Glenn v. American Surety Co.

• Decision Date: 01 April 1947
• Docket Number: No. 10302.,10302.
• Parties: GLENN v. AMERICAN SURETY CO. et al.
• Court: U.S. Court of Appeals — Sixth Circuit

160 F.2d 977 (1947)

GLENN v. AMERICAN SURETY CO. et al.

No. 10302.

Circuit Court of Appeals, Sixth Circuit

April 1, 1947.

Irving I. Axelrod, of Washington, D. C. (Sewall Key, Louis Monarch and Norman S. Altman, all of Washington, D. C., and David C. Walls and A. Roy Copeland, both of Louisville, Ky., on the brief), for appellant.

Robert L. Blackwell, of Louisville, Ky. (Wm. Marshall Bullitt and R. Lee Blackwell, both of Louisville, Ky., on the brief; Bullitt & Middleton, of Louisville, Ky., of counsel), for appellees.

Before SIMONS, ALLEN and MARTIN, Circuit Judges.

SIMONS, Circuit Judge.

The only substantive question that appears to be left of the controversy in the present posture of the appeal, is whether sureties for the faithful performance by a contractor after satisfying the debts of their principal, are entitled to interest upon the amounts expended, recoverable out of retained percentages as against the claim of the government for taxes asserted against the same funds. The right of the sureties to recover their expenditures in principal amount, though unsuccessfully contested below, is not here challenged. Before reaching that question, however, it becomes necessary to solve a procedural problem raised by the appellees' motion to dismiss the appeal, and a motion of the appellant to correct the caption of the record.

The controversy arose out of the following circumstances. On October 3, 1941, one W. J. Paul entered into a contract with the Louisville Municipal Housing Commission to perform certain public housing construction work. Paul, as principal, and the appellees as sureties, delivered to the Housing Commission a faithful performance bond in the penal sum of $540,214, guaranteeing the faithful performance of the construction work and the payment of all obligations incurred in connection with it. Paul completed the contract but defaulted in the payment of labor and material claims in amounts totaling $52,571.57. Pursuant to the terms of the contract the Housing Commission withheld from Paul $59,647.72. On August 12, 1943, Glenn, Collector of Internal Revenue for Kentucky, served a notice of levy and a warrant for distraint upon the Housing Commission for delinquent internal revenue taxes owed by Paul, in the amount of $13,029.28. The Kentucky Unemployment Compensation Commission also filed a lien against the fund, but since it has not appealed its claim of lien disappears from the case. Upon being notified that the Housing Commission proposed to pay the federal tax out of the retained percentages, the sureties brought suit to restrain the Commission from paying any money to the Collector until their claims were satisfied, and for a declaration of right that their claims were prior liens against the retained fund. A temporary restraining order was followed by a temporary injunction and the sureties paid the claims against Paul in amounts totaling $52,571.57. The Collector was made a party defendant to the suit, the United States intervened and, upon motion for summary judgment, the sureties were adjudged to have an equitable lien upon the fund which had, in the meanwhile, been deposited in the registry of the court, in an amount covering their payment of the debts of Paul with interest from the date of payment, and the clerk of the court was directed to make payment to them out of the fund on deposit in the registry. The facts are not in dispute and are sufficiently recited in the memorandum of the district judge. American Surety Co. et al. v. City of Louisville Municipal Housing Commission et al., D.C., 63 F.Supp. 486.

On March 8, 1946, and within the jurisdictional period, the Collector filed a notice of appeal. After several extensions a record was filed and the appeal docketed in the name of the United States on July 17, 1946. Subsequently, a motion was filed to correct the notice of appeal by substituting the United States, intervenor, for the Collector, and on July 29 an order was entered correcting the notice of appeal pursuant to the motion. Thereafter, by stipulation, the order of July 29 was vacated, and on October 16 an order was entered denying the motion of July 17, but without prejudice to a consideration of the rights of the United States as they may appear at the hearing of the case upon its merits. In January, 1947, the sureties moved to docket and dismiss the appeal of Glenn because he had failed to file a record and to docket his appeal on or before the return date, as enlarged, and to dismiss the appeal of the United States because it had failed to file a notice of appeal within the required time. The United States thereupon moved that the caption of the record and docket entry be corrected by a nunc pro tunc decree substituting the Collector for the United States as the appellant.

