St. Paul-Mercury Indemnity Company v. United States

• Decision Date: 04 January 1957
• Docket Number: No. 5331,5332.,5331
• Citation: 238 F.2d 917
• Parties: ST. PAUL-MERCURY INDEMNITY COMPANY, Appellant, v. UNITED STATES of America FOR THE USE OF H. C. JONES, doing business as H. C. Jones Construction Company, Appellee. Burden Ivy BARFIELD, Bourdon Ray Barfield, and Oliver Eakle Barfield, as co-partners doing business as Barfield Construction Company, Appellants, v. UNITED STATES of America FOR THE USE OF H. C. JONES, doing business as H. C. Jones Construction Company, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

238 F.2d 917 (1956)

ST. PAUL-MERCURY INDEMNITY COMPANY, Appellant, v. UNITED STATES of America FOR THE USE OF H. C. JONES, doing business as H. C. Jones Construction Company, Appellee.

Burden Ivy BARFIELD, Bourdon Ray Barfield, and Oliver Eakle Barfield, as co-partners doing business as Barfield Construction Company, Appellants, v. UNITED STATES of America FOR THE USE OF H. C. JONES, doing business as H. C. Jones Construction Company, Appellee.

Nos. 5331, 5332.

United States Court of Appeals Tenth Circuit.

November 13, 1956.

Rehearing Denied January 4, 1957.

COPYRIGHT MATERIAL OMITTED

Howard T. Fleeson, Homer V. Gooing, Wayne Coulson, Paul R. Kitch, Dale M. Stucky, Donald R. Newkirk, Gerrit H. Wormhoudt, Wichita, Kan., for appellant St. Paul-Mercury Indemnity Co.

W.F. Lilleston, George Stallwitz, Richard W. Stavely, Wichita, Kan., for appellants Burden Ivy Barfield, Bourdon Ray Barfield, and Oliver Eakle Barfield, as co-partners doing business as Barfield Const. Co.

James P. Mize, Salina, Kan., George B. Powers and Malcolm Miller, Wichita, Kan., for appellee.

Before HUXMAN, MURRAH and PICKETT, Circuit Judges.

PICKETT, Circuit Judge.

H. C. Jones, d/b/a Jones Construction Company, brought this action under the Miller Act, 40 U.S.C.A. § 270a et seq., against Barfield Construction Company, a copartnership composed of Burden Ivy Barfield, Bourdon Ray Barfield, and Oliver Eakle Barfield, and St. Paul-Mercury Indemnity Company, a corporation, to recover the reasonable value of labor and material furnished to Barfield at Salina, Kansas, on government contracts. Barfield was the prime contractor on three separate contracts for the improvement and expansion of Smoky Hill Air Force Base and St. Paul executed a payment bond on the three contracts as required by the Miller Act. Jones verbally agreed with Barfield to do the excavating, ditching, earth moving and cushioning work, commonly known as dirt work, required by the prime contracts and was to receive two-thirds of the profits realized on this portion of the work. Barfield was to advance sufficient funds to pay Jones' costs and expenses, but a dispute arose as to what items were to be included in Jones' costs prior to determination of profits.

In his complaint Jones alleged that Barfield breached the verbal contract and prevented completion of the work. He sought to recover the reasonable value of the services rendered. The court found that Jones was a subcontractor, protected under the Miller Act; that there was a substantial breach of the contract by Barfield. The court also found that the quantum meruit value of Jones' performance under the subcontract, including change orders and extras not covered by change orders, was $397,301.67.¹ To this amount was added the sum of $35,762.70 for miscellaneous services furnished to Barfield, including service station, shop and rental services. After deducting credits the sum found to be due Jones was $149,186.66. Judgment was entered for this amount against Barfield, and against St. Paul for $148,111.49.

The principal contentions of St. Paul are that the trial court was without jurisdiction because the relationship between Jones and Barfield was that of joint adventurers and that Jones was not a subcontractor, therefore could not maintain an action under the Miller Act, and that the judgment is not sustained by the evidence. Barfield admits that Jones was a subcontractor and maintains that there was no substantial breach of the subcontract and that there was a failure of proof of reasonable value of the performance under the subcontract. Barfield also alleged that Jones was overpaid and sought to recover the amount of the over-payment on a counter-claim.

The record is voluminous, the evidence confusing and conflicting, and the findings a general résumé of the evidence accepted by the court, but stripped of all the nonessentials three questions are presented: (1) Was Jones a subcontractor of Barfield, or was their relationship that of partners or joint adventurers? (2) Was there such a breach of the terms of the oral agreement by Barfield as to permit Jones to disregard the subcontract and recover the reasonable value of the completed work? (3) Was there sufficient evidence to sustain the court's finding as to the reasonable value of the labor and materials furnished by Jones?

