Transmix Concrete of Rockdale v. United States

• Decision Date: 15 February 1956
• Docket Number: Civ. A. 1453.
• Citation: 142 F. Supp. 306
• Parties: TRANSMIX CONCRETE OF ROCKDALE, Plaintiff, v. UNITED STATES of America et al., Defendant.
• Court: U.S. District Court — Western District of Texas

142 F. Supp. 306

TRANSMIX CONCRETE OF ROCKDALE, Plaintiff, v. UNITED STATES of America et al., Defendant.

Civ. A. 1453.

United States District Court W. D. Texas, Waco Division.

February 15, 1956.

John J. McKay, Austin, Tex., for Transmix Concrete of Rockdale, plaintiff.

Charles F. Herring, U. S. Atty., and Lonnie F. Zwiener, Asst. U. S. Atty., Austin, Tex., for the United States, defendant.

Camp & Camp, Rockdale, Tex., for B. W. C. Const. Co., defendant.

RICE, District Judge.

From the pleadings of the parties, the stipulations filed herein, and the evidence introduced at the trial of the above cause on July 12, 1954, and in accordance with Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.A., this Court makes and enters the following Findings of Fact and Conclusions of Law:

This is an action of a civil nature, arising under the laws of the United States, particularly the Revenue Acts, involving more than $3,000 and less than $10,000, and this Court has jurisdiction thereof.

The Court finds that each and all of the stipulations on file herein are true and correct, and the Court references the same, incorporating all of such stipulations herein as a part of the Findings of Fact.

Calhoun Development Company, a wholly owned subsidiary of Aluminum Company of America, as owner, contracted for the construction of a housing subdivision at Rockdale, in Milam County, Texas, in 1951, 1952 and 1953. Karl B. Wagner Engineering, Inc., was the general contractor, J. R. Canion was the first-tier subcontractor under Wagner, W. S. Conner was a subcontractor under Canion to construct curbs and gutters, and B. W. C. Construction Company (an assumed name used by J. L. Wayte, W. G. Braddock and J. L. Colwell, a partnership) was a subcontractor under Conner to construct the curbs and gutters.

B. W. C. Construction Company contracted with Conner to furnish the necessary labor and materials to complete certain specified concrete curb and gutter work. The agreed consideration between them was fixed on a lineal foot basis.

At all times pertinent to this case, J. R. Canion has owed W. S. Conner $7,049.59 arising out of their contract with each other, which amount is in the registry of the court as all that remains of the original construction contract with Aluminum Company of America.

At all times pertinent to this case W. S. Conner has owed B. W. C. Construction Company Seven Thousand Forty-Nine and 59/100 Dollars ($7,049.59), which amount is in the registry of the court and is all that remains of the original construction contract with Aluminum Company of America.

Transmix Concrete of Rockdale, during the period August-October, 1952, furnished ready-mixed concrete, as ordered by B. W. C. Construction Company, which the latter used in constructing the curbs and gutters. The total amount furnished, in proper quality, at prices just and reasonable, was in the value of $11,496.45. This concrete was used and incorporated in the curb and gutter improvements on said project. The concrete was furnished on an open account, Conner making total payments in September and October, 1952, to plaintiff of $6,252.40, in accordance with his agreement with, and the instructions and consent of B. W. C., and at the end of the job there was owing to Transmix Concrete of Rockdale the sum of $5,246.05, which has not been paid. The Transmix delivery tickets were made in the name of B. W. C. From November 1st, 1952, and thereafter, Transmix billed the balance due to B. W. C. Construction Company and to W. S. Conner.

B. W. C. gave its permission to Conner before September 15, 1952, to make payment of money to Transmix out of funds Conner owed to B. W. C. to be applied on B. W. C.'s indebtedness; also B. W. C. gave Canion permission through Conner to make payments directly to Transmix on B. W. C.'s indebtedness to Transmix out of funds which Conner owed to B. W. C. and which Canion owed to Conner.

W. S. Conner made two payments to Transmix Concrete of Rockdale for concrete furnished on the B. W. C. Construction Company subcontract.

The concrete for which Transmix Concrete of Rockdale is seeking payment was furnished to B. W. C. Construction Company, and any payments made to Transmix Concrete of Rockdale by W. S. Conner for concrete furnished to B. W. C. Construction Company were made with the consent of B. W. C. Construction Company, and such amounts were credited on the agreed contract price owed by Conner to B. W. C. Construction Company under their subcontract.

