
    NELSON et al. v. SAN ANTONIO TRACTION CO. et al.
    (No. 2398.)
    (Supreme Court of Texas.
    April 14, 1915.)
    1. Contracts @=>303 — Breach—Effect.
    Where, under a contract to lay pavements for a traction company, the company refused to make the final payment, whereupon the contractor announced that he would not be bound by the agreement in the contract to maintain the pavement for ten years, the refusal to make the final payment, though no valid reason existed for such refusal, was not such an abandonment of the contract as prevented the company from enforcing its claim against the contractor for the cost to it of maintaining the pavement.
    [Ed. Note. — For other cases, see Contracts, Cent. Dig. §§ 1409-1443; Dec. Dig. @=>303.]
    2. Contracts @=>306 — Breach—Performance by Other Party — Recovery.
    Under a contract to lay pavements which provided that the contractor would guarantee the pavement for ten years and repair defects therein, upon the contractor’s refusal to make necessary repairs, the other party had a right to make such repairs and recover the cost of doing the work from the contractor.
    [Ed. Note. — For other cases, see Contracts, Cent. Dig. §§ 1528-1533; Dec. Dig. @=>306.]
    3. Limitation of Actions @=>03 — Operation and Effect — Payment or Offset.
    Where, under a contract to lay pavements, the contractor refused to keep the pavement in repair for ten years, as agreed, whereupon the other party made necessary repairs, the cost of making such repairs was not a payment on the contract price, a part of which had not been paid, but was in the nature of an offset, against which limitations ran from the time each item originated, as the amount to which such party was entitled on account of making such repairs was unascertainable, except by determining the cost of the work, and was recoverable by an action against the contractor, which would not be true of a payment.
    [Ed. Note. — For other cases, see Limitation of Actions, Cent. Dig. § 343; Dee. Dig. @=>63.]
    4. Limitation of Actions @=>41 — Computation of Period of Limitation — Offsets.
    In an action for a balance due on the contract price for laying pavements, amounts expended by defendant on the contractor’s failure to keep the pavement in repair for ten years, as required by the contract, were barred by limitations if they accrued more -than four years before the action was instituted or after the action was instituted, but more than four years before the plea of set-off was filed, but not if they became due and payable within four years before the suit was instituted.
    [Ed. Note. — For other cases, see Limitation of Actions, Cent. Dig. §§ 214, 215; Dec. Dig. @=>41.]
    Error to Court of Civil Appeals of Fourth Supreme Judicial District.
    Suit by the Parker Washington Company against J. P. Nelson and others, in which J. P. Nelson and another filed a cross-action against the San Antonio Traction Company. A judgment in favor of the Traction Company was affirmed by the Court of Civil Appeals (142 S. W. 146), and the cross-complainants bring error.
    Reversed and remanded, with instructions.
    Denman, Franklin & McGown, of San Antonio, and Geo. E. Shelley, of Austin, for plaintiffs in error. Templeton, Brooks, Napier & Ogden, of San Antonio, for defendant in error.
   BROWN, C. J.

We find it somewhat difficult to make a proper statement of the facts upon which the decision of this case depends, but we believe that it can be better accomplished by making liberal extracts from the opinion.of the Court of Civil Appeals (142 S. W. 146), which we do as follows :

