Summary
In Sehlin, the plaintiffs sought to recover as assignees of the original contracting party; however, they were found to have mischaracterized the bases for their claim.
Summary of this case from Cleansoils Wis., Inc. v. State Dept. of TranOpinion
February 8, 1950 —
March 8, 1950.
APPEAL from a judgment of the circuit court for Dane county: HERMAN W. SACHTJEN, Circuit Judge. Affirmed.
For the appellants there were briefs by Fugina, Kostner, Quinn Ward of Arcadia, and George, Brehmer McMahon of Winona, Minnesota, and oral argument by Clarence E. Fugina and C. Stanley McMahon.
For the respondent there was a brief by the Attorney General, Warren H. Resh and J. R. Wedlake, assistant attorneys general, and oral argument by Mr. Resh and Mr. Wedlake.
This is an action by the plaintiffs to recover the sum of $5,738.38 claimed to be due from the state of Wisconsin on a contract for the construction of an interstate bridge across the north channel of the Mississippi river on State Highway 54 in Wisconsin and Highway 43 in Minnesota.
The contract was entered into on December 19, 1940, by the states of Wisconsin and Minnesota, jointly, parties of the first part, and A. A. Prendergast Associates and Industrial Contracting Company, parties of the second part.
The complaint alleged that the plaintiffs, A. A. Sehlin and P. A. Prendergast, together with A. A. Prendergast and R. G. McGrail, constituted the partnership of A. A. Prendergast Associates at the time the contract was entered into; that the Industrial Contracting Company was a Minnesota corporation which owned contracting equipment used by the partnership on a rental basis and that the stock of the corporation was owned by the partners. It was alleged in usual form that the contract was completed by the, parties of the second part and that there remained due and owing for balance on contract and extras a total of $5,738.38. The complaint then alleged, "That on the 13th day of July, 1944, the said A. A. Sehlin and P. A. Prendergast acquired the interest of the said A. A. Prendergast Associates and Industrial Contracting Company in said contract and the indebtedness herein mentioned. That the said A. A. Sehlin and P. A. Prendergast are now the lawful owners of all claims against the state of Wisconsin for the work performed. . . ." It is further alleged that a claim was filed by the plaintiffs for presentation to the Wisconsin legislature in 1945 and that it adjourned its regular session without taking action upon the claim; that a claim was filed for presentation to the legislature at its 1947 session and that this claim was disallowed.
Defendant moved for summary judgment, which motion was based primarily upon its answer and the supporting affidavit of the secretary of the highway commission of Wisconsin. The answer and affidavit set forth a pertinent provision of the contract (sec. 109.08, p. 52, Standard Specifications for Road and Bridge Construction, 1935 ed.) which reads as follows:
" Assignment of Payments. All moneys payable under the contract, or any part thereof, shall be paid to the contractor in accordance with the provisions of this section, and no assignment or order executed by the contractor directing payment of any portion or all of such funds to any other person or persons shall be recognized by the state unless such assignment or order shall specify the amounts to be so paid, and the purpose for which the assignment or order is given and shall have attached thereto, by indorsement or otherwise, the consent of the surety. No such assignment or order shall be binding on the state."
Defendant maintained that this provision established a conclusive defense to the action as a matter of law.
It appears from the affidavit of P. A. Prendergast, one of the plaintiffs, that work under the contract was completed October 21, 1942; A. A. Prendergast died on September 9, 1943; the partnership continued to function until March 31, 1944, for the purpose of winding up the partnership affairs: on July 13, 1945, R. G. McGrail who is since deceased, and Laura A. Prendergast, as administratrix of the estate of A. A. Prendergast, deceased, received full and final settlement of the partnership assets. In the dissolution of the partnership the plaintiffs received assignments of all outstanding claims and' accounts of said partnership, including specifically the claim against the defendant.
It further appears that Industrial Contracting Company assigned its claim to plaintiffs, and on June 29, 1945, a voluntary dissolution of the corporation was voted and a trustee appointed. On September 24, 1946, the final certificate terminating the corporate existence of Industrial Contracting Company was filed.
Under the partnership agreement and its revision, which are set forth as exhibits to the affidavit of P. A. Prendergast, the heirs at law of a deceased partner had the following options:
"First, to demand payment in full of the deceased partner's interest. When the account is struck or settled, said heir or heirs shall receive from said partnership, the credit coming to said deceased, in instalments of twenty per cent of same, annually, plus interest on the unpaid balances at the rate of six per cent per annum until such share or credit of said deceased partner shall have been paid in full, or
"Second, said heir or heirs may elect to leave the credit of said deceased in said partnership, in which event, he or they shall receive therefrom interest annually at the rate of six per cent per annum until such share or credit of said his or their deceased."
Plaintiffs contend that under the terms of this agreement the interest of a deceased partner passes to the survivors by operation of law, and the fact that assignments were given for the purpose of accelerating the acquisition of this interest does not change the nature of their holdings; and that therefore. they are not assignees but owners of the whole partnership by operation of law.
The trial court held that the plaintiffs were assignees of A. A. Prendergast Associates and the Industrial Contracting Company within the meaning of sec. 109.08 of the contract quoted above, and as they had not complied with the provisions of that section by obtaining the consent of the state and the surety company, they were barred from bringing this action. The trial court granted defendant's motion for summary judgment of dismissal.
