Fine v. Travelers Indemnity Company

• Decision Date: 08 September 1964
• Docket Number: 1954.,1877,1901,No. 1852,1945,1937,1852
• Citation: 233 F. Supp. 672
• Court: U.S. District Court — Western District of Missouri
• Parties: R. W. FINE, Plaintiff, v. TRAVELERS INDEMNITY COMPANY, Defendant. C. E. RUSSELL, d/b/a General Tire Service, Plaintiff, v. TRAVELERS INDEMNITY COMPANY and S. S. Silberblatt, Inc., Defendants. MISSOURI-ILLINOIS TRACTOR & EQUIPMENT COMPANY, Plaintiff, v. TRAVELERS INDEMNITY COMPANY and S. S. Silberblatt, Inc., Defendants. SINCLAIR REFINING COMPANY, Plaintiff, v. S. S. SILBERBLATT, INC., and Travelers Indemnity Company, Defendants. FABICK & COMPANY, Plaintiff, v. W. S. CONNER, S. S. Silberblatt, Inc., Sterling Brukar Company, Inc., and Travelers Indemnity Company, Defendants. P & P LUMBER COMPANY, Inc., Plaintiff, v. TRAVELERS INDEMNITY COMPANY and S. S. Silberblatt, Inc., Defendants.

233 F. Supp. 672

R. W. FINE, Plaintiff, v. TRAVELERS INDEMNITY COMPANY, Defendant.

C. E. RUSSELL, d/b/a General Tire Service, Plaintiff, v. TRAVELERS INDEMNITY COMPANY and S. S. Silberblatt, Inc., Defendants.

MISSOURI-ILLINOIS TRACTOR & EQUIPMENT COMPANY, Plaintiff, v. TRAVELERS INDEMNITY COMPANY and S. S. Silberblatt, Inc., Defendants.

SINCLAIR REFINING COMPANY, Plaintiff, v. S. S. SILBERBLATT, INC., and Travelers Indemnity Company, Defendants.

FABICK & COMPANY, Plaintiff, v. W. S. CONNER, S. S. Silberblatt, Inc., Sterling Brukar Company, Inc., and Travelers Indemnity Company, Defendants.

P & P LUMBER COMPANY, Inc., Plaintiff, v. TRAVELERS INDEMNITY COMPANY and S. S. Silberblatt, Inc., Defendants.

Nos. 1852, 1877, 1901, 1937, 1945, 1954.

United States District Court W. D. Missouri, S. D.

September 8, 1964.

White & White, Rolla, Mo., Neale, Newman, Bradshaw, Freeman & Neale, Springfield, Mo., for United States for use and benefit of R. W. Fine.

Cohn & Lentz, Waynesville, Mo., for C. E. Russell, Sinclair Refining Co. and others.

Lewis, Rice, Tucker, Allen & Chubb, St. Louis, Mo., Lincoln, Haseltine, Keet, Forehand & Springer, Springfield, Mo., for United States for use and benefit of Missouri-Illinois Tractor & Equipment Co., Inc.

Ernest A. Brooks, II, St. Louis, Mo., Lilley & Cowen, Springfield, Mo., for Fabick & Co.

Miller, Fairman, Sanford, Carr & Lowther, Springfield, Mo., for P & P Lumber Co.

Farrington & Curtis, Springfield, Mo., Francis L. Kenney, Jr., St. Louis, Mo., Owens & Purser, Austin, Tex., for William S. Conner and others.

Farrington & Curtis, Springfield, Mo., Kenney & Reinert, Francis L. Kenney, Jr., St. Louis, Mo., for Travelers Indemnity Co. and S. S. Silberblatt, Inc.

JOHN W. OLIVER, District Judge.

This memorandum opinion will determine another issue involved in six of the cases included in the multiple consolidation of Capehart cases pending on the docket of the Southern Division of this Court. See United States v. Travelers Indemnity Company, W.D.Mo.1963, 215 F.Supp. 455. See also Triangle Electric Supply Co. v. Mojave Electric Co., W.D. Mo.1963, 217 F.Supp. 913, affirmed sub nom., D & L Construction Co. v. Triangle Electric Supply Co., 8th Cir. 1964, 332 F.2d 1009, and Travis Equipment Co. v. D & L Construction Co., W.D.Mo.1963, 224 F.Supp. 410.

In Travelers Indemnity we determined, and in Triangle Electric we applied, the legal principle that "the rules of decision that will be applied to the various factual situations involved in the various cases will be the rules of decision developed under the Heard and Miller Act decisions."

Our Court of Appeals, in affirming Triangle Electric, held that, upon the record before it in that case, we had properly determined and applied the applicable Heard and Miller Act rules of decision to the factual situation there presented.

