United States Daniel Hill v. American Surety Company of New York

• Decision Date: 02 January 1906
• Docket Number: No. 39,39
• Citation: 200 U.S. 197,26 S.Ct. 168,50 L.Ed. 437
• Parties: UNITED STATES for the Use and Benefit of DANIEL H. HILL, and Howard H. Hill, Copartners Doing Business under the Firm Name of N. D. Hill & Sons, Plffs. in Err. , v. AMERICAN SURETY COMPANY OF NEW YORK
• Court: U.S. Supreme Court

200 U.S. 197

26 S.Ct. 168

50 L.Ed. 437

UNITED STATES for the Use and Benefit of DANIEL H. HILL, and Howard H. Hill, Copartners Doing Business under the Firm Name of N. D. Hill & Sons, Plffs. in Err.,

v AMERICAN SURETY COMPANY OF NEW YORK.

No. 39.

Submitted November 3, 1905.

Decided January 2, 1906.

Mr. Albert W. Buddress for plaintiffs in error.

[Argument of Counsel from pages 197-199 intentionally omitted] Mr. Henry C. Willcox for defendant in error.

Mr. Justice Day delivered the opinion of the court:

This case was decided on demurrer in the court below. It was held that no cause of action was stated by the plaintiffs, and judgment was rendered accordingly. Plaintiffs brought action as partners against the American Surety Company upon a bond given in pursuance of the act of August 13, 1894. 28 Stat. at L. 278, chap. 280, U. S. Comp. Stat. 1901, p. 2523. The allegations of the petition, so far important as to be noticed here, are: The defendant is a corporation duly authorized to do a general insurance and bonding business. On February 14, 1891, 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. That, among other things, it was stipulated in the contract 'that the said New Jersey Foundry & Machine Company shall be responsible for and pay all liabilities incurred in the prosecution of the work for labor and material,' the work to be completed within seven months from date of contract. The United States required of the said New Jersey Foundry & Machine Company a bond, which was executed by the company and the American Surety Company as surety, on the 14th day of February, 1901, in the penal sum of $4,000, to be paid unto the United States of America, which bond contained the condition: 'Now, therefore, if the above bounden New Jersey Foundry & Machine Company shall and will in all respects duly and fully observe and perform all and singular the covenants, conditions, and agreements in and by said contract agreed and convenanted by said New Jersey Foundry & Machine Company to be observed and performed, according to the true intent and meaning of 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 terms of the same, and shall promptly make full payments to all persons supplying it labor or materials in the prosecution of the work provided for in said contract, then the above obligation shall be void and of no effect; otherwise, to remain in full force and virtue.' That afterwards the said New Jersey Foundry & Machine Company entered into a contract with the Richard Manufacturing Company for certain portions of the work, and said Richard Manufacturing Company entered upon the performance of the contract, and in the performance thereof between the 3d day of April and the 17th day of May, of the same year, Daniel H. Hill, and Howard H. Hill, the plaintiffs, the special instance and request of the said Richard Manufacturing Company, scraped and painted the four observation towers, to be constructed under the contract with the said New Jersey Foundry & Machine Company, for which said Richard Manufacturing Company agreed to pay the said plaintiffs the sum of $246.80, of which there is unpaid the sum of $141.80. That on the 11th day of August, 1903, plaintiffs made the affidavit required by the statute, and procured from the Secretary of War of the United States certified copies of the original contract and bonds; that the said New Jersey Foundry & Machine Company, the Richard Manufacturing Company, and the United States accepted the said scraping and painting so done and performed by the plaintiffs in the necessary prosecution of the work required by the original contract.

The statute under consideration is entitled 'An Act for the Protection of Persons Furnishing Materials and Labor for the Construction of Public Works.' It provides, in substance, that persons entering into formal contracts with the United States for the construction or repair of public buildings and works shall be required, before performing such work, to execute the usual penal bond with good and sufficient surety, with the additional obligation 'that such contractor or contractors shall promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in such contract.' The statute further provides for the furnishing of a copy of the contract and bond to persons furnishing an affidavit that labor and materials for the prosecution of such work have been supplied by him or them, and giving a right of action in the name of the United States for the benefit and use of said person or persons against the contractor and his sureties.

We may remark, before considering the construction to be given this act, that it has been materially amended by the act of February 24, 1905. 33 Stat. at L. 811, chap. 778.¹ The amended act makes provision for preference in payment in favor of the United States, limits the time in which actions may be brought, provides for bringing all the creditors into one action, and for the prosecution of the same in the name of the United States in the circuit courts of the United States in the district in which the contract was to be performed, and not elsewhere. In respect to the persons entitled to the benefit of the bond, there has been no material change in the act. While not governing the present action, the amended statute has some bearing in construing the act in question, as it shows the consistent purpose of Congress to protect those who furnish labor or material in the prosecution of public work.

In considering the statute and determining the scope of the bond, divergent...