Panhandle Telephone & Telegraph Co. v. Kellogg Switchboard & Supply Co.

132 S.W. 963, 62 Tex. Civ. App. 402, 1910 Tex. App. LEXIS 234

• Court: Court of Appeals of Texas
• Decided: October 22, 1910
• Status: Published

Opinion

SPEER, Associate Justice.

Statement of the case.—Sometime prior to May 14, 1908, the City Council of Amarillo granted to H. H. Davenport & Company, a firm composed of H. H. Davenport and W. W. Taylor, a franchise to install and operate a telephone system in the city of Amarillo, and that company purchased a lot and partly constructed a building thereon to be used in connection with .their telephone system. On April 23, 1908, H. H. Davenport, J. T. Harrison and Mike LeMaster prepared, executed and acknowledged articles of incorporation under the statutes of Arizona for the incorporation of the Panhandle Telephone & Telegraph Company. On May 14, 1908, J. E. Nunn was, and for a long time prior thereto had been, the owner of the Amarillo Telephone Exchange, a telephone system doing business in the city of-Amarillo, and on that day he and Davenport & Company entered into the following contract:

“State of Texas,

“County of Potter.

“Know All Men By These Presents: That we, H. H. Davenport & Company, a firm composed of H. H. Davenport and W. W. Taylor, party of the first part, and J. E. Nunn, party of the second part, all of Potter County, Texas, have this day made and entered into the following contract and agreement in duplicate, towit:

“The party of the second part, for and in consideration hereinafter mentioned, doth for himself, his executors and administrators, covenant, promise and agree to sell, transfer and deliver to the party of the first part, their heirs and assigns, all apparatus, franchise rights, privileges, supplies, office fixtures and furniture, and all accessories thereto, now used in operating the telephone exchange of the said J. E. Nunn in Amarillo, Texas, except the building used for business offices, and all poles, wires and construction and accessories thereto now on hand owned and being used by the said Amarillo Telephone Exchange in connecting all instruments in and near said town of Amarillo, Texas, which are using Amarillo as their switching station, except the toll leads from the edge of town, magneto switchboards, terminal racks and arrestors, and instruments used and owned by the said J. E. Nunn in connection with said exchange.

“The party of the first part, for and in consideration of the above covenants and agreements, hereby agree and bind themselves, their executors and administrators, to assign, transfer and deliver to the said party of the second part one hundred thousand dollars in bonds, said bonds drawing six per cent per annum interest, and to be twenty-year gold bonds of the Panhandle Telephone & Telegraph Company, a corporation duly incorporated under the laws of the Territory of Arizona, and to be of date hot later than July 1, 1908; and one hundred thousand dollars in shares of the capital stock of the said Panhandle Telephone & Telegraph Company; interest on the bonds to be paid from the date of turning over the plant to the- date of the bonds by the Panhandle Telephone & Telegraph Company to the party of the second part; and further agree to add to the said Amarillo Telephone Exchange and apparatus sufficient additions and improvements to make the said telephone exchange a first class one in every respect and of the latest devices, and twelve hundred working telephones; and also to construct and build a modern three-story brick building, 30x100 feet, on the N. W. corner of Sixth and Taylor Streets in the town of Amarillo, Texas, said building to be used as an exchange building by the Panhandle Telephone & Telegraph Company, unless the Board- of Directors deem it expedient to ar-' range for other quarters. And for this plant complete the said party of the first part are to receive from the said Panhandle Telephone & Telegraph Company, under a contract to be hereinafter made and entered into, two hundred and twenty-five thousand dollars in the above described bonds, and two hundred and twenty-five thousand dollars of the capital stock above described, which said last amount of bonds will be the full amount of bonds outstanding of an issue of three hundred and thirty thousand dollars in bonds by the said Panhandle Telephone & Telegraph Company, leaving-a balance of one hundred'and five thousand dollars in bonds in the treasury of the said last mentioned comparnc

“The capital stock of the said Panhandle Telephone & Telegraph Company is in the sum of five hundred thousand dollars, and after payment-of the above mentioned capital stock to the said party of the first part there will be remaining in the treasury of the said last mentioned telephone company two hundred and seventy-five thousand dollars of the capital stock.

“It is expressly agreed to and understood that the Panhandle Telephone & Telegraph Company is to give connection to the toll lines belonging to the Amarillo Telephone Exchange and the Northwest Texas Telephone Company, their successors and assigns, and to handle the toll business of the said companies at the rate of commission common in Texas.

“It is also agreed and understood that the following officials shall be elected to hold office the first year, viz., J. E. Nunn, president; W. W. Taylor, vice-president; H. H. Davenport, secretary; H. Lellaster, treasurer; and Horace Gooch, general manager, these five before mentioned to constitute the board of directors for the first year.

