Smith v. Mosier

• Decision Date: 23 March 1909
• Citation: 169 F. 430
• Parties: SMITH v. MOSIER et al.
• Court: U.S. District Court — Northern District of New York

169 F. 430

SMITH v. MOSIER et al.

United States Circuit Court, N.D. New York.

March 23, 1909

F. T Cahill, for plaintiff.

Thayer Tuttle & White, for defendants Mosier and another.

Miller & Fincke, for Empire State Surety Co.

RAY District Judge.

On or about the 16th day of November, 1903, Mosier & Summers, a copartnership, entered into a contract with the United States for the construction of 16 brick buildings at Ft. Ontario, in the state of New York, at a price agreed upon-- $223,795.87.

Under and pursuant to the statute in such cases made and provided said Mosier & Summers as principals, and the Empire State Surety Company as surety, on or about the 21st day of November, 1903, duly executed and delivered their bond reciting the contract, and which bond was conditioned in substance and effect that Mosier & Summers 'shall and will, in all respects, duly and fully observe and perform all and singular the covenants, conditions, and agreements in and by the said contract agreed and covenanted by said Mosier &amp Summers to be observed and performed according to the true intent and meaning of the said contract, and as well during any period of extension of said contract that may be granted on the part of the United States as during the original term of the same, and shall promptly make full payments to all persons supplying them labor or materials in the prosecution of the work provided for in said contract,' and in case the said Mosier & Summers complied with and performed the conditions, then the obligation of the said bond was to be void and of no effect; otherwise to remain in full force and virtue.

The time for the performance of the contract was twice extended, and such extensions were agreed to by the surety company. One Max L. Kurchhoff made an oral contract with Mosier & Summers to do the painting of the buildings mentioned and described in the said contract between Mosier & Summers and the United States, and to furnish the paint and materials for painting the said buildings, for which he was to receive from Mosier & Summers the sum of $5,435. Kurchhoff performed the agreement on his part, and supplied materials and did the painting of said buildings. F. Lewis Smith, for whose benefit this suit is brought, furnished the said Kurchhoff with certain paints, oils, and other materials which were used in doing such painting, at Kurchhoff's request, and upon his promise to pay therefor. There is a balance due Smith from Kurchhoff amounting to the sum of $642.08, with interest thereon from August 1, 1905, for such paints, oils, and materials. No part of same has been paid to Smith by any person. In due course the said Charles Mosier and William Summers paid to said Max L. Kurchhoff the full amount which they agreed to pay Kurchhoff for painting said buildings and supplying the paints and other materials for doing the work.

This action is brought upon the theory that F. Lewis Smith supplied Mosier & Summers with paints and materials which were used by them in performing their said contract with the United States. The complaint alleges that to be the fact, and also alleges that Mosier & Summers failed to pay Smith the said balance due him. The complaint also states that the said contract was finally completed and settled November 30, 1905, and that this action was brought within one year after the final settlement and completion of the said contract between Mosier & Summers and the United States. There is, however, an agreed statement of facts to the effect above stated. The condition of the bond is that Mosier & Summers will fully perform the contract according to its true intent and meaning, and that they will promptly make full payments to all persons who supply them with labor or materials in the prosecution of the work provided for in the said contract.

It seems hard to hold that, under this contract and bond with the condition recited, the contractors and their surety, the Empire State Surety Company, are liable to pay all the debts owing by subcontractors of Mosier & Summers to persons who supplied labor and materials, or labor or materials, which actually went into the buildings which Mosier & Summers contracted to build and did build for the United States under the provisions of said contract, when said Mosier & Summers have already paid such subcontractors in full for the work done and materials furnished. I would not so hold were I not forced thereto by the decision of the Supreme Court of the United States in United States, for the Use of Hill, v. American Surety Company, 200 U.S. 197, 26 Sup.Ct. 168, 50 L.Ed. 437, which in effect overrules United States v. Farley et al. (C.C.) 91 F. 474, and United States v. Simon et al., 98 F. 73, 38 C.C.A. 659 .

