480 F.2d 1095 (8th Cir. 1973), 72-1422, United States v. Aetna Cas. & Sur. Co.

Docket Nº:72-1422, 72-1468.
Citation:480 F.2d 1095
Party Name:UNITED STATES of America For and on Behalf of J. W. Smith & Co., Plaintiff-Appellant, v. AETNA CASUALTY & SURETY CO., and Wieman-Slechta Co., Defendants-Appellees. UNITED STATES of America For and on Behalf of J. W. Smith & Co., Plaintiff-Appellee, v. AETNA CASUALTY & SURETY CO., and Wieman-Slechta Co., Defendants-Appellants.
Case Date:June 29, 1973
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1095

480 F.2d 1095 (8th Cir. 1973)

UNITED STATES of America For and on Behalf of J. W. Smith & Co., Plaintiff-Appellant,

v.

AETNA CASUALTY & SURETY CO., and Wieman-Slechta Co., Defendants-Appellees.

UNITED STATES of America For and on Behalf of J. W. Smith & Co., Plaintiff-Appellee,

v.

AETNA CASUALTY & SURETY CO., and Wieman-Slechta Co., Defendants-Appellants.

Nos. 72-1422, 72-1468.

United States Court of Appeals, Eighth Circuit.

June 29, 1973

Submitted May 14, 1973.

Page 1096

[Copyrighted Material Omitted]

Page 1097

Warren S. Zwieback, Omaha, Neb., for J. W. Smith & Co.

Stephen A. Davis, Omaha, Neb., for Aetna Casualty.

James F. Kasher, Omaha, Neb., for Wieman-Slechta.

Before MATTHES, Chief Judge, and MEHAFFY and STEPHENSON, Circuit Judges.

MATTHES, Chief Judge.

J. W. Smith and Company (Smith), a mechanical subcontractor, instituted this suit under the Miller Act, 40 U.S.C. § 270a et seq., to recover from the prime contractor, Wieman-Slechta Company (Wieman-Slechta), and its surety, Aetna Casualty and Surety Company (Aetna), the sum of $23,618.89 allegedly due on a subcontract in connection with a federal construction project.

Two issues were tried to the court, the first being whether a letter, dated April 3, 1970, prepared by Wieman-Slechta and signed by Smith, reciting payment of $14,335.92 by Wieman-Slechta to Smith in full settlement of all accounts, coupled with Smith's subsequent negotiation of Wieman-Slechta's check in the same amount, constituted an accord and satisfaction of all accounts between Smith and Wieman-Slechta.

In resolving this question, the trial court found that the parties intended the letter to be a sham for the purpose of deceiving Aetna and as such was "of no effect in relation to the debt between Smith and Wieman-Slechta. . . ."

The second issue before the court was whether, by reason of the sham letter, a copy of which had been sent to Aetna by Wieman-Slechta, Smith was estopped from asserting its claim against Aetna. The court ruled that Smith was estopped.

Accordingly, judgment was entered in favor of Smith against Wieman-Slechta for $23,618.89, stipulated by the parties to be the amount in controversy, and in favor of Aetna.

Smith's appeal challenges the trial court's finding and judgment relieving Aetna of liability on the ground of estoppel.

Wieman-Slechta, by cross-appeal, urges that the trial court erred in not finding that the April 3 letter was an accord and satisfaction of all accounts between Wieman-Slechta and Smith, and in not finding that, in any event, Wieman-Slechta had partially paid the amount due. Specifically, Wieman-Slechta asserts that its indebtedness to Smith for the purposes of this case is $15,178.94 instead of $23,618.89.

Aetna, in its brief and at oral argument, defends the court's action relieving it from liability.

We affirm the judgment against Wieman-Slechta but reverse the judgment in favor of Aetna.

On September 1, 1969, Wieman-Slechta entered into a written contract with the federal government for the construction of an auto hobby shop at Offutt Air Force Base, near Omaha, Nebraska. As required by the Miller Act, Wieman-Slechta executed at the same time a payment bond with Aetna for the protection of all persons supplying labor and material to the project. A day later, Wieman-Slechta subcontracted with Smith for the performance of all mechanical work. By March 15, 1970, Smith had satisfactorily completed the work at a contract price, including extras, of $43,658.66. Wieman-Slechta and Smith...

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