Court Opinion

ID: 3944573
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:07:40.672823+00
Date Added: 2024-06-11T14:01:43.657155
License: Public Domain

* Writ of error dismissed for want of jurisdiction October 24, 1923.
We doubt if appellee in its petition stated a cause of action, arising on the contract set out above, against the construction company. Of course, if it did not, the judgment should be reversed so far as it was against appellants, even if they were liable as sureties for a failure of the construction company to perform its obligation under said contract. Article 1827, Vernon's Ann.Civ. Statutes 1918 Supp.; American Bonding 
Trust Co. v. Garrett, 61 Tex. Civ. App. 454, 129 S.W. 298; Texas Auto 
Supply Co. v. Magnolia Petroleum Co. (Tex.Civ.App.) 191 S.W. 573; Ricks v. Pinson, 21 Tex. 507. The undertaking of the construction company was "to commence and complete (quoting) the construction of certain street improvements and all extra work in connection therewith as stated in general specifications," furnishing the material, tools, etc., necessary therefor, "in accordance with plans and specifications" agreed upon, "in the manner and under the *Page 325 
conditions (quoting) hereinafter specified." The allegations as to the breach by the construction company of its undertaking were that appellee had issued $50,000 in warrants to it (the construction company), and that it (the construction company) "had not completed paving work under said contract to exceed the sum of $35,000," and had "refused to proceed with the paving work outlined and provided by plaintiff (quoting) for it to do under the provisions of its contract to the extent of $15,000 of warrants issued to it by plaintiff." There was no allegation that the warrants, or any of them, had been paid, nor any reason stated why, if appellee had not paid them, it was bound to do so; nor were there any allegations showing that appellee had in any way been injured by the failure of the construction company to complete the work it undertook to do.
But if it should be conceded that a cause of action was stated against the construction company, we think the judgment so far as it was against appellants was nevertheless unauthorized, because it did not appear from the allegations in the petition that they were liable for the consequences to appellee of a breach by the construction company of its contract, nor did it appear from said allegations that they, or either of them, had defaulted in the performance of any obligation or duty they owed to appellee. What Head agreed to do and what the surety company by its bonds bound itself he would do was "to protect and indemnify" appellee against loss "in the event of any dispute, discrepancy or other contingency arising which might in any way affect the amount of work done or materials furnished" by the construction company, "so as to in any way affect" the warrants issued by appellee to the construction company and by it (the construction company) indorsed and delivered to him. That Head was a mere trustee of the parties for the purpose of holding possession of the warrants until he was directed by appellee's mayor to deliver them to the construction company is plain, we think. It was not alleged that he did not have the warrants in his possession, or was not holding them as agreed upon, or that he had in any way violated the trust. If he was holding them as agreed upon, certainly appellee had no right to maintain this suit against him. And, of course, if it could not maintain it against him, it could not maintain it against the surety company as his surety.
The judgment is reversed, and the cause is remanded to the court below for such proceedings as may be proper there.
                 On Motion of appellee for a Rehearing.
The construction company did not appeal from the recovery appellee obtained against it, and it was not the intention of this court to disturb the judgment of the court below in that respect. That it was not so stated, directly, in the opinion disposing of the appeal, was due to an oversight of the writer.
If this court erred, as appellee insists it did, in holding that it appeared that Head was a mere trustee for the purpose of holding possession of the warrants, the conclusion reached that a cause of action was not stated against him nor against the surety company was nevertheless correct, we think because it did not appear from the allegations in the petition that a "dispute, discrepancy or other contingency" arose which in any way affected the warrants turned over to Head. If Head held the warrants, and it was not alleged he did not hold them, and if he had not "paid to or credited" any of same to the construction company "except in such amounts" as were shown "by estimates duly allowed and signed by the mayor," and it was not alleged that he had, he had not breached his undertaking, and a cause of action against either him or the surety company did not exist.
  The motion is overruled. *Page 353