Court Opinion

ID: 7914769
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:09:38.577293+00
Date Added: 2024-06-11T16:32:45.314900
License: Public Domain

Thiele, J.
(dissenting): I dissent. The record discloses that had it not been for the letter of the lumber company that it would extend its name to the contractor so that he might obtain a line of credit at the bank, the surety company would not have signed the bond. The ordinary meaning of the phrase “line of credit” means a margin of credit extended. (See Shneider-Davis Co. v. Hart, 23 Tex. Civ. App. 529, 57 S. W. 903, 904, and American Button-Hole, etc., Machine Co. v. Gurnee, imp. 44 Wis. 49, 62; 37 C. J. 1261.) The effect of the letter was to assure the bonding company the lumber company would stand behind the contractor to the extent of $1,200. The loan was procured as agreed. Out of the proceeds of the building contract that particular debt was paid. Had it not been so paid, the lumber company would have been liable to the bank. Had it been compelled to pay the bank, I hardly believe the lumber company could recoup from the surety company. But by indirection that result is now to be accomplished.
Stated in another way, the lumber company told the surety company it would back the contractor to the extent of $1,200 if the *233surety company would sign the bond, having procured the bond to be issued for its own benefit in the prospective, and later realized, sale of lumber, it should not be allowed to deny its original position. The disposition made of this appeal permits the lumber company to profit by its action in inducing the surety company to execute the bond.
In my opinion the judgment of the trial court was correct and should be affirmed.