United States v. George A. Fuller Co.

Decision Date17 February 1966
Docket NumberCiv. No. 2376.
Citation250 F. Supp. 649
PartiesUNITED STATES of America for the Use and Benefit of CHEMETRON CORPORATION, a corporation, Denver Oxygen Company, a corporation, and Welders Supply Company, a corporation, Plaintiffs, v. GEORGE A. FULLER CO. and Del E. Webb Corporation, doing business as Fuller-Webb, a Joint Venture, and the Aetna Casualty and Surety Company, the Travelers Indemnity Company, the Home Insurance Company, Maryland Casualty Company, Fireman's Fund Insurance Company, Hartford Accident and Indemnity Company, General Reinsurance Corporation, North American Reinsurance Corporation, American Reinsurance Company and Employer's Reinsurance Corporation, Sureties, Defendants.
CourtU.S. District Court — District of Montana



Howard Ellis, John L. Bordes, Chicago, Ill., Risken & Scribner, Helena, Mont., for plaintiffs.

J. J. Bottomly, Los Angeles, Cal., and Alexander, Kuenning & Hall, Great Falls, Mont., for defendants.

JAMESON, District Judge.

In this Miller Act case,1 use plaintiffs seek recovery of $2,433.86 for Chemetron Corporation, $6,518.02 for Denver Oxygen Company, and $48,734.59 for Welders Supply Company, together with interest from April 25, 1962, costs and attorney fees.2 The defendants are the prime contractor on a government contract and its sureties. Use plaintiffs furnished materials to a subcontractor. The case was submitted on stipulations, documents, and depositions.

Findings of Fact

1. On February 28, 1961, the defendant George A. Fuller Co. and Del E. Webb Corporation, doing business as Fuller-Webb, a joint venture, entered into a written contract with the United States for construction of Minuteman facilities at Malmstrom Air Force Base, Montana. Fuller-Webb and the defendants The Aetna Casualty and Surety Co., The Travelers Indemnity Company, The Home Insurance Company, Maryland Casualty Co., Fireman's Fund Insurance Co., Hartford Accident and Indemnity Co., General Reinsurance Corp., North American Reinsurance Corporation, American Re-Insurance Company, and Employer's Reinsurance Corp. executed and delivered to the Government, in accordance with 40 U.S.C. 270a, a payment bond for the protection of all persons supplying labor and materials in prosecution of the work provided for in the contract.

2. On May 1, 1961, Fuller-Webb entered into a written subcontract with Idaho-Maryland Industries, Inc., whereby Idaho-Maryland was to fabricate and furnish a portion of the materials provided for in the principal contract. Pursuant to this subcontract Idaho-Maryland fabricated and delivered to Fuller-Webb certain items incorporated into and used in the completion of the principal contract.

3. Between November 8, 1961, and January 31, 1962 Chemetron Corp., acting through its National Cylinder Gas Division, furnished to Idaho-Maryland quantities of welding gases, equipment and supplies of the total value of $2,453.86, for which Idaho-Maryland agreed to pay Chemetron. The last materials furnished by this plaintiff to Idaho-Maryland were delivered on January 31, 1962.

4. Between August 1, 1961, and February 2, 1962 Denver Oxygen Company furnished to Idaho-Maryland quantities of welding gases, equipment and supplies for which Idaho-Maryland agreed to pay the sum of $6,518.02. The final date upon which materials were furnished to Idaho-Maryland by Denver Oxygen was February 2, 1962.

5. During the period from August 30, 1961, to February 1, 1962, Welders Supply furnished to Idaho-Maryland welding gases, materials and supplies for which Idaho-Maryland agreed to pay the sum of $48,734.50. No materials were furnished to Idaho-Maryland pursuant to this arrangement after February 1, 1962.

6. On February 2, 1962, Idaho-Maryland filed a petition in bankruptcy for a plan of arrangement under Chapter XI of the Bankruptcy Act (11 U.S.C. 701 et seq.), in the United States District Court for the Southern District of California, Central Division. Subsequently, meetings of creditors were held and on October 19, 1962, an order confirming the plan of arrangement was entered by the Referee in Bankruptcy. Prior to the entry of this order the plaintiffs, on July 13, 1962, had filed with the Bankruptcy Court proofs of claim as unsecured creditors in the amounts claimed in the complaint. Each of these claims contained the following statement:

"By filing this Claim deponent does not waive any of its rights under the Miller Act and any and all such rights are hereby expressly reserved."

