Stevens v. Appleton et al.

It is very unjust to the creditors. It compels them to prove twice over a debt against one firm; and much expense would be uselessly incurred in a double administration.

This bill is a way of trying the question more favorable to the defendants than any other could be. They have on this an appeal to the Supreme Court. They have to meet the question once for all.

Especially does it make a compromise possible. Such comproImise might be most advantageous both to Appleton and to the creditors of Bowles Bros.; and if the court overrule this demurrer, it may be possible for the parties, with the sanction of the court, to effect a compromise which will bind all persons.

Sidney Bartlett, for the respondents.

Has this court original jurisdiction in equity, or otherwise, to determine that a firm composed of all the persons named in this bill, including Appleton, shall be declared partners and bankrupt; or is that power exclusively confided by law to the District Court? Such, in effect, is the entire scope of the bill.

It is clear, on the face of the bill, that no decree, declaring a firm thus constituted to be bankrupt, has hitherto been made.

It is an elementary principle that, to sustain a decree declaring a partnership bankrupt, some act of bankruptcy must be shown to have been committed or acquiesced in by each of the members, and each is therefore entitled to be heard in the usual form and before the usual tribunal. Beasley v. Beasley, 1 Atk. 96; Mills v. Bennett, 2 M. & S. 556; Allen v. Hartley, 4 Doug. 21.

If, then, this court is to declare the partnership (constituted as averred in the bill) to be bankrupt, it must, under this bill, take and hear all the proofs as to each member of the alleged partnership, in the same manner as the District Court is required to do on an original application. In fact, it must exercise a concurrent original jurisdiction in bankruptcy with the District Court, for which there is no warrant in the statute.

But it is assumed by the bill that where a decree of the District Court exists, declaring certain parties to constitute a firm and to be bankrupt, authority is vested in this court, in equity, to reform the decree and add to the designated members of the firm others, so that the original decree shall be amended and stand.

Stevens v. Appleton et al.

But it is obvious that such an exercise of jurisdiction is, in all respects, identical with the original jurisdiction of the District Court, and is a jurisdiction nowhere conferred on this court; and further, that the proceeding, if it could be maintained, must be instituted by creditors and by them only.

But what is fatal to the bill is, that it proceeds upon the ground that the firm of Bowles Bros. & Co. was not constituted as is alleged in the decree declaring it bankrupt, but of the parties named in that decree and also of Nathan Appleton. This averment makes the former decree wholly void. The plaintiff, therefore, cannot be aided in the present case by the nominal existence of such a decree; and thus the bill must rest, if sustained, solely upon the ground that this court is a court of original jurisdiction in bankruptcy.

There cannot be a joint adjudication against three, four, or five of the members, and that such an adjudication is absolutely void is well settled. Allen v. Hartley, 4 Doug. 21; Wats. Part. 244 (179); Streatfield v. Halliday, 3 T. R. 779.

The Stat. 32 & 33 Vict. c. 71, § 100, has so far changed this in England, that a creditor of a firm may petition for an adjudication of bankruptcy against any one or more of the firm, and thus sever what, except for the statute, would be a joint claim. Robson's

Law of Bankruptcy, 573.

But the United States Bankrupt Act makes no provision of the kind. It contemplates no other adjudication in bankruptcy against a partnership, except one in which all the members of the firm are named and embraced, and where all the partners have been notified and had an opportunity to be heard. See § 36.

It may not be improper to add that if this court had power and jurisdiction to amend a former decree, and add new parties to that decree, still the result of such reformation would not, as matter of course, enable the plaintiff to take from the assignee of Mr. Appleton the assets which, under an earlier decree declaring Mr. Appleton individually a bankrupt, have passed to his assignee. The course to be adopted, where a partnership has been declared bankrupt subsequent to a decree of bankruptcy against an individual partner, depends entirely upon the attitude of things when the decree declaring the partnership bankrupt is passed, and rests in the discre

Stevens v. Appleton et al.

tion of the court, whether the continued administration of the separate estate can be most advantageously allowed to stand or the whole administration confided to the assignee of the firm.

CLIFFORD, J. I am of the opinion that the Circuit Court has no jurisdiction to grant the relief prayed in this case, for the following reasons:

1. Because the parties are citizens of the same State.

2. Because the subject-matter of the controversy is not within the scope and meaning of the third clause of § 2 of the Bankrupt Act.

3. Because the complainant, as the assignee of the bankrupts first named in the bill of complaint, is not authorized by the third clause of § 2 of the Bankrupt Act, nor by any other provision of that act, to maintain this suit against the respondent Story, as the assignee of the other bankrupt therein named, for any purpose set forth in the bill of complaint.

4. Such conflicting claims of assignees, as in this case, must be adjudged in the first instance by the Bankrupt Court, as they involve questions of administration rather than questions of title or of ownership, and consequently do not fall within the descriptive words employed in the provision giving jurisdiction to the Circuit and District Courts, at law or in equity, of controversies in respect to property, between an assignee and third persons claiming an adverse interest therein.

