Cox v. New England Equitable Ins. Co.

Decision Date28 November 1917
Docket Number4807.
Citation247 F. 955
CourtU.S. Court of Appeals — Eighth Circuit

George J. Grayston and A. E. Spencer, both of Joplin, Mo., for appellant.

D. A Murphy, of Nevada, Mo. (John T. Harding and S. F. Harris both of Kansas City, Mo., and Hugh Dabbs, of Joplin, Mo., on the brief), for appellee.

Before SMITH and STONE, Circuit Judges.

SMITH Circuit Judge.

In 1912 the government let a contract to Moore & Payne, a copartnership of Missouri, for the construction of a post office building at Bonham, Tex., for $46,145. The contract provided for payments upon the contract as prescribed in the specifications. The specifications provided:

'Payments.-- Payment of 90 per cent. of the value of the work executed and satisfactorily in place, as ascertained by the supervising architect, acting through the superintendent will be made monthly, and payment of the 10 per cent. retained will be made after the final acceptance by the duly authorized representative of the Treasury Department of all materials and workmanship embraced in the contract; but payment will not be made until every part of the work to the point for which payment is claimed is satisfactorily supplied and executed in every particular and all defects remedied to the satisfaction of the supervising architect.'

Moore & Payne gave a bond in the sum of $23,000, with the appellee as surety, conditioned as required by chapter 778 of the Acts of the 58th Congress, 33 Stat. 811 (section 6923 of the United States Compiled Statutes 1916), as follows:

'Now, if the said Moore & Payne * * * shall promptly make payments to all persons supplying labor or materials in the prosecution of the work contemplated by said contract, then this obligation to be void; otherwise, to remain in full force and virtue.'

To procure this bond Moore & Payne made application to the appellee and therein stipulated:

'And the undersigned does further agree, in the event of any breach or default of the provisions of the contract or contracts hereinbefore mentioned, that the surety, as surety upon the aforesaid bond or bonds, shall be subrogated to all rights and properties of the undersigned as principal in said contract, and that deferred payments, and any and all moneys and properties that may be due and payable to the undersigned, at the time of such breach or default, or that may thereafter become due and payable to the undersigned on account of said contract or contracts, shall become the property of the surety, to be credited upon any claim that may be made upon the surety under the bond or bonds above mentioned.'

The contract was performed by Moore & Payne, but they left persons supplying labor and materials upon the post office wholly unpaid to the amount of about $9,000, which appellee compromised for $8,182.28. About June 12, 1914, the government made final payment to Moore & Payne to the amount of about $5,345.63. They then owed the Citizens' State Bank of Joplin, Mo., about $8,000. They deposited the money received from the government with it, and checked the same out in small amounts down to about $5,000. They gave a check for $1,000 to the Citizens' State Bank of Joplin, Mo., to apply upon their account. Subsequently the bank credited $4,000 more upon the indebtedness of Moore & Payne, and later the latter gave their check for that amount. On October 3, 1914, Moore & Payne were adjudged bankrupts, and appellant, Norman Cox, was appointed and qualified as trustee. He brought suit against the Citizens' State Bank to recover the sum of $5,000. The petition was in three counts, the first two to recover the amounts of the checks for $1,000 and $4,000 as unlawful preferences. The third count was upon the right of the persons supplying labor and materials and the appellee to be subrogated to the rights of the persons supplying labor and materials against said fund. This resulted in a judgment in favor of the plaintiff upon the first two counts of the petition for $5,175. It is perhaps worthy of notice that the attorneys for Cox, trustee, in that case, were the attorneys for the appellee in this case in the court below, and the attorneys for the Citizens' State Bank in that case were the attorneys for appellant below.

On September 2, 1915, the appellee filed a petition for enforcement of lien priority with the...

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