These cases were cited by the defendant in error before the United States Supreme Court, but not referred to by the court in giving its opinion.

In United States, for the Use of Hill, v. American Surety Company, 200 U.S. 197, 26 Sup.Ct. 168, 50 L.Ed. 437, the New Jersey Foundry & Machine Company entered into a written contract with the United States for the construction of four observation towers, for the agreed compensation of $2,575. The contract contained this provision:

'That the said New Jersey Foundry and Machine Company shall be responsible for and pay all liabilities incurred in the prosecution of the work for labor and material.'

This, of course, was a provision for the benefit and protection of the United States, and was not a promise made for the benefit of third persons. This provision in words is not found in the contract between Mosier & Summers and the United States. It is, of course, implied, for when Mosier & Summers agreed to 'furnish all labor and material required for the construction proper of' certain buildings, describing them, for the compensation mentioned, it was implied that they would pay therefor.

The bond given by the New Jersey Company, as principal, and the American Surety Company, as surety, was the same as here in its obligations and conditions, except as to parties and penalty.

After the making of the contract and the execution and delivery of the bond, the New Jersey Foundry & Machine Company entered into a contract with the Richard Manufacturing Company for certain portions of the work, and that company entered upon the performance of its contract with the New Jersey Company, and, while so engaged, Hill & Hill, the plaintiffs, at the instance and request of the Richard Manufacturing Company 'scraped and painted the four observation towers' agreed to be constructed by said New Jersey Company for the United States, for which the Richard Manufacturing Company agreed to pay Hill & Hill $246.80, of which sum $141.80 remained unpaid when the action was brought.

The Supreme Court placed no stress on the language quoted from the contract, but held that the bonds given by contractors under the statute referred to (Act Aug. 13, 1894, c. 280, 28 Stat. 278 (U.S. Comp. St. 1901, p. 2523), now amended, Act Feb. 24, 1905, c. 778, 33 Stat. 811 (U.S. Comp. St. 1901, p. 709)) are for the protection of and do protect those who do work for and supply materials to subcontractors as well as to those who do work for and supply materials to the contractors themselves, which work is done in and upon the government work or structure contracted to be done, and which material goes into such government works or buildings. The court, per Mr. Justice Day, said:

'In considering the statute and determining the scope of the bond, divergent views have been urged upon the court. Upon the one hand, it is insisted that the bond is to be strictly construed and a recovery limited to those who have furnished material or labor directly to the contractor; and, upon the other, that a more liberal construction be given and a recovery permitted to those who have furnished labor and materials which have been used in the prosecution of the work, whether furnished under the contract directly to the contractor, or to a subcontractor. * * *

'The courts of this country have generally given to statutes intending to secure to those furnishing labor and supplies for the construction of buildings a liberal interpretation, with a view of effecting their purpose to require payment to those who have contributed by their labor or material to the erection of buildings to be owned and enjoyed by those who profit by the contribution of such labor or materials. Mining Co. v. Cullens, 104 U.S. 176, 177, 26 L.Ed. 704. And the rule which permits a surety to stand upon his strict legal rights, when applicable, does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract in the light of the language used and the circumstances surrounding the parties. Ulster County Savings Inst. v. Young, 161 N.Y. 23, 30, 55 N.E. 483.

'As against the United States, no lien can be provided upon its public buildings or grounds, and it was the purpose of this act to substitute the obligation of a bond for the security which might otherwise be obtained by attaching a lien to the property of an individual. The purpose of the law is, as its title declares, 'For the protection of persons furnishing materials and labor for the construction of public works.' If literally construed, the obligation of the bond might be limited to secure only persons supplying labor or materials directly to the contractor, for which he would be personally liable. But we must not overlook, in construing this obligation, the manifest purpose of the statute to require that material and labor actually contributed to the construction of the public building shall be paid for, and to provide a security to that end. * * *

'Looking to the terms of this statute in its

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