American Cas. Co. of Reading, Pa. v. Southern Mat. Co.

Decision Date13 November 1958
Docket NumberNo. 7727.,7727.
Citation261 F.2d 197
PartiesAMERICAN CASUALTY COMPANY OF READING, PENNSYLVANIA, and Bay Construction Company, Incorporated, Appellants, v. SOUTHERN MATERIALS COMPANY, Incorporated, use-plaintiff, Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

Norris E. Halpern and Spencer Gill, Jr., Norfolk, Va. (Rixey & Rixey, Norfolk, Va., on brief), for appellants.

Charles L. Kaufman, Norfolk, Va., for appellee.

Before HAYNSWORTH, Circuit Judge, and BARKSDALE and BRYAN, District Judges.

BARKSDALE, District Judge.

This is an appeal by American Casualty Company of Reading, Pa. (hereinafter referred to as "American"), and Bay Construction Company, Inc. (hereinafter referred to as "Bay"), from a judgment in the sum of $10,649.06 rendered against them in favor of Southern Materials Company, Inc. (hereinafter referred to as "Southern"), for ready-mixed concrete delivered by Southern to Seaboard Construction Company, Inc. (hereinafter referred to as "Seaboard"), a sub-contractor of Bay, in an action instituted under the provisions of the Miller Act, 40 U.S.C.A. § 270b. There was no controversy about the amount. The case was tried by the court without a jury, and the facts, as found by the court, are substantially as follows:

On November 26, 1954, Bay entered into a contract with the United States to construct a towing tank for the high-speed hydro-dynamic facility of the National Advisory Committee for Aeronautics (hereinafter referred to as "NA CA"), located at Langley Field, Virginia. As required by the Miller Act (40 U.S. C.A. § 270a), Bay gave its payment bond with American as surety. Before entering into the contract, Bay obtained from Southern a statement showing the prices at which Southern would furnish ready-mixed concrete for the project, and Southern assisted Bay in obtaining permission from NACA to use ready-mixed concrete on the project. Thereupon, Southern agreed to furnish, and Bay agreed to purchase, at the quoted prices, all the ready-mixed concrete needed for the project. At the request of Bay's supervisor, Christiansen, Southern began the delivery of ready-mixed concrete on or about March 24, 1955, billing the concrete furnished on the first three days directly to Bay. At that time, Southern had no knowledge of the existence of any subcontractor for the concrete work. After the first three days, Christiansen informed Southern that Bay had subcontracted the concrete work to Seaboard and requested that all bills for concrete be directed to Seaboard. Southern continued to deliver concrete for the project until June 3, 1955, and pursuant to Bay's request rendered all bills, including the concrete furnished during the first three days, to Seaboard. No part of these bills was ever paid by Seaboard. All the concrete delivered for the project prior to June 3, 1955, was on the oral order of Bay's superintendent, Christiansen, there being no contact between Southern and Seaboard aside from the billings. Christiansen was regularly employed by Bay, but as he was supposed to look after the joint interests of Bay and Seaboard, one-half of his salary was paid by Seaboard. This fact was not known by Southern. On June 3, 1955, Bay's president advised Southern that Seaboard had abandoned the job. Southern thereupon advised Bay that no part of its bill for the concrete delivered on the job had been paid by Seaboard, and that it would have to notify the bonding company and the Public Works Officer at Langley Field. Bay urgently requested Southern not to give such notice, informed Southern that it would complete the contract work, and requested that Southern continue to deliver concrete to Bay on the job. Bay, through its president, verbally agreed to pay Southern for the concrete previously delivered to the job site and billed to Seaboard. The district court found that this agreement was supported by a valid consideration in that (1) Southern relinquished its right to give written notice to the parties under the Miller Act and (2) it continued to deliver concrete to the job site at the same prices which prevailed when the billings were directed to Seaboard, all of which was at the request of Bay.

Thereafter, Southern continued to deliver concrete for the project until it had been completed, which was promptly paid for by Bay. After it had quit the job, Seaboard went into bankruptcy. Southern filed no claim against Seaboard in the bankruptcy proceeding; Bay did file its claim for money owing to it by Seaboard, but received nothing on its claim. Neither did Bay receive anything from the proceeds of the equipment which Seaboard left on the job when it quit. After completing its contract and obtaining final settlement with the United States, Bay refused to pay for the concrete delivered by Southern to Seaboard prior to June 3, 1955, and this suit followed.

So far as pertinent, the Miller Act (40 U.S.C.A. § 270b) is as follows:

"(a) Every person who has furnished labor or material in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished under section 270a of this title and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which such claim is made, shall have the right to sue on such payment bond for the amount or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment for the sum or sums justly due him: 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. * * *"

Since the proviso in the above quoted statute recites:

"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
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