“This suit was brought on May 22, 1905, by the Parker Washington Company against J. P. Nelson and others to recover the price which Nelson had agreed to pay plaintiff as his subcontract for certain work done for the San Antonio Traction Company under Nelson’s contract with it. and to foreclose a mechanic’s lien upon the property of said traction company. Other defendants in this petition were the Nelson Paving Company and the San Antonio Traction Company and the Uvalde Asphalt Company. Nelson and the Nelson Paving Company filed a cross-action to recover against, the traction company for what was due under Nelson’s contract with said company and to foreclose mechanic’s lien on the latter’s property.
“The traction company defended against said actions upon the ground that the work done by the Parker Washington Company was not in accordance with Nelson’s contract with it, and claimed that it had paid more for the work done than it was reasonably worth; and it also on January 3, 1911, filed a cross-action against Nelson and the Nelson Paving Company for breach of his contract with it. The case was determined by the trial court in special findings of the jury, supplemented with finding by the trial judge.
“The case comes here narrowed down to issues of law which concern solely the traction company and Nelson. It is therefore unnecessary to state in this opinion more from the voluminous record than is necessary to elucidate those issues.
“Nelson, on January 3,1901, entered into a contract with the San Antonio Traction Company to lay for it the certain asphalt pavements in controversy here, and to maintain and repair the same for a period of ten years. He assigned this contract to the Nelson Paving Company. Cn October 26. 1901. he and the Nelson Paving Company, by subcontract, turned the work over to the Parker Washington Company, and the Parker Washington Company laid the pavement in controversy, completing the same December 20, 1901. The traction company had agreed to pay Nelson certain prices, partly as the work progressed, and balance when the work was completed. The bulk of the price was paid during the progress of the work, but, when completed, the traction company refused to make the final payment.
“Nelson and the Nelson Paving Company had agreed to pay'the Parker Washington Company the price named in the contract, and, whenever Nelson received payments from the traction company, they were turned over to Parker Washington Company; but, when it came to the final payment, he refused to pay the Parker Washington Company, claiming that the money was not due from him until he was paid by the traction company; and Nelson announced that he refused to be bound by his contract to maintain the pavement and claims that his contract with the traction company to do so was discharged or terminated by said company’s breach of its contract in refusing to make the final payment.
“The findings, so far as material to this appeal, were that the work, when completed, was in accordance with Nelson’s contract; hence no valid reason existed in fact for the traction company’s refusal to make the final payment when it was due. That Nelson was entitled to recover from it the sum of $18,516.52; this being the balance of the contract price, $11,819.51, with interest thereon to the date of the decree. There was also a finding that the San Antonio Traction Company was entitled to recover on its cross-action against Nelson and the Nelson Paving Company, the sum of $15,714.40 and $3,491.00 interest thereon to date of decree, making $19,205.60, for breach of Nelson’s contract to maintain.
“The above allowance to the traction company resulted in a judgment being rendered in favor of said company against Nelson and the Nelson Paving Company for the difference, $6S9.08. * * * The provision of the contract on this subject reads as follows: ‘The contractor agrees to guarantee the pavement for a period of ten (10) years from the date of acceptance, which shall be when open to traffic, and during said period all defects in said pavement upon notice from the railway company or the city engineer or city council, shall be immediately repaired by the contractor at his own cost and expense and free of cost to the railway company or to the city of San Antonio, said contractor agreeing that before he shall receive any money on this contract he will furnish to the railway company a bond in the sum of seventeen thousand dollars ($17,000.00) to be guaranteed by some surety company acceptable to the railway company, conditioned that said contractor shall faithfully maintain said pavement for said period of ten (10) years, and shall pay all costs of repairing the pavement to be constructed hereunder during the said period of ten (10) years. The repairs shall be made at the time and in the manner and under the conditions specified in the contract of the city of San Antonio with the Parker-Washington Company.’
“Nothing is found in the contract which conditioned the above obligation upon compliance by the traction company of its obligations to make payments in accordance with the contract. The fact is that the contract price it was to pay for the work amounted to $93,554.30, and it had paid during the progress of the work all but $11,819.51.”

The application for writ of error is based upon the following two grounds: First. That the traction company had, by refusing to pay the sum sued for, repudiated the contract between Nelson and the said traction company, and therefore could not make a defense under that contract. Second. That the claim of the traction company was barred by the statute of limitation of four years.

There was no abandonment of the contract by the traction company, as the evidence appears in the record, hut its demand was simply an enforcement of the terms of the contract by which it was entitled to a credit upon a balance due to the Nelson Company for the cost that it had been put to in maintaining the pavement. In the terms of the contract itself, the cost of the work of maintaining it was included in the sum agreed to be paid by the traction company.

