W. L. Macatee & Sons v. Chambers

• Decision Date: 18 January 1934
• Docket Number: No. 9909.,9909.
• Parties: W. L. MACATEE & SONS v. CHAMBERS et al.
• Court: Texas Court of Appeals

69 S.W.2d 486

W. L. MACATEE & SONS v. CHAMBERS et al.

No. 9909.

Court of Civil Appeals of Texas. Galveston.

January 18, 1934.

Rehearing Denied March 1, 1934.

Appeal from District Court, Harris County; Ewing Boyd, Judge.

Suit by W. L. Macatee & Sons against Fred B. Chambers, the Indemnity Insurance Company of North America, and another, wherein the Indemnity Insurance Company filed a cross-action against Fred B. Chambers. From the judgment, plaintiffs appeal.

Affirmed in part, and reversed and rendered in part.

H. L. Nicholson and E. R. Campbell, both of Houston, for appellants.

S. H. German and Homer L. Bruce, both of Houston (Baker, Botts, Andrews & Wharton, of Houston, of counsel), for appellees.

LANE, Justice.

W. L. Macatee & Sons, a copartnership, were engaged in the sale of building material in the city of Houston, Tex. Fred B. Chambers was a general contractor and was, at the time of the transactions forming the basis of this suit, a customer of Macatee & Sons, as he had been for many years theretofore, purchasing building materials from them in carrying out his contracts for the construction of buildings. Chambers had contracts with the Board of Education of the Houston Independent School District of the City of Houston for the construction of two large school buildings, one the Sidney Johnston school building and the other a building located at the intersection of Merrell and Beauchamp streets, known as Travis school. The transactions forming the basis of this suit, however, are those relating to the contract and construction alone of the latter building.

As a part of and connected with the execution of the contract to build the Travis school building and as required by article 5160 of our Revised Civil Statutes, Chambers, as principal, and Indemnity Insurance Company of North America, as surety, executed a bond guaranteeing the faithful performance of Chambers' contract with the school board. Such bond is for $44,300. It recited that the contract had been entered into between Chambers, as contractor, and the school board, as builder, of the Travis school building. The amount to be paid to Chambers by the school board for the construction of said building was $88,598.

One pertinent part of the bond is as follows: "Now, therefore, the said principal and surety obligate and bind themselves that they will faithfully perform said contract and make prompt payment to all persons supplying the principal with labor and material in the prosecution of said work. If the principal shall faithfully perform said contract according to the terms, covenants and conditions thereof, by the principal to be performed, and shall pay all sub-contractors, workmen, laborers, mechanics and furnishers of material, as their interests may appear, then this obligation shall be void; otherwise, to remain in full force and effect." (Italics ours.)

The bond also provides: "That should the obligees (laborers and others) be put to any expense for the enforcement of the contract or this bond, the same shall be paid by the principal and surety to the owner, sub-contractor, workmen, laborers, mechanics, and furnishers of material, as their interest may appear."

In the construction of the Travis school building, Chambers had to have some one finance his pay rolls due to laborers engaged in the work of such construction. To procure such financial aid he applied to Macatee & Sons, from whom he had purchased a large amount of building material. Upon such application being made it was agreed between Macatee & Sons and Chambers that Chambers should make, or cause to be made, a weekly pay roll showing the amount due laborers who had for the respective week performed labor in the construction of the Travis school building, and that upon the same being presented to Macatee & Sons there should be firmly attached thereto and on the front thereof a sheet of paper which should contain the following form of transfer: "The money covering the wages set out on the attached sheets having been paid to us by W. L. Macatee & Sons, we hereby assign to W. L. Macatee & Sons our respective claims for such wages, and subrogate them to all of our rights under such claims." And that if such pay roll was so made and presented with such transfer attached, Macatee & Sons would turn over to Chambers money necessary to pay off the wages of the laborers, shown on the several weekly pay rolls, such money to be paid to the respective laborers, provided they should each sign the respective pay rolls with the aforesaid transfer attached thereto. Such pay rolls were made out, presented to Macatee & Sons by Chambers or his authorized agent, and the paper containing the transfer was firmly attached to and on the front page of such pay rolls, and the necessary money mentioned was turned over to Chambers to be used in the payment of the laborers' wages shown by the pay roll to be due them, respectively, upon their signing the pay roll.

