Court Opinion

ID: 7057496
Source: CourtListenerOpinion
Date Created: 2022-07-24 07:08:10.949984+00
Date Added: 2024-06-11T16:12:02.660786
License: Public Domain

Lairy, J.
— This is an appeal from a decree of the Marion Superior Court. The court made a special finding of facts- and pronounced its conclusions of law thereon. Following its conclusions of law the court entered a decree by the terms of which the proceeds arising from the construction of a certain sewer under a contract between the city of Indianapolis and the Julius Keller Construction Company were ordered to be paid out on certain claims presented under the pleadings, the amounts of which were fixed and the priorities of which were determined.
1. It seems to this court that the proceedings in which the decree was rendered were irregular for the reason that it was entered in a proceeding brought by the receiver for the purpose of reducing the fund to his possession and enjoining the city, in whose hands the funds were, from disposing of them in any other manner. In this proceeding the various persons having claims against the fund filed cross-complaints asking that such claims be adjudicated, their amounts fixed, and their priorities declared. On the issue thus formed the decree referred to was entered. Under proper procedure it would seem that the receiver as the arm’of the court appointing him should have reduced the fund to his possession. All claims should have been filed in the proceeding in which the receiver was appointed, and the priorities and the order of payment should have been determined in such proceeding. However, as the regularity of the proceedings is not questioned and as all questions presented on appeal rest on the findings of fact and the conclusions of law based thereon, the *625questions presented will be determined without reference to the pleadings.
For brevity in stating the substance of the finding of facts, the Equitable Surety Company will be designated as the Surety company, the Aetna Trust and Savings Company will be designated as appellant, the Julius Keller Construction Company will be designated as the Construction company, the city of Indianapolis will be designated as the city, the Indianapolis Mortar and Fuel Company will be designated as the Indianapolis company, and the Cannelton Sewer Pipe Company will be designated as the Cannelton company.
The special findings show the entering into a contract on May 5, 1913, by the city and the Construction company for the construction of the sewer which contained the agreement of the latter “to furnish at their own proper cost and expense all the necessary materials and labor of every description, and to carry out and complete in a good, firm and substantial manner the construction of local sewers with their appurtenances in Schurmann Avenue;” that on May 2, 1913, the Construction company made application for surety bond agreeing that as a part of the consideration for the making of the bond the Surety company should “be subrogated to all of the applicant’s rights, privileges and properties as principle and otherwise in said contract, and hereby assigns, transfers, conveys to said company all the deferred payments and retained percentages, and any and all moneys and properties that may be due and payable to the applicant at the time of such breach or default that thereafter may become due and payable” on account of the contract; that both prior to the beginning of this action, and since, the Cannelton company and the Indianapolis company made demands of the Surety company to pay for materials sold for and used in the sewer; that on *626May 5, 1913, the .bond of the Surety company was executed and accepted by the city, conditioned that the Construction company shall fulfill all the conditions and stipulations in its construction contract; that among the specifications contained in the contract were the agreements of the Construction company to pay all moneys due any contractor, materialman or laborer upon such sewer, and that “the contractor shall not be allowed to sublet the whole or any part of the work or make any assignment of the moneys to be paid him, without special permission in writing from the board of works, and, should this permission be violated, the said board may at its option, end and determine his contract;” that on May 5, 1913, the Construction company and the appellant entered into an agreement whereby the former was to execute to the latter an assignment of the assessment roll and the latter agreed to advance the former eighty per cent, of the assessment roll, to be used to pay labor and material bills, such advance to bear seven per cent, from day of advancement until approval of final assessment roll, to be evidenced by memorandum promissory notes, and the latter agreed to take over the assessment roll at ninety-six cents on the dollar in payment, of its advances and interest, the assessments against the state and the United States excepted from this contract price; that such assignment was executed on May 5, 1913, authorizing the city comptroller to issue all warrants and bonds in payment of assessment to the appellant, and authorizing the city treasurer to pay the same, which was delivered to the city comptroller prior to May 8, 1913; that on May 5, 1913, the Construction company executed its note for $2,000 to the appellant for fees and services rendered in procuring the financing of the contract; that, in accordance with the