Apache Powder Company v. Ashton Company
| Decision Date | 24 February 1959 |
| Docket Number | No. 16052.,16052. |
| Citation | 264 F.2d 417 |
| Parties | APACHE POWDER COMPANY, a corporation, Appellant, v. ASHTON COMPANY, Inc., Contractors and Engineers, formerly Ashton Building Company, and Mardian Construction Company, corporations engaged in Joint Venture as Ashton-Mardian Company, and Travelers Indemnity Company, a corporation, Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Evans, Kitchel & Jenckes, Alfred B. Carr, Phoenix, Ariz., for appellant.
Hall, Catlin & Jones, Hamilton R. Catlin, Conner & Jones, A. O. Johnson, Tucson, Ariz., for appellees.
Before POPE, Chief Judge, and HAMLEY and HAMLIN, Circuit Judges.
This action was instituted in the District Court of Arizona by the United States, for the use of Apache Powder Company, a corporation, against the Ashton Company, Inc., and Mardian Construction Company, corporations, engaged in a Joint Venture as Ashton-Mardian Company, the Travelers Indemnity Company, a corporation, Pioneer Constructors, a corporation, and Construction Materials Company, a corporation. A judgment was rendered by the District Court against the plaintiff therein and in favor of Ashton-Mardian Company and Travelers Indemnity Company, and in favor of the plaintiff and against Pioneer Constructors in the sum of $18,947.96. The action was brought under the Act of Congress of August 24, 1935 (40 U.S.C.A. § 270b),1 known as the Miller Act, on the payment bond of the contractor under a contract with the United States of America which was performed and executed within the District of Arizona. Apache appealed to this Court from the judgment rendered against it and in favor of Ashton-Mardian and Travelers Indemnity.
Jurisdiction of the District Court was based on said § 270b, and in this Court on 28 U.S.C. § 1291.
The District Court held that Apache did not comply with the Miller Act in that it did not serve written notice on Ashton-Mardian within ninety days of the last materials supplied by Apache to Pioneer Constructors, and thus, under the Miller Act, could not recover on the payment bond for moneys owed it on that claim. We do not agree.
It was established at the trial before the District Court, sitting without a jury, that Ashton-Mardian Company, hereinafter prime contractor, entered into a written contract with the United States of America, Corps of Engineers, United States Army, under which the prime contractor agreed to furnish material and to perform work for the construction and completion of Air Force Station TM-181, a radar station five miles north of Ajo, Arizona. Upon the same date, pursuant to the terms of said contract and of the Miller Act, the prime contractor and The Travelers Indemnity Company as surety, executed and delivered to the United States of America their payment bond for $940,655.04, the condition of which bond as required by the Miller Act being that the principal shall promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract.
The prime contractor entered into a subcontract with Pioneer Constructors for the performance and completion of certain parts of the work under the prime contract. The subcontract's specifications were in accordance with the plans, specifications, terms and conditions of the prime contract, and it was undertaken by Pioneer for $401,217.83. The subcontract applied principally to the construction of the roadway on the Ajo job.
It appears that Pioneer Constructors had dealt with Apache Powder Company on other jobs and had an open account with Apache. Apache contacted Pioneer and obtained a contract to furnish to Pioneer explosives and blasting supplies required by Pioneer for use in the performance of its subcontract at the usual list prices less discounts which were known to the subcontractor. There was no written agreement between Apache and Pioneer, each transaction apparently being the result of a verbal order by Pioneer, the writing up of that order by Apache, and the later delivery by Apache to Pioneer of the supplies specified on the order.
Beginning with June 24, 1956, Paul A. Swagerty, then an employee of Pioneer, ordered all of the materials from Apache. These orders were apparently all given by telephone. Paul Negley, a shipping and billing clerk in the accounting department of Apache, received most of the telephone orders and those he did receive were from Swagerty.
Late in the month of October, 1956, Pioneer and Construction Materials Company, an Arizona corporation, hereafter Construction, began negotiations between themselves looking to arrangements whereunder Construction would replace Pioneer as the subcontractor on the job as of November 1, 1956. J. E. Skorpick and Thomas E. Moore were, respectively, president and vice-president of both Construction Materials Company and of Pioneer Constructors. The two men were minority stockholders in Pioneer and majority stockholders in Construction.
