Trinity Universal Insurance Company v. McLaughlin

373 S.W.2d 66, 1963 Tex. App. LEXIS 1813
CourtCourt of Appeals of Texas
DecidedNovember 6, 1963
Docket11074
StatusPublished
Cited by39 cases

This text of 373 S.W.2d 66 (Trinity Universal Insurance Company v. McLaughlin) 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
Trinity Universal Insurance Company v. McLaughlin, 373 S.W.2d 66, 1963 Tex. App. LEXIS 1813 (Tex. Ct. App. 1963).

Opinion

HUGHES, Justice.

This suit arises from a Contract entered into between J. C. McLaughlin and the Texas State Highway Department on November 7, 1960, for road work to be performed by McLaughlin for a consideration of $176,841.20.

This work was duly performed by McLaughlin and accepted by the State Highway Department.

Appellant, Trinity Universal Insurance Company, is assignee of McLaughlin and brings this suit to recover the sum of $8,-817.36, the balance due under such road Contract, 5% of the contract price, which has been retained by the State Highway Department pursuant to the provisions of Art. 6674m, Vernon’s Ann.Civ.St., for the reason that it has not been shown that, as required by such statute, “all sums of money due for any labor, materials, or equipment furnished for the purpose of such improvements made under any such contract have been paid.”

The Contract referred to is one for ■“highway improvement.” Art. 6674Z, V.A. C.S.

Named as defendants herein were the members of the State Highway Commission, McLaughlin and certain other parties who were alleged to be asserting some claim to the funds sued for, the exact nature of such claims being unknown. Some of these alleged claimants filed disclaimers. None has answered.

Appellant prayed that the Highway Commissioners be required to pay such money retained by them under the McLaughlin. Contract into the registry of the Trial Court, upon the payment of which they should be discharged of all liability herein, and that its claim to such funds be adjudicated superior to all other claimants and that it have judgment therefor.

The Highway Commissioners, by appropriate pleadings, say that they are immune from suit since this is a suit against the State without legislative consent. This plea was overruled. Judgment was rendered denying appellant any relief.

The case was tried on the pleadings. No evidence was introduced. We quote from the answer of the Commissioners:

“X. That the Defendant, F. C. McLaughlin, has not, pursuant to Article 6674m, Vernon’s Civil Statutes, shown that all sums of money due for any labor, materials, or equipment furnished for the purpose of such improvements made under the aforesaid contract have been paid.
“XI. That the State Highway Department, has, in fact, been given notice that certain sums of money due for labor, materials, or equipment furnished for the purpose of such improvements made under the aforesaid contract have not been paid.
“XII. That the State Highway Department is, in fact, a mere stake-holder in the instant case and is ready, willing and able to tender the aforesaid sum that it is presently holding pursuant to the provisions of Article 6674m, Vernon’s Civil Statutes, into the registry of this Court or to such party or parties as this Court may direct.”

*68 It is our opinion that the Trial Court correctly held that this was not a suit against the State in the sense that it could be maintained only with legislative permission. We base this conclusion upon the decision in Chapman v. Guaranty State Bank, 259 S.W. 972, Fort Worth Civil Appeals, reversed and remanded, 267 S.W. 690, Tex.Comm. of Appeals. That case involved a bank depositors’ guaranty fund and the assets of an insolvent bank. In holding that a suit against the State Banking Commissioner who held such funds and assets for application to a claim of the plaintiff was not a suit against the State, the Court stated:

“It thus appears that the money ap-pellees sought to recover is wholly within the control of the state banking board, payable only upon that board’s warrants, and that fund, by the specific terms of the law, may not be considered as a state fund. The state, therefore, can only be interested in that fund indirectly; i.e., by the interest that the state has in seeing that its laws, enacted for the protection of her people, are duly executed. Other provisions of the act undoubtedly place the control of the assets, other than cash, such as notes, etc., of an insolvent state bank in process of liquidation, in the hands of the commissioner of insurance and banking and the banking board, and which may be disposed of within the sound discretion of the board and commissioner, under the regulations of the act by sale or otherwise, and thus made to add to the guaranty fund. But nowhere in the law do we find any expression indicating that the state has a pecuniary interest in the promissory notes and other assets of the insolvent bank which has been operating under the state bank deposit guaranty law. In 36 Cyc. p. 916, in treating of the subject under consideration, it is said:
“ ‘It seems that the rule which forbids a suit against state officers because in effect a suit against the state applies only where the interest of the state is through some contract or property right, and it is not enough that the state should have a mere interest in the vindication of its laws, or in their enforcement as affecting the public at large or the rights of individuals or corporations; it must be an interest of value in a material sense to the state as a distinct entity.’ ”

See also to the same effect Reagan v. Farmers Loan and Trust Co., 154 U.S. 362, 14 S.Ct. 1047, 38 L.Ed. 1014, cited and quoted from in Chapman, supra.

Neither the State nor the State Highway Department, if considered separately from the State, has any pecuniary or proprietary interest in the subject matter of this suit. No judgment affecting the State in any manner could be rendered in this case. The only concern which the Highway Department has here is to obey the statutes which have been enacted, not for its benefit, but for the protection of those persons falling within the classes named in Art. 6674m, supra. Since the State and the Highway Department are here merely passive parties, with no claim to assert or defend, we hold that the members of the State Highway Commission are not immune from this suit. See State v. Lain, 162 Tex. 549, 349 S.W.2d 579.

It is the contention of appellant that Art. 6674m should be construed along with other relevant statutes and be held to apply only to Contracts for $2000.00 or less.

We will notice such other statutes.

Art. 5472a, V.A.C.S., provides, in part, that any person furnishing labor or material, etc. to “any contractor under a prime contract where such prime contract does not exceed the sum of Two Thousand Dollars ($2,000) for any public improvements in this State” shall have a lien on the moneys etc. due or to become due under such contract upon timely giving written notice to the officials whose duty it is to pay such claim.

*69 Art. 5472b, V.A.C.S., provides, in part, that when any public official who receives such notice shall retain sufficient of the moneys due such contractor to pay the claim of which it has had notice in case it is established by judgment. Art. 5472b-l provides for a bond for a release of such impounded funds.

These statutes are in Title 90, Ch. 2, captioned LIENS, V.A.C.S.

Art.

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Bluebook (online)
373 S.W.2d 66, 1963 Tex. App. LEXIS 1813, Counsel Stack Legal Research, https://law.counselstack.com/opinion/trinity-universal-insurance-company-v-mclaughlin-texapp-1963.