United States v. Maryland Casualty Co.

• Decision Date: 18 February 1944
• Docket Number: No. 861.,861.
• Parties: UNITED STATES, for Use of EDWARD E. MORGAN CO., Inc., v. MARYLAND CASUALTY CO.
• Court: U.S. District Court — Western District of Louisiana

54 F. Supp. 290

UNITED STATES, for Use of EDWARD E. MORGAN CO., Inc., v. MARYLAND CASUALTY CO.

No. 861.

District Court, W. D. Louisiana, Shreveport Division.

February 18, 1944.

William H. Cox, of Jackson, Miss., for plaintiff.

Watkins & Eager, of Jackson, Miss., for defendant.

DAWKINS, District Judge.

Plaintiff sued the Maryland Casualty Company as the surety on the bond of the prime contractors, Newsom Brothers & J. W. Snowden, successful bidders on a project known as Wallace Dam, to be built across Cypress Bayou, approximately fourteen miles southwest of Shreveport, Louisiana. Complainant was the subcontractor for a portion of the said work and has demanded the sum of $26,143.16, with six per cent interest, alleged unpaid estimates, and also for the rental or use value of certain equipment, together with a "reasonable attorney's fee".

It is charged that the United States Engineer in charge had ordered plaintiff not to proceed with work on a part of said project at a time when there was only a small amount on the north side of the bayou uncompleted; that without its fault and for reasons not contemplated in or provided for by the contract, it was denied the right to complete the work south of the bayou, and was instructed not to remove its plant and equipment from said project, but to keep it intact on the job; and this was done with personnel only sufficient to prevent depreciation. Further, that plaintiff promptly complained to the said prime contractor, its surety, the defendant, and the United States Engineer, about "the unanticipated loss and special damage accruing daily * * * on account of such circumstances and conditions"; that its said plant and equipment remained "idle for the period beginning September 16, 1942 and ending October 17, 1942", and entitled the plaintiff to "recover from the defendant (the surety company) its loss as an extra and unexpected and unforseen item not contemplated by its said subcontract * * *", the sum of $17,378.25.

Further, that the contract between the prime contractor and the United States was later terminated with plaintiff's consent, and that "final settlement on said contract was effected with the prime contractors by the United States March 1st, 1943". Plaintiff alleged that the prime contractors were not made parties because they resided in the state of Mississippi and "are not to be found within the jurisdiction of this Court".

The prayer was for a total sum of $43,521.41, consisting of the aforesaid estimates and the amount claimed for the rental or use of said plant or equipment during the period of idleness alleged.

Defendant's answer pleaded payment of the estimates for the work actually performed, and, as to the demand for the rental value or use of the plant and equipment, asked dismissal on the ground that no cause of action or basis for recovery was shown. Defendant further alleged that the partnership of Newsom Brothers and J. W. Snowden was doing business in Louisiana, that Snowden resides in the City of Shreveport, Louisiana, and each should be made parties hereto.

Thereafter, on September 9, 1943, defendant filed a motion for summary judgment, alleging payment of the estimates of $26,143.16 by checks, which plaintiff took to and had certified by the bank upon which they were drawn, and the amounts were charged to the prime contractors; and that the matters embraced in the remainder of the demand are not covered by defendant's bond. It prayed for summary judgment dismissing the plaintiff's petition.

On October 8, 1943, plaintiff filed an amended bill, omitting the claim for estimates and demanding the sum claimed for rent or use value of the plant and equipment, the pertinent paragraphs of which are as follows:

