Title Guaranty & Trust Co. v. Puget Sound Engine Works

• Decision Date: 10 June 1908
• Docket Number: 1,451.
• Parties: TITLE GUARANTY & TRUST CO. v. PUGET SOUND ENGINE WORKS et al.
• Court: U.S. Court of Appeals — Ninth Circuit

163 F. 168

TITLE GUARANTY & TRUST CO. v. PUGET SOUND ENGINE WORKS et al.

No. 1,451.

United States Court of Appeals, Ninth Circuit.

June 10, 1908

This action was brought in the Circuit Court for the Western District of Washington in the name of United States of America, for the use and benefit of Crane Company, a corporation, plaintiff, against the Puget Sound Engine Works incorporated, and the Title Guaranty & Trust Company of Scranton, Pa., a corporation, defendants.

The substance of the complaint is that about February 17, 1905 the Puget Sound Engine Works made a written contract with Capt. Grant, of the United States Army, acting for and in behalf of the United States of America, whereby the Puget Sound Engine Works agreed to furnish all the material and labor required for, and to construct and deliver to the United States, free from incumbrances, a steamer with engines, boiler, apparel, furniture, etc., in accordance with certain specifications made and furnished; the steamer to be known as the 'Lieutenant Harris.' It is alleged that in compliance with the law, the Puget Sound Engine Works and the Title Guaranty & Trust Company executed and delivered to the United States, through Capt. Grant, their certain bond wherein it was agreed that the Puget Sound Engine Works should fully perform the covenants, agreements, and conditions contained in the contract for the construction of the steamer, and agreed and provided that the Puget Sound Engine Works should promptly make all payments to persons supplying it with labor and material in the performance of the work provided for in the contract; that the bond was executed and delivered on February 27, 1905; that between June 3 and September 15, 1905, the Crane Company, at the special instance and request of the Puget Sound Engine Works, furnished and delivered to the Puget Sound Engine Works certain goods, wares, and material for use, and which were used, in the construction of the steamer. It is alleged that the construction work was completed on September 22, 1905, and that no action has been brought on the bond by the United States, and that more than six months have elapsed since the final completion of the work of construction upon the steamer, as provided for in the contract. Judgment is asked against the defendants and each of them for $1,194.88.

Thereafter the Olympic Foundry Company intervened, and alleged, substantially, that between May 2 and September 2, 1905, at the special instance and request of the Puget Sound Engine Works, it had furnished and delivered to the said Puget Sound Engine Works certain material, which was used by the Puget Sound Engine Works in the construction of the steamer Harris. Judgment was asked against the defendants and each of them in the sum of $771.04.

Complaint in intervention was also filed by Eyres Transfer Company; its claim being for services in the way of cartage of material to the steamer Harris, and for payment of certain sums for freight upon material to be used in the construction of said steamer, and which was carted to the said steamer.

Judgment was asked against the defendants and each of them in the sum of &89.34.

Complaint in inter vention was also filed by Dunham, Carrigan & Hayden Company, a corporation. Said company alleged that it had furnished merchandise and material used in the construction of the steamer. Judgment was prayed for in the sum of $80.20 upon one cause of action, and $223.45 upon another.

The defendant Title Guaranty & Trust Company demurred to the complaint of the Crane Company, and to the several complaints in intervention upon the ground that it did not appear from the face of the complaint that all claims against the bond in favor of the United States had been paid, because it did not appear from the face of the complaint that, before the commencement of the suit, plaintiff applied for or secured a certified copy of the bond or undertaking declared upon, because the action was not predicated upon a certified copy of said obligation, because the United States was not made a party defendant, because the material and service, the price of which is sought to be recovered, were not such as come within the class of material and service provided for by statute governing and defining such a bond as is declared upon, and because the statute does not contemplate construction of a vessel.

