United States v. Maryland Casualty Co.

• Decision Date: 21 February 1946
• Docket Number: No. 4589.,4589.
• Citation: 64 F. Supp. 522
• Court: U.S. District Court — Southern District of California
• Parties: UNITED STATES ex rel. HARGIS v. MARYLAND CASUALTY CO. et al.

64 F. Supp. 522

UNITED STATES ex rel. HARGIS v. MARYLAND CASUALTY CO. et al.

No. 4589.

District Court, S. D. California. Central Division.

February 21, 1946.

Alfred E. Rogers, of Los Angeles, Cal., for plaintiff.

Vernon F. Gant, of Modesto, Cal., for defendants.

YANKWICH, District Judge.

On September 21, 1943, M. J. Ruddy, Sr., and M. J. Ruddy, Jr., comprising the partnership of Ruddy and Son, entered into a contract with the United States of America for performing certain public works, namely, air field facilities at the Materials Test Base, Muroc, California. The contract which was duly executed by the contracting parties, bears the designation and number of W-509 eng 5584.

The contractor executed a bond under the provisions of 40 U.S.C.A. § 270a — known as the Miller Act — with themselves as principals and the defendant Maryland Casualty Company, a Maryland corporation, as surety. In the performance of this contract, the contractor employed M. E. Whitney as a subcontractor to do a certain portion of the work. Whitney earned $67,769.87. The contractor, before the completion of the work and according to the provisions of the contract to be referred to, paid to or expended for Whitney the sum of $60,878.73. This left a balance of $6791.14 in the hands of the contractor. As against this sum, the unpaid claims of Whitney's creditor's amounted to $14,681.44.

Elmer S. Hargis, the use plaintiff, rented to Whitney a tractor and equipment which was used in the performance of his subcontract. The Agreed Statement of Facts states that the rental value is the sum of $1710.00, against which there is a set-off of $71.85, leaving a balance of $1638.15. This is the maximum amount of liability of the defendants, if any liability exists.

The contract between the contractor and the subcontractor contained the following provisions:

"Subcontractor agrees specifically to perform the following designated work: Furnish and place 16,700 sq. yds. of 9 inch concrete pavement, furnish and deliver to job site 143 cu. yds. (more or less) concrete mix, all above items to be in accordance with Government specifications and measures as outlined in contractor's prime contract with the Government.

"Payment and Acceptance of Said Work. The total price to be paid subcontractor for said work shall be the unit price of $3.90 per sq. yd., and $12.00 per cu. yd. payable in lawful money of the United States of America, which shall be paid as follows: Contractor agrees to pay all accrued material, freight, equipment rental and transportation charges, payrolls and incidental charges to be deducted from final settlement of total amount due under this contract, provided, however, that 10% of said total contract price shall not be due and payable until 35 days after the actual completion of contractor's contract, and acceptance thereof by the owners or their agents. And it is further agreed that the unit price of 380 ft. of double conduit shall cost $1.05 per ft., also that the contractor shall add to the amount of the total weekly gross payroll 6.685 per $100.00 to cover accrued workmen's compensation insurance, social security taxes and deductions, plus 5% handling and bookkeeping charges, also that the final payment shall not become due until 35 days after the actual completion of contractor's contract, and acceptance thereof by the owners or their agents."

The following facts are also stipulated in conjunction with the clause just quoted, which are contained in Paragraph IV of the Stipulation.

"Ruddy and Son, did in fact, pay directly for all labor upon the job carried on said Whitney's payroll, and did pay for all other materials and other services rendered to said Whitney in connection with said job, insofar as any payment was made. It was the custom and the practice of Whitney to present the bills of his suppliers to M. J. Ruddy for his approval. On or about the 15th day of February, 1944, the subcontractor wrote to the plaintiff stating the gross amount of plaintiff's bill in the sum of $1710.00, which was the total of the amount of bills that had been submitted to the plaintiff by Whitney up to February 15, of 1944. The subcontractor Whitney made a charge against Hargis in the sum of $71.85 for certain oils, greases, and service to the tractor, and claimed that the net balance due to Hargis was $1,638.15."

The Agreed Statement of Facts contains the following reservations:

"That by entering into this stipulation, the defendants do not concede the materiality of the matters set forth in paragraphs 4, 8, 9, 10 and 15 hereof, but contend that said matters are immaterial and irrelevant and should not be considered by the Court.

