Court Opinion

ID: 9661804
Source: CourtListenerOpinion
Date Created: 2023-08-23 22:50:57.026143+00
Date Added: 2024-06-11T18:14:33.927023
License: Public Domain

WALKER, Justice
(dissenting).
I respectfully dissent. The language of Art. 5469 is not as clear as it might be, but that is a very good reason for avoiding the construction adopted by the Court. Under the majority holding the statutory retain-age withheld by the owner from an original contractor who has fully performed and paid all of his workmen and suppliers will be subject to claims for labor and material furnished to another original contractor who is insolvent. This will inevitably lead to one of two rather harsh results: either (1) the owner will be required to pay more than the total of the contractual obligations incurred by him for the construction of the improvement, or (2) original contractors who fully perform and pay their bills will ultimately receive less than the amounts stipulated in their contracts with the owner. An intention to adopt a statutory scheme of that nature should not be attributed to the Legislature unless the language of the statute is too plain to admit any other construction.
Respondents contend and the Court holds that the 1961 amendment to Art. 5469 made no change in the statute except to include materialmen within its scope. Apparently this conclusion is based largely on the caption and emergency clause of the Act. It seems to me that the Court fails to give proper weight to the changes in the crucial language of Art. 5469, to other parts of the 1961 revision, and to the practical consequences of its holding. Prior to 1961 the owner was required to retain:
“. . . [T]en per cent of the contract price of such building, fixture or improvement, or the repair thereof, or ten per cent of the value of such building, fixture or improvement, or the repair thereof, measured by the proportion that the work done bears to the work to be done thereon, and using the contract price or the reasonable value of the completed building, fixture or improvement, or the repair thereof, as a basis of computation of value.”
The Legislature had thus used the terms “contract price of such building, fixture or improvement,” “value of such building, fixture or improvement,” and “the contract price or the reasonable value of the completed building, fixture or improvement.” This language is quite clear and certainly would not have been abandoned by anyone who wished to require the owner to retain a proportion of the total cost of the entire project. It is of more than passing significance then that the Legislature decided to and did eliminate all of these terms. The 1961 amendment contains no language of similar import. According to its provisions, the owner should retain:
“ . . . [T]en per cent (10%) of the contract price to the owner, his agent, trustee or receiver of such work, or ten per cent (10%) of the value of same, measured by the proportion that the work done bears to the work to be done, using the contract price or, if none, the reasonable value of the completed work as a basis of computing value.”
The majority construe “work” to mean all work to be done in completing the building, fixture or improvement. This, it seems to me, is a distortion of the statute. Subject to certain limitations not material *797here, the term “work” is defined in Art. 5452 as “any construction or repair” of any house, building, improvement, levees, embankments, or railroad “under' and by virtue of a contract with the owner, owners, or his or their agent, trustee, receiver, contractor, contractors, or with any subcontractor.” The definition is thus stated in terms of the nature of the activity, the type of permanent addition to real property that is involved, and the parties to the contract under which the activity is conducted. Any construction or repair of any of the designated improvements under a contract with the owner, his contractor or subcontractor, constitutes “work.”
There is nothing in the definition concerning the scope or extent of the activity, and other parts of the statute indicate that the Legislature did not think of the term as including all or any particular part of an entire project of construction or repair. Art. 5452 refers to “all or part of the work required by an original contract.” Art. 5455 provides that an affidavit claiming a lien must contain “a general statement of the kind of work done or materials furnished by him, or both. It shall not be necessary to set forth the individual items of work done or material furnished or specially fabricated.” In Art. 5467 the Legislature spoke of “all work called for by the contract between the owner and the original contractor.”
Under the statutory definition, the term “work” does not embrace everything that is done in the course of an entire project. Prior to the 1961 amendment the retainage was measured by “contract price of the building.” After the 1961 amendment it is measured by the contract price “of such work” to the owner. According to the introductory clause, moreover, the duty of the owner with respect to statutory retain-age arises “whenever work is done whereby a lien or liens may be claimed under Article 5452.” The words “such work” later in the statute obviously refer to any work that is done whereby a lien or liens may be claimed under Art. 5452. It seems fairly obvious, moreover, that there will be no contract price “to the owner” except where he is a party to the agreement. So the “contract price” used to measure the retainage is the price set out in a contract to which the owner is a party. The other party to such an agreement is, by definition, an original contractor, and the statute expressly provides that there may be one or more original contractors. Art. 5452.