7. The records of the Bankruptcy Court contain certain documents entitled "Consent to Plan of Arrangement" filed on August 3, 1962 signed with the name "Kenneth Tremayne". These documents purport to contain consents on the part of the plaintiffs to the plan of arrangement filed in the bankruptcy proceedings. The weight of the testimony, however, shows that Tremayne, who was the proprietor of Nationwide Collection Service, had not signed the consents. Rather they were signed by his employee Vivian Fiene. Tremayne had not received any assignment of the plaintiffs' claims against Idaho-Maryland, nor did either he or Mrs. Fiene have any power of attorney or other written authorization giving them authority to consent to the arrangement.3

8. Pursuant to the plan of reorganization the plaintiffs, along with all the unsecured creditors whose claims had been allowed under the plan, were issued two shares of stock in the debtor corporation for each dollar of indebtedness claimed. The order of the Bankruptcy Court confirming the plan contained the following provisions:

"The issuance of shares pursuant to the said plan shall be in cancellation, extinguishment and full settlement of all the claims of general, unsecured creditors receiving said shares * * *."
"All unsecured creditors of and all unsecured claimants against the debtor are hereby restrained and enjoined from pursuing or attempting to pursue or from commencing any suit or proceeding at law or in equity against the Debtor, directly or indirectly, upon any right, claim or interest which any such creditor or commencement of this proceeding."

9. On April 25, 1962, and within 90 days of the last date on which materials and equipment were furnished to Idaho-Maryland by the respective plaintiffs, the plaintiffs served written notice by registered mail upon defendant Fuller-Webb of their claims for the amounts owing to them by Idaho-Maryland for equipment and materials furnished in the prosecution of work under the prime contract.

National Cylinder Gas Claim

10. The National Cylinder Gas Division of Chemetron in the period from November 8, 1961, to January 31, 1962, furnished to Idaho-Maryland welding supplies, gases, and materials in the amount of $2,453.86. Of the original balance the sum of $2,228.09 remains due and owing. Approximately 90 percent of this item is for gases supplied and 10 percent for other materials. There is little direct evidence on this claim. The deposition of George M. Morton shows that during the period involved in this claim Idaho-Maryland was engaged in work on the principal contract in the Denver, Colorado area. Answers to Interrogatories to E. L. Lawson, District Manager of National Cylinder Gas, state, on the basis of information received from Idaho-Maryland employees, that the materials were going to the Fuller-Webb project.4 There is no substantial proof to the contrary. Accordingly I find that plaintiff has sustained its burden of showing that the materials and supplies were furnished for and consumed in prosecution of the work under the contract.

The Denver Oxygen Claim

11. Between August 1, 1961, and February 2, 1962, Denver Oxygen Co., a subsidiary of Chemetron and distributor for National Cylinder Gas, furnished Idaho-Maryland with welding supplies and equipment in the amount of $6,518.02. $6,490.84 remains unpaid on this claim. Of this claim $64.80 represents demurrage charges on gas cylinders loaned to Idaho-Maryland. Approximately 10 percent of the total claim is for equipment and supplies other than welding gases. From a review of the invoices covering the other equipment and supply items it appears that approximately one-third of these items were of the type which would be consumed in the ordinary prosecution of work on the Fuller-Webb project and were not capital equipment items.

The proof both supporting and opposing this claim is almost identical to that relating to the National Cylinder Gas claim. Accordingly, I find that the items represented by this claim were furnished for and substantially used in the prosecution of work on the Idaho-Maryland contract with Fuller-Webb.

The Welders Supply Claim

12. Between August 30, 1961, and February 1, 1962, Welders Supply furnished to Idaho-Maryland welding gases, supplies and materials in the amount of $48,734.50. Of this amount 22 percent represents welding gases supplied, 15 percent represents Dual Shield supplied, 31 percent represents stick electrode supplied, and 32 percent represents other items supplied.

13. The purchases of the items involved in this claim were made by Iteeco-division of Idaho-Maryland at Studio City, California, and were utilized and consumed at its plant in Studio City. During the August 30, 1961-February 1, 1962, period the Iteeco plant was engaged in fabricating items for the Great Falls missile project pursuant to Idaho-Maryland's contract with Fuller-Webb. In this same period Iteeco was also doing contract work for the State of California, for Lockheed Aircraft Company, and on a Titan II program contract in Tucson, Arizona. The supplies and materials furnished by Welders Supply Co. with one exception were not segregated according to the job upon which they were to be utilized, nor under the operational set up of the Iteeco plant was it practical to do so. It is therefore apparent that a part of the items making up this claim were...

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