The Court of Appeals also emphasized in Triangle Electric that it had recognized in Continental Cas. Co. v. United States, for Use and Benefit of Robertson Lumber Co., 8th Cir. 1962, 305 F.2d 794, cert. denied 371 U.S. 922, 83 S.Ct. 290, 9 L.Ed.2d 231, that a "Capehart bond is a bond required by federal law" and that it had stated in that case "that Congress intended that Capehart should have substantive bond protection essentially similar to that of Miller Act suppliers" (l. c. 1011 of 332 F.2d).¹

The Court of Appeals in Triangle Electric also noted that it had held in Robertson Lumber that "42 U.S.C.A. § 1594a gave the Secretary of Defense the right to prescribe the form of bond to be furnished on Capehart Projects", and that "the procedural provisions of the Capehart bond must be followed" (l. c. 1011 of 332 F.2d). But the Court of Appeals made clear that in so holding, it had "said nothing about the Miller Act decisions lacking persuasiveness in instances where the Miller Act bond and Capehart bond contained substantially similar provisions" (l. c. 1011 of 322 F.2d).²

As we did in Triangle Electric (l. c. 914 of 217 F.Supp.), we expressly adopt all applicable language of what we said in Travelers Indemnity and, of course, we shall follow the rationale of the Court of Appeals' decision in Triangle Electric, and we add by interlineation, Allsop Lumber.

In Travelers Indemnity we indicated that in all the consolidated cases "the principles of MacEvoy Co. v. United States, for Use and Benefit of Calvin Tomkins Co., 322 U.S. 102, 64 S.Ct. 890, 88 L.Ed. 1163 (1944), will be followed" and that "in determining the status of a particular plaintiff we shall accept the definitions announced in MacEvoy and attempt to apply them realistically to facts of each pending case" (l. c. 474-475 of 215 F.Supp.).

In approaching the question involved in the particular cases now before us, it must be noted at the outset that such question does not involve a procedural provision of a Capehart bond, within the meaning of the distinction between "procedural" and "substantive" provisions established by our Court of Appeals in Robertson Lumber.³ We are here concerned with the substantive rights of the parties. None of the parties contend to the contrary.

The parties have stipulated that the provision of the Capehart bonds in dispute is as follows:

"A claimant is defined as one having a direct contract with the principal or with a sub-contractor of the principal who has furnished labor, material, or both, in the prosecution of the work provided for in the contract and who has not been paid in full therefor. Labor and material are construed to include, but are not limited to, that part of water, gas, power, light, heat, oil, gasoline, telephone service or rental of equipment directly applicable to the contract."

In broad factual outline, plaintiffs involved in these cases supplied labor or materials to one W. S. Conner who, according to defendants' position, was a subcontractor of Sterling Brukar, Inc., who was, according to defendants' position, a subcontractor of S. S. Silberblatt, Inc., the prime contractor on one of the Fort Leonard Wood Capehart housing projects.

Defendants contend generally that plaintiffs' contractual relationships were too remote from the prime contractor to permit recovery by them on the required bonds. Plaintiffs contend otherwise.

Recognition must be given at the outset to the legal principle that the substantive rights of the plaintiffs are not defined solely by the clause quoted from the Capehart bond. Consideration must, for reasons to be presently detailed, be given to the substantive rights established by the Miller Act. The definition of a "claimant" as contained in the Capehart bond is but an obvious paraphrase of the provisions of the Miller Act we now notice.⁴

Section 1(a) (2) of the Miller Act (Section 270a(a) (2) of Title 40, United States Code) broadly provides that a bond be furnished for all government construction projects "for the protection of all persons supplying labor and material in the prosecution of the work provided for in the contract."

Section 2(a) of the Miller Act (Section 270b(a) of Title 40, United States Code), also broadly provides that "every person who has furnished labor or material in the prosecution of the work provided for in such contract * * * who has not been paid in full * * * shall have the right to sue on such payment bond * * * and to prosecute said action to final execution and judgment for the sum or sums justly due him."

A proviso to the last quoted section then states:

"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, * * *."

MacEvoy held that while "the Miller Act, like the Heard Act, is highly remedial" and was therefore "entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects," that nevertheless, "such a salutary policy does not justify ignoring plain words of limitation and imposing wholesale liability on payment bonds."

Specifically, MacEvoy held that the proviso of Section 2(a) of the Miller Act contained "limitations on liability which Congress intended to impose and did impose" and that:

"The proviso of Section 2(a), which had no counterpart in the Heard Act, makes clear that the right to bring suit on a payment bond is limited to (1) those materialmen, laborers and subcontractors who deal directly with the prime contractor and (2) those materialmen, laborers and sub-contractors who, lacking express or implied contractual relationship with the prime contractor, have direct contractual relationship with a subcontractor and who give the statutory notice of their claims to the prime contractor. To allow those in more remote relationships to recover on the bond would be contrary to the clear language of the proviso and to the expressed will of the framers of the Act."

The particular issue for determination under the clause of the Capehart bond quoted above and under the proviso of Section 2(a) of the Miller Act and the gloss added by MacEvoy was stipulated by the parties as follows:

"The issue to be determined pursuant to this stipulation is whether persons who supplied materials and labor, or both, to W. S. Conner at Fort Leonard Wood, Missouri, in connection with the contract of S. S. Silberblatt, Inc., with the United States of America, acting by and through the Department of the Army and certain Delaware corporations, for the construction of 800 units of military housing at Fort Leonard Wood, Missouri, are claimants within the terms of the six separate payment and performance bonds furnished by defendant

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