United States v. National Surety Corporation, Civ. A. No. 23965

• Citation: 179 F. Supp. 598
• Decision Date: 11 December 1959
• Docket Number: Civ. A. No. 23965,23966.
• Parties: UNITED STATES of America, at the relation of and for the use of WESTINGHOUSE ELECTRIC SUPPLY COMPANY v. NATIONAL SURETY CORPORATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

179 F. Supp. 598

UNITED STATES of America, at the relation of and for the use of WESTINGHOUSE ELECTRIC SUPPLY COMPANY

v.

NATIONAL SURETY CORPORATION.

Civ. A. Nos. 23965, 23966.

United States District Court E. D. Pennsylvania.

December 11, 1959.

Nathan Lavine, Philadelphia, Pa., for plaintiff.

Samuel B. Brenner, Philadelphia, Pa., for defendant.

VAN DUSEN, District Judge.

Findings of Fact

The trial judge makes the following Findings of Fact:

1. The United States Army Corps of Engineers entered into a written agreement, No. DA-36-109-Eng-6193, with Joseph W. Montgomery, trading as Montgomery Construction Co., dated March 26, 1956, for construction by Montgomery of Nike Site 78 at Edgemont, Pennsylvania, for the contract price of $543,915.

2. The United States Army Corps of Engineers entered into a written agreement, No. DA-36-109-Eng-6194, with Joseph W. Montgomery, trading as Montgomery Construction Co., dated March 26, 1956, for construction by Montgomery of Nike Site 97 at Eureka, Pennsylvania, for the contract price of $544,709.

3. The defendant, The National Surety Corporation, as surety, and Joseph W. Montgomery, trading as Montgomery Construction Co., as principal, pursuant to the provisions of the Miller Act executed and delivered to the United States of America their two separate joint and several bonds, both dated March 26, 1956, conditioned for the prompt payment to all persons supplying labor and material in the prosecution of the construction of the said two Nike Sites, 78 and 97. The amount of the bond with reference to Nike Site 78 was $271,957.50 and the amount of the bond with reference to Nike Site 97 was $272,354.50.

4. Nike sites consist primarily of storage facilities, launching equipment and guidance equipment for Nike missiles, which are an integral part of our country's national defense.

5. Nike Site 78, located at Edgemont, Pa., and Nike Site 97, located at Eureka, Pa., are both within the territorial jurisdiction of this court.

6. These suits were commenced on January 17, 1958, by the use plaintiff.

7. The date of final settlement of both contracts involved was sometime after January 17, 1957.

8. At the time these suits were commenced, more than 90 days had elapsed since the last material was furnished by the use plaintiff for which a claim is made.

9. Joseph Montgomery, trading as Montgomery Construction Co., entered into a written contract with Maguire Engineering Co., Inc., on May 29, 1956 (plaintiff's Exhibit 1), which provided that Maguire Engineering Co., Inc., was to supervise the installation of the electrical work comprehended for Nike Sites 78 and 97 and to prepare material lists and obtain prices from electrical suppliers. The lists were to be presented to Montgomery Construction Co. for approval before orders were placed, excepting when, in the opinion of the Maguire Engineering Co., Inc., such delay might cause undue hardship or expense to the Montgomery Construction Co., in which case orders were to be placed by the Maguire Engineering Co., Inc., with verbal approval.

10. Subsequent to the execution of the contract of May 29, 1956, between Montgomery Construction Co. and Maguire Engineering Co., Inc., it was agreed by the parties to the contract that the requirement that all orders be approved by the Montgomery Construction Co. be ignored and that Maguire Engineering Co., Inc. should order any necessary materials directly from the suppliers.

11. An account was opened with the use plaintiff by the Montgomery Construction Co.

12. Joseph W. Montgomery, trading as Montgomery Construction Co., by Joseph W. Montgomery and Edmund J. Maguire acting for Joseph W. Montgomery, requested the use plaintiff to supply and deliver substantial electrical materials, itemized in Exhibit A attached to the use plaintiff's Complaint in Civil Action No. 23965 and Exhibit A attached to the plaintiff's Complaint in Civil Action No. 23966, which materials are also itemized in plaintiff's Exhibits 6 to 144, inclusive.

13. All orders placed with the use plaintiff for the materials itemized in plaintiff's Exhibit 6 to 144, inclusive, were placed in accordance with the agreement between Montgomery Construction Co. and Maguire Engineering Co., Inc. in effect at the time they were placed.

14. There was a direct contractual relationship between Montgomery Construction Co. and the use plaintiff with respect to the purchase and sale of the materials itemized in plaintiff's Exhibits 6 to 144, inclusive.