Barfield, in its answer, which was adopted by St. Paul, admits that Jones was a subcontractor. In an amended answer, it is alleged generally that the court lacks jurisdiction over the parties. The purpose of the Miller Act is to protect those who furnish labor and material for public construction and to insure that they will be paid for the same. Moyer v. United States, for use of Trane Co., 4 Cir., 206 F.2d 57, 39 A. L.R.2d 1098; Liebman v. United States for use of Cal. Electric Supply Co., 9 Cir., 153 F.2d 350; Commercial Standard Ins. Co. v. U. S. for use of Crane Co., 10 Cir., 213 F.2d 106. The Act was not designed to protect general contractors. It is conceded that a partner or a joint adventurer in the contract itself, or a portion of it, would not be one of those protected by the Miller Act. Consequently if Jones was a partner or a joint adventurer with Barfield there was no jurisdiction under the Miller Act. Theobald-Jansen Electric Co. v. P. H. Meyer Co., 10 Cir., 77 F. 2d 27; United States for Use and Benefit of Walker v. United States Fidelity & Guaranty Co., D.C.Wyo., 4 F.Supp. 854

The agreement between Barfield and Jones contains some elements of a partnership or joint adventure, the principal one being a division of profits. An agreement to divide profits, however, does not necessarily create a partnership relation which would prevent a recovery under the Miller Act. Aetna Ins. Co. v. Murray, 10 Cir., 66 F.2d 289; see Weiland v. Sell, 83 Kan. 229, 109 P. 771; Beard v. Rowland, 71 Kan. 873, 81 P. 188. The true relationship must be determined by the conduct of the parties, together with all the other material facts and circumstances. Grannell v. Wakefield, 172 Kan. 685, 242 P.2d 1075. Jones was not to share in losses, as under the contract which the trial court found to exist he was to be reimbursed for all his costs including rentals for his machinery. St. Paul urges that this is a typical case of one party furnishing his money and another his time and effort to a project with an understanding that there shall be a division of profit; therefore a partnership or joint adventure exists under the rule of Shoemake v. Davis, 146 Kan. 909, 73 P.2d 1043. The Shoemake case recognizes the rule that the furnishing of labor and the division of profits is only one of the tests for determining the relationship of the parties. The court characterized the agreement as a costplus contract wherein Barfield guaranteed Jones all of his costs and, in addition, two-thirds of the profits, based upon the amount paid by the United States to Barfield for the work covered by the subcontract. The advances were made to Jones and his accounts were paid directly by him. Although Jones' books were kept in a manner which would indicate a joint enterprise, there was evidence that this was done to protect the parties for their respective advances and expenditures. Barfield had no control over the Jones portion of the work except to see that it conformed to the prime contract specifications. The relationship between Barfield and Jones was not materially unlike that between the parties in Southern Painting Co. of Tenn. v. United States for use of Silver, 10 Cir., 222 F.2d 431, where a suit under the Miller Act was upheld.²

A subcontractor, as defined by the Miller Act, is one who performs for and takes from the prime contractor a specific part of the labor or material requirements of the original contract. MacEvoy Co. v. United States for use of Tompkins Co., 322 U.S. 102, 64 S.Ct. 890, 88 L.Ed. 1163; Southern Painting Co. of Tenn. v. United States for use of Silver, supra; Basich Bros. Construction Co. v. United States for use of Turner, 9 Cir., 159 F.2d 182. The evidence is undisputed that Jones took from Barfield a specific part of the labor and material which the latter was required to furnish under the prime contract. Under the agreement, Jones was required to move his heavy machinery onto the job and furnish all the labor and materials and to perform all the excavating, ditching, earth moving and cushioning work which Barfield was obligated to do. In addition, Jones took over and completed certain change-order and extra work which Barfield was required to and did agree to perform for the United States. He did everything that a subcontractor ordinarily does except finance himself. This suffices to constitute Jones a subcontractor with a right of action under the Miller Act.

We held in the Southern Painting Company case that in a Miller Act case a subcontractor, upon breach of a subcontract, may forego any suit on the contract and sue for the reasonable value of his performance. See also Restatement, Contracts, Sec. 347 (1932); United States for use of Susi Contracting Co. v. Zara Contracting Co., 2 Cir., 146 F.2d 606; Jensen v. Lee, 67 Kan. 539, 73 P. 72.

Accepting the oral contract as found by the Court,³ as we must, we think there was a breach on the part of Barfield which would permit Jones to sue for the reasonable value of his services and materials furnished. Barfield admits that he was to furnish Jones sufcient money to pay all the ordinary costs incurred in connection with the work which he was to perform and alleges that Jones as subcontractor was to do the work at the prices used by Barfield in the submitted bids. The parties were in disagreement as to how the rentals for the use of Jones' machinery was to be handled. Jones contended that he was to be paid the agreed amount for rentals along with other costs and that such rentals were paid until about September of 1952. Barfield claimed that he agreed to pay only the amounts which were...