United States Pipe & Foundry Co. v. City of Waco

• Decision Date: 19 November 1936
• Docket Number: No. 1732.,1732.
• Parties: UNITED STATES PIPE & FOUNDRY CO. v. CITY OF WACO et al.
• Court: Texas Court of Appeals

Page 1099

100 S.W.2d 1099

UNITED STATES PIPE & FOUNDRY CO. v. CITY OF WACO et al.

No. 1732.

Court of Civil Appeals of Texas. Waco.

November 19, 1936.

Rehearing Denied January 21, 1937.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, McLennan County; Giles P. Lester, Judge.

Action by the City of Waco and others against the United States Pipe & Foundry Company and others. From an adverse judgment, the named defendant appeals.

Affirmed.

Naman & Howell, of Waco, for appellant.

McClellan, Lincoln & Williams, Sam Darden, Allan McDonnell, and John McGlasson, all of Waco, Worsham, Burford, Ryburn & Hincks, of Dallas, Witt, Terrell & Witt, of Waco, A. S. Rollins, of Greenville, Bryan & Maxwell, of Waco, Bromberg, Leftwich, Carrington & Gowan, of Dallas, C. B. Emery, of Waco, and I. J. Walker, of Dallas, for appellees.

ALEXANDER, Justice.

The City of Waco contracted for and had constructed a pipe line for the conveyance of water for municipal purposes from Lake Waco to the city's filteration plant. The line proved defective and as a consequence the city brought this suit against O. N. Floyd and J. L. Lochridge, the engineers who drew the plans and specifications, W. E. Callahan Construction Company, the contractor, and United States Pipe & Foundry Company, who manufactured and furnished the pipe used in constructing the line, to recover the damages resulting therefrom. Plaintiff's pleadings, so far as is material to the issues to be discussed, alleged that in 1928 the City of Waco employed Floyd and Lochridge as engineers to survey, lay out, design, and supervise the construction of the pipe line in question; that W. E. Callahan Construction Company, which we will refer to as Callahan Company, was engaged in building Lake Waco and was a prospective bidder for the contract to build the pipe line and that United States Pipe & Foundry Company, which we will call the Pipe Company, was engaged in manufacturing pipe such as was used in the construction of such lines; and that said engineers and the Callahan Company and the Pipe Company entered into a conspiracy for their own mutual benefits whereby it was understood that said engineers would specify Hi-tensile pipe, a particular brand of pipe manufactured by the Pipe Company, as the material out of which the line should be built, and that Callahan Company would secure the contract and would build said line out of pipe purchased from the Pipe Company; that if said defendants did not so conspire, they nevertheless acted separately to accomplish the same purposes; that the defendant Pipe Company advocated and by false representations induced the adoption of plans calling for the construction of said line out of a light grade of Hi-tensile pipe; that defendant Pipe Company falsely and fraudulently represented to the city and its engineers that Hi-tensile pipe of the grade suggested by it and as called for in said specifications, when cast in accordance with its specifications, would be adequate in strength for use under deep fills and would be suitable for the building of such line; that said defendant well knew that the kind and grade of pipe advocated by it was too light and would be inadequate in strength for service in the line as contemplated, but that nevertheless it fraudulently induced the city's engineers to breach their contract with the city and to specify such pipe as the material out of which the line would be built and induced the city to agree to allow said line to be built thereof; that after said plans were adopted, the contract for building the line was let to the W. E. Callahan Construction Company, who in turn bought the necessary pipe therefor from the defendant Pipe Company; that the contract as let called for the construction of said line of pipes of three sizes, to wit, 9,000 feet, 37½ inches in diameter; 9,400 feet, 40 inches in diameter, and the balance 42 inches in diameter; that after the contract for the construction of the line had been entered into, the Pipe Company fraudulently induced the engineers to allow the line to be constructed of pipes of two sizes only, to wit, 37½ inches and 42½ inches, respectively, and that the Pipe Company so supplied pipe of the latter dimensions and caused the same to be installed in said line, which changes in designs constituted a material departure from the original specifications; that the pipe as actually furnished by said Pipe Company and installed in the construction of said line was too light, and particularly it was charged that the bell portion of the pipe as furnished by the Pipe Company and actually installed was too light to withstand the stress of the overburden in the deep fills; and that as a consequence the line proved defective and was worthless. Plaintiff sought to recover against all the defendants jointly because of the alleged conspiracy and in the alternative sought recovery against each defendant separately because of its misconduct in the premises.