The claim set up by the traction company for a reduction of the demand made by the Nelson Company for the construction of the pavement was based upon the refusal of Nelson to perform his part of the contract for the construction and upkeep of the pavement itself. When the Nelson Company refused to make the necessary repairs upon the pavement in accordance with their contract, they were guilty of a breach of that contract, and the 'traction company, being bound to the city to perform that work, had the right to perform it in accordance with its contract, and the measure of its recompense would be the cost to it of performing the work which Nelson had contracted to do, but had failed to perform. In order to determine the question of limitation upon this claim of the traction company against Nelson, we must ascertain what the contract was, and what the rights of the parties were under it. There was no sum specified to be paid by the traction company for the keeping of the pavement in repair. It was all embraced in one lumpr sum, which was the price to be paid for the building of the pavement as well as the repairing of it. Therefore, when Nelson refused to perform his part of the contract with regard to the pavement, he was guilty of a breach of the terms of the said contract, and the traction company was entitled, under the terms of that contract, to do the work itself, and its measure of compensation for so doing would be the cost to it of the work.

To determine the question of limitation upon the claim of the traction company for the work thus done, we must first ascertain whether it constituted a payment to Nelson on the contract price for the whole work of constructing and keeping the pavement in repair. If it was not a payment, then it must have been in the nature of an offset, because it could not be both, and the question arises, which is of some difficulty: Can it be considered in any sense a payment?

There being no definite sum specified to be paid for the keeping of the pavement in repair, to ascertain the rights of the parties it was necessary to determine what it cost to perform the work when done by the traction company. This being the case, it cannot be said that the performance of the work was the payment of any part of the price specified in the contract with. Nelson. There was not a definite sum to be paid in satisfaction of that or for any portion of it, and it cannot be claimed as a credit, because it was unascertainable, except by determining what the work actually cost the traction company. We therefore conclude upon these facts that the cost of maintaining the pavement paid by the traction company and claimed as a credit upon its obligation did not have the effect to satisfy so much of the obligation of the Nelson company; there being no specified sum to which it could be applied. It was in law a breach of the contract on the part of Nelson to refuse to perform that work, and the right of the traction company was to recover damages; that is, the amount which it cost it to do the work which Nelson refused to do.

A sound and safe test in determining whether a claim of this character is to be regarded as a payment and satisfaction pro tanto of the claim of the opposite party or simply as a counterclaim or set-off which it has a right to assert in satisfaction thereof is: If it was a payment on Nelson’s contract, then the traction company could not have maintained any suit against Nelson to enforce that credit until action had been brought upon the original contract by Nelson, and it would then be applicable as a payment strictly. In this case there was, as we stated above,' no definite sum specified in the contract, upon which the damages claimed by the traction company could be ascertained, but it was necessary, in order to determine that question, that there should be proof of what the work cost the traction company, which would be the measure of their damages for the breach of the contract.

It is well settled in the authorities and beyond question that, if the traction company co.uld have maintained the suit against Nelson to recover the amount paid for the repairs on' the pavement, it was not a payment upon the sum agreed to be paid to Nelson, but would constitute damages which it was entitled to recover because the failure of Nelson to perform the work compelled the defendant in error, in performance of its contract with the city, to pay the amount claimed. In no sense can this be said to be a payment by the traction company to Nelson for the work of constructing the pavement and his obligation to keep it in repair.

The conclusion then is necessarily reached that if it was the subject of an independent action by the traction company against Nelson, and did not constitute payment to Nelson for any part of the contract made with the traction company, the statute of limitation would begin to run from the time each item of the claim against Nelson originated; and, if due and payable more than four years before the institution of the action by Nelson against the traction company, such claims of the traction company were barred by the statute of limitation. Holliman v. Rogers, 6 Tex. 91; Walker v. Fearhake, 22 Tex. Civ. App. 61, 52 S. W. 629.

The plea of limitation by Nelson against all claims which had accrued more than four years prior to the institution of his suit against the traction company should have been sustained, and the refusal of the court to sustain that plea of limitation against such claims was such error as to make it necessary that the judgment should be reversed, but such items as accrued less than four years prior to the institution of the suit by Nelson were not barred. Crook v. McGreal, 3 Tex. 487. The claims of the traction company against Nelson which accrued after the institution of the latter’s suit, but more than four years before the traction company filed its plea of set-off, were also barred.

It is therefore ordered that the judgment of the Court of Civil Appeals be reversed, and the cause be remanded to the district court for another trial, with instructions to follow this opinion in determining this issue between the parties. 
      <g=3For other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
     