It is unnecessary to determine in this proceeding whether plaintiffs actually acquired the right to the claim by operation of law or by assignment.
The claim denied by the legislature, which denial constitutes the basis of plaintiffs' right to maintain this action, states that plaintiffs "purchased and acquired the interest of A. A. Prendergast Associates and Industrial Contracting Company named as parties of the second part in said contract," and assert their right to amounts claimed to be due on the contract "as assignees of the parties of the second part."
As was pointed out by the court in Chicago, M. St. P. R. Co. v. State (1881), 53 Wis. 509, 512, 10 N.W. 560:
"The effect of the statute is to make the refusal of the legislature to allow the claim a condition precedent to the right of the claimant to maintain an action on his claim."
In State ex rel. Martin v. Reis (1939), 230 Wis. 683, 685, 284 N.W. 580, it was held that one suing the state for wages had the duty of complying with the provisions of ch. 285, Stats., and that therefore the filing of a bond was a necessary condition precedent to the right to maintain the action. The court said:
"It is not disputed that it is an established principle of law that no action will lie against a sovereign state in the absence express legislative permission. It is further established that when a sovereign permits itself to be sued upon certain conditions, compliance therewith is a jurisdictional matter, and a suit against the sovereign 'may not be maintained unless such conditions are complied with."
In the claim filed with the legislature the plaintiffs sought to recover as assignees of the original contracting parties. After that claim was disallowed by the legislature they brought this action upon the theory that they acquired rights by operation of law as successors to the original partnership and corporation. We are of the opinion that this suit cannot be maintained because the condition precedent, namely, the filing of the claim upon which suit is based and its disallowance, has not been complied with. As stated in 38 Am. Jur., Municipal Corporations, p. 391, sec. 685:
". . . it has been held that a notice filed by a husband claiming damages for injuries to his wife cannot be used to sustain an action by the wife; or a notice filed on behalf of an infant for injuries sustained by him cannot support an action by the infant's father for his own claim. One reason given for this view is that it is important that the municipal corporation know who has, or claims to have, a right of recovery of damages against it, since it might decline to recognize such a right on the part of the one who files a notice, on the ground that he had no claim in fact, while as to another for the same wrong a claim might be allowed as just."
In this case the legislature may have failed to consider the merits of the claim, but in reliance upon the facts stated in the claim filed, concluded that plaintiffs were simply assignees of the original contracting parties and that as such they had no right under the contract. This would be a valid basis for rejection of the claim. The legislature has never had an opportunity to pass upon the question of whether the plaintiffs are rightful owners of the claim by operation of law, as successors to the original partners, and therefore the claim of the plaintiffs upon that basis has not been denied. At no place in the claim filed did the plaintiffs claim rights as surviving partners, nor in fact was any reference whatever made to their having been original partners at the time of the execution of the contract. On the contrary, they referred to themselves as "assignees" in four separate places in the claim. It cannot be said that they have complied with the statute in presenting the claim upon which they sue and afforded the state an opportunity to allow it before the commencement of suit. We are therefore of the opinion that the trial court correctly held the defendant was entitled to a summary judgment of dismissal. This appears to be the proper remedy where the action is prematurely brought. Binsfeld v. Home Mut. Ins. Co. (1945), 247 Wis. 273, 19 N.W.2d 240.
By the Court. — Judgment affirmed.
MARTIN, J., took no part.
A. A. Prendergast, P. A. Prendergast, A. A. Sehlin, and R. G. McGrail were the copartners doing business as A. A. Prendergast Associates. They also owned practically all of the stock of Industrial Contracting Company. Work under the contract was completed in October, 1942. A. A. Prendergast died in 1943, thereby terminating the partnership. The plaintiffs acquired the interests of A. A. Prendergast and R. G. McGrail in the partnership and also in the corporation which was liquidated and dissolved. McGrail died later and the plaintiffs are the surviving partners of A. A. Prendergast Associates.
The paragraph with reference to the assignments quoted in the decision was made a part of the contract by reference. The purpose of the paragraph is obvious. It was to prevent partial assignments of the amount due under the contract. It would be inconvenient and costly if the state had to deal separately with various subcontractors, the suppliers of cement, steel, and other materials required in the construction of the bridge, and with laborers. After the work has been completed and accepted the reason for the paragraph disappears and the state is only required to make one final settlement with the two survivors of the four original contractors. To say that the plaintiffs cannot now recover if they have a just claim because the claim filed with the legislature stated that they were assignees is highly technical. Although actual assignments were made to the plaintiffs by R. G. McGrail while living and by the personal representative of A. A. Prendergast after his death and by the corporation in anticipation of its dissolution, the plaintiffs as surviving partners would have received the same assignments by operation of law following the deaths of A. A. Prendergast and R. G. McGrail. The state admits that had the claims come to plaintiffs by operation of law the quoted provision of the contract would not be applicable. This is hairsplitting raised to a high degree. They were assignees when the claim was filed whether by actual assignment or by operation of law.
It is my opinion further that said provision is not applicable in this case because it prohibits assignments or orders "executed by the contractor." There has been no assignment, partial or otherwise, by the contractor to other persons. The claimants are the sole survivors of the contractors. They are the only persons who could file the claim.
The state is raising an unconscionable defense. It should be required to try the case on the merits.