The jury, in answer to special issues, found that the Pipe Company, through its agents and representatives, Mr. Stokes and Mr. Hanlon, represented to the city's engineers that the Hi-tensile cast iron pipe which was actually specified and supplied for use in constructing the line would be adequate in strength for the purpose intended and for the depth of cover under which it would be laid and knowingly induced the city and its engineers to specify such pipe for the construction of said line; that but for such representations the city would not have allowed such pipe to have been so specified and installed; that in truth and in fact said pipe was inadequate in strength for the services intended and particularly for the depth under which it was to be installed and the Pipe Company knew of the conditions under which the pipe was to be laid and knew that said pipe was inadequate, or should have known it by the exercise of reasonable diligence; that the use of the two size combination of pipe actually used in the construction of the line constituted a material departure from the original specifications and the pipe so used was not substantially equal in strength to the 40-inch pipe originally provided for; that the Pipe Company represented that the two-size combination of pipe actually used in the construction of the line was adequate in strength for the depth of covering under which it would be laid, and the plaintiff believed such representations and but therefor would not have installed such pipe in the line; that the city was not aware of the inadequacy in strength of the line and could not have known thereof by the exercise of reasonable diligence until after the line had been accepted; that the material departure in the use of two-size pipe combination for the three-size pipe combination as originally specified consisted in the use of different bells from those provided for in the original specifications; and that the reasonable value of the line as actually constructed, as of the date of its acceptance by the City of Waco, was $150,000. Based upon the foregoing findings, judgment was rendered for the city against the United States Pipe & Foundry Company for the sum of $237,159.78, that being the difference between the original cost of the line and its actual value as found by the jury. All other defendants were discharged. The Pipe Company appealed.

Appellant's first major proposition is that the Pipe Company's representatives did not make any misrepresentations as to the sufficiency of its pipe for the job in question, but that any representations made by them were mere expressions of opinion, which opinions were accepted as such by the city's engineers; that the pipe manufactured by appellant was a standard product and the city's engineers had before them proper data showing the chemical content of such pipe, the results of certain laboratory tests that had been made for the purpose of testing the strength of such pipe, and the methods used in making such tests; that the question as to whether such pipe was sufficient for the job in question was purely an engineering problem to be calculated by the city's engineers, who were experts in their line capable of making such calculations, and therefore they had no right to rely on the opinions so expressed by appellant's representatives, and such representations could not constitute the basis of actionable fraud. Its second major contention is that there was no contractual relation between appellant and the City of Waco, and consequently appellant is not responsible for any damages that may have accrued to the city by reason of any misrepresentations on its part made to the city's engineers as to the sufficiency of the pipe for the job in question.

We will first review the facts concerning the nature of the representations claimed to have been made by the Pipe Company and relied on by the city and the relation that existed between the parties at the time these events occurred. The evidence shows that in 1928 Callahan Company was engaged in building Lake Waco for the city. During the same year the city employed Floyd and Lochridge, engineers, to survey, lay out, design, and supervise the construction of a pipe line from said lake to the city's filteration plant, a distance of approximately 28,500 feet. It was understood that the line was to be large enough to carry twenty million gallons of water per day. The Pipe Company was engaged in the manufacture of cast-iron pipe. It was also engaged in the manufacture of a high tensile pipe under the trade-name of "Hi-tensile." High tensile is a kind of cast iron, but on account of its chemical content, pipe made thereof is stronger in proportion to the amount of metal used than ordinary cast-iron pipe. The formula by which it is manufactured is not a secret and such pipe is manufactured by other concerns in the United States but appellant appears to be the chief producer thereof. Ordinary cast-iron pipe had been in use for many years...