Feucht v. Corbett

• Decision Date: 15 February 1938
• Docket Number: 27035.
• Citation: 12 N.E.2d 957,214 Ind. 103
• Parties: FEUCHT et al. v. CORBETT.
• Court: Indiana Supreme Court

12 N.E.2d 957

214 Ind. 103

FEUCHT et al. v. CORBETT.

No. 27035.

Supreme Court of Indiana

February 15, 1938

Appeal from Clinton Circuit Court; Frank B Russell, Special judge.

Barnard & Walker, of Indianapolis, and Harker & Irwin, of Frankfort, for appellants.

Thos M. Ryan and Wm. Robison, both of Frankfort, for appellee.

FANSLER Judge.

Appellants filed a verified claim against the estate of Albert E. Betts based upon two promissory notes, aggregating $25,000 executed after the death of Albert E. Betts by the surviving partners of the firm of A. F. Cohee & Co., of which Albert E. Betts was a partner at the time of his death. The notes were executed to evidence a loan of funds borrowed for the purpose of being used, and actually used, in completing the performance of a construction contract with the New York, Chicago & St. Louis Railraod Company. There was a trial by the court, and judgment for the defendant, from which the claimants appeal.

Error is assigned upon the overruling of appellants' motion for a new trial. The motion questions the correctness of the result under the evidence, in which there is no substantial conflict.

In the year 1919, Albert E. Betts, A. F. Cohee, and Hez M. Cohee formed a partnership under the firm name and style of 'A. F. Cohee & Company.' The partnership was often known and referred to as 'A. F. Cohee Company.' The partnership engaged in the construction of roads, streets, and similar enterprises. On September 3, 1925, the partnership, having learned that the railroad company intended to let a contract for the construction of a project in Illinois, communicated with the company for the purpose of procuring an invitation to bid for the construction of the work. The communication, a letter, disclosed the character of the firm, the names of the partners, their financial ability, ability to give bond, gave a list of their equipment, and undertook to establish their ability to undertake and complete the work contemplated. In response to this communication, on October 14th, the railroad company invited the partnership to submit a bid, and furnished complete and detailed plans and specifications. On October 22d, the partnership submitted a bid, by which it proposed to do all of the work and furnish all of the material necessary to complete the project according to the plans, and in the manner indicated by the specifications, for the total price of $82,571.91. The letter in which the bid was transmitted contained the following statement: 'For the purpose of procuring estimates during the progress of the construction of said work we hereby submit the following itemized bid per unit of its respective kind.' This was followed by an itemized unit bid totaling $82,055.81. It thus appeared, from the face of the proposal, that the total of the unit bids was less than the total price bid. On October 28th the railroad company communicated with the partnership, by letter, the material part of which is an follows:

'We will accept your proposal to do the work at unit prices specified in your letter of October 22nd, the work to be commenced soon as can be arranged.

'We will have contract prepared and submit for your signature soon as can be arranged, and understand, as per our conversation, that you will arrange for bond covering in amount $62,000.00.'

The district engineer of the railroad company testified that, between the time of receiving the bid and dictating the above letter, he had a conversation with A. F. Cohee: 'To the effect that we accepted his proposal and for him to go ahead with the work as stated in this letter. We figured the total of the bond by estimating the total lump sum of Mr. Cohee's bid and took 75% for the amount of the bond, which resulted in the figure of $60,000. Mr. Cohee was told at that time that he would have to furnish a bond of $60,000, to which he agreed and he later furnished the bond.' In a very short time after receipt of the latter of October 28th, and during the lifetime of Albert E. Betts, the partnership began the performance of the contract, with the knowledge of the railroad company and under the supervision of an assistant engineer. The work went forward continuously from that time. On November 27th following, Albert E. Betts died. The work was continued without interruption. On December 5th the chief engineer wrote to the railroad's company's attorney, at Toledo, Ohio, for the purpose of furnishing information as a basis for a written contract covering the work in question. In his letter he stated that the successful bidder was the A. F. Cohee Company, of Frankfort, and that: 'This is not a corporation but a partnership, the names of the partners being: A. F. Cohee, H. M. Cohee and A. E. Betts. Mr. Betts died last week and do not know what change this will make in the company.' The company attorney responded: 'Since the Cohee Company is a partnership, the Contractor appears as A. F. Cohee and H. M. Cohee. In view of Mr. Betts' death, it was not proper to include his name as a partner.' A written contract was prepared and signed. It recited that the agreement was made and entered into 'between A. F. Cohee and H. M. Cohee, copartners doing business as 'The A. F. Cohee Company." It was signed by A. F. Cohee and Hez M. Cohee. The chief engineer, in his letter to the railroad company's attorney, did not advise that he had told the partners that the proposal was to be accepted, subject to conditions which they had agreed to, and that they were to go to work, nor did he advise that the work had progressed on the contract, thus consummating it. The attorney may have understood that no contract had been entered into. The bond, which was required, had been executed upon the credit of the three partners before the death of Mr. Betts, and the chief engineer had been notified of its execution and of an attempt to deliver it to him.

During the progress of the work the contractors were in need of funds to complete the contract, and borrowed the $25,000 here involved. The notes were signed by A. F. Cohee & Co., and by A. F. Cohee and Hez M. Cohee. All of the money borrowed was used for the purpose of performing the work contemplated by the contract.

Where a partnership is a party to an executory contract, the death of a partner does not terminate the contract, nor does it dissolve the partnership, with respect to participation in the benefits or the liabilities involved in such an executory contract. There seems to be no contention between the parties upon this score. See Kimmel et al. v. State ex rel Anderson Banking Co., 1920, 75 Ind.App. 168, 128 N.E. 708, 130 N.E. 139, and Dickson et al. v. Indianapolis Cotton Manufacturing Co., 1878, 63 Ind. 9. If there was a contract between the partnership and the railroad company, prior to the death of Mr. Betts, he was a party thereto and his estate was entitled to a share in the benefits or profits and responsible for the liabilities involved. It will be noted that the railroad company did not accept the proposal made by the partnership, so that no contract was thus created, but that, after peceipt of the proposal, there was a conversation between one of the partners and a representative of the railroad company in which a bond was agreed upon, and the railroad company then submitted a counter proposal, consistent in every respect with the original proposal,...