Case ID: sw_132/html/0963-01.html
Source: Caselaw Access Project
Author: {"author": "SPEER, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PANHANDLE TELEPHONE & TELEGRAPH CO. et al. v. KELLOGG SWITCHBOARD & SUPPLY CO. et al.
    
    (Court of Civil Appeals of Texas.
    Oct. 22, 1910.
    Rehearing Denied Dec. 3, 1910.)
    1. CONSTITUTIONAL LÍW (§ 34) — Constitutional Peo vision — Construction.
    Const, art. 16, § 37, providing that mechanics and materialmen shall have a lien on the buildings and articles made or repaired by them, and the Legislature shall provide for the speedy and efficient enforcement of such lien, is self-enforcing.
    [Ed. Note. — Eor other cases, see Constitutional Law, Cent. Dig. § 34; Dec. Dig. § 34.]
    2. Corporations (§ 483) — Relation op Parties.
    A contract was entered into between N. and a partnership, composed of D. and T., which provided that N. should transfer certain telephone equipment to the partnership in return for stock and bonds of a corporation which was to take over the property so conveyed; that the partnership was to make certain improvements in equipment and buildings and turn them over to the corporation; and that the parties to the contract should be the officers of the corporation. The contract was ratified by the corporation, and the partnership entered into contracts with telephone supply companies to furnish the improvements. Held that, under the contract and ratification the partnership was either a seller of the property to the corporation, or the agent of the corporation ; and hence a mechanic’s or materialman’s lien upon the materials purchased would arise between the materialman and the corporation.
    [Ed. Note. — For other eases, see Corporations, Dec. Dig. § 483.]
    3. Liens (§ 9) — Proceedings.
    In the case of a vendor who sells property with the agreement that certain. improvements are to be made upon it, a lien arises in favor of one who does work or furnishes material as against the vendee without compliance with the statutes regarding liens, where the work is done by a contractor.
    [Ed. Note. — For other cases, see Liens, Dec. Dig. § 9.]
    4. Mechanics’ Liens (§ 12) — Constitutional Provision — Public Service Corporation.
    Const, art. 16, § 37, providing for mechanics’ liens on all buildings, applies to an exchange building belonging to a telephone company.
    [Ed. Note. — For other cases, see Mechanics’ Liens, Dec. Dig. § 12.]
    5. Fixtures (§ 9) — Machinery.
    Some of the promoters of a telephone corporation agreed to furnish certain appliances in consideration for bonds and stock. Their contract was ratified by the corporation and they purchased the appliances on credit, giving a chattel mortgage to secure payment, to the seller, with the agreement that the machinery should be considered as personalty. This property was attached to the building with bolts and screws, but could be taken out and dismantled for shipment, leaving the building practically uninjured. Held, that it did not become affixed to the soil, and therefore a foreclosure of the chattel mortgage was proper as against the corporation.
    [Ed. Note. — For other cases, see Fixtures, Dee. Dig. § 9.]
    6.Corporations [§ 672) — Foreign Corporations — Right. to Sue — Permit—Pleading.
    In an action by a foreign corporation, where the petition does not show that the corporation is doing business in the state in violation of law, that defense cannot be raised by exception; but must be pleaded.
    [Ed. Note. — For other cases, see Corporations, Cent. Dig. §§ 2645-2649; Dec. Dig. § 672.]
    7. Appeal and Error (§ 179) — Foreign Cor--porations — Right to Sue — Permit—Evidence — Issue.
    Though defendant, in an action by a foreign corporation, pleaded that the corporation was doing business without a permit, he could not raise such contention in the appellate court, where he failed to offer evidence to sustain it, and no issue thereon was submitted to the jury.
    [Ed. Note. — For other cases, see Appeal and Error, Cent. Dig. §§ 1137-1140; Dec. Dig. § 179.]
    8. Sales (§ 308) — Lien for Price — Priority.
    One who conveys personal property to another under an agreement that the transferee shall make certain improvements in the property, is not entitled to a lien for the price as against materialmen furnishing such improvements.
    [Ed. Note. — For other cases, see Sales, Cent. Dig. § 873; Dec. Dig. § 308.]
    Appeal from District Court, Potter County; J. N. Browning, Judge.
    Suit by the Kellogg Switchboard & Supply Company and others against the Panhandle Telephone & Telegraph Company, J. E. Nunn, and others. From a judgment for plaintiffs, defendants appeal.
    Affirmed.
    Cooper & Stanford, for appellant Telephone Co. Jno. W. Yeale, for appellant Nunn. Spence, Knight, Baker & Harris, for appellee Western Electric Co. Stephens & Miller, for appellee Kellogg Co. Crane & Crane and Madden, Truelove & Kimbrough, for appellee North Electric Co. Madden, Truelove & Kimbrough, for appellees Alfalfa Lumber Co., Morrow-Thomas Hdw. Co., Roseoe Lmbr. Co., and H. A. Seigner.
    
