In re P.J. Sullivan Co., Inc.

• Decision Date: 04 January 1918
• Citation: 247 F. 139
• Parties: In re P. J. SULLIVAN CO., Inc.
• Court: U.S. District Court — Northern District of New York

247 F. 139

In re P. J. SULLIVAN CO., Inc.

United States District Court, N.D. New York.

January 4, 1918

This is an application by H. A. Whiting, trustee in bankruptcy of the P. J. Sullivan Company, Incorporated, now bankrupt, and Frank B. Hodges, ancillary receiver of said bankrupt, for an order or decree directing the vocational high school commission in the city of Syracuse, appointed under and by virtue of chapter 299 of the Laws of 1914, and which went into effect April 11, 1914, and the city of Syracuse, to deliver to said trustee and receiver, one or both, the property mentioned and described in the petition herein, or in default thereof to pay to said trustee and receiver, one or both, the value of said property, alleged to be $8,882.89.

The said city of Syracuse and said commission answer the petition, and claim that the property belonged to and was in the possession of the city or board of commissioners, one or both, and was rightfully and lawfully withheld and used by them, and that neither the city nor the said commission are liable for the value thereof, but of course ask that the petition be dismissed.

The Fidelity & Deposit Company of Maryland appears and answers the petition, and prays that the petition be dismissed and that it be adjudged that the property mentioned in the petition taken and used or in the possession of the board of commissioners and the city of Syracuse and retained for use by the commissioners, and the proceeds thereof, be adjudged to have been rightfully retained and used, and that certain tools, equipment, and materials not used or retained for use by the board of commissioners and the said city be adjudged to belong to and to be the property of the Fidelity & Deposit Company of Maryland under an agreement between it and the said now bankrupt company. The matter comes to this court on an agreed state of facts.

Costello Burden, Cooney & Walters, of Syracuse, N.Y., for trustee and receiver.

Stewart F. Hancock, of Syracuse, N.Y. (E. L. Robertson, of Syracuse N.Y., of counsel), for city of Syracuse and Vocational High School Commission.

Gannon Spencer & Michell, of Syracuse, N.Y., for Fidelity & Deposit Co. of Maryland.

RAY, District Judge (after stating the facts as above).

On the 8th day of December, 1916, a petition was filed in the United States District Court for the District of Massachusetts, praying that the P. J. Sullivan Company, Incorporated, be adjudged a bankrupt, and pursuant thereto an adjudication was duly made, and thereafter, and on or about January 5, 1917, the petitioner Henry A. Whiting was duly appointed trustee of the estate, etc., of said bankrupt, and he duly qualified. In the meantime, and on December 13, 1916, for the protection and preservation of the property of said alleged bankrupt situate in the Northern district of New York, on petition of certain creditors, Frank B. Hodges, of the city of Syracuse, was appointed receiver of the estate of said bankrupt situate in the Northern district of New York. He qualified as such and has not been discharged.

In 1914, chapter 299, Laws of 1914, state of New York, was enacted and became a law April 11, 1914, with the approval of the Governor. Under the provisions of said act certain gentlemen of the city of Syracuse were appointed and qualified as a board of commissioners for the purposes set forth in said act, and were thereby authorized and empowered to erect, equip, and furnish a vocational high school building in said city of Syracuse. On or about the 17th day of February, 1915, the said board of commissioners, pursuant to the said act of the Legislature and the amendments thereto, entered into a contract in writing with the said P. J. Sullivan Company, Incorporated, for the furnishing and installing of the heating and ventilating apparatus for said vocational high school building, and which was being erected or to be erected on lands belonging to the said city in said city of Syracuse. This contract, inter alia, provided as follows:

