Welsh v. Warren , 159 S.W. 106 ( 1913 )

By its second assignment of error the appellant surety company makes the contention that judgment should have been entered in its favor because it was discharged through the failure of the owner of the house and the contractor to perform the contract according to the agreement therein which provided that the owner was to pay the contractor for the work "the sum of $3,300 as follows: Each week during the life of this contract and progress of work estimate shall be made of actual labor done and material furnished, and owner shall pay 85 per cent of same upon said estimate in lawful money U.S. A.; remainder of contract retained by owner shall be paid in lawful money of the U.S. A. within five days after work is completed." The contract contained the agreement mentioned. The evidence admittedly shows that the contractor abandoned the contract after commencing the work, At the time the contractor abandoned the contract, the building was about two-thirds finished, having the walls and partitions up, the floors to the second story in, and the roof on. At the time of the abandonment of the contract the appellee had paid over to the contractor the total sum of $2,528; the same having been paid only as the work progressed each week and only for labor done and material furnished for the building. As to whether there was compliance with or failure of performance of the particular terms of contract complained of rests in the evidence given by appellee and Mitchell. Appellee testified that "It was agreed between Welsh and me that for the purpose of making estimates of the work, and so far as making payments was concerned, Mr. Mitchell would look after that, as superintendent to that extent. * * * I think it was $2,528 that I paid to Welsh, leaving only a balance of $772 to complete the building. * * * I did not have him to furnish me along, while he was erecting the building, with the bills for the different materials which he had purchased; I knew about practically most of the bills, but I did not take any copies of any bills. When I paid him I reserved nothing with which to pay these bills. I would not pay him just whenever he would call on me for money. As the work progressed every week Mitchell paid him the amounts. I put the money to his credit as trustee to make payments. * * * Every week he advised me of the amounts he was paying; he knew how many men they had on the job and could tell how many days' work they had put in. It was a matter of very easy calculation, what the labor amounted to, and in that way the estimates were made. * * * I did not pay up the labor in full. The purpose and intention was to keep back within the provisions of the contract all the time. I presume that the laborers were paid in full each week up to the last week, when they were not; but the material was not paid up in full; the material was never paid up in full. Each week I took an approximate estimate of everything as it went along. The superintendent would know as what his judgment was as to whether or not the proper estimates were made on the work as it progressed. * * * As to what estimates Mr. Mitchell made of the work, and whether he paid 85 per cent. of the labor and material, or whether he paid all the labor off each week, I know that after the matter was wound up (that is, when Welsh quit) there was $668.30 of labor and material that went into the building that had not been paid for by me or Welsh; and that is more than 15 per cent, which the contract says I shall keep back."

W. B. Mitchell testified as follows: "Mr. Warren asked me to look over the building and to make estimates on it and to see if anything went wrong. I am familiar with the provisions of the contract relative to making payments of 85 per cent. of labor done and material furnished. In making the estimates I estimated and paid, according to my best judgment, within the 85 per cent, and I tried to hold it to less than that. The payments were made according to my estimates from time to time. When the foreman presented his bills and pay rolls I would look over his list, and I demanded the time book; and by that means, and with my knowledge of the men he had on the job, passing there every day, I would arrive at the correctness of the matter. I did not keep the bills and pay rolls, but I took a receipt for the checks I gave him showing whether for labor or material." He further testified: "I would pay the men up entirely every Saturday night. In some cases I did not pay them up entirely, and in some cases I did not hold back anything. I kept the labor pretty well paid up as I went along. I paid off for part of the material that he furnished. For instance, a bill for material was furnished; I would not deduct 15 per cent. of it, but would pay it all, whatever it was. I paid their bills for freight in full. I did not deduct anything out of the bills, but would just pay their bills. * * * I paid the money directly to Mr. Cuberly, gave him a check, and he paid the bills himself. Whenever he presented a bill, for instance, he claimed he had a bill for sand or something of that sort to be paid, I made an estimate and considered whether or not he had enough to cover that within the 85 per cent.; and if he did, on my estimate, I paid it. I did the same way with reference to labor, pay rolls, making my estimates on labor done and material furnished as a whole." He further testified that he knew Welsh was getting hardware, cement, and the materials in the aggregate of $668.30, and that in making his estimates he figured these as part of the material on the ground, but no bills for said items were ever presented or paid, and according to his estimates payments were less than 85 per cent. It was shown that there was $668.30 worth of material furnished in the building at the time above the $2,528 paid the contractor and not paid for by the owner or the contractor.

