E. I. Noxon Const. Co. v. Wallace Process Piping Co. of Cal.

• Decision Date: 27 April 1961
• Citation: 13 Cal.Rptr. 26,191 Cal.App.2d 651
• Court: California Court of Appeals Court of Appeals
• Parties: , 2 Empl. Prac. Dec. P 10,080, 61 Lab.Cas. P 9316 E. I. NOXON CONSTRUCTION CO., a California corporation, Plaintiff and Respondent, v. WALLACE PROCESS PIPING CO., Inc., OF CALIFORNIA, a California corporation, Wallace Process Piping Co., Inc., a Texas corporation, Defendants and Appellants. Civ. 24992.

Page 26

13 Cal.Rptr. 26

191 Cal.App.2d 651, 2 Empl. Prac. Dec. P 10,080,

61 Lab.Cas. P 9316

E. I. NOXON CONSTRUCTION CO., a California corporation, Plaintiff and Respondent, v. WALLACE PROCESS PIPING CO., Inc., OF CALIFORNIA, a California corporation, Wallace Process Piping Co., Inc., a Texas corporation, Defendants and Appellants.

Civ. 24992.

District Court of Appeal, Second District, Division 2, California.

April 27, 1961.

Hearing Denied June 21, 1961.

Jerome Weber and Bertram S. Harris, Los Angeles, for appellants.

Mitchel & Strange, George C. Mitchel, Edwin W. Green, Los Angeles, for respondent.

FOX, Presiding Justice.

This is an appeal from an order denying defendants' ¹ motion for an order releasing an attachment. Two questions are involved: (1) Does the superior court have jurisdiction to hear the action; and (2) does the complaint state a cause of action for which an attachment will lie within the meaning of subdivision 1 of section 537 of the Code of Civil Procedure?

The complaint alleges that plaintiff is a general contractor for the United States with reference to a certain construction project known as the G/M Building No. 2, at Vandenberg Air Force Base, Lompoc, California. As general contractor, plaintiff entered into a subcontract agreement with defendant. A portion of the contract is set out in the complaint. Its material terms are as follows: At its own expense defendant was to 'furnish all labor, material, equipment and competent supervision incidental thereto, to furnish and install all Mechanical work as specified * * *;' subject to 'due performance,' plaintiff was to pay $156,400.00 in the form of monthly payments with a lump sum balance due following completion by defendant and acceptance by plaintiff; '* * * all work done and materials furnished hereunder' were to be 'performed and furnished free from any mechanic's lien,' and defendant was to 'furnish, if required, prior to any * * * further payment of money hereunder, a * * * waiver of lien from every person * * * furnishing labor or materials to [defendant] on account of any work done or materials furnished hereunder;' defendant was to 'indemnify * * * [plaintiff] from any claim, obligation, or liability arising out of or connected with any mechanic's lien or claim of lien resulting from the work done or materials furnished hereunder, including all expenses and attorney's fees incurred in investigating, resisting, or settling such lien or claim, and in the event any such lien is asserted, or if at any time there shall be evidence of the existence of any claim or lien for which, if established, [plaintiff or its] property would be liable,' plaintiff was 'given the right to retain out of moneys due or to become due [defendant] an amount sufficient to indemnify [plaintiff] against all possible loss or liability in connection therewith, including expenses and attorney's fees,' but the right to retain the moneys was not to be deemed to be an exclusive remedy and was not to 'prevent recovery from [defendant] hereunder;' is was further agreed that 'if [defendant] shall fail to perform * * * within the time specified or in accordance with the requirements herein stated and to the satisfaction of [plaintiff], the [plaintiff] may, at his election, have said work done and may purchase said materials elsewhere, and [defendant] shall, upon demand, pay any excess in cost of the same over and above the price herein specified, together with any additional expense incurred by [plaintiff] in connection therewith;' in case of default by defendant and action by plaintiff on this contract, it was agreed that defendant would pay reasonable attorney's fees. It is further alleged that plaintiff has duly performed.