With the money mentioned being in the hands of Chambers, W. W. Treloar, bookkeeper and timekeeper for Chambers, called the several laborers to whom wages were due, as shown by the respective pay rolls, to the window of his office, and upon their signing the pay roll with the transfer mentioned attached thereto, he would pay such laborer the wages due him. All and each of the laborers shown on the pay roll, except a few whose names were signed without authority and who will be hereinafter mentioned, signed the pay roll in person or by their marks before any payment was made to them.

The money advanced by Macatee & Sons, paid to the laborers shown on the several pay rolls, not repaid, amounted to a total of $28,142.45, which includes the sum of $5,337.85 paid to laborers who did not sign the pay roll and transfer, and also the sum furnished to and personally used by Chambers himself, which amount is not now claimed to be a liability of the Indemnity Company, the bondsmen, to Macatee & Sons. The net sum paid to those who signed the transfer, exclusive of Chambers and those not signing, was $22,804.60.

After these payrolls with the transfer attached had been signed and the wages to the laborers paid, such transfer was delivered to Macatee & Sons.

There were nineteen of such transfers, one of which was executed on the 9th day of July, 1926, and the others one each at the end of each week thereafter up to November 11, 1926, covering a period of more than four months.

It was shown that on November 11, 1926, Chambers, the contractor, gave up the job and the surety company took over the work and completed the building; that the surety company received from the school board that part of the contract price that Chambers had not received; that the school board paid to Chambers and the surety company together the entire contract price of $88,598; that the surety company paid all unpaid bills on the job, except the sum then claimed by Macatee & Sons amounting to $28,142.45, which it refused to pay, or any part thereof.

W. L. Macatee & Sons, a copartnership composed of W. L. Macatee, J. I. Macatee, George P. Macatee, Mrs. Mary Grunewald, and Mrs. Cora McEnnis, brought this suit against Fred B. Chambers, Indemnity Insurance Company of North America, hereinafter referred to as the Indemnity Company, and the Board of Education of Houston Independent School District of Houston, Harris County, Tex., to recover from Fred B. Chambers and the Indemnity Company the sum of $28,142.45, alleged to be the sum due to laborers for work performed on the erection of said school building, which was transferred to the plaintiffs by the several laborers and Fred B. Chambers, and which said sum was by plaintiffs paid to said laborers and the said Chambers. They also sued for $2,814.25 as attorney's fees.

The plaintiffs substantially alleged the facts shown in our preliminary statement. They also alleged that the school board had on hand a part of the money agreed to be paid to Chambers under the building contract in the sum of $5,000, which should be paid to them.

Fred B. Chambers and the school board answered by general denials.

The Indemnity Company answered by a general denial and by specially alleging that the laborers furnishing the labor on the building, when they received the sum due them for their labor and signed the pay rolls (to which the transfer provision was attached), "did not know that the money being paid to them was being furnished by plaintiffs but thought and understood it was money being paid to them by the defendant Chambers, and not by plaintiffs or by anyone else, and did not know that said assignments were attached to said pay rolls, and in signing said pay rolls intended thereby merely to acknowledge receipt from the defendant Chambers of the amounts being paid to them and did not intend thereby to assign their said claims for wages due them to plaintiffs."

It also alleged that the amounts sued for by plaintiffs had been fully paid to appellants by the school board.

The statement of the answer of the Indemnity Company, as above stated, is sufficient for a comprehensive understanding of its contentions made on this appeal relative to the plaintiffs' suit. It, however, filed a cross-action against Fred B. Chambers, and alleged that Chambers failed to perform his contract and by reason of...