“Immediately upon the action of the City Council upon the question of rates, the said second party will transfer by bill of sale to the first party the property above described, at which time and place the said first party will by bill of sale transfer all the property to the Panhandle Telephone & Telegraph Company.

“H. H. Davenport & Company,

“by W. W. Taylor.

“J. E. Nunn.”

On the same day the Panhandle Telephone & Telegraph Company held a meeting of its stockholders and directors, the following officers being present: ■ J. E. Nunn, president; W. W. Taylor, vice-president; H. H. Davenport, secretary; Hike C. LeHaster, treasurer; and Horace Gooch, general manager (said officers having been elected at a prior meeting of the company in pursuance of the contract above set out), when the foregoing contract between Nunn and Davenport & Company was ratified in all its terms and stipulations by a resolution duly adopted. On June 15th in pursuance of this contract J. B. Nunn executed a bill of sale conveying to H. H. Davenport & Company all of the property owned by the Amarillo Telephone Exchange, and on the same day H. H. Davenport & Company executed bills of sale conveying to the Panhandle Telephone & Telegraph Company all property, privileges, rights, franchises, etc., owned by them in the city of Amarillo. These instruments were placed in escrow, to be delivered to the respective parties as soon as the Panhandle Telephone & Telegraph Company had obtained a permit from the State of Texas to do business in this State, which permit was duly granted and received by the officers of the company on July 6, 1908, when the above mentioned papers were delivered to the respective parties entitled to them. W. W. Taylor, who held the title to lot 10, block No. 61 of the Glidden & Sanborn Addition, on which was situated the telephone building, had executed a deed of date May 21, 1908, conveying the same to the Panhandle Telephone & Telegraph Company and this was also delivered and filed for record on July 6. In pursuance of their contract to do so, the firm of H. H. Davenport & Company at once entered into contracts with the Kellogg Switchboard & Supply Company and various other parties to this appeal, for the purchase of materials to be used in the work of repairing the Amarillo Telephone Exchange property.

This is a consolidated suit by which the Kellogg Switchboard & Supply Company and North Electric Company as plaintiffs, and the other appellees as interveners, seek judgments against H. H. Davenport & Company and the Panhandle Telephone & Telegraph Company for the contract price of materials used in- the reconstruction of the plant thus conveyed to the Panhandle Telephone & Telegraph Company, the Kellogg Switchboard & Supply Company praying for a foreclosure of its chattel mortgage lien, and the other parties seeking a foreclosure of their mechanics’ lien.

After the evidence was introduced the court instructed the jury to find for the various appellees herein the amount claimed by each respectively ; as to the Kellogg Switchboard & Supply Company, against H. H. Davenport & Company together with a foreclosure of their chattel mortgage lien as to all parties; and as to the other appellees, against H. H. Davenport & Company and the Panhandle Telephone & Telegraph Company, together with a foreclosure of their mechanics’ lien as to all parties. Upon the verdict thus returned the court entered judgment from which the Panhandle Telephone &' Telegraph Company and J. E. Nunn have appealed.

Conclusions.—1. Section 37 of article XYI of the Constitution of 1876, is as follows: “Mechanics, artisans and material men of every class shall have a lien upon the buildings and articles made or repaired by them for the value of their labor done thereon or materials furnished therefor; and the Legislature shall provide by law for the speedy and efficient enforcement of said liens.” This article has been held in effect to be self-enacting and to be operative as between the owner of the property improved and the one furnishing material for making such improvements. Farmers & Mechanics National Bank of Fort Worth v. Taylor, 91 Texas, 78. It is the contention of appellants that H. H. Davenport & Company occupied the position of contractors, and that therefore, in order to fix a mechanic’s lien, the appellees must have complied with the terms of the Mechanics’ Liens statutes of this State, which it is admitted they have not done.

On the other hand, it is the contention of these appellees, who had a foreclosure of their mechanics’ lien, that H. H. Davenport & Company and the Panhandle Telephone & Telegraph Company were but other names for one and the same individuals, and that at most H. H. Davenport & Company were either the owners of the property which they had .furnished materials to improve, or were the duly authorized agents of the Panhandle Telephone Telegraph Company, who was the owner, and that in either event they were entitled to their lien under the section of the Constitution above quoted, regardless of a compliance with the terms of the statute giving a lien where the rights of a contractor intervened. We hold with this latter contention. There is nothing in the contract between H. H. Davenport & Company and the corporation to indicate that Davenport & Company was in any manner a contractor with the corporation to repair or otherwise improve the corporation property. The relation is that.rather of vendor and purchaser where by the terms of the contract of sale the vendor is to make certain stipulated improvements of the thing sold. In such a case the authorities appear to hold, and justly we think, that one furnishing material to the vendor is entitled to his lien upon the theory that the vendor is either the owner of the property or at least the authorized agent of the purchaser to make such improvements. Dougherty-Moss Lbr. Co. v. Churchill (Mo.), 90 S. W., 405; Curtin Clark Hdw. Co. v. Churchill (Mo.), 104 S. W., 476; Houston v. Long (Ky.), 23 S. W., 586; Paulsen v. Manske, 18 N. E., 275; Pope v. Heckscher, 96 N. Y. Supp., 533; York Mfg. Co. v. Brewster, 174 Fed., 566. We are especially strengthened in this view by the unconditional ratification by the Panhandle Telephone & Telegraph Company of the Nunn-Davenport contract. This conclusion, independently of any other consideration, disposes of the major part of appellants’ brief covering assignments from one to sixteen inclusive.