There were a number of other complaints in intervention filed, and, in order to facilitate proceedings, a stipulation was entered into, whereby such complaints in intervention should be brought before this court as would exemplify the record in respect to the various points presented, and providing that any judgment which may be entered shall be entered as to all claims, except in so far as any such judgments may be distinguished by individual features.

The demurrers of the appellant Title Guaranty & Trust Company to the complaint of the Crane Company, and to each of the complaints in intervention, were overruled. The Title Guaranty & Trust Company answered. It admitted that it executed, as surety, to the United States, a certain bond, whereby it agreed that the Puget Sound Engine Works should fulfill the conditions contained in the contract for the construction of the steamer Harris, and that the bond was further conditioned for the full payment by the Puget Sound Engine Works to all persons supplying labor or materials for the prosecution of the work provided for in said contract. It denied any indebtedness, and affirmatively set forth the contract between Capt. Grant, for the United States, and the Puget Sound Engine Works. Omitting the more formal parts, the contract is substantially as follows:

Article 1 provided that the Puget Sound Engine Works should furnish all the material and labor required, and should construct, complete, and deliver to the United States, free from incumbrance, a wooden steamer, with engines, machinery, apparel, furniture, etc., as specified and described in the specifications attached to and made part of the contract.

Article 2 provided that full access to the vessel, while under construction, and full facilities for examination of labor and material, should be given to the inspectors appointed by the United States to supervise the work, and that such tests of material as might be deemed necessary should be made at the expense of the Puget Sound Engine Works, under the supervision of such inspectors, and before receiving the finish coat of paint the vessel should be tested, in order to satisfy the United States.

Article 3 provided that, in consideration of the faithful performance of the agreement, the contractor should be paid for the completed vessel, according to plans and specifications, $24,886. Payments were to be made as the work progressed, provided that, in the opinion of the officer in charge, the work progressed satisfactorily, one-fourth the amount, less 20 per cent. of the same, when the labor and material furnished should equal 25 per cent. of the total; a second payment of 15 per cent. of the amount, less 20 per cent. of the same, when the labor and material furnished should equal 40 per cent. of the total. Third and fourth payments upon percentage plans were provided for, less 10 per cent. on the total amount, which was reserved to be paid 60 days after date of delivery and acceptance of the vessel, provided no defects, due to inferior material or bad workmanship, should be detected or developed.

Article 4 provided that the portion of the vessel completed and paid for under said method of partial payments 'should become the property of the United States, but the party of the second part shall be responsible for the proper care of such portion of the vessel so paid for until the final delivery to, and acceptance by, the United States, as more particularly specified in paragraph 15, at page 6, of said specifications.'

Article 5 provided that the vessel should be satisfactorily completed by July 15, 1905, and for liquidated damages for time consumed in excess of that time.

Article 6 required the work to be commenced by February 18, 1905.

Article 7 provided that the builder should be paid at the quartermaster's office at Seattle for the vessel completed, as specified, $24,886.

Article 8 provided that, in case of failure of the builder to comply with the contract, the United States should have the power to complete the work at the expense of the builder in such manner as the United States should deem best for the interest of the public service, either by days' labor, or open market purchase, or contract, or both, and any excess of cost resulting from such failure should be charged to the contract.

The defendant also pleaded the execution and delivery of the bond. By the terms of the bond, the Puget Sound Engine Works and the Title Guaranty & Trust Company were held unto the United States in the penal sum of $10,000. The condition of the obligation was such that if the Puget Sound Engine Works should in all respects perform the conditions and agreements agreed upon by the Puget Sound Engine Works to be observed and performed in the contract for the construction of the vessel, and should promptly make full payments to all persons supplying it labor and material in the prosecution of the work provided for in the contract, then the obligation should be void; otherwise, should be in full force and effect.

The defendant further pleaded: That the bond was executed and accepted by the United States for its sole benefit and protection, and that the execution was without any consideration as to any party furnishing labor or material to the Puget Sound Engine Works, to be used, or which was used in the construction of the vessel, and that the bond was without...