Skorpick and Moore represented both companies in negotiating with the prime contractor in reference to Construction taking over and completing Pioneer's contract with the prime contractor. These negotiations were carried on between Skorpick and Moore and the prime contractor during the latter part of November, 1956. The prime contractor at that time orally agreed that Pioneer might terminate its contract with it, and that Construction Materials might complete the job on the condition, however, that a new surety bond would be issued to Construction Materials covering the completion of the contract. About January 8, 1957, such a bond (with the same surety company) was furnished and the contract with Construction Materials was signed by the prime contractor.
From the time the job began in June, 1956, Swagerty was the construction superintendent and purchasing agent for Pioneer, and Simmons was the assistant secretary and office manager of Pioneer. In the early part of November, 1956, Swagerty and Simmons apparently discontinued their employment with Pioneer, but continued on with Construction Materials, holding the same positions with Construction Materials as they had with Pioneer. There was no cessation of work on the job during this changeover, and it appears that both Pioneer and Construction Materials occupied the same offices, had the same address and the same telephone.
The evidence discloses that on December 4, 1956, Swagerty in giving a telephone order to Apache for more blasting supplies, talked to Paul Negley of Apache. Negley made pencilled notations of this conversation which were admitted into evidence. Negley testified that "Mr. Swagerty informed me upon giving me this order that the balance of the materials for the Ajo job should be billed to Construction Materials Company, Construction Division, Tucson, Arizona, and that this division, this company is a division of Pioneer Constructors." Negley then testified that he had made the following notation on the order: "above is division of Pioneer Constructors." The written memorandum in evidence verifies this. Negley reported this conversation to his superiors.
Another witness, Simmons, testified that on or about December 10, 1956, he had a telephone conversation with someone in the accounting or bookkeeping department of Apache. He did not remember to whom he talked, but he testified that he explained that the powder being sent to the Ajo job should have been billed to Construction, and said, "I would appreciate if they would bill it to Construction Materials." Apache denied that any one at their office received such a call and produced witnesses to that effect. It is not contended by any one that Apache at any time prior to March 19, 1957, was in words or writing specifically informed of the termination of Pioneer's subcontract or of the new contract with Construction.
Thereafter, from time to time, up until and including March 12, 1957, further orders from Swagerty were received for blasting supplies. All of these orders were filled by Apache and billed to Pioneer Constructors, P.O. Box 2768, Tucson, Arizona, which was the same address to which bills had been previously sent. No objection was made to such billing by Construction Materials. A check dated 12/27/56 in the sum of $4,723.37 was sent by Construction Materials Company to Apache. Attached to the check was a voucher stub upon which the following was typed:
"12 27 56 Billed to Pioneer Const
Inv. 42088
42175
42256 $4723.37"
The invoices referred to above were for material ordered, billed, shipped to, and receipted for in the name of Pioneer Constructors during November, 1956. On February 12, 1957, Construction Materials forwarded to Apache a check in the sum of $3,417.74, upon which was typed on the voucher stub attached to it the following:
"covers the following Invoices
42291
42308 Billerd sic to pioneer Constructors was added
42406 in ink and pioneer was
underlined in ink
2-12-57 Accounts Payable 3,417.74"
The referred-to invoices were for supplies furnished in December, 1956. On April 12, 1957, Apache received an additional payment from Construction Materials in the amount of $4,411.91 with similar typed notations on the voucher stub, listing certain itemized invoices covering supplies furnished in January, February and up to March 12, 1957. The total of these three checks equalled the amount of all blasting supplies furnished by Apache on the job subsequent to November 1, 1956.
The last delivery made by Apache on the job was March 12, 1957.
Apache applied the above checks to the account of Pioneer and on December 31, 1956, January 31, February 28, and on March 31, 1957, Apache mailed bills addressed to Pioneer showing the balance due Apache after crediting (to the balance due) the payments received from Construction on December...
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