      
       For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
    
      
       writ of error denied by Supreme Court.
    
   Statement of the Case.

SPEER, J.

Some time prior to May 14, 1908, the city council of Amarillo granted to H. H. Davenport & Company, a firm composed of H. H. Davenport and W. W. Taylor, a franchise to install and operate a telephone system in the city of Amarillo and that company purchased a lot and partly constructed a building thereon to be used in connection with their telephone system. On April 23, 1908, H. H. Davenport, J. T. Harrison, and Mike Le Master prepared, executed, and acknowledged articles of incorporation under the statutes of Arizona for the incorporation of the Panhandle Telephone & Telegraph Company. On May 14, 1908, J. E. Nunn was, and for a long time prior thereto had been, the owner of the Amarillo Telephone Exchange, a telephone system doing business in the city of Amarillo, and on that day he and Davenport & Company entered into the following contract:

“State of Texas, County of Potter.

“Know All Men by These Presents: That we, H. H. Davenport & Company, a firm composed of H. H. Davenport and W. W. Taylor, party of the first part and J. E. Nunn, party of the second part, all of Potter county, Texas, have this day made and entered into the following contract and agreement in duplicate, to wit:

. “The party of the second part, for and in consideration hereinafter mentioned, doth for himself, his executors and administrators covenant, promise and agree to sell, transfer and deliver to the party of the first part, their heirs and assigns all apparatus, franchise rights, privileges, supplies, office fixtures and furniture and all accessories thereto now used in operating the telephone exchange of the said J. E. Nunn, in Amarillo, Texas, except the building used for business offices, and all poles, wires, and construction and accessories thereto now on hand owned and being used by the said Amarillo Telephone Exchange in connecting all instruments in and near said town of Amarillo, Texas, which are using Amarillo as their switching station, except the toll leads from the edge of town, magneto switchboards, terminal racks and arresters and instruments used and owned by the said J. E. Nunn in connection with said exchange.

“The party of the first part, for and in consideration of the above covenants and agreements hereby agree and bind themselves, their executors and administrators, to assign, transfer and deliver to the said party of the first part one hundred thousand dollars in bonds, said bonds drawing six per cent, per annum interest, and to be twenty-year gold bonds of the Panhandle Telephone & Telegraph Company, a corporation duly incorporated under the laws of the territory of Arizona, and to be of date not later than July 1st, 1908, and one hundred thousand dollars in shares of the capital stock of the said Panhandle Telephone & Telegraph Company, interest on the bonds to be paid from the date of turning over the plant to the date of the bonds by the Panhandle Telephone & Telegraph Company to the party of ■ the second part, and further agree to add to the said Amarillo Telephone Exchange and apparatus sufficient additions and improvements to make the said telephone exchange a first-class one in every respect and of the latest devices and twelve hundred working telephones; and also to construct and build a modern three-story brick building 30x100 feet on the N. W. corner of Sixth and Taylor streets in the town of Amarillo, Texas, said building to be used as an exchange building by the Panhandle Telephone & Telegraph Company, unless the board of directors deem it expedient to arrange for other quarters. And for this plant complete the said party of the first part are to receive from the said Panhandle Telephone & Telegraph Company under a contract to be hereinafter made and entered into two hundred and twenty-five thousand dollars in the above described bonds and two hundred and twenty-five thousand dollars of the capital stock above described, which said last amount of bonds will be the full amount of bonds outstanding of an issue of three hundred and thirty thousand dollars in bonds by the said Panhandle Telephone & Telegraph Company, leaving a balance of one hundred and five thousand dollars in bonds in the treasury of the said last mentioned company.

“The capital stock of the said Panhandle Telephone & Telegraph Company is in the sum of five hundred thousand dollars and after payment of the above mentioned capital stock to the said party of the first part there will be remaining in the treasury of the said last mentioned telephone company two hundred and seventy-five thousand dollars of the capital stock.

“It is expressly agreed to and understood that the Panhandle Telephone & Telegraph Company is to give connection to the toll lines belonging to the Amarillo Telephone Exchange and the Northwest Texas Tele-' phone Company, their successors and assigns, and to handle the toll business of the said companies at the rate of commission common in Texas.

“It is also agreed and understood that the following officials shall be elected to hold office the first year, viz., J. E. Nunn, president, W. W. Taylor, vice president, H. II. Davenport, secretary, M. Le Master, treasurer, and Horace Gooch, general manager, these five before mentioned to constitute the board of directors for the first year.

