B-127311, MARCH 29, 1956, 35 COMP. GEN. 529

B-127311: Mar 29, 1956

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

PARTNERSHIP - DEATH OF PARTNER - AWARD OF CONTRACT TO SURVIVING PARTNER THE SUBMISSION OF A BID FOR A GOVERNMENT CONTRACT BY A PARTNERSHIP CREATES AN OBLIGATION WHICH IS NOT REVOKED ON THE DEATH OF ONE OF THE PARTNERS AND WHERE THE SURVIVING PARTNER GRANTS AN EXTENSION OF THE ACCEPTANCE DATE. INDICATES A WILLINGNESS TO PERFORM AND THE SURETY WILL GUARANTEE PERFORMANCE. PROVIDED THE LATTER IS SPECIFICALLY AUTHORIZED BY COURT ORDER TO EXECUTE THE CONTRACT. 1956: REFERENCE IS MADE TO YOUR LETTER OF MARCH 13. IT IS STATED IN YOUR LETTER THAT THE PARTNERSHIP SUBMITTED THE LOW BID ON THE PROCUREMENT AND. TO PAYMENT OF DAMAGES UP TO THE AMOUNT OF THE BOND IN THE EVENT THE PRINCIPALS REFUSE TO EXECUTE THE NECESSARY CONTRACTUAL DOCUMENTS IF AWARD IS MADE TO THE PARTNERSHIP.

B-127311, MARCH 29, 1956, 35 COMP. GEN. 529

PARTNERSHIP - DEATH OF PARTNER - AWARD OF CONTRACT TO SURVIVING PARTNER THE SUBMISSION OF A BID FOR A GOVERNMENT CONTRACT BY A PARTNERSHIP CREATES AN OBLIGATION WHICH IS NOT REVOKED ON THE DEATH OF ONE OF THE PARTNERS AND WHERE THE SURVIVING PARTNER GRANTS AN EXTENSION OF THE ACCEPTANCE DATE, INDICATES A WILLINGNESS TO PERFORM AND THE SURETY WILL GUARANTEE PERFORMANCE, AN AWARD MAY BE MADE TO THE SURVIVING PARTNER, INDIVIDUALLY OR WITH THE PERSONAL REPRESENTATIVE OF THE DECEASED PARTNER, PROVIDED THE LATTER IS SPECIFICALLY AUTHORIZED BY COURT ORDER TO EXECUTE THE CONTRACT.

TO THE SECRETARY OF THE ARMY, MARCH 29, 1956:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 13, 1956, REQUESTING A DECISION AS TO WHETHER AWARD OF A CONTRACT MAY BE MADE EITHER TO THE PARTNERSHIP FIRM OF PERCY A. HARPER AND SON, FORT FAIRFIELD, MAINE, OR TO THE SURVIVING PARTNER, WILLIAM C. HARPER, UNDER INVITATION FOR BIDS NO. ENG-19 -016-56-74, ISSUED BY THE NEW ENGLAND DIVISION, CORPS OF ENGINEERS; OR WHETHER THE BID OF PERCY A. HARPER AND SON SHOULD BE CONSIDERED REVOKED BY OPERATION OF LAW UPON THE DEATH OF PERCY A. HARPER AND AWARD MADE TO THE NEXT LOW BIDDER, COTE CONSTRUCTION COMPANY.

IT IS STATED IN YOUR LETTER THAT THE PARTNERSHIP SUBMITTED THE LOW BID ON THE PROCUREMENT AND, IN CONJUNCTION THEREWITH, A BID BOND IN THE PENAL SUM OF $42,000 EXECUTED BY BOTH PARTNERS; THAT THE BOND BINDS THE PRINCIPAL AND THE SURETY AND THEIR HEIRS, EXECUTORS, ADMINISTRATORS AND SUCCESSORS, JOINTLY AND SEVERALLY, TO PAYMENT OF DAMAGES UP TO THE AMOUNT OF THE BOND IN THE EVENT THE PRINCIPALS REFUSE TO EXECUTE THE NECESSARY CONTRACTUAL DOCUMENTS IF AWARD IS MADE TO THE PARTNERSHIP, OR IF THE BID IS WITHDRAWN AFTER OPENING; THAT ONE OF THE TWO PARTNERS HAS DIED SINCE THE BID OPENING; THAT THE SURVIVING PARTNER AND THE PERSONAL REPRESENTATIVE OF THE DECEASED PARTNER HAVE INDICATED THEIR WILLINGNESS TO ACCEPT AND PERFORM THE CONTRACT IF AWARD IS MADE TO THE PARTNERSHIP, AS A PARTNERSHIP OBLIGATION INCURRED PRIOR TO THE DEATH OF ONE PARTNER; THAT, ALTERNATIVELY, THE SURVIVING PARTNER, WILLIAM C. HARPER, HAS INDICATED THAT HE WOULD BE WILLING TO ACCEPT AND PERFORM THE CONTRACT SHOULD AWARD BE MADE TO HIM INDIVIDUALLY; AND THAT THE SURVIVING PARTNER AND THE NEXT LOW BIDDER, COTE CONSTRUCTION COMPANY, HAVE GRANTED 30-DAY EXTENSIONS TO THEIR ORIGINAL ACCEPTANCE DATES OF MARCH 6, 1956.