The following cases seem to be authority for the proposition that the surety of the contractor would be released if advances were made by the owner to the contractor in excess of contract provisions: Ryan v. Morton,65 Tex. 258; McKnight v. Mfg. Co., 155 S.W. 977. And we for the moment assume the correctness of the decisions mentioned. The difficulty here, though, is to hold that the evidence so conclusively establishes, as assumed by the assignment, that there was such a breach of the terms of contract mentioned on the part of the owner of the house and the contractor as to require the court to say, as a matter of law, that there was a breach in respect to the points above mentioned. The judgment of the trial court involves the finding of fact against the contention made by appellant, and we would not be authorized to disturb such finding if there is evidence to warrant such finding. It is plain to be seen, we think, from the language of the provision in question, that it was not the agreement of the owner and the contractor that payments by the owner to the contractor should be in proportion only as the work bore to the completed building, nor that the owner should pay only a certain per cent. of the contract price as the building progressed. The payments were to be, as expressly provided, 85 per cent. of each weekly "estimate" made "of actual labor done and material furnished." That the payments were made weekly during the progress of the work, and only for actual labor done and material furnished, seems not to be a disputed point in the evidence. Hence the fact appearing that the building was only two-thirds completed at the time of the abandonment, in connection with the fact that $2,528 was paid of the $3,300 contract price, would not in this record be sufficient to show accelerated payments in violation of the contract. And the assignment must rest for merit entirely upon the further contention that the evidence shows that the owner in the payments made exceeded 85 per cent. of "said estimate." It would be difficult to say that the evidence did not authorize the finding by the trial court, as involved in the judgment, that an "estimate," within the meaning of the contract, was made by the parties, and that advances were made by the owner's agent on such estimate as a whole. While it does appear that the labor was paid in full at the end of each week, it does not appear conclusively, taking the evidence as a whole, that the estimate of the cost of the material for the building was fully paid up and in excess of 85 per cent. of the whole estimate. The language of the provision does not require that 15 per cent. each of the amount of the labor done and the amount of material furnished shall be reserved by the owner. It is of sufficient compliance that there be not payment in excess of 85 per cent. of the whole estimate made up of both labor done and material furnished. And especially was the finding warranted that at the time of the abandonment of the contract the payments were not in excess of the amount to be paid under the contract if force and weight be given, as the court was authorized to do, to the fact that $668.30 worth of material was not paid by the owner. This item of material aggregating $668.30 that went into tho building, when added to the $2,528 paid by the owner, would go to show that $3,196.30 in labor done and material furnished went into the building, and that the owner had not paid on the whole estimate a sum in excess of 85 per cent. It is shown that this $668.30 was in the estimated sum on which Mitchell figured 85 per cent. As we cannot say, as a matter of law, that the evidence shows a breach of the agreement, the assignment must be overruled.