Plaintiff alleges as a breach that 'on or about March 11, 1960, defendants failed, neglected and refused to complete the work called for * * * in that the air-conditioning system and heating system was not completed in accordance with the plans and specifications therefor. * * *' It is alleged on information and belief that the cost of completion is $3,000, to the damage of plaintiff in that amount. A further breach is alleged in that 'the work performed * * * was not * * * furnished free from mechanics' liens or claims of lien, but, on the contrary, numerous persons * * * have asserted [them] against plaintiff * * * in connection with said * * * agreement. At the present time the aggregate amount of liens or claims of lien asserted against plaintiff on account of said * * * agreement is $47,697.55. Plaintiff has retained out of moneys due or to become due to defendants the sum of $27,731.53 to indemnify plaintiff, in part, against loss or liability in connection with said liens or claims of lien. By reason of the liens and claims of lien * * * less the sums retained by plaintiff, plaintiff has been damaged in the sum of $19,966.02 together with expenses and attorneys' fees incurred on account thereof.' Lastly, it is alleged that plaintiff has employed counsel to bring this action and deal with the asserted liens and has thereby incurred the expense of reasonable attorneys' fees in the amount of $5,000.

A writ of attachment was procured by which defendant's bank account was garnished. A motion to release the attachment was denied, and defendant has appealed.

Defendant first asserts that the subject matter of this action is within the terms of the Miller Act, U.S.C.A. Title 40, § 270a et seq., which provides that under certain circumstances only the United States may bring an action and that the action must be brought in the United States District Court. Section 270a requires a contractor who is procured by the United States for the purpose of performing any public work for more than $2,000 to furnish a performance bond and a 'payment' bond 'for the protection of all persons supplying labor and material * * *.' Section 270b provides that unpaid persons who have furnished labor or material on such a contract may sue on the payment bond. It is further provided that such unpaid persons who have contracted with a subcontractor instead of the contractor furnishing the bond shall also have a right of action on the bond. Section 270b(b) requires that 'every suit instituted under this section shall be brought in the name of the United States for the use of the person suing, in the United States District Court * * *.'

The Miller Act was enacted to replace former section 270, with some procedural modifications. Section 270 was passed in recognition of the inability of contractors for labor and material to take liens upon public property of the United States (United States v. Ansonia Brass & Copper Co., 218 U.S. 452, 31 S.Ct. 49, 54 L.Ed. 1107), and it was enacted for their protection. Watsabaugh Co. v. Seaboard Surety Co., 9 Cir., 106 F.2d 355; United States, to Use of Hollinger v. Stannard, D.C., 206 F. 326. The essence of the policy of this Act is to provide a surety who must make good the obligations of a defaulting contractor to his suppliers of labor and material. United States for Benefit on Behalf of Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, I. L.Ed.2d 776. This is not an action by a subcontractor, who furnished labor and materials, to recover on the payment bond. It is an action by the primary contractor against a subcontractor for breach of contract. Nowhere in the language of the Act can reference to such an action be found. Defendant's argument is somewhat tenebrous; but it appears to be that since one item of damages is alleged to arise out of liens asserted against plaintiff because of defendant's default, and since liens asserted against plaintiff are contemplated by sections 270a et seq. (although in a wholly different sense) these sections must apply. The mere statement of this argument dictates its disposition. While it is true that the Act refers to people who would have liens under state law, the above cited cases make it clear it was enacted to provide them with a means of recovery upon default of the primary contractor, and not to deprive the contractor of his normal state remedies against a defaulting subcontractor.

It is also argued that the complaint does not state facts upon which an attachment will issue. Section 537, subdivision 1, of the Code of Civil Procedure, provides that the plaintiff may have the property of the defendant attached in an action upon a contract for the direct payment of money. The word 'direct' has been held to be surplusage, for the reason that any contract for the payment of money is for the 'direct'...