United States Fidelity & Guaranty Co. v. McNulty Bros., 1919-1921.

• Decision Date: 08 June 1926
• Docket Number: No. 1919-1921.,1919-1921.
• Citation: 13 F.2d 78
• Parties: UNITED STATES FIDELITY & GUARANTY CO. v. McNULTY BROS., Inc., et al. TITLE GUARANTY & SURETY CO. v. SAME. SLATTERY v. NOEL CONST. CO. et al.
• Court: U.S. Court of Appeals — First Circuit

13 F.2d 78 (1926)

UNITED STATES FIDELITY & GUARANTY CO. v. McNULTY BROS., Inc., et al.

TITLE GUARANTY & SURETY CO. v. SAME.

SLATTERY v. NOEL CONST. CO. et al.

Nos. 1919-1921.

Circuit Court of Appeals, First Circuit.

June 8, 1926.

H. R. Bygrave, of Boston, Mass., for Title Guaranty & Surety Co.

Henry V. Cunningham, of Boston, Mass., for United States Fidelity & Guaranty Co.

William C. Rogers, of Boston, Mass., for John E. Slattery, trustee.

William F. Kimber, of New York City, and Frank H. Stewart, of Boston, Mass., for McNulty Bros. and Herzog Iron Works.

Charles R. Elder, of Boston, Mass., for Daniel Bloomquist Co.

Charles R. Elder and William C. Rogers, both of Boston, Mass., for Crane Co.

Thompson, Hoague & Hill, of Boston, Mass. (Theodore Hoague, of Boston, Mass., of counsel), for Sykes Co.

Gaston, Snow, Saltonstall & Hunt, of Boston, Mass. (Robert H. Holt, of Boston, Mass., of counsel), for H. J. M. Howard Mfg. Co. and American Sterilizer Co.

Before BINGHAM, JOHNSON, and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge.

This is a controversy arising under the Materialmen's Act (28 Stat. 278; 33 Stat. 811 Comp. St. § 6923). On January 17, 1910, the Noel Construction Company entered into a contract with the United States for the erection of three hospitals — one in Chelsea, Mass., one in Newport, R. I., and one in Portsmouth, N. H. — at an aggregate price of $847,100. The contract is stipulated to be a "single, entire, and indivisible contract." The plaintiffs in error in Nos. 1919 and 1920 were sureties on the bond of $254,130.

On December 2, 1915, suit was brought by McNulty Bros., Inc., on the equity side of the court, to recover for labor and materials. On February 19, 1917, the case was transferred to the law side of the court; jury trial was waived. Various creditors had intervened. The case was referred to Emery B. Gibbs as auditor, and heard by him over 40 days; he died before making a report; the case was then referred to Arthur Black as auditor, whose report was filed on January 15, 1924. The auditor's findings were, with an exception not now material, affirmed by the District Court on August 8, 1924 (1 F.2d 446). The result was a judgment in favor of seven creditors, in amounts not now material. From this judgment the surety companies have prosecuted the writs of error in Nos. 1919 and 1920.

The third writ of error, No. 1921, is by John E. Slattery, trustee in bankruptcy of W. W. Campbell & Son, Inc., an intervening creditor.

The defendants' assignments of error are:

(1) That under this statute recovery can be had only for labor and material supplied to the hospital built in this district of Massachusetts, where the suit was brought.

(2) That final settlement of this case, within the meaning of the statute, was made on March 12, 1915, and not on May 27, 1915, as the auditor and the court below found.

(3) That the Crane Company, by giving time to its debtor, discharged the surety company from liability to it.

This statute has been so recently elaborately analyzed and construed by the Supreme Court that it is unnecessary here to reproduce it. In brief, it provides that under such contract, if no suit be brought by the United States within six months from the "completion and final settlement of said contract," the concerns furnishing labor and materials may bring such suit "in the district in which said contract was to be performed and executed"; that such suit shall be commenced within one year after such completion and final settlement; and that only one such suit shall be brought.

In Fleischmann Construction Co. v. United States, 46 S. Ct. 284, 289, 70 L. Ed. ___, decided on March 1, 1926, the court say:

"The purpose of the Materialmen's Act, which is highly remedial and must be construed liberally, is to provide security for the payment of all persons who supply labor or material in a public work; that is, to give all creditors a remedy on the bond of the contractor, to be enforced within a reasonable time in a single proceeding, in which all claimants shall unite. Bryant Co. v. Steam Fitting Co., 235 U. S. 327, 337, 35 S. Ct. 108, 59 L. Ed. 253; Illinois Surety Co. v. Davis, 244 U. S. 376, 380, 37 S. Ct. 614, 61 L. Ed. 1206. In resolving the ambiguities in its provisions, the court must endeavor to give coherence to them in order to accomplish the intention of Congress, and adapt them to fulfill its whole purpose. Bryant Co. v. Steam Fitting Co., supra, 337, 338 (35 S. Ct. 111). In this case it was further stated, as the premise on which the court rested the solution of the particular ambiguity there involved, that the act `imposes a limitation of time on all claimants, * * * beginning to run from the same event' — that is, the performance and final settlement of the contract — and that, just as the creditor who institutes the original suit has one year from the final settlement in which to commence the action, other creditors must file their claims `within the same limit of time.' A like construction of the act was also adopted in Pederson v. United States, 253 F. 622, 626, 165 C. C. A. 248, and London Indemnity Co. v. Smoot, 287 F. 952, 956, 52 App. D. C. 378. And this we now confirm."

The defendant's first contention is that on the suit brought in this district recovery can be had only for labor and materials furnished for the hospital built in this district. It is far from clear that on the record this objection is now open to the defendants. But, assuming that it is open, it is without merit. The statute is, as above noted, highly remedial. The provision of the act requiring that such suit shall be brought "in the district in which said contract was to be performed and executed" must be construed in the light of the general remedial purpose of the act. In this case, under a single contract, labor and materials were furnished on three hospitals, in three districts. The statute also requires that only one such action shall be brought. It follows that in such a case, like the one now at bar, where one contract is to...