By the third and fourth assignments of error grouped the contention is made that it was error to allow appellee a recovery for the especial amount of expenditures for labor and material shown in the evidence to have been necessarily incurred in overhauling and rebuilding certain work of the contractor, because appellee's superintendent, Mitchell, made payments for the work done and materials furnished and made no objections as the work progressed, and which operated as an acceptance of the work done by the contractor, concluding appellee under the contract from questioning the inferiority of the contractor's work. In other words, the assignment complains of the judgment being excessive to the amount expended in overhauling the inferior work of the contractor for the reasons advanced in the assignments. It would seem to be a full answer to the assignments, as against the contention of estoppel by negligence against the appellee as a matter of law, that the parties to the building contract expressly provided: "It is agreed no acceptance or payment under the contract shall be conclusive that the contractor has fully performed this contract, if, as a matter of fact, he has not done so nor as a waiver of any defective work." And further on the facts of the case we cannot say that estoppel by negligence, as a matter of law, exists, and the assignments for this reason must be overruled. The contract provided: "The contractor shall and will well and sufficiently perform and furnish the labor and materials under the direction and to the satisfaction of J. Dawson Mathews, architect, or such other person as may be employed by the owner as superintendent." The testimony in the record shows that Mitchell was not employed as a superintendent on the building, but it was agreed between appellee and the contractor that Mitchell should be the person to "estimate" weekly the cost of actual labor done and materials furnished for the purpose of having the 85 per cent. paid. It was understood that Mitchell was not to perform any duties on or about the building. As Mitchell was not a superintendent on or about the building, and it was so understood that he was not, he owed no duty under the contract to make decision and pass upon and approve or disapprove the work being done by the contractor. If it had appeared as a fact, which it does not here, that Mitchell was a superintendent employed as such on the building by the owner, then a different ruling might be made. Jones v. Risley, 91 Tex. 1, 32 S.W. 1027. And as the authority of Mitchell was to make "estimate" only for purpose of advances, and with no authority to inspect or superintend the work and the kind and quality of the work done, it would follow that appellee was not bound by the contract nor by estoppel from questioning the inferiority of the work done by the contractor. Mathews, the architect, testified that he drew the plan and specifications, but that he was never on the ground while the contractor was putting up the building, and never inspected the building until after the contractor abandoned the work. When the architect did inspect the building he discovered that the walls of the building were not plumb, the floor was not level, the foundations were in wrong, none of the rooms were of the size called for by the plan, and the brick work had cracked. It was necessary for the whole work to be gone over because of its inferiority and to complete it according to the contract plan and specifications. No question is made as to the inferiority of the work done by the contractor nor as to the work not being done according to the plan and specifications, and no question is made that the architect specified did accept the work of the contractor as it progressed. The surety company guaranteed the faithful performance of the work, which involves a risk on the part of the surety company of the inferiority of the work done by the contractor. And, besides, paragraph 3 of the contract contemplates that the work may be done defectively by the contractor and authorizes the owner to have such condemned work done over and the expense incurred charged to the contractor and paid by him. Hence the amount necessary and proper for overhauling the work is recoverable. The assignments are overruled.

By the fifth assignment the contention is made that appellee was not entitled to recover as a part of his damages the amount paid the architect for services in supervising the overhauling of the work done by the contractor on the ground that appellee was estopped from making such claim by reason of having paid out the advances required by the contract without inspection of the work done either by himself, the architect, or the superintendent. It is believed there is no estoppel by negligence or carelessness, as a matter of law, in the case, as ruled in the preceding assignments, and this assignment should be overruled. The contract expressly provides that the advances required to be made by the owner each week shall not be deemed an acceptance or waiver of any defective work by the contractor, and the contract does not require that the owner shall inspect the quality and character of the work or that the architect or superintendent shall do so before the owner shall make the 85 per cent. advance. And it is not claimed that appellee himself, or the architect or Mitchell for appellee, ever as a fact accepted the work done by the contractor, either in whole or in part So the evidence would seem to support the finding by the court, as involved in his judgment, that the owner was not guilty of negligence on which to predicate estoppel, and we would be bound by this finding, since the assignment does not challenge the finding of fact.

By the sixth assignment appellant contends that there was error in not allowing it credit for the sum of $772 balance due on the contract price of the building. It appears that the 85 per cent. advances paid to the contractor amounted to $2,528, leaving $772 as a balance of the $3,300 contract price. The itemized account of the damages sued on and proven was $4,411.47. The $772 was credited on this amount, leaving a balance of $3,639.47, and judgment was rendered against the contractor for the $3,639.47, and against appellant for $3,300 the amount of the bond. Thus it appears that due credit was allowed for the $772 by deducting that sum from the amount expended by appellee in completing the building. After deducting the $772 from the amount expended in completing, the remainder, which was $3,639.47, was the proven necessary cost of the building in excess of the contract price. The credit given inured to the credit and benefit of both the contractor and the surety, and the damages for which judgment was given were authorized.

The judgment is affirmed.

On Motion for Rehearing. Appellant especially argues that it was error to overrule the third and fourth assignments, which were grouped. We still think, as before, that the two assignments mentioned can only properly be construed as presenting for our determination the one point that the judgment is excessive to the extent of the amount expended by appellee in overhauling inferior work done by the contractor upon the ground that the proof established estoppel by negligence in supervising the work against appellee. This assumes, as we undertook to say before, that the proof so conclusively established estoppel by negligence as to require us to say, as a matter of law, that estoppel by negligence against appellee in supervision of the work of the contractor existed and should be applied. We still think we would not be warranted in so holding, as a matter of law, and that the finding of fact in that respect, as involved in the judgment of the court, would be binding on us. As we could not say, as a matter of law, that estoppel by negligence in supervising the work of the contractor was established against appellee, then we feel constrained to rule, as before, that the judgment could not be held excessive upon the ground of the assignment.

The motion is overruled.