United States v. Merritt-Chapman & Scott Corporation

• Decision Date: 29 June 1962
• Docket Number: No. 13773.,13773.
• Citation: 305 F.2d 121
• Parties: The UNITED STATES of America, for the Use of "AUTOMATIC" SPRINKLER CORPORATION OF AMERICA, Plaintiff-Appellant, v. MERRITT-CHAPMAN & SCOTT CORPORATION, Fidelity and Deposit Company of Maryland, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Third Circuit

305 F.2d 121 (1962)

The UNITED STATES of America, for the Use of "AUTOMATIC" SPRINKLER CORPORATION OF AMERICA, Plaintiff-Appellant, v. MERRITT-CHAPMAN & SCOTT CORPORATION, Fidelity and Deposit Company of Maryland, et al., Defendants-Appellees.

No. 13773.

United States Court of Appeals Third Circuit.

Argued March 8, 1962.

Decided June 29, 1962.

Joseph P. Brennan, Scranton, Pa. (Laurence E. Oliphant, Jr., of Squire, Sanders & Dempsey, Cleveland, Ohio, on the brief), for plaintiff-appellant.

John W. Bour of O'Malley, Morgan, Bour & Gallagher, Scranton, Pa., James A. Gallagher of Manning, Hollinger & Shea, New York City, Charles H. Welles, 3rd, of Welles & Mackie, Scranton, Pa., for defendants-appellees.

Before STALEY, HASTIE and SMITH, Circuit Judges.

WILLIAM F. SMITH, Circuit Judge.

This appeal is from a judgment for the defendants, and from the denial of a motion for a new trial, in an action on a payment bond furnished pursuant to Section 1 of the Miller Act, 40 U.S.C.A. § 270a. The judgment is predicated solely on the determination that the "plaintiff * * * failed to prove its compliance with the Act." We are of the opinion that the trial court erred.

The United States of America entered into a contract with the defendant Merritt-Chapman & Scott Corporation for the construction of buildings, the installation of utility systems, and other work in connection therewith, at the Signal Corps Depot, Tobyhanna, Pennsylvania. The contract provided that materials supplied and work performed were to be in accordance with the plans and specifications. Pursuant to the pertinent provisions of the Act, supra, the said defendant furnished the customary payment bond on which the other defendants named in this action are sureties.

A subcontract was let to one Frederick J. Raff (Frederick Raff Company), who entered into a subcontract with the plaintiff for the installation of an automatic sprinkler system at a cost of $305,000.00. The plaintiff thereunder agreed "to furnish all material and labor for all work * * * in accordance with the general conditions, plans, and specifications" embodied in and made a part of the prime contract. The prime contract was made a part of the subcontract by specific reference.

While the construction work was in progress, and as the result of an authorized revision of the specifications and drawings, a written change order issued. It appears from the evidence that the change order effected a modification of the existing contracts, a modification permissible under the general conditions of the prime contract. The said order required, in addition to other work, the installation of a "water flow alarm detection system." The plaintiff, at the direction of Raff, and pursuant to correspondence which passed between them, undertook the performance of the additional work covered by the revised specifications and drawings. The plaintiff supplied the materials and furnished the labor as required under its subcontract and the modifications thereof.

When Raff failed to pay the balance allegedly due under the subcontract as modified, the plaintiff served upon the defendant Merritt-Chapman & Scott Corporation a written notice and request for payment. There is no dispute here as to the sufficiency of the notice; in fact, the trial court found the notice adequate. When the said defendant failed to honor the request for payment, the plaintiff brought this action under Section 2 of the Act, 40 U.S.C.A. § 270b.

The pertinent provisions of Section 2 are as follows:

"Every person who has furnished labor or material in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished * * * and who has not been paid in full therefor before the expiration of a period of ninety days after the day on which the last of the labor was done or performed by him or material was furnished or supplied by him for which such claim is made, shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment for the sum or sums justly due him: Provided, however, That any person having direct contractual relationship with a subcontractor BUT NO CONTRACTUAL RELATIONSHIP EXPRESS OR IMPLIED WITH THE CONTRACTOR furnishing said payment bond shall have A RIGHT OF ACTION UPON THE SAID PAYMENT BOND UPON GIVING WRITTEN NOTICE TO SAID CONTRACTOR WITHIN NINETY DAYS FROM THE DATE ON WHICH SUCH PERSON DID OR PERFORMED THE LAST OF THE LABOR OR FURNISHED OR SUPPLIED THE LAST OF THE MATERIAL FOR WHICH SUCH CLAIM IS MADE, stating with substantial accuracy the amount claimed and the name of the party to whom the material was furnished or supplied or for whom the labor was done or performed. * * *" (Emphasis by this Court).

Under the proviso, a prerequisite to the right of the plaintiff to maintain this action was the service of written notice upon the defendant Merritt-Chapman & Scott Corporation within the prescribed period.

The necessary allegations as to the plaintiff's compliance with the proviso is contained in Paragraph 11 of the Complaint, which reads as...