United States v. HR Henderson & Company

• Decision Date: 05 January 1955
• Docket Number: Civ. A. No. 1163.
• Citation: 126 F. Supp. 626
• Parties: UNITED STATES of America, For the Use and Benefit of MAGNOLIA PETROLEUM COMPANY, Plaintiff, v. H. R. HENDERSON & COMPANY, C. H. Leavell & Company, Utah Construction Company, the Aetna Casualty and Surety Company, and Maryland Casualty Company, Defendants.
• Court: U.S. District Court — Western District of Arkansas

126 F. Supp. 626

UNITED STATES of America, For the Use and Benefit of MAGNOLIA PETROLEUM COMPANY, Plaintiff, v. H. R. HENDERSON & COMPANY, C. H. Leavell & Company, Utah Construction Company, the Aetna Casualty and Surety Company, and Maryland Casualty Company, Defendants.

Civ. A. No. 1163.

United States District Court, W. D. Arkansas, Fort Smith Division.

January 5, 1955.

COPYRIGHT MATERIAL OMITTED

Owens, Ehrman & McHaney, Little Rock, Ark., Roy L. Merrill, Dallas, Tex., for plaintiff.

Wright, Harrison, Lindsey & Upton, Little Rock, Ark., Smith & Hall, Marshall, Tex., for defendants.

JOHN E. MILLER, District Judge.

On August 31, 1954, the use plaintiff, hereinafter referred to as plaintiff, filed its complaint against defendants, seeking to recover the sum of $20,575.63, plus penalty and attorney's fee, which plaintiff claimed the defendant, H. R. Henderson & Company, a subcontractor, owed it for certain goods, wares and merchandise purchased by the said defendant from the plaintiff. The suit was brought under the Miller Act, 40 U.S. C.A. § 270a et seq., and the prime contractors, together with the sureties, were made parties defendant. It was alleged by plaintiff that all the goods furnished by it to the defendant Henderson were used in the performance of Henderson's subcontract with the prime contractors, C. H. Leavell & Company and Utah Construction Company, which in turn was a part of the prime contract between said prime contractors and the United States of America for the construction of certain smokeless powder magazines for the United States Naval Ammunition Depot at Shumaker, Arkansas.

The defendant, H. R. Henderson & Company, on September 23, 1954, filed its answer admitting that the charges for goods, wares and merchandise were substantially correct, but denying that all of said goods were used in connection with the contract or subcontract and denying that it was indebted to plaintiff in any sum. Included in the said defendant's answer was its counterclaim in which it alleged that it purchased certain motor oil from the plaintiff for use in connection with the construction contract; that the oil furnished by plaintiff to it was contaminated with rust or other foreign particles; that said contaminated oil caused damage to four Cummins NBH 600 motors being used by it on the job; that said damage was caused by the negligence of plaintiff, or, in the alternative, that the damage resulted from a breach of warranty on the part of plaintiff; and that it was damaged in the sum of $30,500, for which it should have judgment after deduction of the amount it owed plaintiff for the purchase price of the oil and other merchandise.

On the same date, September 23, 1954, the remaining defendants filed their answer containing substantially the same admissions, denials and allegations as were contained in the separate answer of H. R. Henderson & Company. In addition, these defendants alleged that the primary liability, if any, was that of H. R. Henderson & Company, and prayed recovery over against Henderson in the event plaintiff recovered a judgment against them.

A pre-trial conference was had on September 29, 1954, and at that time defendants admitted that the amount sued for by plaintiff was correct and that Henderson received and used the merchandise, but defendants did not admit at that time that all of said merchandise was used in the performance of the contract in question.

On October 2, 1954, the defendant, H. R. Henderson & Company, filed a motion for continuance on the ground that it had previously filed an action against the present plaintiff, Magnolia Petroleum Company, in the District Court of Harrison County, Texas, involving the same controversy.

Plaintiff on October 8, 1954, filed its reply to Henderson's counterclaim, denying that it was guilty of negligence or breach of warranty, and in the alternative alleging that the said defendant was precluded from recovering on its counterclaim since it was guilty of contributory negligence in the use of the oil purchased from plaintiff.

In the meantime the parties had filed briefs in support of and in opposition to the motion for continuance, and on October 8, 1954, the Court entered an order overruling said motion.

On October 23, 1954, upon agreement of the parties the case was transferred from the El Dorado Division to the Fort Smith Division for trial, and on November 3 and 4, 1954, the case was tried to the Court, without a jury. At the conclusion of the trial the Court took the case under advisement, pending receipt from the respective attorneys of briefs and proposed findings of fact and conclusions of law.

