King Construction Co. v. W. M. Smith Electric Co.

350 S.W.2d 940, 1961 Tex. App. LEXIS 2028
CourtCourt of Appeals of Texas
DecidedAugust 29, 1961
Docket7298
StatusPublished
Cited by12 cases

This text of 350 S.W.2d 940 (King Construction Co. v. W. M. Smith Electric Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
King Construction Co. v. W. M. Smith Electric Co., 350 S.W.2d 940, 1961 Tex. App. LEXIS 2028 (Tex. Ct. App. 1961).

Opinions

DAVIS, Justice.

On or about December 4, 1956, W. M. Smith Electric Company, hereinafter referred to as Smith, conveyed to King Construction Company, hereinafter referred to as King, an estimate upon an electric overhead crane, as “specified” by the Atomic Energy Commission, in connection with a contract that was about to be let for the construction of a plant near Amarillo, Texas. Smith submitted an offer to sell the overhead crane, as “specified”, for a total price of $16,691 f. o. b., factory. As the result of the offer by Smith, King made a bid with reference to the overhead crane at a total price of $17,900.

On December 5, 1956, King was awarded a contract, with penalty provisions, to build the plant, and was to commence work immediately. On December 6, 1956, King entered into an oral contract with Smith, and Smith agreed to sell to King the overhead crane, as “specified”, for the sum of $16,691.00. On December 12, 1956, Smith informed King that it would not deliver the overhead crane for $16,691. Smith made the excuse that the Inspector and the Atomic Energy Commission would not approve the crane Smith “proposed” to deliver. King had already contracted on the basis of the previous bid. King instructed Smith to go and see if it was possible to get the crane Smith “proposed” to deliver approved. An agent of Smith went to Burlington, Iowa, and Muskegon, Michigan.

After many telephone calls and other communications, a written contract dated January 8, 1957, was entered into between Smith and King, whereby Smith agreed to sell to King the same crane (as specified) for the sum of $30,750. Prior to the signing of this contract, King had insisted that the crane be delivered for $16,691. King did place an order to Smith for the crane at the price of $30,750, but Smith refused to ship the crane until King had signed the written contract.

Prior to signing the contract, King made other contacts for the purpose of trying to [942]*942purchase a crane elsewhere. It learned that there had been only one such crane built in prior years. Smith was the agent for the company that built the crane. There were other companies that built overhead cranes, but none of them would be approved. King was forced to sign the contract for the purchase of the crane so it could build the plant according to its contract.

The crane was delivered and installed. King paid 85% of the $30,750, which it had contracted in writing to pay for same. King then refused to pay the balance of $4,612.50, and Smith filed suit. King answered and filed a cross-action setting up that it had overpaid Smith the sum of $9,446.50, and asked -for a judgment for that amount against Smith.

The court entered a judgment in behalf of Smith for the sum of $4,612.50, and a $750, attorney’s fee. From this judgment King has perfected its appeal and brings forward nine points of error.

The court filed his findings of fact and conclusions of law.

By its point No. 5, appellant complains of the action of the trial court in holding that King was not compelled by duress to enter into a new contract, and the original contract was novated. The court found that Smith knew that the crane which it “proposed” to deliver, to King for $16,691 did not meet the “specifications” as contained in the contract between King and the Atomic Energy Commission. The court found that King did not know that the crane Smith “proposed” to deliver did not meet the “specifications” and requirements as contained in the contract. The court found that King was not compelled by fraud or duress to enter into a new contract with Smith, but King only did so by reason of fear of economic loss. Only one such motor had previously been built. It was built by Manning, Maxwell and Moore, represented by Smith. King was under a contract which provided penalties in case of delay. There could not be another motor purchased elsewhere. Manning, Maxwell and Moore built the cranes and sold them through their agents.

It seems that Smith took an undue advantage of King in refusing to deliver the crane “specified” for the price of $16,691. As a result thereof, King was at a loss. It could not acquire the crane elsewhere, and actually it was compelled by virtue of fear of economic loss (a duress), to enter into the signed contract.

Under the law as stated in 31 Tex.Jur. 383-407 “Novations”, a contract that has been entered into cm not be novated without the absolute agreement on the part of both parties. 31 Tex.Jur. 387-8, Sec. 5, reads, in part, as follows: “* * * A reaffirmation by a party of his obligation under a contract, with a request that the other party comply with his undertaking, there being no change therein, is obviously not a novation.” (Emphasis added.) There is no evidence of such agreement.

31 Tex.Jur. 398, Sec. 12, the novation of a contract requires the extinguishment of the old obligation by the giving and acceptance of a new promise. There is nothing said in the new contract between Smith and King to the effect that the new contract was in lieu and in discharge of the old one. 31 Tex.Jur. 398 to 402, Secs. 12, 13 and 14. Under the question of fraud and mistake, agreements, etc., see 31 Tex.Jur. 383-407; 46 Cor.Jur. 573 to 594; 66 C.J.S. Novation §§ 1 to 15, pp. 681 to 696 ; 39 Am.Jur. 254-273. On the question of merger instead of novation, see 17 C.J.S. Contracts §§ 379 to 384, pp. 871 to 876.

Smith knew that the crane which it “proposed” to deliver for $16,691, did not meet the “specifications” contained in the contract between the Atomic Energy Commission and King, and after some efforts to get them to approve the same, it just refused to deliver the crane that would meet the “specifications”. King contacted other manufacturers relative to such a crane, but could not find one. There is no evidence in the record that any mutual agree[943]*943ment was made between the parties that they would forget about and supersede the oral contract, and there is no evidence on the part of either party to the effect that a novation of the original contract would be made. A novation must be according to the intention of all parties to a contract. Such intention is never presumed. 31 Tex. Jur. 394, Sec. 9; Scott v. Atchison, 36 Tex. 76; 38 Tex. 384; Cooper Grocer Company v. Strange, (Tex.Com.App.) 18 S.W.2d 609; McElwrath v. City of McGregor (Tex.Civ.App.) 58 S.W.2d 851, err. dism.; Austin v. Guaranty State Bank of Copperas Cove, et al. (Tex.Civ.App.) 300 S.W. 129, n. w. h.; Hix et al. v. Tomlinson (Tex.Civ.App.) 200 S.W. 897, n. w. h.; General Finance & Guaranty Company v. Smith, Tex.Civ.App., 309 S.W.2d 531, er. ref., n. r. e.; Chastain, et al. v. Cooper & Reed, (Tex.Civ.App.) 250 S.W.2d 652, affmd. 152 Tex. 322, 257 S.W.2d 422; 31 Tex.Jur. 395, Sec. 10, and 31 Tex.Jur. 404, Sec. 17. Appellant’s point 5 is sustained.

By its Second, Third and Fourth points of error, King takes issue with the findings of fact and conclusions of law. King takes the position that under the undisputed evidence in the case, it is entitled to judgment. Smith did rescind the oral contract of December 6, 1956, without any reason whatsoever.

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350 S.W.2d 940, 1961 Tex. App. LEXIS 2028, Counsel Stack Legal Research, https://law.counselstack.com/opinion/king-construction-co-v-w-m-smith-electric-co-texapp-1961.