2. Next the proposition is asserted that neither the Constitution nor the statutes of this State provide for or authorize the fixing of a mechanic’s lien on the property of a public service corporation such as appellant. The section of the Constitution quoted, however, appears to be broad enough to include all buildings, and the exchange, centering as it does, according to the evidence in this case, in the three-story brick building belonging to appellants, is a building within the contemplation of that section, we have no doubt. No reason occurs to us for making an exception in favor of buildings owned by public service corporations, and no case is cited by appellants where such has been done. Some rail road cases have been cited where the constitutional lien was denied, not because the railroads were public service corporations, but because they were not buildings.

3. There are other assignments which affect only the appellee the Kellogg Switchboard & Supply Company. The point is sought to be made that the Kellogg Switchboard & Supply Company’s chattel mortgage lien was inoperative because the property covered by it was so attached to the building in which it was installed as to become a part of the realty and, therefore, not subject to a chattel mortgage. But the evidence without dispute shows that while the apparatus is.fastened to the floor and ceiling and walls with bolts and screws the same could be taken out and dismantled for shipment leaving the building in practically the same condition as before without in any manner injuring the same. It was furthermore undisputed that in the contract of sale to H. H. Davenport & Company, of which all parties had notice, the property was treated as a chattel and the lien reserved. Under these circumstances there -was no error in foreclosing the chattel mortgage lien. Willis v. Munger Improved Cotton Machine Mfg. Co., 13 Texas Civ. App., 677 (36 S. W., 1010).

4. The remaining assignments of appellant Panhandle Telephone & Telegraph Company attack appellee the Kellogg Switchboard & Supply Company’s right to maintain this suit upon the ground that it was doing business in the State of Texas without a permit. These assignments can not be sustained. The matter does not arise on the special exception since the petition on its face did not show that appellee company was doing business in Texas in violation of law. Geiser Mfg. Co. v. Gray, 59 Texas Civ. App., 617. The petition failing in this respect, the question could only be raised by a plea by the defendant, and such defense was pleaded, but the record is entirely silent as to the appellee’s default in the matter of obtaining a permit to do business in this State. Under the evidence there was, therefore, no issue in this respect to be submitted to the jury. Huff v. Kinloch Paint Co., 110 S. W., 467. We are not at all to be understood as holding that the evidence in this case shows the transaction in controversy to be such a one as is interdicted by statute. On the contrary, we think the case is not ruled by the cases of St. Louis E. M. Fireproofing Co. v. Beilharz, 88 S. W., 512, and Ft. Worth Glass & Sand Co. v. Smythe, 128 S. W., 1136, but rather by the Tennessee cases of Milan Mill. & Mfg. Co. v. Gorten, 27 S. W., 971, and Davis v. Rankin Bldg. & Mfg. Co. v. Caigle, 53 S. W., 240.

5. As to appellant Hunn’s contention that he was entitled to a preference lien as against all the other parties to secure his claim aggregating one hundred thousand dollars as the purchase price of the Amarillo Telephone Exchange, it is sufficient to say that the resolution of the Panhandle Telephone & Telegraph Company creating a lien upon its property to secure him in such amount was conditioned specially that “if the said Panhandle Telephone & Telegraph Company shall well and truly deliver unto the said J. E. Kunn the stocks and bonds above specified. then this resolution to be nnll and void,” and it is undisputed that such stocks and bonds were duly delivered to Nunn, thereby discharging the lien.

But appellant Nunn is otherwise in no better position than appellant' Panhandle Telephone & Telegraph Company because by his own act he has vested in H. H. Davenport & Company the title to his property upon the express understanding that they were to rebuild and otherwise improve it, thereby subjecting it to the lien of material men who furnished the supplies for such improvements.

These conclusions dispose of all assignments adversely to appellants and result in an aErmance of the judgment. Judgment aErmed.

Affirmed.

Writ of error refused.