Case Name: FIRST STATE BANK OF EASTLAND et al. v. PHELPS
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1934-01-05
Citations: 67 S.W.2d 900
Docket Number: No. 1204
Parties: FIRST STATE BANK OF EASTLAND et al. v. PHELPS.
Judges: FUNDERBURK, J., disqualified and not sitting.
Reporter: South Western Reporter Second Series
Volume: 67
Pages: 900–903

Head Matter:
FIRST STATE BANK OF EASTLAND et al. v. PHELPS.
No. 1204.
Court of Civil Appeals of Texas. Eastland.
Jan. 5, 1934.
Supplemental Opinion Feb. 2, 1934.
Jno. W. Goodwin, Joe T. Goodwin, and Ocie Speer, all of Austin, for plaintiffs in error.
Turner, Seaberry & Springer, of Eastland, for defendant in error.

Opinion:
HICKMAN, Chief Justice.
Defendant in error, H. T. Phelps, instituted this suit against the First State Bank of East-land, the Texas State Bank of Eastland, and James Shaw, hanking commissioner of Texas, who is in charge of said hanks as liquidating agent. He pleaded an express contract with the First State Bank of Eastland, by which he was employed as an architect to prepare plans and specifications for a bank building, by the terms of which his compensation was to be 3½ per cent, of the cost of the construction as compensation for preparing the plans and specifications, and 1½ per cent of such cost for architectural supervision the cost of the construction being estimated at the time at approximately $138,000. It was alleged that a contract was entered into between said bank and a contractor for the construction of the building according to the plans and specifications for $137,000; that, after the contractor began to perform his contract, a disagreement arose between him and the bank, and he abandoned the enterprise, whereupon the bank completed' same; that, when the bank undertook to complete the building, it desired defendant in error to furnish, in addition to the architectural supervision which had been contracted for, additional supervision such as is .usually furnished by a contractor; that thereupon the original contract was modified, and, as modified, defendant in error agreed to furnish said contractor's superintendence, and to make certain changes and modifications in the plans and specifications, which were desired by the bank, for an agreed compensation of 5 per cent, of the ultimate cost of the building, which additional services he alleged were rendered by him and were accepted by thq bank. It was further alleged that the building was completed on January 19, 1921, at a cost of approximately $245,000; that defendant in error had been paid on account $7,-930, leaving a balance owing him on the date of the completion of the building of $4,345.
As an alternative plea, it was alleged that, in the event plaintiffs in error should contend that the contract for changes in the plans and specifications and for additional supervision was not made, then he alleges that, at the request of said bank, he did alter, change, and modify the plans and specifications, and furnish architectural supervision for the entire construction, and additional supervision and superintendence usually furnished by the contractor, all of which were accepted by the bank, and for which it became obligated and bound to pay the usual, reasonable, and customary compensation for such services. which, it was alleged,'was 5 per cent, of $245,-500, the total cost of the construction of the building.
Facts were pleaded showing that defendant in error had fixed a mechanic's lien against the property by filing his sworn itemized statement in the office of the county clerk of Eastland county within the time provided by law. Further allegations were that, subsequent to the fixing of the lien, plaintiff in error Texas State Bank acquired some character of interest in and to the building and lots in controversy, and said bank was made a party defendant; that both the First State Bank of Eastland and Texas State Bank of Eastland are in the hands of James Shaw, banking commissioner, for liquidation, and he was made a party defendant along with the Texas State Bank in order that the rights of all parties might be adjudicated and the alleged lien foreclosed as to all parties claiming title to or interest in said property.
The case was tried below before the court without the aid of a jury, resulting in a judgment in favor of defendant in error against First State Bank of Eastland for $3,345, together with 6 per cent, interest per annum thereon from January 19,1921, the date of the completion of the building, and, as against all of the parties, the judgment decreed a foreclosure of the mechanic's lien on the property involved. From that judgment all the defendants below have prosecuted a writ of error to this court.
The ease is briefed under eight assignments of error. Assignments Nos. 1, 2, 4, and 5 will be considered together. These assignments present the question that the court erred in finding that the alleged contract was modified and in rendering judgment in favor of defendant in error for the balance due under the modified contract, because there was no evidence that the First State Bank made, or authorized any one in its behalf to make, such modified contract. Defendant in error testified that the new contract made after the trouble arose between the bank and the contractor was oral, and was made in behalf of the bank by one W. B. Smith. There is no evidence that, in making such contract, if he did make it, Smith was a-uthorized to act for the bank. Defendant in error admits in his brief that, because of his failure to establish Smith's authority to act for the bank, he showed no right of recovery upon his alleged express contract for changes in plans and specifications and additional superintendence and supervision. But it does not follow that these assignments present error. They .are predicated upon the assumption that the court rendered judgment upon tlie express contract. We cannot so assume, for no findings of fact or conclusions of law were filed, and, since tfie judgment fias support under tfie pleading of quantum meruit, we sfiall assume, as is clearly indicated by tfie' judgment, tfiat recovery was fiad upon tfiat alternative pleading. Tfiese assignments will be overruled.
