Southern Painting Company of Tenn. v. United States

• Decision Date: 05 May 1955
• Docket Number: No. 5007.,5007.
• Parties: SOUTHERN PAINTING COMPANY OF TENNESSEE, Inc., a corporation; and United Pacific Insurance Company, a corporation, Appellants, v. UNITED STATES of America, for the Use of E. M. SILVER, Doing Business as Silver Plumbing & Heating, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

222 F.2d 431 (1955)

SOUTHERN PAINTING COMPANY OF TENNESSEE, Inc., a corporation; and United Pacific Insurance Company, a corporation, Appellants, v. UNITED STATES of America, for the Use of E. M. SILVER, Doing Business as Silver Plumbing & Heating, Appellee.

No. 5007.

United States Court of Appeals Tenth Circuit.

May 5, 1955.

Howard G. Engleman, Salina, Kan. (E. S. Hampton, H. H. Dunham, Jr., John Q. Royce and C. Stanley Nelson, Salina, Kan., on the brief), for appellants.

Malcolm Miller, Wichita, Kan. (James P. Mize, Salina, Kan., George B. Powers, Carl T. Smith, Wichita, Kan., on the brief), for appellee.

Before BRATTON, HUXMAN and PICKETT, Circuit Judges.

HUXMAN, Circuit Judge.

This is an appeal by the defendants, Southern Painting Company of Tennessee, Inc., and the United Pacific Insurance Company, from a judgment of $13,000 rendered by the United States District Court for the District of Kansas in favor of the appellee, E. M. Silver, doing business as Silver Plumbing and Heating, in an action by the United States for the use of E. M. Silver, under the Miller Act, 40 U.S.C.A. § 270a, etc.

The complaint alleged that Southern Painting Company of Tennessee, Inc., herein called Southern, hired Silver as a subcontractor to furnish all labor, material and supervision in connection with the plumbing and heating specifications under two contracts which Southern had with the United States; that after he had practically completed such work under the contract, Southern breached the contract by refusing to allow him to finish the work; that because of such breach he was entitled to sue for the reasonable value of the work he had performed under quantum meruit. He asked for judgment in the sum of $72,000.

In its answer Southern alleged that Silver wrongfully breached the contract, forcing Southern at great cost to get another contractor to complete the work; that Silver had been paid more than his services were worth; that Silver had entered into a settlement with Southern as to the portion of work covered by Contract 999, and that the action was in the nature of a breach of contract and as such could not be maintained under the Miller Act; hence the court was without jurisdiction.

The terms of the contract are without dispute and only a short reference will be made thereto. Southern held two contracts with the Government, No. ENG 999 and ENG 1052 for rehabilitation work on Government camps near Salina. Under the subcontract with Silver, he was to furnish all labor and material necessary to do the plumbing and heating work under the two contracts. Southern agreed to reimburse Silver for all material, labor, taxes, insurance, etc., and agreed to purchase tools and equipment necessary to do the work. Silver was to receive $6,000 lump sum for the work under Contract 999 and $4,000 lump sum for work under Contract 1052, plus a fair percentage of the net profit on all additional extra plumbing and heating work.

The parties are in disagreement as to who breached the contract. Southern claimed Silver did. It is sufficient to say that the court found that Southern breached the contract. We are satisfied that the evidence clearly sustains this finding. Apparently more than 90% of all the work under the subcontract was completed at the time of the breach by Southern. Silver had peen paid $7,000 of his fee under the subcontract. The court found the fair and reasonable value of Silver's services under the contract and found that in addition to what he had received he was entitled to receive an additional $13,000, together with interest from July 15, 1952, until paid, that being the day on which Silver was wrongfully discharged, according to the court's finding.

Appellants contend that plaintiff's cause of action was for breach of contract and, therefore, not maintainable under the Miller Act. However, a casual reading of the complaint clearly shows that it was an action in which Silver sought the recovery of the fair and reasonable value of services performed to the time of the wrongful breach of the contract by Southern. Thus Paragraph 11 of the complaint states: "In consequence of the wrongful breach and interference by Contractor aforesaid, E. M. Silver does hereby make claim upon quantum meruit for the reasonable value and price of his performance." The evidence of the appellee to sustain this cause of action and the resulting damage substantially follows this theory of the case.

Appellant further urges that appellee was not a subcontractor. In Clifford F. MacEvoy Co. v. United States, for Use and Benefit of Calvin Tomkins Co., 322 U.S. 102, 108, 64 S.Ct. 890, 894, 88 L.Ed. 1163, the Supreme Court points out that the Miller Act itself makes no attempt to define the word "subcontractor." The court in substance defines a subcontractor under the Miller Act as one who performs for and takes from the prime contractor a specific part of the labor or material requirements of the original contract, "thus excluding ordinary laborers and materialmen." The court then went on to say that the technical definition of a subcontractor was the one referred to in the Miller Act. A casual examination of the contract would indicate that Silver was a subcontractor. The main contract required Southern to install the plumbing and heating and the obligation under this portion of the contract was transferred to Silver. He agreed to install the plumbing and heating, pay all the bills, labor costs and so on connected therewith. An analogous case in which similar facts appear is Basich Brothers Construction Co. v. United States, for the Use of Turner, 9 Cir., 159 F.2d 182. The case of United States, for Use and Benefit of Dorfman v. Standard Surety and Casualty Company, D.C., 37 F.Supp. 323, relied on by appellant, is clearly not in point. There the alleged subcontract was executed after everything was performed and by it the alleged subcontractors agreed to furnish all labor and the contractor to furnish all equipment, material and compensation therefor. All the alleged subcontractor really agreed to give was personal services in painting the exterior of a building. The court indicated that the fact that the contractor went into bankruptcy after the work was done seemed to have influenced the interested persons to distort the facts.

The main portion of appellant's attack on the judgment is devoted to its argument that quantum meruit does not lie under the facts of the case. That quantum meruit may be asserted under the Miller Act where there is a breach of the contract seems to be clear. See United States, for Use of Susi Contracting Co. v. Zara Contracting Co., 2 Cir., 146 F.2d 606, 610. That was a Miller Act case and the court said, "For it is an accepted principle of contract law, often applied in the case of construction contracts, that the promisee upon breach has the option to forego any suit on the contract and claim only the reasonable value of his performance. * * *" Recovery was permitted in that case for quantum meruit. United States, for Use of Wander v. Brotherton, D.C., 106 F. Supp. 353, also indicated that quantum meruit may be relied upon under the Miller Act. Other cases bearing on this point are Continental Casualty Company v. Schaefer, 9 Cir., 173 F.2d 5, and Great Lakes Construction Company v. Republic Creosoting Co., 8 Cir., 139 F.2d 456. In these cases, recovery in excess of the contract price was permitted.

Appellant cites two Kansas cases under the Kansas mechanics' lien statute in support of its argument that the amount of recovery cannot be in excess of the amount contracted to be paid. The amount of recovery perhaps is controlled by Kansas law. The cases relied upon, however, are distinguishable. In those cases there was no breach of contract justifying a recovery under the lien for quantum meruit and the court so held. The case of Jenson v. Lee, 67 Kan. 539, 73 P. 72, clearly held that where the contract is wrongfully breached it may be...