Fairbanks, Morse & Co. v. Welshans

• Decision Date: 09 June 1898
• Parties: FAIRBANKS, MORSE & CO. ET AL. v. WELSHANS ET AL.
• Court: Nebraska Supreme Court

55 Neb. 362

75 N.W. 865

FAIRBANKS, MORSE & CO. ET AL.

v.WELSHANS ET AL.

Supreme Court of Nebraska.

June 9, 1898.

Syllabus by the Court.

1. The petition set out in the opinion, and held to be an ordinary creditors' bill, and as such not to state a cause of action.

2. A nonjudgment creditor of an insolvent copartnership dissolved by the death of one of the partners, the surviving member and the estate of the deceased partner being insolvent, cannot maintain an action, in the nature of a creditors' bill, to set aside a fraudulent and void disposition made of the co-partnership assets by the surviving partner, unless the facts averred in the petition show that the creditor has a lien on such assets, or that they are held in trust for partnership creditors, or that it is impossible to obtain judgment because the parties liable are out of the jurisdiction of the court, and it appears that there exists no property within the court's jurisdiction which can be reached by attachment, garnishment, or other legal process.

3. An agreement of a debtor to pay his creditor's claim out of the moneys of a particular fund, but which gives the creditor no present right in or control over such fund or any part thereof, does not operate as an equitable assignment of any part of such fund to the creditor.

4. The creditors of a co-partnership, merely because they are such, are not given a lien by law upon its assets, whether the firm be solvent or insolvent.

5. The assets of a co-partnership, dissolved by the death of one of its members, are not held in trust by the surviving partner of the firm for the payment of co-partnership debts.

6. On the dissolution of a co-partnership by the death of one of its members, the right to the possession and disposition of the co-partnership assets vests in the surviving partner.

Appeal from district court, Douglas county; Ambrose, Judge.

Suit by Fairbanks, Morse & Co. and others against J. L. Welshans & Co. and others. The N. O. Nelson Manufacturing Company intervened by a cross petition against the same defendants. From the decree rendered, plaintiffs and intervener appeal. Reversed in part, with instructions.V. O. Strickler, B. G. Burbank, Kennedy & Learned, Isaac W. Hascall, and B. N. Robertson, for appellants.

Congdon & Parish, O'Neill & Gilbert, Jas. W. Carr, L. I. Abbott, Rich & Sears, and A. C. Wakeley, for appellees.

RAGAN, C.

Fairbanks, Morse & Co., an Illinois corporation, brought this suit to the district court of Douglas county against J. L. Welshans & Co., a Nebraska co-partnership; J. L. Welshans, the surviving member of said co-partnership; David C. Patterson, administrator of the estate of J. H. Dwelley, the deceased member of said co-partnership; Anna Dwelley, widow of J. H. Dwelley, deceased; Daniel Keniston, Josiah Kent, and David C. Patterson, sureties on certain bonds executed by said co-partnership; and the Crane Company, a creditor of said co-partnership. The N. O. Nelson Manufacturing Company, also a creditor of said co-partnership, intervened in the action, and filed an answer in the nature of a cross petition against the persons made defendants to Fairbanks, Morse & Co.'s action. Numerous other parties, being creditors of said co-partnership, were also brought into the action. Fairbanks, Morse & Co. will hereinafter be designated as “Morse & Co.”; the N. O. Nelson Manufacturing Company as the “Manufacturing Co.”; Patterson, Keniston, and Kent will hereafter be denominated the “sureties.”

When the case came on for trial in the district court the sureties and all the creditors of the co-partnership of Welshans & Co., except the Manufacturing Company, objected to the introduction of any evidence on the part of Morse & Co. or the Manufacturing Company, on the ground that neither the petition of the former nor the cross petition of the latter stated facts sufficient to constitute a cause of action against the objectors. These objections were overruled, the court heard the case, and rendered a decree therein, which is now before us on appeal.

