Maryland Casualty Co. v. United States
| Decision Date | 08 January 1940 |
| Docket Number | No. 4558.,4558. |
| Citation | 108 F.2d 784 |
| Parties | MARYLAND CASUALTY CO. et al. v. UNITED STATES, to Use of HEYWARD et al. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Roscoe C. Lorentz, of Springfield, Ohio, and Thomas B. Whaley, of Columbia, S. C. (Wise & Whaley, of Columbia, S. C., and Todd, Tehan & Lorentz, of Springfield, Ohio, on the brief), for appellants.
Frank B. Gary, Jr., of Columbia, S. C. (Roger M. Heyward, of Columbia, S. C., on the brief), for appellees.
Before PARKER and SOPER, Circuit Judges, and COLEMAN, District Judge.
This suit was brought to the use of E. R. Heyward, a sub-contractor under a government contract for the erection of a court house at Columbia, South Carolina, against James I. Barnes, the principal contractor, and the Maryland Casualty Company, as surety, to recover the sum of $1324.29 with interest, as the balance due to the sub-contractor for plumbing and heating fixtures installed under the contract. The suit was filed under the Hurd Act, 40 U.S.C.A. § 270, and was prosecuted on behalf of Heyward and of such other creditors of the contractor as might intervene. G. A. Shillito, a sub-contractor who supplied the metal work and roofing to the building and claimed a balance due of $646.98, was allowed to file an intervening petition. The suit resulted in a judgment in favor of Heyward in the sum of $1,324.29 with interest, and a judgment in favor of Shillito in the sum of $136.67 with interest, the defendants to pay the costs including an attorney's fee of $350.
That the sub-contractors have not been paid for work and materials furnished to the extent of the respective sums included in the judgment is admitted; but the defendants appeal on the ground, urged without success in the District Court, that the United States has withheld like amounts from the principal contractor because the rate of wages paid by the sub-contractors to their employees on the work was less than the rate agreed to be paid in the general contract and in the sub-contracts. At the time of the execution of the main contract an approved code of fair competition, established under the National Industrial Recovery Act, 48 Stat. 195, provided for a minimum rate of wages of 40¢ per hour, whereas the prevailing minimum rate at the time and place was 20¢ per hour, and it was stipulated in all the contracts that the wages on the work should be those prescribed by the United States under the code. This situation also obtained when the Shillito sub-contract was executed. Subsequently, however, the National Industrial Recovery Act was declared invalid by the Supreme Court in Schechter Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947, and thereafter the Heyward sub-contract was executed. The United States has taken the position that because of this chain of circumstances, the main contractor would be unjustly enriched if paid the full contract price because that price was fixed with relation to the approved code which the parties believed would govern the rate of wages during the performance of the work, whereas in fact the code was found to be invalid before the work was done and labor was actually furnished on the job at a much lower figure. The main contractor has brought suit against the United States in the Court of Claims to test the matter, and therefore asks that the present suit be dismissed, or that it be held in abeyance pending the decision of the Court of Claims.
The defendants rely upon a paragraph of the sub-contracts which provides in substance that if there shall be evidence of any lien or claim chargeable to the sub-contractor for which, if established, the contractor or owner might become liable, the contractor shall have the right to retain out of any payment due or to become due an amount sufficient to indemnify the contractor or owner against such lien or claim; and that no payment for work under the contract...
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