5. Orders and decrees of the Bankrupt Court in such matters may doubtless be subject to revision in the Circuit Court, under the first clause of § 2 of the Bankrupt Act; but I am of the opinion that neither the third clause of that section, nor any other provision of the Bankrupt Act, confers jurisdiction upon the Circuit Court to grant the relief prayed in this case.

Judge Lowell does not concur in the second, third, fourth, and fifth propositions expressed in the foregoing opinion, and the case is disposed of by the presiding justice under § 1 of the act entitled "An act to further the administration of justice," approved June 1, 1872.

May 28, 1874. CLIFFORD, J. Demurrer sustained and bill dismissed.

James v. Lycoming Insurance Company.

HENRY L. JAMES v. LYCOMING INSURANCE COMPANY.

BEFORE CLIFFORD AND LOWELL, JJ.

Repairs which have become indispensably necessary to remedy defects in a building and machinery, which endanger the safety of the property insured, may be made, and old machinery may be replaced with new, without invalidating a policy of insurance, if the structures made, or changes effected, are reasonably necessary, and do not increase the risk.

In this case, work was done in taking out an old boiler, and putting in a new one, a brick chimney and fireplace were erected, and a structure to cover the projecting end of the boiler and fireplace, and to afford shelter to the attendant, and steam was used as an auxiliary motive power. Held, these facts did not render the policy void under the condition termed the "builders' risk."

This condition must receive a reasonable construction, and neither it nor any other condition in the policy can be so construed as not to be repugnant to the nature and purpose of the policy, or inconsistent with the due and customary use of the property. In the construction of a contract, courts of justice are not denied the same light and infor mation the parties enjoyed when the contract was executed, and so may acquaint them. selves with the persons and circumstances that are the subjects of the stipulations in the written instrument, and are entitled to place themselves in the same situation as the parties who made the contract, so as to view the circumstances as they viewed them, and so to judge of the meaning of words, and of the correct application of language to the things described.

Conditions subsequent, and even mere promissory conditions, may be of a character that the breach of one or more of them will render the policy null and void; but courts of justice are not inclined to give such conditions that effect unless it clearly appears that such was the intention of the parties as manifested in their language.

Affirmative warranties are in general conditions precedent, which, if untrue, whether material to the risk or not, the policy does not attach.

Promissory warranties may be express or implied; they usually have respect to the happening of some future event, and in that case are usually held to be conditions subsequent, to be reasonably construed to effect the intention of the parties.

Owners of property insured must have the right to repair defects which render property untenantable and unsafe, and unfit for use; if not, the effect of the policy would be to render property comparatively valueless.

There was nothing unreasonable in this case, in the putting in of the horizontal boiler in the place of the former upright one, or in erecting the structure to cover the projecting end of the boiler, and afford shelter to the attendant.

Where there is no increase of the risk by the repairs or necessary alterations, and where the evidence showed that the fire did not occur in consequence thereof, it was held, there was no need of notice to the insurance company of the proposed repairs.

ACTION upon a policy of insurance upon a woollen mill, with an L and the movable machinery, tools, and stock. A total loss was admitted.

The agreed statement of facts upon which the case was submitted was, in substance, as follows:

James v. Lycoming Insurance Company.

$3,500 were insured by the plaintiff for one year, commencing March 14, 1871, as follows, to wit: $1,500 on his stone, frame, and slate-roof woollen mill building and L attached; $1,000 on movable machinery, tools, and furniture therein; and $1,000 on stock, raw, unwrought, and in process, including mill supplies. On the 10th of January following, the property was totally destroyed by fire. By the agreed statement it appears that the L, at the date of the policy, contained an upright steam boiler, about eight feet high, with a bonnet four feet high, reaching through the floor into the room above, and that it was used exclusively for heating the premises and for washing wool; and that the mill was situated on a small stream, which at times did not furnish a sufficient supply of water; that it was found in July following, that the boiler and chimney were cracked and in a dangerous condition, so that it was necessary to repair or change them. Payment being refused, the plaintiff brought an action of assumpsit to recover the amount. Proof of loss was waived, and, of course, the judgment should have been for the plaintiff, unless the insurance company showed a good defence, and for that purpose they relied upon the following facts:

That the old boiler was removed, and a new horizontal steam boiler, about sixteen and one half feet long, and three and one half feet in diameter, was placed in the L, the end projecting about two and one half feet outside the building; that a brick chimney, separated entirely from the building, and with a brick fireplace, was built at the end of the building outside, and that the boiler itself was set in brick; that the boiler was used not only for heating the premises and washing wool, but that there was attached to it and run by it a steam-engine of fifteen horse power, which was used to supply any deficiency in water power in running the mill; that in order to place the engine and boiler in the mill, the wooden side of the lower story of the L was taken out about ten feet in length and ten feet in height; that a structure from ten to twelve feet wide and fifteen to twenty feet long was subsequently erected to cover the projecting end of the boiler and fireplace and lower part of the chimney, and the man who fed the boiler; that the structure was built of wood and had a shingled roof; that the roof commenced about eight feet high and extended up to the second-story