herein.

The evidence shows that the City of Texarkana, Texas, has owned and operated its municipal water system since 1948. Being unable to issue additional bonds because the revenue from its water system did no permit, the City, in order to enlarge its water system, formed or caused to be formed in 1957 the Texarkana Water Supply Corporation, under Art. 1434a, Vernon's Annotated Texas Civil Statutes, as amended, for the purpose of obtaining funds through the sale of bonds of such corporation. Upon learning that appellant was inviting bids on a raw water transmission pipe line, appellees obtained copies of the plans, specifications and bidding documents. They inspected the terrain over which the line was staked and made certain investigations prior to submitting their bid which was accepted. They contend that they submitted their bid in reliance on the misrepresentation in the bidding documents that appellant 'has obtained' right of way. The provision in question reads:

'RIGHT OF WAY: The owner will provide all necessary right-of-way along the route of the water supply line. The wisth of right-of-way on private property will be thirty (30') feet normally; however, the Owner has obtained an easement for construction purposes of fifty (50') feet. * * *.'

Appellees allege in their petition an alternative cause of action for damages based on fraud committed in Harris County, and in their controverting affidavit they plead that venue was properly laid in Harris County by virtue of Subdiv. 7 of Art. 1995, which provides that in all cases of fraud suit may be brought in the county where the fraud was committed. The allegations concerning fraud are sufficiently pleaded by appellees. It is appellant's contention, however, that the use of the words 'has obtained' in the provision hereinabove set out was a mere clerical error; that the contract was made in Bowie County and no fraud was committed in Harris County; that even if there was a misrepresentation in the bidding documents, there is nothing to show that appellees were misled as to the easements; that by suing on the contract, appellees have waived any alleged fraud in its inducement; and that fraud is not the gist of appellees' cause of action.

There is nothing to show that the misrepresentation contained in the provision hereinabove set out, was a mere clerical error or that the provision is ambiguous. It clearly states that the owner 'has obtained' an easement for construction purposes of 50 feet. This statement does not conflict with the first part of the provision that the owner will provide all necessary right of way and that the right of way on private property will be 30 feet normally. The representation is contained in the special provisions of the document distributed to induce bidders. There can be no question as to the materiality of the representation or as to damages suffered by appellees.

We do not think appellees waived fraud by suing alternatively for breach of contract. They were careful to plead in the alternative the different grounds or theories upon which they relied for recovery. Fraud is the gist of the cause of action in their pleading alleging the elements of fraud and the damages suffered by them as a result thereof, and indeed the alleged misrepresentation is the gist of the entire action. Under Rule 48, Texas Rules of Civil Procedure, 'A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count or defense or in separate counts or defenses.'

The cases relied upon by appellant are factually inapplicable to the present case. In Caprock Machinery Company v. Boswell, Tex.Civ.App.1958, 318 S.W.2d 669, writ dism., the court was of the opinion that appellee didn't show any fraud and especially he did not show that any fraud was committed in Gray County where the suit was brought, but if such were not so, venue could not be sustained in the county where the fraud was alleged to have occurred in inducing the execution of the contract because where one sues for breach of contract he waives the fraud as a fact in fixing venue. In that case there was no alternative cause of action pleaded as there is in the present case. In the cases cited by appellant an election had been made by the plaintiff to sue for breach of contract, and not to sue alternatively for damages resulting from fraud. See Hopcus v. Tredway, Tex.Civ.App.1951, 244 S.W.2d 857, and cases cited.

In Cockburn v. Dixon, 1953, 152 Tex. 572, 261 S.W.2d 689, the court in effect held that under Art. 4004, V.A.T.S., the cause of action was for fraud and not for breach of contract and hence the lower court in overruling defendant's plea of privilege properly applied Subdiv. 7, Art. 1995.

We think it would serve no useful purpose to discuss the other cases cited by appellant. The holdings in such cases merely support the general rule which is well...