Tfie tfiird, sixtfi, and seventh assignments are construed to present tfie question that there was no evidence supporting tfie judgment under tfie pleading of quantum meruit. We have experienced some difficulty in understanding the exact contention under tfiese assignments. There is an abundance of evidence tfiat 5 per cent, of tfie total cost of tfie completed building would be reasonable compensation for tfie services rendered. We do not understand plaintiffs in error to contend to tfie contrary, except in this particular: Tfie evidence disclosed tfiat, at tfie time tfie contractor abandoned the construction of tfie building, one-third of it had been completed. The extra superintendence and supervision furnished by defendant in error was for two-tfiirds of the building. Tfie witnesses testifying in behalf, of defendant in error on the question of tfie reasonable and customary compensation for services of the character detailed were not asked tfie specific question as to the reasonable charge for such services for tfie last two-tfiirds of tfie building, but their testimony related to tfie construction of a wfiole building. It seems to be tfie contention tfiat, in tfie absence of evidence relating to the exact situation existing in tfie instant case, where tfie extra superintendence and supervision began after tfie building was one-third completed, there is no evidence supporting tfie quantum meruit theory. We have never heard of a contention like tfiat before, and are at a loss to know how to discuss it. It impresses us as being wholly without merit. No reason is perceived why the same percentage should not apply to any portion of the work as tfiat applicable to tfie whole. Tfiese assignments are overruled.
Tfie eighth assignment complains of tfiat portion of tfie judgment awarding interest at tfie rate of 6 per cent, per annum from January 19, 1921, to date of judgment. Tfie money judgment was against tfie First State Bank, alone. Tfie other parties were joined as defendants for foreclosure purposes only, and tfie record does not disclose vMiat interest, if any, tfie Texas State Bank had in the property. The petition of defendant in error upon which he went to trial alleged tfiat tfie First State Bank was in tfie process of liquidation and in the hands of James Shaw, banking commissioner. There is neither allegation nor proof of tfie date when said bank became insolvent and passed into the hands of the commissioner for liquidation. Absent allegations and proof of this fact, no interest whatever should have been allowed upon tfie claim.' Had this fact been alleged and proved, interest accruing prior to tfie date of insolvency could properly have been allowed. Tfie general rule is tfiat, if tfie property of an insolvent passes into the hands of a receiver, or an assignee, or, in case of a state bank, into tfie hands of tfie banking commissioner for liquidation, tfie running of interest ceases. Thomas v. Western Car Co., 149 U. S. 95, 13 S. Ct. 824, 37 L. Ed. 663; White v. Knox, 111 U. S. 784, 4 S. Ct. 686, 28 L. Ed. 603; American Nat. Bank v. Williams (C. C. A.) 101 F. 943; Gaston & Ayres v. J. I. Campbell Co., 104 Tex. 576, 140 S. W. 770, 141 S. W. 515; Brazelton & Johnson v. J. I. Campbell Co., 49 Tex. Civ. App. 218, 108 S. W. 770; First Nat. Bank of Houston v. J. I. Campbell Co., 52 Tex. Civ. App. 445, 114 S. W. 887; Atlanta Nat. Bank v. Four States Grocer Co. (Tex. Civ. App.) 135 S. W. 1135; St. Louis Union Trust Co. v. St. L. & S. F. Ry. Co. (Tex. Civ. App.) 146 S. W. 348; 6 Tex. Jur. § 179, p. 328. No reason can be perceived why the general rule is not applicable to the facts in tfie instant case. Defendant in error cites tfie decision of this court in tfie case of Shaw v. Morrison, 14 S.W.(2d) 953. In tfie light of the foregoing authorities, which were recently discovered by tfie member of this court who wrote the opinion in the Shaw v. Morrison Case, we question the soundness of our opinion therein on tfie interest question.
Tfie judgment below erroneously awarded interest on tfie claim from January 19, 1921, to date of judgment, and, since defendant in error neither pleaded nor proved facts showing himself entitled to any interest, it should not have been allowed. It is accordingly our order tfiat tfie judgment of the court below be so reformed as to disallow tfie claim for interest, and that, as reformed, the same be affirmed. The costs of tfie appeal will be taxed against defendant in error. • Reformed and, as reformed, affirmed.
FUNDERBURK, J., disqualified and not sitting.
Supplemental Opinion.
HICKMAN, Chief Justice.
The defendant in error filed a motion for rehearing herein complaining of tfiat portion of our opinion in which we hold tfiat there was error in rendering judgment for any interest. After filing the motion and before the same was acted upon by the court, a settlement was made between the parties, the motion was withdrawn, the costs of appeal paid, and mandate issued. There is therefore nothing before us for decision, and the judgment heretofore rendered will not be disturbed.
In our original opinion, after stating the general rule that, if the property of an insolvent passes into the hands of a receiver, the running of interest ceases, we stated: "No reason can be perceived why the general rule is not applicable to the facts in the instant case." In view of the fact that the foreclosure of a lien was awarded, it is insisted that the appointment of a receiver did not stop the running of interest, in so far as same could be collected out of the proceeds of the sale of the security. In support of this contention we are referred to the cases of First Nat. Bank of Houston v. J. I. Campbell Co., 52 Tex. Civ. App. 445, 114 S. W. 887, and Brazelton & Johnson v. J. I. Campbell Co., 49 Tex. Civ. App. 218, 108 S. W. 770. While there is nothing before us for determination, we desire to state that a consideration of these authorities has, at least, created a doubt in our minds as to the correctness of the sentence in our original opinion above quoted. We therefore withdraw that statement, in so far as it may be an authority binding upon this court in the future. In other words, we make no decision at all of the question as to whether the general rule has full application to the facts of the instant case.