Fidelity & Deposit Company of Maryland v. Felker

469 S.W.2d 389, 14 Tex. Sup. Ct. J. 437, 1971 Tex. LEXIS 241
CourtTexas Supreme Court
DecidedJuly 7, 1971
DocketB-2470
StatusPublished
Cited by14 cases

This text of 469 S.W.2d 389 (Fidelity & Deposit Company of Maryland v. Felker) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fidelity & Deposit Company of Maryland v. Felker, 469 S.W.2d 389, 14 Tex. Sup. Ct. J. 437, 1971 Tex. LEXIS 241 (Tex. 1971).

Opinion

GREENHILL, Justice.

This suit was instituted by W. E. Felker against A. R. Johnston and against Fidelity & Deposit Company of Maryland, a bonding company. Judgment was for Felker against both defendants, and the judgment was affirmed. Johnston v. Felker, Tex., 459 S.W.2d 923. The judgment against Johnston is not here challenged. He is not a Petitioner in this court.

The immediate problem is whether under the circumstances here presented one original contractor may recover against a bonding company on the bond here issued to another original contractor under the Hardeman Act. 1 The courts below held that he can. We disagree. We consider that this case is controlled by the holding of this court in Trinity Universal Ins. Co. v. Barlite, 435 S.W.2d 849 (Tex.1969). Accordingly we reverse as to the bonding company.

The Hardeman Act provides, among other things, for a general statutory scheme whereby a payment bond, executed by an original contractor, is substituted for relief which might be obtained by suits against the owner and his property by subcontractors and those furnishing materials and labor. When the bond is properly executed and recorded, the owner is relieved from all liability to derivative claimants. It may be said that, in general, the bond does not eliminate the constitutional lien of the prime contractor and those who deal directly with the owner. Where such a bond is executed, the statute specifically provides that subcontractors of the original contractor executing the bond must look to the contractor’s bond, and not to the owner or his property, for security.

There may be more than one original contractor. If a bond is not executed by such other original contractor, the owner and his property are not protected; and, assuming he has taken the necessary steps, the other original contractor, as well as the contractor executing the bond, may enforce his lien against the property. We are told that Felker, the plaintiff here, has taken such steps; but that matter is not before us. Nor do we have any question of priority of liens. The question is whether Felker, whom we regard as an original contractor as a matter of law, can recover upon *391 the bond of another original contractor under the circumstances here presented. We hold that he cannot.

The facts reflect difficulty in the financing of a shopping center in Groves, Texas. The project was owned by Center Enterprises, Inc., herein called Center. Originally, Center contemplated that one general contractor would be responsible for the entire project. It received bids from five general contractors in the fall of 1965. All of the bids were rejected as being too high.

After some revision of the plans, the Center undertook to put the project together itself, and it called for bids by various firms for particular parts of the work. It received bids from Felker for the electrical work, from Johnston for the concrete work, and from various other persons and firms for other portions of the work.

The bid of Felker for the electrical work was submitted directly to Center on December 10, 1965, in an amount of $33,562.-24. Felker’s bid was accepted by Center on that date as an original contract. Johnston and Felker were not then acquainted and had no prior dealings.

Apparently because of requirements of Center’s financing agency for a bond to prevent other liens, Johnston submitted a proposal as “General Contractor” which was, in fact, an approximation of the bids by the various contractors to the Center. Johnston was to receive a fee for supervision or coordination of the work. 2

Omitting immaterial provisions, Johnston’s proposal reads:

“To: Center Enterprises, Inc. January 12, 1966
Groves, Texas
“I or we agree to furnish all materials, tools, labor, and facilities to construct the building in accordance with the proposed contract, documents consisting of the general conditions, specifications, drawings and addenda thereto as prepared by Lowell Lammers, Architect.
“Based on the revision, we agree to perform the following amount of work in order to put an enclosed building on the site of the -Groves Shopping Center.
Roof and Roofdeck 30,000.00
Structural Steel 35,000.00
Glass, including doors 12,000.00
Electrical (including parking) 35,000.00
Masonry 28,000.00
Structural Concrete and Slab 45,000.00
Plumbing (roughed in) 8,000.00
$204,000.00
“For all the work required in the General Construction listed above, we will construct this building for $204,000.00.”
The proposal was signed by “A. R. Johnston, General Contractor” and by officers of the Center. This contract is incorporated by reference in the bond set out below.

*392

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Bluebook (online)
469 S.W.2d 389, 14 Tex. Sup. Ct. J. 437, 1971 Tex. LEXIS 241, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fidelity-deposit-company-of-maryland-v-felker-tex-1971.