London & Lancashire Indemnity Co. of America v. Smoot
| Decision Date | 05 February 1923 |
| Docket Number | 3827. |
| Parties | LONDON & LANCASHIRE INDEMNITY CO. OF AMERICA v. SMOOT. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Submitted November 3, 1922.
H. J Pack and Levi H. David, both of Washington, D.C., for appellant.
W. G Johnson, of Washington, D.C., for appellee.
Before SMYTH, Chief Justice, ROBB, Associate Justice, and BARBER Judge of the United States Court of Customs Appeals.
This case involves the construction of what is commonly called the Materialmen's Acts of 1894 and 1905, the last of which was approved February 24, 1905. 33 Stat. 811 (Comp. St. Sec. 6923). The title of the statute is:
'An act for the protection of persons furnishing materials and labor for the construction of public works.'
It provides that persons furnishing contractors with labor and materials in the construction of public works, in default of payment therefor by the contractor, shall have the right to intervene and be made party to an action, if one is instituted, in favor of the United States on the bond of the contractor, and may recover therein, subject to priority on the part of the United States; that if no action is brought by the United States within six months from the completion and final settlement of said contract, any such person may bring suit in the name of the United States for his own use and benefit against the contractor and the sureties on his bond.
The issues presented here involve the construction to be given the following provisions of the act:
'Provided, that where suit is instituted by any of such creditors on the bond of the contractor, it shall not be commenced until after the complete performance of said contract and final settlement thereof, and shall be commenced within one year after the performance and final settlement of said contract, and not later: And provided further, that where suit is so instituted by a creditor or by creditors, only one action shall be brought, and any creditor may file his claim in such action and be made party thereto within one year from the completion of the work under said contract, and not later.'
The undisputed facts are that Pawling & Co. had a contract with the United States of the kind contemplated in the statute; that appellant was surety on its bond, and the appellee furnished to said contractor labor and material in the performance of its contract.
Pawling & Co. actually completed the work in October, 1919. The last of the buildings contracted for was substantially completed August 29, 1919, and the authorized officers of the United States administratively determined that the latter date was the date of the completion of the contract, and so treated it in making the settlement with Pawling & Co. The last item of labor or material furnished by the appellee to Pawling & Co. was in August, 1919. The last payment made by the company to him was in December, 1919, on the 13th day of which month there was a balance due of $3,335.52. April 12, 1920, appellee accepted a note from said company for that amount, due in six months, with interest, which note was not paid. This note was taken with the knowledge of the surety and upon its agreement that the acceptance thereof by appellee should be without prejudice to his claim against it. The final settlement with the government, contemplated under the proviso, was made January 8, 1921.
No suit on the bond was brought by the United States, but the Rosslyn Steel & Cement Company, in the name of the United States, brought its suit thereon against the contractor and the surety November, 10, 1921. Notice as required by the act was given to four other known creditors, and on December 31, 1921, the appellee, who was not notified, but was in fact a fifth creditor, intervened and filed his declaration under leave of court. On the pleadings judgment was rendered in his favor in the Supreme Court of the District, and the case is here on appeal.
Two questions only are necessary of consideration: (a) Under the facts did the appellee have a right to intervene? (b) Is he entitled to interest on the amount of his claim from August 31, 1919, the end of the month in which the last deliveries of material or work were made to Pawling & Co., or from December 31, 1921, the date of the filing of intervening declaration which was his first demand upon the surety?
The judgment was for the penalty of the bond, $129,963, with proviso that the same be released upon payment to the intervener of the amount due, $3,335.52, with interest from August 31, 1919, together with costs. The appellant admits, if it is held liable, that the appellee may recover interest from date of judgment, or from December 31, 1921.
Until six months after the final settlement the United States only had a right to bring suit provided for in the statute, and if a materialman brought suit within that time it was premature. Texas Cement Co. v. McCord, 233 U.S. 157, 34 Sup.Ct. 550, 58 L.Ed. 893; Miller v. American Bonding Co., 257 U.S. 304, 42 Sup.Ct. 98, 66 L.Ed. 250, decided December 12, 1921. This six months expired July 8, 1921. November 10, 1921, less than six months after the time when a materialman might sue, the suit of the Rosslyn Steel & Cement Company was brought. Thereupon a right would accrue to any materialman of Pawling & Co. to intervene in that suit, provided the statute be construed to give such creditors the right to so intervene within the six months following the first six months during which the United States only might bring suit against the contractor and surety.
The second quoted proviso, however, states that, where a suit such as that of the Rosslyn Company is instituted, 'any creditor may file his claim in such action and be made party thereto within one year from the completion of the work under said contract, and not later.'
The appellee here was such a creditor, but he did not file his intervening petition until December 31, 1921. This was within six months after the expiration of the six months reserved to the United States, but it was more than two years and two months after the completion of the work, and based upon this fact alone appellant claims appellee had no right to intervene, that the provisions of the second proviso were in effect a statute of limitations, and that the statute had run against him.
Assuming this to be its true interpretation, it is clear that all creditors except the Rosslyn Steel & Cement Company are deprived of any benefit under the act in question, because only one creditor had the right to bring his suit within the six-months period provided for that purpose. Other creditors, if any, had only the right to intervene. Texas Cement Co. v. McCord, supra; Miller v. American Bonding Co., supra. In other words, while the statute in express terms provides that any creditor may intervene within a year after the completion of the contract, and the purpose of the act is to allow all creditors of contractors to recover, if the penalty of the bond is large enough to satisfy their claims, yet, in a case like the one before us, only one such creditor may actually enjoy that right, because October 19, 1920, is the end of the year from the finishing of the work under the contract, while July 8, 1921, is the first date any creditor could bring his suit.
The Supreme Court of the United States, in Bryant Co. v. New York Steam Fitting Co., 235 U.S. 327, 35 Sup.Ct. 108, 59 L.Ed. 253, well said of this statute that it was undoubtedly ambiguous, and that, considering the letter only of the provisos, they absolutely repelled accommodation. It also said the purpose of the act was beneficial, and that the court should try to give coherence to its provisions and accomplish the intention of Congress. While the precise question before us was not considered there, the court did say that:
'The act, however, imposes a limitation of time on all claimants; the time to begin to run from the same event.'
It is obvious that, if the...
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