'If the work to be done under this agreement shall be abandoned by the contractor, or if this contract shall be assigned or said work sublet by him, other than as herein specified, or if at any time the architects shall be of opinion and shall so certify in writing to the board of commissioners that the performance of this contract is unnecessarily or unreasonably delayed, or that the contractor is willfully violating any of the conditions or covenants of this contract, or executing the contract in bad faith, the board shall have the power to require the contractor to discontinue all work or any part thereof under this contract by a written three (3) days' notice to be served upon the contractor, either personally or by leaving such notice at his residence or with his agent in charge of the work; and thereupon the contractor shall discontinue such work or such part thereof as the said board may designate, and the said board shall thereupon have the power to contract for the completion of the work in the manner prescribed by law, and to place such and so many persons, and obtain by purchase or hire such animals, carts, wagons, tools, and plant as the said board may deem advisable, to work at and to be used to complete the work herein described, or such part thereof as the said board may deem advisable, and to procure materials for the completion of the same, and charge the cost and expense thereof to the contractor; and the expense so charged shall be deducted and paid by the board out of such moneys as either may be due or at any time thereafter become due to the contractor under and by virtue of this agreement or any part thereof; and in case such expense shall exceed the sum which would have been payable under this contract shall pay the amount of such excess to the board, and in case such expense shall be less than the sum which would have been payable under this contract if the same had been completed by the contractor, then the board shall pay the balance to the contractor; and when any particular part of the work is being carried on by the board by contract or otherwise, under the provisions of this clause of the contract, and the contractor agrees to continue the remainder of the work in conformity with the terms of this agreement, and in such manner as in no wise to hinder or interfere with the persons or workmen employed as above provided by the said board, by contract or otherwise, to do any part of the work or to complete the same under the provisions of this clause of the contract.'

On or about the 30th day of July, 1915, the said P. J. Sullivan Company, Incorporated, entered into a contract or agreement with the Fidelity & Deposit Company of Maryland, for the purpose of inducing it to become surety for said company on its bond for the faithful performance of its contract with the said board of commissioners and which contract and agreement inter alia contained the following provision:

'In further consideration of the company becoming surety as above applicant hereby covenants and agrees to indemnify the company and save it harmless against all loss, cost, damage, charge, and expense that may accrue to it, whether sustained or incurred by reason of any act, default, or neglect of the applicant, or on account of claims made under or in connection with said bond, or any extension or continuation thereof, applicant agreeing to repay to said company all such loss, cost, damage, charge, and expense, including the fees or other compensation and expense of any and all attorneys and agents employed by the company to investigate or adjust such claim or to defend any suit in which the company is directly or indirectly interested, and for the better protection of the said company applicant does as of the date hereof hereby assign, transfer, and convey to the said company all the right, title, and interest of the applicant in and to all the tools, plant, equipment, and materials of any nature and description that it may now or hereafter have upon said work or in, on, or about the site thereof, including as well materials purchased for or chargeable to said contract which may be in process of construction or storage elsewhere or in transportation to said site, hereby assigning and conveying also all its rights in and to all said contracts which have been or may hereafter be entered into and the materials embraced therein, and authorizing and empowering said company, its authorized agents or attorneys to enter and take possession of said tools, plant, equipment, materials, and subcontracts, and to enforce, use, and enjoy such possession upon the following conditions, viz.: This assignment shall be in full force and effect as of the date hereof, should the applicant fail or be unable to complete the said work in accordance with the terms of the contract covered by said bond, or in the event of any default on its part under the said contract.'

The said Fidelity & Deposit Company of Maryland did become surety on the bond of said contracting company and at the time of entering into said contract with said commission the P. J. Sullivan Company, Incorporated, filed with the vocational high school commission the bond executed by the Fidelity & Deposit Company of Maryland for the faithful performance of said contract between the said contractor and the said commission.

After entering into the said contract with the said board of commissioners of the vocational high school and the filing of said bond the said P. J. Sullivan Company, Incorporated purchased certain supplies, fixtures, and materials and brought them upon the site of the said vocational high school in the city of Syracuse to be used in carrying out and completing said contract between it and said board of...