Des Moines Bridge & Iron Works v. Plane
| Decision Date | 12 November 1913 |
| Parties | DES MOINES BRIDGE AND IRON WORKS v. I. C. PLANE, JACOB WACKERBARTH, Appellants. GEORGE A. NETCOTT, W. E. BAIN, Appellees |
| Court | Iowa Supreme Court |
Appeal from Buchanan District Court.--HON. F. C. PLATT, Judge.
SUIT in equity to compel an assignee for the benefit of creditors to give preference over general creditors to the claims of sureties for the contractor. From a ruling on demurrer denying the right to such preference, plaintiffs in cross-petition appeal.
Reversed.
Hasner & Hasner, for appellants.
Chapell & Todd, for appellees.
We adopt as a concise statement of the issues the substantial averments of the pleadings as presented by the appellee in his argument:
On the 19th day of April, 1911, one George A. Netcott, a contractor and builder, entered into a contract with W. P. Crumpacker superintendent of the Independence State Hospital at Independence, Iowa for the erection of a certain building. On the same day the said George A. Netcott gave to the said W. P. Crumpacker, as such superintendent, a bond, in the penal sum of $ 1,000, with I. C. Plane and Jacob Wackerbarth as sureties. The said bond was conditioned, among other things, on the prompt payment of all just demands of all persons supplying labor or materials in the prosecution of the work contemplated in the said contract. George A Netcott proceeded to erect the building provided for in the contract, and on or about July 21, 1911, he purchased from the Des Moines Bridge & Iron Works certain materials to the amount of $ 94.50, which materials were delivered and used in the erection of the said building. Netcott failed to pay for said materials, and on October 3, 1911, before the said building was completed, he made a general assignment, for the benefit of his creditors, to W. E. Bain, the appellee herein, who took charge of the work and completed the building, paying for the necessary materials and labor. After the building was completed and accepted by W. P. Crumpacker, superintendent, the assignee, Bain, received a warrant for about $ 2,000, the balance due upon the completion of the building.
On November 3, 1911, the Des Moines Bridge & Iron Works began an action in the district court of Buchanan county, Iowa to enforce the collection of its claim, making George A. Netcott, I. C. Plane, Jacob Wackerbarth, and W. E. Bain, assignee, defendants, and asking a personal judgment against all of the defendants, except W. E. Bain. On November 13, 1911, I. C. Plane and Jacob Wackerbarth filed an answer and cross-petition. In the answer defendants admitted the execution of the bond and the assignment to W. E. Bain, but demanded proof as to the claim. In the cross-petition they alleged the execution of the contract, the bond, and the assignment to Mr. Bain. They alleged that Mr. Bain had completed the building, and had collected the balance, about $ 2,000, due Netcott under the terms of the contract, and that he now had either the money or a warrant on the state treasury for the same. That at the time of the assignment, Netcott had several other contracts for the erection of certain buildings which were but partly completed, and that he was owing for materials and labor furnished for the other buildings and also many personal claims, in addition to what he was owing for materials and labor for the particular building for which this bond was given. Appellants therefore prayed: That as to the plaintiff, judgment be rendered against them as sureties only, and that they be subrogated to all rights of plaintiff against George A. Netcott and W. E. Bain, assignee. That as to their codefendant, W. E. Bain, assignee, they ask relief against him as follows: That he be required to segregate the amount of money received by him of W. P. Crumpacker and the state of Iowa for the work done by his assignor, at the Hospital for the Insane at Independence, from the other funds in his hands, and that he be required, first, to pay all bills owing by said George A. Netcott for materials furnished, or labor performed on said job, including the claim of the plaintiff, before mixing said fund with other funds for general distribution among creditors, and that it be adjudged, further, that all claims for material or labor that these defendants have to pay for in consequence of their liability, as sureties for said George A. Netcott, be declared to have a prior right of satisfaction out of the fund in the hands of the assignee, and that they have such other and further relief as equity and good conscience requires and for costs of suit. W. E. Bain, assignee, demurred to the cross-petition on the grounds that the facts stated therein did not entitle the appellants to the relief demanded. On February 23, 1912, judgment was rendered against I. C. Plane and Jacob Wackerbarth, as sureties, for the amount of plaintiff's claim. On September 24, 1912, the demurrer of appellee to the cross-petition was sustained, and the appeal is from the ruling on the demurrer.
II. By this record is presented the question whether sureties on a building contractor's bond, who have become liable on their obligation to a dealer who furnished material which was used in the construction of the building, are entitled to a preference over general creditors against the fund in the hand of the builders' assignee for the benefit of creditors.
Certain legal propositions advanced by appellants are conceded by the appellee to be correct, and we state them, without discussion, for the application they may have in the further consideration of the case. They are:
1. After a debt becomes due the party liable therefor as surety may resort to chancery to compel the principal to exonerate him by the payment of the debt.
2. Sureties can sustain a bill to have their debt paid by the principal, or out...
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