“Immediately upon the action of the city council upon the question of rates the said second party will transfer by bill of sale to the first party the property above described, at which time and place the said first party will by bill of sale transfer all the property to the Panhandle Telephone & Telegraph Company. •

“H. H. Davenport & Company,

“By W. W. Taylor.

“J. E. Nunn.”

On the same day the Panhandle Telephone & Telegraph Company held a meeting of its stockholders and directors, the following officers being present: J. E. Nunn, president, W. W. Taylor, vice president, H. H. Davenport, secretary, Mike C. Le Master, treasur* er, and Horace Gooch, general manager (said officers Laying been elected at a prior meeting of tbe company in pursuance of tbe contract above set out), when tbe foregoing contract between Nunn and Davenport & Company was ratified in all its terms and stipulations by a resolution duly adopted. On June 15tb, in pursuance of tbis contract, J. E. Nunn executed a bill of sale conveying to H. H. Davenport & Company all of tbe property owned by tbe Amarillo Telephone Exchange and on tbe same day H. H. Davenport & Company executed bills of sale conveying to the Panhandle Telephone & Telegraph Company all property, privileges, rights, franchises, etc., owned by them in the city of Amarillo. These instruments were placed in escrow to be delivered to the respective parties as soon as the Panhandle Telephone & Telegraph Company had obtained a permit from the state of Texas to do business in this state, which permit was duly granted and received by the officers of the company on July 6, 1608, when the above-mentioned papers were delivered to the respective parties entitled to them. W. W. Taylor, who held the title to lot 10, block 61, of the Glidden & Sanborn addition on which was situated the telephone building, had executed a deed of date May 21, 1908, conveying the same to the Panhandle Telephone & Telegraph Company and this was also delivered and filed for record on July 6th. In pursuance of their contract to do so, the firm of H. H. Davenport & Company at once entered into contracts with the Kellogg Switchboard & Supply Company and various other parties to this appeal for the purchase of materials to be used in the work of repairing the Amarillo Telephone Exchange property. This - is a consolidated suit by which the Kellogg 'Switchboard & Supply Company and North Electric Company as plaintiffs, and the other appellees as inter-venors, seek judgments against H. H. Davenport & Company and the Panhandle Telephone & Telegraph Company for the contract price of materials used in the reconstruction of the plant thus conveyed to the Panhandle Telephone & Telegraph Company; the Kellogg Switchboard & Supply Company praying for a foreclosure of its chattel mortgage lien and the other parties seeking a foreclosure of their mechanics’ lien. After the evidence was introduced the court instructed the jury to find for the various ap-pellees herein the amount claimed by each, respectively, as to the Kellogg Switchboard & Supply Company against H. H. Davenport & Company, together with a foreclosure of their chattel mortgage lien as to all parties, and as to the other appellees against H. H. Davenport & Company and the Panhandle Telephone & Telegraph Company, together with a foreclosure of their mechanics’ lien as to all parties. Upon the verdict thus returned the court entered judgment, from which the Panhandle Telephone & Telegraph Company and J. B. Nunn have appealed.

Conclusions.

1. Section 37 of article 16 of the Constitution of 1876 is as follows: “Mechanics, artisans and material men of every class shall have a lien upon the buildings, and articles made or repaired by them for the value of their labor done thereon or materials furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.” This article has been, held in effect to be self-enacting and to be operative as between the owner of the property improved and the one furnishing material for making such improvements. Farmers’ & Mechanics’ National Bank of Fort Worth v. Taylor, 91 Tex. 78, 40 S. W. 876, 966. It is the contention of appellants that H. H. Davenport & Company occupied the position of contractors, and that therefore in order to fix a mechanic’s lien the appellees must have complied with the terms of the mechanics’ liens statutes of this state, which it is admitted they have not done. On the other hand, it is the contention of those ap-pellees, who had a foreclosure of their mechanics’ lien that H. I-I. Davenport & Company and the Panhandle Telephone & Telegraph Company were but other names for one and the same individuals, and that at most H. I-I. Davenport & Company were either the owners of the property which they had furnished materials to improve, or were the duly authorized agents' of the Panhandle Telephone & Telegraph Company, who was the owner, and that in either event they were entitled to their lien under the section of the Constitution. above quoted, regardless of a compliance with the terms of the statute giving a lien where the rights of a contractor intervened. We hold with this latter contention. There is nothing in the contract between H. H. Davenport & Company and the corporation to indicate that Davenport & Company was in any manner a contractor with the corporation to repair or otherwise improve the corporation property. The relation is that rather of vendor and purchaser where, by the terms of the contract of sale, the vendor is to make certain stipulated improvements of the thing sold. In such a case the authorities appear to hold, and justly we think, that one furnishing material to the vendor is entitled to his lien upon the theory that the vendor is either the owner of the property, or at least the authorized agent of the purchaser to make such improvements. Dougherty-Moss Lumber Co. v. Churchill, 114 Mo. App. 578, 90 S. W. 405; Curtin-Clark Hardware Co. v. Churchill, 126 Mo. App. 462, 104 S. W. 476; Houston v. Long, 23 S. W. 586, 15 Ky. Law Rep. 721; Paulsen v. Manske, 126 Ill. 72, 18 N. E. 275, 9 Am. St. Rep. 532; Pope v. Heckscher, 109 App. Div. 495, 96 N. Y. Supp. 533; York Mfg. Co. v. Brewster, 174 Fed. 566, 98 C. C. A. 348. We are espe-dally strengthened in this view by the unconditional ratification by the Panhandle Telephone & Telegraph Company of the Nunn-Davenport contract. This conclusion, independently of any other consideration, disposes of the major part of appellants! brief covering assignments from 1 to 16 inclusive.

