Fennell v. Trinity Portland Cement Co.
Fennell v. Trinity Portland Cement Co.
Opinion of the Court
In August, 1913, the city of Denison entered into a contract with the Murphy-Moulton Company to pave a portion of Gandy street in that city. Among other provisions, the contract contained the following:
“Said contractor shall furnish a bond, to he approved by the city, in the sum of twenty thousand dollars, guaranteeing that said contractor will faithfully perform the undertakings of this contract, and which bond shall also provide that said contractor shall pay for all labor and materials used in the construction of said work; and that any person so furnishing such labor or materials may have their right of action thereunder as if the same were made payable to such laborers or materialmen direct.”
In compliance with the above requirement the Murphy-Moulton Company executed and delivered to the city a bond in the sum of $20,000, conditioned for the faithful performance of the service undertaken, with the appellant Southwestern Surety Insurance Company as its surety. That bond contained, among others, the following stipulation:
“This bond is given to secure the performance of said contract in every particular, including payment of all indebtedness incurred incident thereto for labor and material; and persons employed upon or about said work, or supplying or furnishing material therefor, may have their cause of action therefor as though said bond were payable directly to them.”
In May, 1914, the Murphy-Moulton Company entered into a contract with J. H. Fennell, by the terms of which a portion of the concrete work undertaken by it was sublet to Fennell at an agreed price. Between June 10 and November 12 of 1914 Fennell purchased from the appellee 3,000 barrels of cement at an aggregate cost of $5,370, for use in the work on Gandy street, under his contract with Murphy-Moulton Company. All of this cement was used in the street improvement except about 40 barrels, and all of the purchase price was paid except $1,833.08. On January 8, 1915, the balance due from. Fennell being unpaid, the appellee gave written notice of its claim to the mayor and commissioners of the city of Denison, and later gave similar notice to the Murphy-Moulton, Company and to the appellant surety company. On December 7, 1914, Fennell gave to the appellee an order upon the Murphy-Moulton Company for the sum of $85.92, which was paid and his account credited with that amount. On the same date the appellee took from Fennell two notes covering the balance of his indebtedness, which were secured' by a chattel mortgage on some personal property. This was done, according to the findings of the court, without any Intention on-the part of the appellee to waive its rights under the bond of the Murphy-Moulton Company. The failure of Fennell to pay those notes at maturity was followed by this suit instituted by the appellee against Fennell, in which are joined the Murphy-Moulton Company and the Southwestern Surety Insurance Company, upon the bond above referred to. In a trial before the court a judgment was rendered in favor of the appellee against Fennell for the full amount of the debt, and against the other defendants for the same amount, less the value of the 40 barrels of cement not used in the street improvement work. The Murphy-Moulton Company and the Southwestern Surety Insurance Company have appealed.
The record'shows that in the trial below the following agreement was made by the attorneys:
“The Trinity Portland Cement Company is the same identical corporation as the Southwestern States Portland Cement Company, the name of the company having been changed from Southwestern States Portland Cement Company to Trinity Portland Cement Company by amendment of its charter. That the corporation is one organized under the laws of the state of West Virginia and has a permit to-do business in the state of Texas, its principal office and place of business being at Dallas, Dallas county, Texas.”
If it should he held that because the ap-pellee alleged that its principal office was at Dallas, Tex., on the date the suit was filed it should be inferred that it was •doing business in this state at the time the transaction with Fennell occurred, _ it is •equally as reasonable to infer from the facts ■agreed to that it was also at that time equipped with a permit to do business in this state. If we must presume that location at that time was but a continuation of what it had previously been, we should, with equal propriety, presume that its equipment was the same.
At its regular session in 1913 the legislature (Acts 33d Leg. p. 185) enacted a statute which required parties entering into formal contracts with the state and its various municipalities for the prosecution of any public work to execute the usual penal bond, •with good and sufficient surety—
“with the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract; and any person, company, or corporation who has furnished labor or materials used in the construction or repair of any public building or public work, and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the state or any municipality on the bond of the contractor, and to have their rights and claims adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claims and judgment of the state or municipality.”
The above is a part of section 1 of the act, which will be found as chapter 3- of title 113 of Yernon’s Sayles’ Statutes (section 6394f). Section 2 of that act provided that if no suit shall be 'brought by the state within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials shall, upon application therefor and furnishing affidavit that they have supplied labor and materials for the prosecution of the work for which payment has not been ma'de, such persons shall be furnished with a certified copy of the contract and bond upon which they shall have a right to institute and prosecute a suit for their own benefit.
Appellants also insist that they were released from liability on the bond by the taking of notes from Fennell and extending the time for the payment of his debt. In support of 'this proposition they invoke the well-established rule applied to contracts evidenced by promissory notes and similar instruments. It is not contended that any injury resulted to the appellant by reason of the taking of those notes or the extension of time given. In the United States Fidelity & Guaranty Co. v. United States, 191 U. S. 416, 24 Sup. Gt. 142, 48 L. Ed. 242, a similar objection was considered at length and overruled by the federal Supreme Court. The subject is so fully discussed in that opinion that it is unnecessary to add more.
The judgment of the district court will be affirmed.
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Reference
- Full Case Name
- FENNELL Et Al. v. TRINITY PORTLAND CEMENT CO.
- Cited By
- 15 cases
- Status
- Published