above assignment of contract, sixteen notes were executed for moneys received totaling in amount $39,000 and provid*627ing for payment without relief from valuation and appraisement laws and waiving presentment for payment or protest for nonpayment; that on January 14, 1914, Naekenhorst was, on petition of S. J. Patterson and Company, appointed receiver of the Construction company; that the construction work was not completed and the city notified the Surety company to complete the work, but it refused, and the work was completed by the receiver; that on March 5, 1914, the receiver borrowed $1,158.69 from appellant; that the sewer was completed and the assessment roll finally adopted by the city on November 18, 1914; that on January 26, 1914, the Cannelton company filed its claim with the city for a balance due of $8,108.07, with interest at six per cent, thereon from November 3, 1913, for materials furnished and used; that on March 13, 1914, the Indianapolis company likewise filed its claim for $2,263.95 for materials furnished and used; that on February 11, 1914, the Surety company requested that the Construction company be required to pay all material and labor bills before acceptance of the work as completed; that the work was accepted, and the board of works notified the city comptroller of the approval of the final assessments amounting to $45,079.18; that upon said notice appeared the following memorandum: “Final estimate was allowed Wm. Naekenhorst, Receiver for the Julius Keller Construction Co., the Equitable Surety Co., as surety, and the Aetna Trust & Savings Co., the assignee of the assessment roll as their interests may appear;” that the appellant did advance eighty per cent, of the assessment roll as agreed; that the Construction company used $33,692.49 in payment of labor and material bills upon the sewer, and the balance of the advancement was not so used, but no evidence was presented to show that the appellant knew that fact; that the Cannelton company and the Indianapolis company each furnished the mate*628rials to the amounts set out in their claims which were unpaid; that the Surety company is now the owner of the Indianapolis company’s claim by assignment; that the further sum of $2,117.19 was advanced to the Construction company to pay the premiums for public and employer liability insurance, $221.50 of which was used on the Twenty-sixth street sewer and $1,895.69 upon the Schurmann avenue sewer, which was included in the sum $33,692.49 previously mentioned; that the Construction company paid .to the appellant a total of $533.56 on insurance premiums, and $86.94 interest on the $2,000 note of May 5, 1913; that the president of the Construction company represented to the representative of the appellant that they had funds sufficient to pay all bills except the Indianapolis company; that ninety-six per cent, of the assessment roll is. $43,275.96, and the advances made by the appellant to the Construction company are $2,935.64 in excess of the $43,275.96; that the city refused at first to accept the sewer under the contract until all material bills were paid, but later, Upon the receiver’s petition, agreed to accept the work and hold the money until all bills were paid or an order for distribution made by a court of competent jurisdiction ; that the receiver expended $50 to employ an engineer to assist in making the settlement; that the receiver was directed by order of court to accept $45,-283.13, the amount of the contract price, less $204 retained by the city to pay inspection charges, in full settlement; that, in addition to the $33,692.49 actually expended by the Construction company, it contracted for and used materials to the value of $5,324.11, for which no payment was made; that an estimate was allowed to the Surety company and appellant, as their interest might appear, in the sum of $45,283.13, it being the agreed consideration under the terms of the contract for the construction of the work as adjusted, modified *629and completed by the receiver under orders of the Marion Superior Court wherein said receivership was pending; that the insurance premiums were paid from the $41,000 of notes above referred to; and that the receiver and his' attorneys have performed services to the amount of $2,500.
The court concluded that the city was entitled to retain $4,507.91 of the $45,079.13 under its contract; that the appellant should recover of the Construction company $46,817.93, of which $34,275.12 (for moneys advanced with interest) is preferred to all other creditors, and from the receiver $2,664.08, which is preferred to all claims except costs of administration, or a total of $37,939.20 preferred, and $12,542.81 general claims; that the Cannelton company is entitled to $3,-459.40, and the Surety company to $2,368.68, by assignment from the Indianapolis company, making a total of $5,828.08 to be paid next after the $34,275.12 of appellant; that the receiver is entitled to be paid $2,550 for services of an engineer, attorneys and himself, together with costs herein, which shall be preferred to all creditors ; that the receiver is entitled to receive at once from the city whatever it has in its possession derived from the assessment for the construction of the sewer less the amount held by it as a guarantee fund, and that the city be perpetually enjoined from delivering the final assessment roll to appellant. The judgment of the trial court follows its conclusions of law.