15. The use plaintiff furnished and delivered to Joseph W. Montgomery, trading as Montgomery Construction Co., all of the material itemized in plaintiff's Exhibits 6 to 144, inclusive.

16. All of the materials itemized in plaintiff's Exhibits 6 to 144, inclusive, were required for the electrical construction of Nike Sites 78 and 97.

17. All of the materials itemized in plaintiff's Exhibits 6 to 144, inclusive, were actually incorporated in the electrical installation and construction of Nike Sites 78 and 97.

18. The prices charged by the use plaintiff for all of the materials itemized in plaintiff's Exhibits 6 to 144, inclusive, were reasonable.

19. No payment has been made to the use plaintiff for or on account of the electrical materials itemized in plaintiff's Exhibits 6 to 144, inclusive.

20. The aggregate amount of the invoices for the materials itemized in plaintiff's Exhibits 6 to 144, inclusive, is the sum of $20,643.73, computed as follows: $11,895.14 for Nike Site 78 (Civil Action No. 23965) and $8,748.59 for Nike Site 97 (Civil Action No. 23966). The defendant is entitled to credits as set forth in Exhibit A attached to each of the two Complaints, as follows: Civil Action No. 23965 for Nike Site 78 $37.77, and Civil Action No. 23966 for Nike Site 97, $322.81. In addition, defendant is entitled to a further credit of $138 with respect to plaintiff's exhibit 105, representing a return of material as against the amount claimed in Civil Action No. 23965, and the further and additional credit of $138 with respect to plaintiff's Exhibit 105, representing a return of material as against the amount claimed in Civil Action No. 23966.

21. The amount due to the use plaintiff, therefore, is the sum of $20,367.73 for the electrical materials and, in addition thereto, interest upon each invoice (plaintiff's Exhibits 6 to 144, inclusive) from the due date of the said invoices.

22. Mr. Joseph W. Montgomery, the general contractor and the principal on the surety bond, was present in the courtroom and available as a witness at virtually all times during the trial.

23. All requests for Findings of Fact which are inconsistent with the foregoing are denied.

Discussion

Westinghouse Electric Supply Company brought two actions against the National Surety Company under 40 U. S.C.A. §§ 270a-270e, commonly known as the Miller Act, on two bonds executed by the defendant as surety and Joseph W. Montgomery, trading as Montgomery Construction Co., as principal. These bonds were conditioned for the prompt payment to all persons supplying labor and material in the construction of Nike Sites 78 and 97 which Montgomery had contracted to construct for the United States Army Corps of Engineers. The two actions were consolidated for purposes of trial.

Section 270a of the Miller Act requires that before any contract, exceeding $2,000 in amount, for the construction of any public work of the United States is awarded to any person, he shall furnish to the United States a payment bond for the use and protection of all persons supplying labor and material in the prosecution of the work provided for in the contract.¹ The defendant does not question the fact that the bonds, which are the basis for these actions, were executed and were conditioned for the prompt payment to all persons supplying materials in the prosecution of the construction of Nike Sites 78 and 97.² It asserts, however, that these Nike Sites are not "public works" within the meaning of the Miller Act and that, therefore, that Act does not apply to these bonds. The Supreme Court has held that "public work," as used in the Miller Act, includes projects carried on with public aid to serve the interests of the general public. United States, to Use of Noland Co. v. Irwin, 1942, 316 U.S. 23, 30, 62 S.Ct. 899, 86 L.Ed. 1241.³ It is not disputed that the construction of Nike Sites 78 and 97 was paid for with federal funds. It is also abundantly clear that these Sites serve the interests of the general public as vital elements of our national defense system.⁴ Furthermore, § 270e of the Miller Act provides for the discretionary waiver of its provisions in awarding contracts for the "construction * * * of vessels, aircraft, munitions, material, or supplies of any kind or nature for the Army, Navy, Air Force, or Coast Guard * *."⁵ This section leaves no doubt that Congress intended military projects to be included in the concept of "public works," as used in the Miller Act. It must, therefore, be concluded that Nike Sites 78 and 97 are "public works" within the meaning of the Miller Act.

Defendant also asserts that, even if the Miller Act applies, the use plaintiff has failed to comply with § 270b, which sets forth the circumstances under which suit can be brought. The suits were not premature. Section 270b (a) provides that suit may be brought ninety days after the last material was furnished for which a claim is made. These suits were commenced with the filing of complaints on January 17, 1958. The last invoices for items for which a claim is made were dated June 3, 1957 (Exhibits P-137, P-138), and the last item shipped was on March 30, 1957 (Exhibit P-137). It is a reasonable inference that these items were received before October of that year. Nor were the suits instituted too late. Section 270b(b) states that no suit shall be commenced one year after the date of final settlement of the contract. The Comptroller General has certified that...