After receiving the briefs and proposed findings from the respective parties, the Court concluded that a further hearing was necessary on the question of a reasonable attorney's fee to be allowed plaintiff's attorney, and on the question of whether the defendant surety companies were entitled to recover a judgment over against H. R. Henderson & Company for the amount of attorney's fee and penalty, if any, assessed against said surety companies. The supplemental hearing was had on December 28, 1954, at which time the defendant Henderson admitted the right of the defendant surety companies to recover judgment over against Henderson for the amount of the attorney's fee and penalty, if any, and ore tenus testimony was submitted on the question of a reasonable attorney's fee to be allowed plaintiff in the event the Court awarded plaintiff an attorney's fee.

And now the Court, having considered the pleadings, ore tenus testimony, stipulations, exhibits, briefs, proposed findings of fact and conclusions of law, and oral arguments of counsel for the respective parties, makes and files herein its findings of fact and conclusions of law, separately stated.

Findings of Fact.

1.

Plaintiff is a Texas corporation. The defendant, C. H. Leavell Company, is a Texas corporation; the defendant, Utah Construction Company, is a Utah corporation; the defendant, Aetna Casualty and Surety Company, is a Connecticut corporation; the defendant, Maryland Casualty Company, is a Maryland corporation; and the defendant, H. R. Henderson & Company, is a Texas corporation.

On September 24, 1952, the defendants, C. H. Leavell & Company and Utah Construction Company, acting as associated contractors and coadventurers under the trade name of Leavell-Utah, entered into a contract with the United States of America for the construction of certain smokeless powder magazines for the United States Naval Ammunition Depot at Shumaker, Arkansas, in the Western District of Arkansas, where said work was to be performed. Leavell-Utah, as principal, and The Aetna Casualty and Surety Company and Maryland Casualty Company, as sureties, on September 24, 1952, executed a standard Government form of payment bond to the United States of America, wherein the said defendants bound themselves in the sum of $1,648,777.60, conditioned that if the principal should promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract and any and all duly authorized modifications of said contract, then the obligation to be void; otherwise that the bond remain in full force and effect.

The bond was accepted by the United States, and thereafter Leavell-Utah began work on the project. The defendant, H. R. Henderson & Company, hereinafter referred to as H. R. Henderson or Henderson, was a subcontractor of Leavell-Utah, and during the performance of the work under the subcontract purchased and received $20,575.63 worth of goods, wares and merchandise from the plaintiff. All of said goods were used in the performance of Henderson's subcontract, which in turn was a part of the prime contract between Leavell-Utah and the United States, and said goods were furnished and used with the knowledge, consent and approval of Leavell-Utah.

The defendant, H. R. Henderson, upon demand by plaintiff, refused to pay the $20,575.63, although it was more than ninety days past due. Plaintiff, within ninety days after supplying the last of the goods upon which the claim is based, notified the defendants, Leavell-Utah, The Aetna Casualty and Surety Company, and Maryland Casualty Company, of the failure of Henderson to pay the account, and of the nature and amount of said account.

One year had not elapsed since the date of the final settlement of the contract and no part of the said $20,575.63 has been paid to plaintiff.

All of the goods were purchased and used in the Western District of Arkansas.

2.

As heretofore stated, defendants in their separate answers admitted the accuracy of the account in question, but denied that all of the goods were used in the performance of the contract. However, two days before the trial defendants notified plaintiff that they conceded that all the goods were used in the performance of the contract and that it would not be necessary for plaintiff to have witnesses at the trial for the purpose of proving that fact. And, at the outset of the trial defendants stipulated and agreed that goods in the amount of $20,575.63 were purchased by Henderson and used in the performance of the contract.

3.

H. R. Henderson had been doing business with plaintiff since 1935. After Henderson obtained the subcontract with Leavell-Utah, J. P. McGee and Robert Plemons, employees of plaintiff, came to his office in Marshall, Texas. They reached an oral agreement for the purchase by Henderson and the sale by plaintiff of oil and other supplies to be used by Henderson in connection with the Shumaker project.

4.

The machines which defendants claim were damaged by plaintiff's oil are Euclids, commonly called "Ukes." They are similar to an ordinary trailer truck, except that they are much larger. Three of the Euclids were purchased by Henderson in Denver, Colorado, in 1950. The fourth one was purchased in 1952. All of the Euclids were used...