The contention of appellant is that it was and is the sole and exclusive owner of the assessment roll, a bona fide purchaser for value, and therefore no one other than appellant could have any interest therein, except the city in ten per cent, thereof as a guarantee fund. Upon this contention is based all of appellant’s assignments of error.
*6302. *629It’is apparent from the reading of the sections of the *630statutes in relation to the construction of sewers (§§8711-8725 Burns 1914; Acts 1907 pp. 167, 550, Acts 1909 p. 412) that the legislative intent is to give to the contractor or person performing the contract for the construction of a sewer or street improvement a lien against the property assessed for the amount of the assessment as shown by the assessment roll made after the completion of the contract and filed with the department of finance of the city, which lien is assignable. However, there is also expressed a legislative intent to give such a lien only after the work is completed and the assessments made, but the statute contains provisions giving the contractor a right to a monthly estimate and certificate for sixty-five per cent', of the work completed and a final estimate only upon completion and acceptance of the improvement. These certificates are made negotiable as inland bills of exchange. §8711 Burns 1914, supra. The assignment to appellant of the assessment roll was an assignment of the contractor’s interest in the assessments when they should come into existence by virtue of the completion of the contract. The assignment was made upon a valid consideration after the contractor had entered into a valid and binding contract with the city.
3. 4. 5. 6. Personal property and choses in action to be acquired in the future under a valid contract may be assigned, and such assignments, when fairly made for a valuable consideration, are recognized and enforced in equity. Pomeroy, Eq. Jurisp. (3d. ed.) §1288; Godwin v. Murchison (1907), 145 N. C. 320, 59 S. E. 154, 17 L. R. A. (N. S.) 935. A mere possibility is not the subject of assignment; it is essential that the thing assigned must have an actual or a potential existence. Kane v. Clough (1877), 36 Mich. 436, 24 Am. Rep. 599; Low v. Pew (1871), 108 Mass. 347, 11 Am. Rep. 357, *631359. If the thing on which the assignment is intended to operate is wages to be earned under an employment, or money to be realized by the performance of a contract, it is essential to the validity of the assignment that the contract should be in actual existence at the time the assignment is made. Walton v. Horkan (1900), 112 Ga. 814, 38 S. E. 105, 81 Am. St. 77, 79. Where the subject of an equitable assignment is money to be earned in the future, either as wages or by the performance of a contract, such assignment does not become operative until some wages have been earned or something has become payable under the contract. Nothing can be claimed under such an assignment until conditions have arisen which would have enabled the assignor to assert a claim successfully in the absence of such assignment. Kintz v. Scully Steel, etc., Co. (1915), 184 Ind. 169, 171, 110 N. E. 986; Warren v. First Nat. Bank (1893), 149 Ill. 9, 38 N. E. 122, 25 L. R. A. 746, 750; Cooper v. Douglass (1864), 44 Barb. (N. Y.) 409, 417.