At all times pertinent to this case, J. L. Wayte, W. G. Braddock and J. L. Colwell, doing business as B. W. C. Construction Company owed the United States of America the amounts set out in the stipulation of facts on file, Government Exhibit No. 1 on file in the papers of this cause, and the answer of the United States on file herein, and the notices of tax liens were filed on the dates and in the manner set out in said Government Exhibit 1, said stipulation and said answer.

Transmix Concrete of Rockdale furnished its first material to B. W. C. Construction Company on August 26, 1952, and the first taxes described above accrued in the Second Quarter of 1952, and became a debt due and owing to the United States of America as of June 30, 1952.

The claim of Transmix Concrete of Rockdale, in the amount of $5,246.05, is based on an open account, and is that of a materialman for material furnished and used in the project as described. This materialman filed a statutory materialman's lien, but same was not filed within 90 or within 120 days after furnishing the last material, or after the indebtedness accrued.

(a) Transmix Concrete of Rockdale was not a subcontractor and had no agreement with the "owner", either written or oral. However, the contract of the owner with the general contractor, and of the general contractor with J. R. Canion, contained this written provision, as a part of Article 17 of the General Conditions as follows:

"C. Payments otherwise due may be withheld by the Owner on account of defective work not remedied, claims filed, or reasonable evidence indicating probable filing of claims, failure of the Contractor to make payments properly to subcontractors, or for material or labor, or a reasonable doubt that the contract can be completed for the balance then unpaid, or on account of the failure of the Contractor to perform any of his other obligations under this contract. If the foregoing causes are removed the withheld payments will promptly be made. If the said causes are not removed on written notice, the Owner may rectify the same at the Contractor's expense."

(b) Similarly, the contract between J. R. Canion and W. S. Conner was one for the furnishing by the latter of all labor and materials in connection with the curb and gutter work.

(c) The original agreement between W. S. Conner and B. W. C. was one for the furnishing by the latter of all work and material for the curbs and gutters; however, this was amended prior to delivery of material by Conner's agreement to pay for the ready-mix concrete and take credit therefor as against B. W. C., which arrangement for payment Transmix was familiar with and agreed to.

The existence and amount of the unpaid claim of Transmix Concrete of Rockdale for materials furnished by it on this project was known by all the contracting parties at a time when the retainage fund in the hands of the owner for payment to the contracting tier was well in excess of the amount of the Transmix claim.

Just prior to or at about the time Transmix commenced furnishing concrete, W. S. Conner represented to Transmix officials that he would see that the charges for this material were paid, which representations, made for a valuable consideration, were accepted and relied on by Transmix. Following this, Conner made two payments.

At a time when Transmix was still furnishing material to the job, and before the last percentage of completion estimate was due, and before Transmix had been fully paid, or its account had become delinquent, and while the owner had in its possession funds for payment of the balance of the general contract (including the retainage fund), and before the filing of any tax liens, Conner, acting with the knowledge of B. W. C., represented to Transmix that Transmix was authorized to receive payment for its material from the first-tier subcontractor, J. R. Canion, and Conner, acting with the prior knowledge and consent of J. L. Wayte, a partner of B. W. C., and at Wayte's request, notified J. R. Canion that he was to make payment to Transmix for its material bill out of funds coming to the said Canion. Both Canion and Transmix assented to this arrangement, Canion obligating himself that before Conner received any more moneys from his portion of the contract that he, Canion, would pay Transmix for its material furnished on the job. This arrangement was confirmed by Transmix letter of January 19, 1953.

At no time did B. W. C. retract its agreement that Conner would pay Transmix for its material furnished, nor did B. W. C. or Conner retract the subsequent agreement that Transmix would be paid out of contract funds coming to the first-tier subcontractor, Canion.

Transmix Concrete of Rockdale, acting through its president and secretary, believed, relied and acted upon the representations, arrangement and agreement that Transmix would be paid for its material out of funds coming into the hands of the first-tier subcontractor, Canion, and accordingly looked to the fund in Canion's hands.

Because of the fact that the material claim of Transmix has not been paid, neither the general contract nor the several subcontracts for curb and gutter work have been fully and completely performed, and the sums owing by virtue of the general contract and the successive subcontracts are owed subject to performance of this obligation to pay such material claim.

The fund out of which Transmix was to be paid was the specific...