United States v. Mann

• Decision Date: 09 May 1952
• Docket Number: No. 4404.,4404.
• Citation: 197 F.2d 39
• Parties: UNITED STATES, for Use of MOSELEY, v. MANN et al.
• Court: U.S. Court of Appeals — Tenth Circuit

197 F.2d 39 (1952)

UNITED STATES, for Use of MOSELEY, v. MANN et al.

No. 4404.

United States Court of Appeals Tenth Circuit.

May 9, 1952.

Melvin F. Adler, Fort Worth, Tex. (George A. McCall, Weatherford, Tex., on the brief), for appellant.

W. B. Handley, Dallas, Tex., for appellees.

Before BRATTON, HUXMAN and MURRAH, Circuit Judges.

HUXMAN, Circuit Judge.

The question in this case is whether Great American Indemnity Company is liable to J. R. C. Moseley under its bond given to K. W. Mann, pursuant to the requirements of the Miller Act, 40 U.S.C.A. § 270a et seq. Mann had a contract with the United States for the construction of a flood control project near Duncan, Oklahoma. The bond was given in fulfillment of the provisions of the Miller Act, requiring the contractor to give a bond to secure payment of labor and material claims on the job.

To enable him to perform his contract, Mann entered into a contract with J. R. C. Moseley, under which he rented certain heavy equipment from him, which he used in doing the work on the job. Mann did not have sufficient funds of his own to finance the project and meet his payrolls and other expenses on the job. He bid on the job and obtained the contract under an arrangement with a bank in which it had agreed to finance him. After he signed the contract, the bank refused to extend him credit. At that time he and Moseley had caused their contract for the lease of the rental equipment to be reduced to writing, but before it was executed the arrangement for the credit with the bank fell through. Thereafter they approached a mutual friend, Ernest Loyd, who agreed to finance Mann. Loyd agreed to finance Mann without remuneration to himself, stating only that he did not want to lose any money on the transaction. In order to obtain this credit and protect their mutual friend, certain interlineations were written into the contract, which will be hereafter noted. With these interlineations the contract was executed by Mann and Moseley.

The rental to be paid Moseley for the use of his equipment was fixed at twelve cents per yard for all earth placed in the embankment of the dam. The provision in the contract for the rental payments prior to the time Loyd came into the picture read as follows: "Rental at the rate of twelve (12¢) per yard for all of the earth to be placed in the embankment of the dam, Prairie Dale sites one and three near Duncan, Oklahoma, Invitation No. 887-49 Soil Conservation Service, Washington, D. C., and which amount of earth is estimated at 86,000 yards, such rental to be paid out of the estimate as received from the Government by Bailee, under and by virtue of said contract for the doing of that work and shall be paid by Bailee as and at the time and out of such estimates when paid, and such rentals to be paid Bailor at the Fort Worth National Bank of Fort Worth, in Fort Worth, in Tarrant County, Texas." After Loyd agreed to finance Mann and in order to protect him the following addition was made in longhand and was initialed by all three parties: "After any monies advanced by Ernest Loyd for the execution and completion of said job has been repaid to Ernest Loyd." It was agreed that all estimates paid as the work progressed should be delivered to Loyd to be disbursed by him. It is agreed that under the financing arrangement Loyd paid out $42,074.84 and that eliminating certain challenged items he disbursed in payment of legitimate labor and material claims the amount of $34,720.94. The amount due and received by Mann under the contract, which he turned over to Loyd, was $30,929.35. It is admitted that Loyd advanced and distributed in payment of legitimate labor and material claims on the project more than he received from the estimates delivered to him.

Appellees contend and the trial court held that the provisions of the contract for the payment of the amount of rental due provided this obligation should be paid only from a special fund, namely, the estimates under the contract, and that there was no personal obligation or liability on Mann's part to pay Moseley anything. From this the court concluded and held that since there was no personal liability on Mann's part to pay Moseley's claim there could be no liability under the bond given to guarantee and insure payment of all labor and material claims due on the project.

It is, of course, true as held by the court that where the language of a contract is clear and unambiguous and lends itself to only one construction, extraneous evidence and circumstances, as well as the conduct of the parties with relation to the contract, are inadmissible in determining the legal effect of the contract. But we cannot agree with the trial court that the pertinent language is so clear and positive as to conclusively show that Mann and Moseley agreed and intended that payment should be made only out of the special fund, the amount due under the contract, and that Mann should not be personally liable in any event...