"That the matters set forth in paragraph 4 hereof are included only for the purpose of explaining the procedure followed by M. J. Ruddy and Son in making payment for the benefit of the subcontractor, M. E. Whitney, and for no other purpose."

In view of this reservation, it is necessary to set forth the paragraphs so numbered other than Paragraph IV, which has already been reproduced. They read:

"VIII. That plaintiff also received a carbon copy of a letter, dated May 4, 1944, on the letterhead of M. J. Ruddy and Son, addressed to Herman E. Weigis and the Fidelity and Casualty Company of New York, containing a notation at the bottom: `cc: Copy to Mr. Whitney's creditors on Job No. 5584.'

"IX. That plaintiff received a letter, on the letterhead of M. J. Ruddy and Son, addressed to M. E. Whitney, dated May 9, 1944, signed by Aubrey H. Y'Blood, Office Manager, containing a notation at the bottom `cc: Elmer Hargis, 130 West Foothill Blvd., Monrovia, California,' in which he stated that the invoice of Hargis, dated April 1, 1944, in the amount of $2281.00 was transmitted to M. E. Whitney and asked for Whitney's approval to pay.

"X. That under date of May 9th another letter was sent from M. J. Ruddy and Son to the plaintiff requesting plaintiff's approval as to the charge contained in the letter of M. E. Whitney to the plaintiff herein, dated February 15, 1944."

"XV. That one Mr. Moore, who was the Superintendent for M. J. Ruddy and Son on the Muroc Job, had knowledge that the tractor was working on the job, and also knew the agreed rate that was to be charged for said equipment."

The three invoices attached to the complaint and the letter of May 9, 1944, addressed to Whitney, another letter dated May 18, 1944, and the telegram of March 30, 1944, are also reproduced in full.

                                          "Invoice
                                       Elmer S. Hargis
                            130 West Foothill Blvd., Monrovia 7014
                                    Monrovia, California
                 Caterpillar                 Diesel            Le Tourneau Service
                 Equipment Rentals           Parts      Supplies            Repair Service
                Sold to M. E. Whitney — M. J. Ruddy & Son         Date January 24, 1944
                     Box 32                 Our Invoice No.             Moore and Whitney
                     Muroc, California                                  Your Order No
                Quantity    Part No.               Description          Price  per  Extension
                -----------------------------------------------------------------------------
                           Two Months Rent on D6 Caterpillar at         $410.00    $820.00
                            "    "      "   "  Single Drumm Unit          50.00     100.00
                            "    "      "   "  Bull Dozer                110.00     220.00
                          Maintenance and Repair Per Hour Less
                          Operator Furnished by Whitney & M. J. Ruddy
                          & Son     285 hours at 2.00 per hour                      570.00
                                                                                   ---------
                                                    Total Due                     $1710.00"
                                                    "Invoice
                                                Elmer S. Hargis
                                    130 West Foothill Blvd., Monrovia 7014
                                             Monrovia, California
                 Caterpillar                   Diesel             Le Tourneau Service
                 Equipment Rentals             Parts      Supplies           Repair Service
                Sold to M. E. Whitney — M. J. Ruddy & Son          Date January 24, 1944
                     Box 32                                              Our Invoice No
                     Muroc, California                                   Your Order No
                

                Quantity  Part No.            Description                Price per Extension
                ----------------------------------------------------------------------------
                    1     Starting Engine Air Cleaner                                12.00
                          Lost when Ruddy & Son picked up tractor
                          at Monrovia, California."
                                                "Invoice
                                             Elmer S. Hargis
                                   130 West Foothill Blvd., Monrovia 7014
                                           Monrovia, California
                Caterpillar               Diesel                 Le Tourneau Service
                Equipment Rentals         Parts            Supplies         Repair Service
                Sold to M. E. Whitney — M. J. Ruddy & Son          Date 4/1/44
                     Box 32                                              Our Invoice No
                     Muroc, California                                   Your Order No
                Quantity   Part No.         Description                  Price per Extension
                -----------------------------------------------------------------------------
                           Invoice on January 24-44                               1710.00
                           ½ month's rent after Jan 24, 44 up to Feb 7
                           when tractor was returned to Monrovia
                           112 Hours Maintenance and repairs                       335.00
                           Jan. 24 to Feb. 4, 44                           2.00    224.00
                                                                                  -----------
                                                                                  2269.00
                           Starting engine air cleaner                              12.00
                                                                                  -----------
                           Total for rent on D6 Tractor at Murdoc

...