"The plaintiff avers that said subcontractor moved the requisite units and equipment onto said job as required by the United States for the successful prosecution and performance of said public work at the instance and request of said prime contractors thereon in accordance with the terms of said subcontract therefor. The plaintiff avers that while said subcontractor was engaged in the faithful performance of its contract, that the United States Engineer in charge of said public work ordered said subcontractor to cease all further operations and work on such project indefinitely at a time that there was only a relatively small part of said contract then not completed. The plaintiff avers that said subcontractor substantially completed all of the work to be done north of Cypress Bayou but that there was some work remaining to be done at said point which would require the use of such heavy units of equipment which can not be easily moved on account of their size and great weight. The plaintiff avers that the United States and said prime contractor impliedly agreed in fact not to interfere with or impede the subcontractor's performance of said contract, and said parties likewise impliedly agreed in fact to pay the said subcontractor the reasonable rental on said equipment for the time in question under the circumstances herein delineated. The plaintiff avers that without its fault and for reasons not contemplated in or provided for by its said subcontract, that said subcontractor was denied the right to finish said work or to remove its said plant and equipment from said project, but was required by the United States to hold and keep its said equipment and plant intact and idle on said project with sufficient personnel to prevent the loss and excessive depreciation thereof. The plaintiff avers that all work on said job was stopped and all of said subcontractor's equipment mentioned in the attached account thereof was held thereon intact and idle for the period beginning September 16, 1942, and ending October 17, 1942, and said United States Engineer refused to allow said equipment to be removed from said job under the provisions of said contract, and ordered said equipment to be kept thereat at all times under such circumstances. The plaintiff avers that said subcontractor thereby became entitled to recover from the defendant by reason of the obligation of said prime contractors' implied in fact to compensate said subcontractor for the reasonable rental value of all of said equipment at the ceiling price thereof fixed by the O.P.A. as an extra justly due it under such circumstances in the amount of $17,378.25, as will more fully appear by a verified itemized statement of said claim hereto annexed as Exhibit "D".

"The plaintiff avers that said contract between the United States and said prime contractors was later terminated with said subcontractor's consent, thereby dispensing with the necessity for the final completion of all the work originally contemplated under said contract but plaintiff avers that said contract did not thereby release the defendant from its liability on such obligation implied in fact to pay it as an extra for the rent on said equipment while it was held on said job under the terms of said contract, as aforesaid. The plaintiff avers that a final settlement on said contract was effected with the prime contractor by the United States on March 1, 1943. That plaintiff avers that more than ninety days have expired since the date of the last item in this suit for such rent justly due said subcontractor, and that no part thereof has been paid. The plaintiff avers that said subcontractor on its part duly discharged and performed each obligation by it assumed under said subcontract to entitle it to recover of the defendant on such obligation implied in fact for the reasonable rental value of said equipment for said period of time and plaintiff avers that it has in all things duly discharged and performed each condition precedent to entitle it to institute and maintain this action."

On October 8, 1943, defendant answered the amended complaint, pleading substantially the same defense as to the demand for use or rental of machinery, and in addition, accord and satisfaction as to the amounts covered by the estimates. Thereupon plaintiff moved for a bill of particulars as to the alleged accord and satisfaction and the defendant promptly replied thereto, stating that between the 17th of October 1942 and March 8, 1943, the prime contractors had paid to the plaintiff certain sums of money representing estimates 27 to 34 inclusive, the 34th being a final estimate in the sum of $14,940.84; that upon the last check given in payment of said estimates the prime contractors wrote "in full settlement of all liability", which had the effect of discharging them from any other claim held by the plaintiff.

On December 17, defendant also filed a motion to amend its first defense contained in the answer to the amended complaint, in which it denied "that this action involves a claim for labor and materials furnished by the said subcontractor in the performance of the public work for which it has not been paid, and it is denied that jurisdiction is vested in this court under U.S. C.A. Title 40, Sec. 270b".

The matter has been submitted upon affidavits and briefs, without oral argument.

The parties have argued only the question of the idle equipment and this decision will be so confined.

It appears that there was little or no dispute as to the facts.

The court finds that Newsom Brothers & J. W. Snowden, as prime contractors, undertook construction of Wallace Dam, involving embankments both north and south of Cypress Bayou in Bossier Parish, Louisiana. They sublet a portion of the work to plaintiff, who moved upon the premises its plant and equipment in order to do the work on both sides of the Bayou. When that on the north side, which was first undertaken, was about 90 per cent complete, the Kansas City Railroad Co. raised objection to that on the south side, and this part of the work was never performed, but cancelled by the Government with the consent of both the prime and subcontractors. However, about September 16th, when the...