2. Next, the proposition is asserted that neither the Constitution nor the statutes of this state provide for or authorize the' fixing of a mechanic,’s lien on the property of a public service corporation such as appellant. The section of the Constitution quoted, however, appears to be broad enough to include all buildings, and the exchange, centering as it does according to the evidence in this case, in the three-story brick building belonging to appellants, is a building within the contemplation of that section we have no doubt. No reason occurs to us for making an exception in favor of buildings owned by public service corporations and no case is cited by appellants where such has been done. Some railroad cases have been cited where the constitutional lien was denied, not because the railroads were public service corporations, but because they were not buildings.

3. There are other assignments which affect only the appellee the Kellogg Switchboard & Supply Company. The point is sought to be made that the Kellogg 'Switchboard & Supply Company’s chattel mortgage lien was inoperative, because the property covered by it was so attached to the building in which it was installed as to become a part of the realty, and therefore not subject to a chattel mortgage. But the evidence, without dispute, shows that while the apparatus is fastened to the floor and ceiling and walls with bolts and screws, that the same could be taken out and dismantled for shipment, leaving the building in practically the same condition as before, without in any manner injuring the same. It was, furthermore, undisputed that in the contract of sale to H. H. Davenport & Company, of which all parties had notice, the property was treated as a chattel and the lien reserved. Under these circumstances there was no error in foreclosing the chattel mortgage lien. Willis v. Munger Improved Cotton Machine Mfg. Co., 36 S. W. 1010.

4. The remaining assignments of appellant Panhandle Telephone & Telegraph Company attack appellee the Kellogg Switchboard & Supply Company’s right to maintain this suit upon the ground that it was doing business in the state of Texas without a permit. These assignments cannot be sustained. The matter does not arise on the special exception, since the petition on its face did not show that appellee company was doing business in Texas in violation of law. Geiser Mfg. Co. v. Gray, 126 S. W. 610. The petition failing in this respect, the question could only be raised by a plea by the defendant and such defense was pleaded, but the record is entirely silent as to the appellee’s default in the matter of obtaining a permit to do business in this state. Under the evidence, there was therefore no issue in this respect to be submitted to the jury. Huff v. Kinloch Paint Co., 110 S. W. 467. We are not at all to be understood as holding that the evidence in this case shows the transaction in controversy to be such a one as is interdicted by statute. On the contrary, we think the case is not ruled by the cases of St. Louis, E. M. Fireproofing Co. v. Beilharz, 88 S. W. 512, and F. W. Glass & Sand Co. v. Smythe, 128 S. W. 1136, but rather by the Tennessee cases of Milan Mill. & Mfg. Co. v. Gorten, 93 Tenn. 590, 27 S. W. 971, 26 L. R. A. 135, and Davis & Rankin Bldg. & Mfg. Co. v. Caigle, 53 S. W. 240.

5.As to appellant Nunn’s contention that he was entitled to a preference lien as against all the other parties to secure his claim aggregating $100,000 as the purchase price of the Amarillo Telephone Exchange, it is sufficient to say that the resolution of the Panhandle Telephone & Telegraph Company creating a lien upon its property to secure him in such amount was conditioned specially that “if the said Panhandle Telephone & Telegraph Company shall well and truly deliver unto the said J. E. Nunn the stocks and bonds above specified, then this resolution to be null and void, and it is undisputed that such stocks and bonds were duly delivered to Nunn, thereby discharging the lien. But appellant Nunn is otherwise in no better position than appellant Panhandle Telephone & Telegraph Company, because by his own act he has vested in H. II. Davenport & Company the title to his property upon the express understanding that they were to rebuild and otherwise improve it, thereby subjecting it to the lien of materialmen who furnished the supplies for such improvements.

These conclusions dispose of all assignments adversely to appellants and result in an af-firmance of the judgment.

Judgment affirmed.