Lion Bonding & Surety Co. v. O'Kelly
Lion Bonding & Surety Co. v. O'Kelly
Opinion of the Court
In December, 1915, O’Kelly, the appellee, entered into a contract with the city- of Beaumont, by the terms of which he undertook to construct a wharf and dock in consideration of the payment by the city of $65,536. To secure the performance of his contract, O’Kelly executed two bonds, aggregating $16,500 with the appellant as his surety. In June, 1916, after he had partly performed his undertaking, the city of Beaumont canceled the contract, upon the ground that O’Kelly was unable to complete it. Appellant as surety upon the bonds was notified, and thereafter elected to take over the work and complete the contract according to its terms in order to protect itself against liability for damages. This suit was filed by the appellee to recover the sum of $12,608.35, alleged to be the difference between the amount received by the appellant from the city of Beaumont and the reasonable cost of completing the work; and also to recover the sum of $3,-500 as the value of tools and implements belonging to the appellee which the appellant used in doing the work. In addition to damages claimed, the appellee prayed for the cancellation of a deed of trust given by him to the appellant on a tract of land for the purpose of securing the latter against loss by reason of becoming his surety on the bonds above mentioned.
The appellee pleaded, in substance, the following facts: Up to the 6th of June, 1916, he had performed work of the value of $29,-304.33 and had received from the city therefor the sum of $23,019.65, leaving unpaid on account of the work performed the sum of $6,284.68. The city reserved the right to take from the contract a part of. the work amounting to $5,047.07, leaving the net contract price of $60,4SS.30. The reasonable cost of completing the work after the city had terminated appellee’s contract was $24,895.80, which was $12,608.35 less than the aggregate amount due from the city upon the completion of the contract. When the city on June 6,1916, declined to permit the appellee to proceed further under his contract, the appellant immediately arranged to take over and complete the work and entered into a contract for that purpose. Upon the completion of the work, appellant received and collected from the city the sum of $37,468.56 as the unpaid portion of the contract price. When appellant *1116 took over the work for the purpose of completing the same and thereby.securing its release from liability on the bonds, it became and was its duty to exercise ordinary and reasonable care, prudence, skill, and economy in the prosecution of the work, to complete the same at a reasonable cost and expense, and to not unnecessarily or unreasonably increase such cost and expense, and to account to appellee for the difference between such reasonable cost and expense and the sum received from the city on account of the contract. That, notwithstanding the duty and obligation above referred to, the appellant, in violation of the appellee’s rights, neglected, failed, and refused to exercise such reasonable and ordinary care, economy, and skill in the completion of the work for the purpose of keeping the cost thereof within reasonable bounds, failed to make an investigation to determine what would be the reasonable cost of completing the work, failed to advertise such work, failed to take bids thereon or otherwise to invite competition, failed to secure the opinion and advice of engineers or others skilled in such matters as to the reasonable cost of completion; but, in violation of its duty to appellee, immediately entered into a contract with the McKenzie Construction Company for tire completion of the work, and further obligated itself to pay to said company additional compensation for the extra material and labor included in the contract between the appellee and the city, but. not included in the contract between the appellant and the McKenzie Construction Company. If the appellant had exercised ordinary and reasonable care, skill, economy, prudence, and good faith toward appellee, it could and would have secured the completion of said structure for a price not exceeding $24,869.35; and, if it had so completed the work at the reasonable cost thereof, there would have'remained in its hands the difference between the above sum and the amount received from the city, the sum of $12,608.35, for which amount he prayed judgment.
To this portion of the petition the appellant specially excepted on the ground that it failed to state the facts necessary to constitute a liability for the amount sued for. The exception was overruled, and the case submitted to the jury on special issues.
The first question submitted required the jury to find whether or not any part of the money collected by the appellant from the city of Beaumont on account of the contract was expended by it otherwise than in good faith under the belief that it was liable for the sums disbursed or that it was necessary or expedient to make such disbursements. The jury answered that question in the affirmative ; and, in answer to the second question, found the amount so disbursed to be $1,525.-53. They further found that the value of the tools taken over and retained by the appellant amounted to $3,500. Upon those findings the court rendered judgment in favor of the appellee for the sum of $5,025.53 and also canceled the deed of trust before referred to.
The remaining assignments of error have been carefully considered and are overruled.
The judgment will be affirmed.
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Case-law data current through December 31, 2025. Source: CourtListener bulk data.