In the light of these provisions, I am satisfied that the word “work” as used in Art. 5469 means the construction and repair done and to be done under an original contract with the owner. It also seems clear to me that the Legislature intended for each original contract to be treated separately in determining the owner’s duty and liability under Art. 5469. Any doubt in this respect should be dispelled by the provisions of Art. 5472d, which was also adopted as a part of the 1961 Act. It is there provided that whenever “an original contractor” furnishes the owner a payment bond “in a penal sum not less than the total of the original contract amount” and the bond is approved by the owner and filed in the office of the county clerk as therein provided, “the owner shall be relieved of all obligations under Articles 5454, 5463 and 5469 hereof.” Since a payment bond furnished by an original contractor will not protect the creditors of another original contractor, the lawmakers must have contemplated that the terms of Art. 5469 would be applied to each original contract separately.
Under the Court’s interpretation of Art. 5469, an original contractor who has fully performed by constructing the foundation of the building and who has paid all bills incurred by him cannot be paid in full until 30 days after the painting contractor has finally completed the last work on the building. This may be several years after the work of the foundation contractor was completed. During that period the foundation contractor must protect himself by filing claims and perfecting liens. Otherwise he will run the risk of losing the entire ten *798per cent withheld from the price stipulated in his contract to those who furnished material to the insolvent painting contractor. Even if he files claims and perfects liens, he may lose the entire ten per cent to artisans and mechanics employed by the painting contractor.
I am not entirely clear as to the effect of the today’s holding on the contractor who gives the bond contemplated by Art. 5472d when other original contractors on the same project do not furnish bond. As I interpret the majority opinion, Art. 5469 makes the owner responsible to any supplier for up to ten per cent of the cost of the entire building until thirty days after the last work on the building is done. If the Court adheres to that construction of the statute, the foundation contractor in our example would gain nothing by executing the bond contemplated by Art. 5472d. The owner could not afford to pay him promptly after completion of the foundation work, because the owner would know that, despite the provisions of Art. 5472d, he could be held liable to any supplier for up to ten per cent of the cost of the entire building until thirty days after the work of the painting contractor was completed. Art. 5472d would thus be rendered meaningless where there are several original contractors and some but not all furnish payment bonds. On the other hand, the Court might hold that Art. 5472d overrides Art. 5469 in the situation just mentioned. We would thus be saying that the Legislature intended to provide that one original contractor might, by giving a bond for the protection of his workmen and suppliers, deprive the creditors of another original contractor of part of the protection otherwise afforded them by Art. 5469. That, it seems to me, is absurd.
In my opinion the Court of Civil Appeals at Austin correctly interpreted the statute in Lennox Industries, Inc. v. Phi Kappa Sigma E. & B. Ass’n, Tex.Civ.App., 430 S.W.2d 404 (no writ). The court mentioned the contrary holding by the Court of Civil Appeals at Corpus Christi in Hunt Developers, Inc. v. Western Steel Co., Tex.Civ.App., 409 S.W.2d 443 (no writ), but concluded that the earlier decision is unsound for the following reasons:
Art. 5452, subd. 2, par. e, V.T.C.S., defines “original contractor” and “original contract” and provides that “There may be one or more original contractors.”
Art. 5469, supra, provides that it shall be the duty of the owner to retain “10% of the contract price to the owner . to secure . . . the payment of . claimants furnishing material . for any contractor . . ..”
This Article prior to its amendment in 1961 provided, in part, that the owner should retain “. . . ten per cent of the contract price of sucb building, fixture or improvement . . ..”
The change in legislative language implies change in meaning. This change, clear to us, is that the amount of required retainage is no longer necessarily measured by the contract price of the building but is measured by the contract price, one or more, to the owner. This construction of the statutes is fair to the owner, the contractors and fair to the statutory beneficiaries who deal with a particular contractor.
It seems to me that this reasoning is entirely sound. If Art. 5469 is interpreted to mean that each original contract is to be considered separately, and that the owner must retain ten per cent of the cost to him of the work under each contract until thirty days after such work is completed, the statutory scheme is workable, reasonable and fair to all parties. I would modify the judgments below to award respondents ten per cent of the cost of the work done under the original contracts between petitioners and Glenn McEntire.
GREENHILL, POPE and REAVLEY, JJ., join in this dissent.