2. The subject of the assignment under consideration in this case was the assessments to be made on the completion and acceptance of the sewer contract. At the time the assignment was made there were no assessments in existence, and none could be made under the law unless and until the work of constructing the sewer should be completed and accepted. During the progress of the work the assignor had a right, under the statute, to have partial estimates made and to have issued negotiable certificates to an amount equal to sixty-five per cent, of such partial estimates; and on completion and acceptance of the entire work he had a right to receive a final estimate. The assignee could not successfully assert any claim to any amount not shown to be payable to the assignor either on a partial or final estimate. The record shows that the as*632signor abandoned the contract before it was completed. Under such conditions there was no basis for any assessments against the property, as no final estimate could be made until the work was completed and accepted. .Upon completion of the work the final estimate became available, but the amount available to the contractor would ■ be the final estimate less the costs and expenses of completing the work. The primary and only purpose of levying assessments against property under the provisions of the statute is to provide a fund to pay the costs and expenses of the work constructed. This litigation arises over the distribution of the amount shown to be due on the final estimate after the work had been completed by a receiver appointed by the Marion Superior Court. Appellant as assignee of the proceeds of the contract cannot successfully assert a right to anything which did not become available to its assignor under the contract with the city. As the costs and expenses of completing the work after it had been abandoned by the Construction company must be deducted from the final estimate before anything could be available to the Construction company, it becomes apparent that its assignment to appellant would not be operative - or enforceable for an amount greater than the final estimate less the costs and expenses of completing the work. The incompleted work at the time the contract was abandoned by appellant’s assignor afforded no basis for an assignment against property. The completion of the work was required in order that the inchoate interests might be lifted up and placed on a property basis. The cost of thus completing the work must be given first • place in this distribution of the assets, regardless of whether such work was done by the city directly or by reletting the contract or by any other means authorized by law.
*6337. *632Under the facts involved here, a receiver was ap*633pointed for the defaulting contractor and he finished the work under the orders of the court appointing him. The record does not show, and it cannot be assumed, that appellant was ignorant of the failure of its assignor to complete the work and of the appointment of a receiver, or that the work was carried forward to completion by such receiver without the knowledge of appellant. The record does not show that appellant made any objection to the work being completed in the manner stated. Having acquiesced in what was done and having received the benefits, appellant is in no-position to question the authority of the receiver or to complain that the cost of completion was greater than it would have been had some other plan been pursued to complete the work.
8. It has been suggested that appellant, as the assignor of the contract, should be awarded the entire proceeds of the contract if necessary to repay it for money loaned on the faith of the assignment, whether the entire proceeds were earned by the contractor or not, and that the cost of completing the unfinished work after it was abandoned by the contractor should fall on the surety on the contractor’s bond. It must be remembered that the bond of the contractor was given to the city for the protection of property to be affected by the improvement and to be assessed for its construction. In making the contract and in accepting the bond, the city was acting as an enforced agent of the property owners to be affected by the improvement. As surety on the contractor’s bond the Surety company undertook to indemnify the city for any loss sustained by reason of the failure of the contractor to complete the work according to its contract. By the very terms of the contract and bond, the Surety company became hablé for all unpaid claims for labor and materials which entered into the construction of the sewer; but it was not *634liable under the law or under the contract and bond for money loaned or advanced to the contractor by a third person.
9. 10. The statute does not give to persons furnishing material for the construction of a sewer, or to those performing labor thereon, any claim against the city or any lien on the assessments made to pay the cost and expenses of the improvement. Their only remedy is against the contractor, unless the bond given by the contractor by its terms inures to their benefit, in which event they may resort to the bond. Unpaid claims for material furnished to the contractor before he abandoned the work have no priority over the claims of appellant under the equitable assignment of the proceeds of the contract, but are inferior thereto.
11. The receiver is entitled to receive from the city the entire proceeds of the contract, less any amount that may have been paid the contractor on certificates issued on partial estimates, and less also the ten per cent, which the contract provides shall be retained by the city for five years for the purpose of keeping the sewer in repair.
12. The costs and expenses of completing the work after its abandonment by the Construction company, including the allowance to the receiver and all court costs, should be given priority over all other claims. National Surety Co. v. Maag (1908), 43 Ind. App. 16, 86 N. E. 862.
The balance due under the contract, including any amount may be ultimately due from the city out of the fund retained for repair of the sewer, passed to appellant under its assignment, free from any claims in favor of persons furnishing material or labor, and should be ordered paid subject only to the priority of the costs of completing the work, including money borrowed by the *635receiver for that purpose and the court costs and receiver’s allowance.
The court erred in its conclusions of law, and' the judgment is therefore reversed, with instructions to the trial court to restate its conclusions of law in conformity with the rules stated in this opinion.
Myers, J., and Harvey, C. J., concur in the reversal, but do not agree with the reasoning or with the result reached.