1. In view of the conclusions reached by us, we have thought it best to set out all the material allegations of the petition of Morse & Co. They are as follows:

“(3) That on the said 29th day of May, 1893, J. L. Welshans and J. H. Dwelley, doing business as J. L. Welshans & Co., as aforesaid, entered into a written contract with Major C. F. Humphrey, quartermaster of the United States army, to furnish all labor and material necessary to do and perform all of the plumbing, steam heating, and gas piping in all of the buildings then being erected by the United States at Fort Crook, Sarpy county, Nebraska. * * *

(4) That, to secure the faithful performance of all of the covenants, requirements, and conditions of said contract, plans, and specifications, the said J. L. Welshans & Co., as principals, and defendants David C. Patterson and Daniel Keniston, as sureties, did, on the said 29th day of May, 1893, make, execute, and deliver their certain bond to the United States in the sum of $11,708. * * *

(5) That on the 2d day of August, 1893, the said J. L. Welshans and J. H. Dwelley, doing business as J. L. Welshans & Co., entered into a contract for $5,355, with Major C. F. Humphrey, quartermaster of the United States army, to furnish certain labor and material in and about the construction of certain other buildings at Fort Crook, not included in the contract marked ‘Exhibit A’; and on said date the said J. L. Welshans and J. H. Dwelley, as J. L. Welshans & Co., made, executed, and delivered a bond to the United States to guaranty the faithful performance of said contract, which said bond was for the sum of $2,285, signed by defendants Daniel Keniston and Josiah Kent as sureties; that on September 11, 1893, the said J. L. Welshans and J. H. Dwelley, as J. L. Welshans & Co., entered into a contract for $1,331 with the said C. F. Humphrey, quartermaster of the United States army, as aforesaid, to furnish certain labor and material in and about the construction of a storehouse at the quartermaster's depot at Omaha, Nebraska, and that, to secure the faithful performance of said last-named contract, the said J. L. Welshans & Co. made, executed, and delivered to the United States a certain bond for $446,000, which said bond was signed by defendants David C. Patterson and Josiah Kent as sureties.

(6) That after the execution of said contract between the United States and Welshans and Dwelley, as J. L. Welshans & Co. as aforesaid, on the 29th day of May, 1893, and hereto attached as Exhibit A, the said J. L. Welshans & Co. entered into a contract with the plaintiff whereby the plaintiff agreed to furnish to the said J. L. Welshans & Co., to and for the construction of the buildings at Fort Crook, as aforesaid, mentioned in Exhibit A, four boilers and necessary trimmings, valves, water columns, gauges, cocks, grates, and all other appurtenances thereto, according to the specifications furnished, for the agreed price of $2,735; that the said specifications, which were made a part of the contract between J. L. Welshans & Co. and the government, provided that the boilers should be paid for as soon as they were set in place and accepted, and that the said J. L. Welshans & Co. then and there agreed to and with the plaintiff that the said plaintiff should be paid for the said boilers and other materials, so furnished as aforesaid, out of and have a lien upon the proceeds of said contract, and that as soon as said boilers had been set in place and accepted by the United States that the plaintiff should receive the money accruing under said contract therefor; that the plaintiff furnished said boilers and other materials, and delivered the same at Fort Crook, Nebraska, at or about the 1st of July, 1894, but that on or about the 10th day of September, 1894, the said boilers and other materials so furnished by plaintiff were rejected by the United States, as plaintiff was notified, upon the ground that said boilers and appurtenances thereto did not come up to the requirements of said specifications.

(7) That on the 15th day of September, 1894, the said J. L. Welshans & Co. became insolvent, and notified Major C. F. Humphrey, quartermaster as aforesaid, that they would be unable to complete their contracts with the United States; that on said 15th day of September the said J. L. Welshans & Co. attempted to assign, and did assign, in so far as they were able to do, to their said bondsmen, David C. Patterson, Daniel Keniston, and Josiah Kent, defendants herein, all of their rights, title, and interest in and to all of their contracts with the United States, together with all moneys due or to become due upon said contracts, and gave to their said bondsmen full right and authority to carry on and complete said contracts in the place and stead of the said J. L. Welshans & Co., as fully and completely as the said J. L. Welshans & Co. could or would have done; that by the terms of said attempted assignment the said David C. Patterson, Daniel Keniston, and Josiah Kent were authorized and empowered to collect and receive from the United States all moneys then due the said J. L. Welshans & Co., together with all sums that were to become due under their said contracts, and were empowered, authorized, and directed to proceed with the work under said contracts, and to complete the same, in the place and stead of J. L. Welshans & Co.; that the said defendants David C. Patterson, Daniel Keniston, and Josiah Kent accepted, affirmed, and ratified said attempted assignment from said J. L. Welshans & Co. to themselves, together with all the conditions thereof, and immediately on the said 15th day of September, 1894, took charge of the work under said contracts, for and in the place of the said J. L. Welshans & Co., and have ever since said time carried on the work under said contracts, and are now carrying on the work under said contracts, in the place and...