Standard Surety & Casualty Co. v. United States

• Decision Date: 26 April 1946
• Docket Number: No. 3205.,3205.
• Parties: STANDARD SURETY & CASUALTY CO. OF NEW YORK et al. v. UNITED STATES, for Use and Benefit of CAMPBELL.
• Court: U.S. Court of Appeals — Tenth Circuit

164 ALR 935, 154 F.2d 335 (1946)

STANDARD SURETY & CASUALTY CO. OF NEW YORK et al. v. UNITED STATES, for Use and Benefit of CAMPBELL.

No. 3205.

Circuit Court of Appeals, Tenth Circuit.

March 15, 1946.

Rehearing Denied April 26, 1946.

Louis H. Yarrut, of New Orleans, La., and A. G. Crowe, of Oklahoma City, Okl. (Ralph H. Fishman, of New Orleans, La., and Hal Crouch and Chris L. Rhodes, both of Tulsa, Okl., on the brief), for appellants.

Claude Monnet, of Oklahoma City, Okl., for appellee.

Before PHILLIPS, BRATTON, and HUXMAN, Circuit Judges.

HUXMAN, Circuit Judge.

This was an action instituted under the Miller Act, 40 U.S.C.A. § 270b, by the United States for the use and benefit of Vic Campbell, herein referred to as Campbell, against Wm. F. Kelly Company, Inc., and the Standard Surety and Casualty Company of New York, a corporation, herein referred to wherever necessary as Kelly and Standard. The action was brought to recover the balance claimed due for work and materials performed and furnished under sub-contracts on two construction projects, at Frederick and Altus, Oklahoma. The facts necessary to consider for determination of the questions presented, briefly are these:

Kelly was a general contractor who held a number of government contracts for the construction of various war projects throughout the southern and southeastern part of the United States. Kelly had contracts for constructions at DeRidder, Camp Polk, New Orleans Airport, Bainbridge, Georgia, and Gulfport, Mississippi.¹ Kelly also had contracts for constructions at Elgin Field, Florida, Grenada, Mississippi, Greenville, Texas, Frederick, Oklahoma, and Altus, Oklahoma.²

Campbell was engaged in the electrical business. Kelly subcontracted to him all the electrical requirements for all of the projects in both Groups One and Two. Both the main contracts and the subcontracts in Group One antedated in point of time similar contracts in Group Two. The subcontracts at least in Group Two were oral contracts. Both Kelly and Campbell resided in New Orleans and throughout a long period of time had had intimate and friendly business relations with each other. Kelly as principal and Standard as surety executed a bond to Campbell under the applicable provisions of the Miller Act.

About May 21, 1943, Campbell requested a payment on account. At a meeting between the parties on that date at New Orleans, Campbell's oral contracts in Group Two were discussed, and it was agreed that they should be, and they were, reduced to writing. Thereupon Kelly gave Campbell a check for $6,000. Kelly entered the check on its books as a charge to Campbell, "Miscellaneous." Campbell entered the check on his books as a general credit, but did not at that time allocate it as a payment to any particular project.

On October 3, 1944, Campbell instituted this action against Kelly as principal and Standard as surety, in the United States District Court for the Western District of Oklahoma, to recover for labor and materials furnished on the Frederick and Altus projects. While the parties were in sharp disagreement as to the amount due Campbell on these two projects, the trial court made findings of fact and entered judgment thereon, and no appeal has been taken therefrom. While five assignments of error are urged for reversal, they all present the same question, namely: how much of a balance of $3,324.51 of the $6,000 payment of May 21, 1943, should be allocated to the satisfaction of the amount found to be due by the trial court on the two projects in this suit?³ The trial court allocated only $470.90 of this amount to the satisfaction of the judgment, while Kelly contends that $2,233.61, in addition to the $470.90, should have been so allocated.

The method in which both the debtor and the creditor entered the check on their respective books has been set out above. At the trial, Kelly, however, contended that oral directions were given by it at the time of the payment that $1,500 of the amount should be credited to the Frederick project, and $750 to the Altus project. The trial court, however, found against Kelly on this issue. The court's finding is supported by substantial evidence and is therefore binding on this court. The court's finding as to whether Campbell made a specific allocation of these funds on May 21, 1943, is not clear. We conclude, however, that the court failed to find that Campbell made a specific allocation of this sum when he received it. Such a finding would have no support in the record. Campbell testified positively on cross examination that when he received the $6,000 he made no specific allocation to any account. We think his testimony is also clear that the first specific allocation he made was about October, 1943, when he consulted his attorney who advised him that the law would allocate this fund to the oldest accounts, and he thereupon and about that time, for the first time, made a specific allocation of parts of these funds as follows:

                  To the Camp Polk job ..........  $  150.00
                  To the New Orleans base project     470.00
                  To the Gulfport project .......     716.65
                  To the Camp Bainbridge, Miss
                   project ......................   1,516.96
                                                   _________
                     Total ......................  $2,853.61
                

At that time, however, a controversy had arisen between the parties as to Campbell's work on the Gulfport and Bainbridge projects. Objection had been made by the United States Engineers' Office as far back at least as June, 1943, to some of his work. Campbell testified that he went to Bainbridge in August to inspect the work on that project. We think it is clear that he went there in response to the objections to his work by both the United States Engineers and by Kelly. Kelly challenges Campbell's right at that time to make a specific allocation of these funds.

Some question is raised as to whether the Louisiana law or the federal law controls the allocation of the fund in question. In our opinion it is not necessary to resolve this question, because in the main both laws require the same application of the payment. If there is any difference in the two laws, the federal rule is more favorable to Campbell than is the Louisiana rule, and the decision...