We have, then, this situation. The Collector filed the notice of appeal but did not file a record. The United States filed a record but had failed to notice an appeal within the statutory period. The United States now seeks to correct the docket by substituting Glenn as the appellant, which the sureties oppose. The sureties seek a dismissal of the appeal because of the variance between the party filing the notice and the party perfecting the record. Rule 73(g) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, requires a docketing of the appeal within 40 days from the date of notice, and Rule 73(a) provides that the failure of the appellant to take any further steps following his notice of appeal will not affect its validity, but is ground for such remedies as may seem appropriate to the appellate court, including dismissal of the appeal. That remedy the sureties would now have us apply. Our jurisdiction attaches at the time of filing the notice of appeal, and whether a dilatory appellant should be allowed to proceed is within our discretion. Ispass v. Pyramid Motor Freight Corp., 2 Cir., 152 Fed.2d 619. This discretion could be exercised if we grant the motion of the United States to correct the caption of the record, which would make it Glenn's record filed out of time, and this we think ought to be done for it is apparent that the caption of the record was a clerical error made by the United States Attorney who represented both the Collector and the United States as intervenor. The courts, in general, have liberally construed the rule. Mosier v. Federal Reserve Bank, 2 Cir., 132 F.2d 710; Ainsworth v. Gill Glass & Fixture Co., 3 Cir., 104 F.2d 83; National Surety Corp. v. Williams, 8 Cir., 110 F.2d 873.

A more fundamental and less technical ground for permitting the extension and correction, however, appears. The Collector, in asserting the rights of the United States to the reserved fund for the payment of Paul's taxes, was acting not in his individual capacity but as the agent of the United States. Second Nat'l Bank of Saginaw v. Woodworth, D.C.S.D.Mich., 54 F.2d 672, affirmed 6 Cir., 66 F.2d 170. While he was the formal party defendant, the real party in interest was the United States, which, by its intervention in the suit, likewise became a formal party thereto. The interests of the Collector and the United States were, however, identical. The tax, if collected, would be remitted to the Treasury of the United States. The appeal could have been prosecuted either by Glenn or the government. While it has been held, Sage v. United States, 250 U.S. 33, 39 S.Ct. 415, 63 L.Ed. 828, that a suit against the Collector for the recovery of an illegally held tax is not a suit against the United States, in respect to the application of the doctrine of res judicata, yet it has also been held that a judgment for or against the United States is binding upon the Collector who is the agent or trustee for the government. Second Nat'l Bank of Saginaw v. Woodworth, supra. However, it has been with great clarity pointed out that a suit against a Collector is today "an anomalous relic of bygone modes of thought" when he is engaged merely in the fulfillment of a ministerial duty. Moore Ice Cream Co. v. Rose, 289 U.S. 373, 382, 53 S.Ct. 620, 623, 77 L.Ed. 1265. There Mr. Justice Cardozo observed, "There may have been utility in such procedural devices in days when the government was not suable as freely as now (citing cases). They have little utility today, at all events where the complaint against the officer shows upon its face that in the process of collecting he was acting in the line of duty, * * * In such circumstances his presence as a defendant is merely a remedial expedient for bringing the government into court." Whether the present appeal could be by us entertained in the name of the United States, in view of this identity of interest between the government and the Collector, we need not now decide, but viewing the present situation realistically, we are not persuaded that the appeal should fail because the United States Attorney, through neglect, excusable or otherwise, failed to caption the record in the name of the Collector who had filed the notice of appeal. We held in Toledo Edison Co. v. McMaken, 6 Cir., 103 F.2d 72, certiorari denied, Toledo Railways & Light Co. v. McMaken, 308 U.S. 569, 60 S.Ct. 82, 84 L.Ed. 477, that while a Collector could expressly or by indirection waive the statute of limitations in a suit against him, he could not impart to such waiver the obligation which the statute, Title 28 U.S.C.A. § 842, imposes upon the government under certain circumstances to pay a judgment rendered against him individually. Similarly, we think, a neglect by the Collector to caption a record on appeal to conform to the notice of appeal, may not deprive the government of its hearing on appeal where the government is not only the real party in interest but is likewise a formal party, and now, by its motion, seeks to have the record conform to the notice. See Porter v. Maule, 5 Cir., 160 F.2d 1. Wherefore, we conclude that the motion to dismiss the appeal must...