United States Upon the Relation and For the Use and Benefit of Texas Portland Cement Company v. Cord

• Decision Date: 06 April 1914
• Docket Number: No. 234,234
• Citation: 233 U.S. 157,58 L.Ed. 893,34 S.Ct. 550
• Parties: UNITED STATES UPON THE RELATION AND FOR THE USE AND BENEFIT OF TEXAS PORTLAND CEMENT COMPANY et al. v. D. C. McCORD and National Surety Company of New York
• Court: U.S. Supreme Court

233 U.S. 157

34 S.Ct. 550

58 L.Ed. 893

UNITED STATES UPON THE RELATION AND FOR THE USE AND BENEFIT OF TEXAS PORTLAND CEMENT COMPANY et al.

v D. C. McCORD and National Surety Company of New York.

No. 234.

Argued March 6, 1914.

Decided April 6, 1914.

Messrs. Francis Marion Etheridge and Joseph Manson McCormick for the Texas Portland Cement Company.

Messrs. Charles W. Starling and W. F. Robertson for McCord et al.

Mr. Justice Day delivered the opinion of the court:

This case is here upon a certificate from the United States circuit court of appeals for the fifth circuit. The pertinent facts certified are:

The United States, upon the relation and for the use and benefit of the Texas Portland Cement Company and others, brought suit in the United States circuit court for the northern district of Texas, on January 3, 1910, against D. C. McCord, as the principal, and the National Surety Company of New York, as surety, on a certain bond dated March 19, 1906, given in conformity to the act of February 24, 1905 (33 Stat. at L. 811, chap. 778, U. S. Comp. Stat. Supp. 1911, p. 1071), for the performance by McCord of a contract for the erection of certain public works for which they had furnished labor and material. The petition was filed after the completion of the contract and final settlement between the contractor and the United States, and it was alleged that the United States had no claim or cause of action against the defendants, and would not bring suit within six months from the completion and settlement of the contract, nor at any other time. An appropriate order for service and publication was had. Many creditors intervened in the case, among others W. Illingsworth, who, on May 25, 1910 (more than six and less than twelve months after final completion and settlement), filed an intervention in accordance with the act, which constituted a complete bill, purporting to be also for the benefit of the plaintiffs in the original suit and others intervening in the cause, and in which he prayed, if the recovery on the bond should be inadequate to pay all claims in full, for a pro rata judgment.

Subsequently, on January 9, 1911, the original plaintiffs filed an amended original petition, elaborating the allegations of their original petition, and averring among other things that the government had no claim against the defendants, and therefore had not, within six months from the completion and settlement of the contract, brought suit against them, and did not have the legal right to maintain such suit, except upon the relation of a creditor. Illingsworth dismissed his intervention on February 2, 1911, and thereafter the court ordered that his petition and petition in intervention be dismissed.

The allegations of the petition were sustained by proof, and a plea in abatement filed by the Surety Company was heard upon an agreement and statement in open court to the effect that the contract was completed on October 12, 1909, and settlement was made on November 11, 1909, and that the government thereafter neither had nor asserted any claim, demand, or cause of action against the defendants on the contract or bond. The circuit court thereupon dismissed the suit, and the case was taken to the circuit court of appeals upon error.

The questions certified are:

'First. Under the provisions of the act of August 13, 1894 (28 Stat. at L. 278, chap. 280, U. S. Comp. Stat. 1901, p. 2523), as amended by the act of February 24, 1905 (33 Stat. at L. 811, chap. 778, U. S. Comp. Stat. Supp. 1911, p. 1071), may persons who furnish material and perform labor in the construction of governmental works bring suit on the bond of the contractor in the Federal court in the name of the United States, for their use and benefit, within six months from the completion of the works and final settlement of the contract, where it appears of record and was agreed by the parties in open court, that after performance and settlement of the contract, the United States neither had nor asserted any claims, demands, or cause of action either against the contractor or the sureties on his bond?

'Second. If the original bill was prematurely filed, was a right of action saved to the parties so filing the same, by the intervention of Illingsworth, which was filed after the six months, but before the expiration of the twelve months' period, and the amended bill, filed more than one year after the completion and settlement of the contract between the government and the contractr?'

The differences in the act of February 24, 1905, and the former statute of August 13, 1894 (28 Stat. at L. 278, chap. 280, U. S. Comp. Stat. 1901, p. 2523), were pointed out by this court in the case of Mankin v. United States, 215 U. S. 533, 54 L. ed. 315, 30 Sup. Ct. Rep. 174, and need not be repeated here. The act of 1905 provides that the persons

That hereafter any person or persons entering into a formal contract with the United States for the construction of any public building, or the prosecution and completion of any public work, or for repairs upon any public building or public work, shall be required, before commencing such work, to execute the usual penal bond, with good and sufficient sureties, with the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract; and any person, company, or corporation who has furnished labor or materials used in the construction or repair of any public building or public work, and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the United States on the bond of the contractor, and to have their rights and claims adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claim and judgment of the United States. If the full amount of the liability of the surety on said bond is insufficient to pay the full amount of said claims and demands, then, after paying the full amount due the United States, the remainder shall be distributed pro rata among said interveners. If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials shall, upon application therefor, and furnishing affidavit to the Department under the direction of which said work has been prosecuted that labor or materials for the prosecution of such work has been supplied by him or them, and payment for which has not been made, be furnished with a certified copy of said...