A REPORT DATED FEBRUARY 18, 1956, FROM THE OFFICE OF THE DIVISION ENGINEER, STATES THAT THE SURETY ON THE BID BOND IS READY TO EXECUTE PERFORMANCE AND PAYMENT BONDS EITHER IN THE NAME OF PERCY A. HARPER AND SON, WITH THE BOND SIGNED BY WILLIAM HARPER AND BY PERCY A. HARPER'S LEGAL REPRESENTATIVE, OR WILL BOND WILLIAM HARPER AS AN INDIVIDUAL. IT IS ALSO REPORTED THAT PERCY HARPER'S INTEREST IN THE PARTNERSHIP WAS WILLED TO HIS WIDOW, THAT THE WIDOW WISHES TO DO ANYTHING NECESSARY TO CONTINUE THE ACTIVITY OF THE LATE PARTNERSHIP AND THAT WILLIAM C. HARPER HAS ADVISED THAT THERE WAS NO PARTNERSHIP AGREEMENT, THE CLOSE FAMILY RELATIONSHIP BEING SUCH THAT NO ONE FELT ANY WAS REQUIRED.

SECTION 1 OF CHAPTER 161, REVISED STATUTES OF MAINE (1954), PROVIDES THAT THE ADMINISTRATOR OR EXECUTOR OF A DECEASED MEMBER OF A PARTNERSHIP SHALL INCLUDE IN THE INVENTORY THE PROPERTY OF THE PARTNERSHIP, APPRAISED AS IN OTHER CASES, EXCEPT THAT AN AMOUNT IS TO BE CARRIED OUT EQUAL ONLY TO THE SHARE OF THE DECEASED; AND THAT " THIS PROPERTY SHALL BE RETAINED AND ADMINISTERED, UNLESS THE SURVIVING PARTNER GIVES BOND TO THE JUDGE AS PROVIDED IN THE FOLLOWING SECTION.' SECTION 2 SETS FORTH THE CONDITIONS OF A BOND BY VIRTUE OF WHICH A SURVIVING PARTNER MAY OBTAIN CUSTODY OF THE PARTNERSHIP PROPERTY OF THE DECEDENT FOR THE PURPOSE OF CLOSING THE AFFAIRS OF THE PARTNERSHIP, AND SECTION 4 PROVIDES: "IF THE SURVIVOR, ON BEING CITED, DOES NOT GIVE THE BOND REQUIRED, THE EXECUTOR OR ADMINISTRATOR OF THE DECEASED SHALL GIVE SUCH BOND WITH THE NECESSARY VARIATIONS AS IS REQUIRED IN SECTION 2, AND TAKE POSSESSION OF THE PROPERTY.'

ORDINARILY, THE DEATH OF ONE PARTNER DISSOLVES THE PARTNERSHIP, BUT THE DEATH OF ONE PARTNER WILL NOT RESULT IN A DISSOLUTION IF THE PARTNERSHIP AGREEMENT PROVIDES FOR CONTINUANCE OF THE PARTNERSHIP BUSINESS AFTER SUCH DEATH. IN RE SHAW'S ESTATE, 81 ME. 207, 16 A. 662. IN THE PRESENT CASE, IT APPEARS THAT THERE WAS NO PARTNERSHIP AGREEMENT. HOWEVER, THIS WOULD NOT HAVE PREVENTED THE SURVIVING PARTNER FROM CARRYING OUT THE CONTRACTUAL OBLIGATIONS OF THE PARTNERSHIP, AMONG WHICH WAS THE OBLIGATION TO PERFORM THE PROPOSED GOVERNMENT CONTRACT IF AWARDED TO THE FIRM OF PERCY A. HARPER AND SON. THE STATE OF MAINE HAS FOLLOWED THE COMMON-LAW RULE THAT DISSOLUTION OF A PARTNERSHIP DOES NOT CHANGE THE RIGHTS OF THIRD PARTIES AS TO PAST CONTRACTS WITH THE PARTNERSHIP ( CUMBERLAND COUNTY POWER AND LIGHT COMPANY V. GORDON, 7 A.2D 619) AND THIS WOULD SEEM TO INCLUDE ANY OBLIGATION OF THE TYPE CREATED BY BIDDING ON THE STANDARD FORM OF GOVERNMENT INVITATION FOR BIDS.

SINCE THE STATUTES REFERRED TO PROVIDE THE MEANS WHEREBY THE SURVIVING PARTNER MAY HAVE CONTROL OF THE PARTNERSHIP PROPERTY FOR THE PURPOSE OF FULFILLING THE PARTNERSHIP OBLIGATIONS, WE WOULD, IF THE TIME FOR ACCEPTANCE OF THE BID HAD NOT EXPIRED, HAVE BEEN OF THE OPINION THAT WILLIAM C. HARPER HAD THE RIGHT TO SIGN THE CONTRACT AND THE PERFORMANCE AND PAYMENT BONDS IN THE NAME OF THE PARTNERSHIP. IN THE PRESENT CIRCUMSTANCES, WE CONCLUDE THAT THE CONTRACT PROPERLY MAY BE AWARDED TO WILLIAM C. HARPER, INDIVIDUALLY--- BOTH THE BID AND THE EXTENSION BEING FULLY BINDING UPON HIM--- OR TO HIM AND THE PERSONAL REPRESENTATIVE OF THE DECEASED PARTNER, IF THE LATTER PARTY BE SPECIFICALLY AUTHORIZED BY COURT ORDER TO EXECUTE THE CONTRACT.