United States v. Clifford

• Citation: 137 F.2d 565
• Decision Date: 13 August 1943
• Docket Number: No. 8351.,8351.
• Parties: UNITED STATES, for Use and Benefit of CALVIN TOMKINS CO., v. CLIFFORD F. MacEVOY CO. et al.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

137 F.2d 565 (1943)

UNITED STATES, for Use and Benefit of CALVIN TOMKINS CO., v. CLIFFORD F. MacEVOY CO. et al.

No. 8351.

Circuit Court of Appeals, Third Circuit.

Argued July 8, 1943.

Decided August 13, 1943.

Rehearing Denied September 20, 1943.

Benjamin P. DeWitt, of South Orange, N. J. (Sidney Pepper, of New York City, on the brief), for appellant.

Edward F. Clark, of New York City (Elmer O. Goodwin, of Newark, N. J., on the brief), for appellee.

Before JONES, DOBIE, and GOODRICH, Circuit Judges.

DOBIE, Circuit Judge.

This is an action on a payment bond given pursuant to the Miller Act, 49 Stat. 793, 40 U.S.C.A. § 270a, brought by the use-plaintiff, the Calvin Tomkins Company, hereinafter called plaintiff, in the United States District Court for the District of New Jersey, against the Clifford F. MacEvoy Company, hereinafter called defendant, and the Aetna Casualty and Surety Company, hereinafter called surety.

On June 3, 1941, the defendant entered into a contract with the United States of America, in which the defendant agreed to furnish the materials and perform the work necessary for the construction of a defense housing project near Linden, New Jersey. Pursuant to the Miller Act, defendant and surety executed a bond on United States Form No. 25-A, in the sum of one million dollars, conditioned on the prompt payment of the claims of all persons supplying labor and material in the prosecution of the work specified in defendant's contract.

Defendant thereafter contracted with the James H. Miller Company, hereinafter called Miller Company, for the furnishing of wall-board building materials by it to defendant for use in the housing project. Miller Company then in turn contracted with plaintiff, which, with the knowledge, consent and approval of defendant, furnished $47,119.14 worth of building materials through Miller Company to be used by defendant on the project.

Plaintiff, which had not been paid in full by Miller Company for the goods supplied instituted the present action against defendant and surety on the bond in order to recover the unpaid balance of $12,033.49 due it. The trial court dismissed plaintiff's complaint on the ground that it failed to state a valid cause of action. Plaintiff has duly appealed to this Court. The cardinal question presented for our consideration is whether the Miller Act subjects a government contractor (defendant) and his surety to liability under a payment bond, to a third person (plaintiff) who has furnished material to a materialman (Miller Company), in the absence of any contractual relationship between this third person (plaintiff) and any subcontractor, when the term "sub-contractor" is used in a narrow, technical sense to distinguish this term from the term "materialman".

Apparently, the question is one of first impression since our independent research and that of both counsel have failed to unearth any similar situations passed upon by either the Supreme Court or any Circuit Court of Appeals. Accordingly, we shall scrutinize with great care the exact terminology and legislative history of the Miller Act, 40 U.S.C.A. § 270a et seq. We shall also examine and apply the relevant decisions under the Heard Act which antedated, and has been repealed by, the Miller Act.

At the threshold, we notice that no mention is made of contractors or subcontractors in the title of the Miller Act. A statement is merely made to the effect that the bond is "for the protection of persons furnishing material and labor for the construction, alteration, or repair of said public buildings or public work."

The first section of the Act then goes on to provide that the bond is "for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person." (Italics ours.) Section two continues, in part, "Every person who has furnished labor or material in the prosecution of the work provided for in such contract * * * shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid * * * or sums justly due him." (Italics ours.)

Section three then stipulates that any person who has supplied labor or material for such work and who has not been paid may, upon making an affidavit to that effect, obtain a certified copy of the bond of the contractor and the contract for which the bond was given. Section four merely defines certain terms in the Act and the last section provides for the repeal of the Heard Act, 40 U.S.C.A. § 270.

Thus, the only limitation placed upon admission to the class of persons who may recover on the contractor's bond in the Act itself is that they must have "furnished labor or material in the prosecution of the work." Surely plaintiff's credentials as presented in its complaint entitle it to the protection of the Act within a literal reading of the statute.

Moreover, the condition of the very bond in question which was furnished by defendant pursuant to the Miller Act states that defendant as "principal shall promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract." (Italics ours.) Thus the only restriction or qualification in the bond itself, as in the Act, is that the person seeking a recovery must have supplied labor or material for the project.

We are unable to rest here, however, for section two of the Miller Act also contains the following language: "Provided, however, That any person having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor furnishing said payment bond shall have a right of action upon the said payment bond upon giving written notice to said contractor within ninety days from the date on which such person did or performed the last of the labor or furnished or supplied the last of the material for which such claim is made, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. Such notice shall be served by mailing the same by registered mail, postage prepaid, in an envelop addressed to the contractor at any place he maintains an office or conducts his business, or his residence, or in any manner in which the United States marshal of the district in which the public improvement is situated is authorized by law to serve summons."

The District Court concluded that in the light of this provision "the plaintiff herein, being a mere materialman who furnished material to another materialman who in turn had a contract with the contractor, does not fall within the benefits afforded by the statute." 49 F.Supp. 81, 83. Consequently, the plaintiff's complaint was dismissed for failure to state a valid cause of action. With all due respect to the court below, we are of the opinion that it has erroneously construed the statute in so restricting the class of persons who may recover on the contractor's bond.

It is true that this provision relied on by the lower court appears to be in conflict with the remainder of the statute. But that alone is no reason why this single provision should be controlling to the exclusion of (and at the expense of) the other terms of the Act. We think the following statement made by the Supreme Court in reference to the Heard Act is germane at this point: "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." Fleischmann Construction Co. v. United States to Use of Forsberg, 1926, 270 U.S. 349, 360, 46 S.Ct. 284, 289, 70 L. Ed. 624.

It is our considered opinion that the intention of Congress and the broad purpose of the Miller Act can be carried out only by placing the plaintiff within the cloistered class of those persons who may avail themselves of the benefits of the Act. Our position here is buttressed by the legislative hearings prior to the passage of the Act, as well as by the decisions...