United States v. REPUBLIC CONSTRUCTION & MAIN. CO.
| Decision Date | 04 March 1955 |
| Docket Number | Civ. No. 27. |
| Court | U.S. District Court — Virgin Islands |
| Parties | UNITED STATES of America FOR THE USE AND BENEFIT OF WORLD COMMERCE CORPORATION, S. A., Plaintiff, v. REPUBLIC CONSTRUCTION & MAINTENANCE COMPANY, Inc., and Arango & Lyons, S. A., and Maryland Casualty Company, Defendant. |
Maas & Bailey, St. Thomas, Virgin Islands, William W. Bailey, St. Thomas, Virgin Islands, of counsel Donovan, Leisure, Newton & Irvine, New York City, Sidney P. Howell, Jr., New York City, of counsel, for plaintiff.
Dudley, Hoffman & McGowan, St. Thomas, Virgin Islands, Geo. H. T. Dudley, St. Thomas, Virgin Islands, of counsel for Maryland.
Almeric Christian, St. Croix, Virgin Islands, for Republic.
This matter came on for hearing on November 4, 1954, on a motion by defendant Maryland Casualty Company to be dismissed from the action. The use plaintiff, World Commerce Corporation, S. A. was represented by Maas and Bailey, William W. Bailey, Esquire, of counsel and Donovan, Leisure, Newton & Irvine, Sidney P. Howell, Esquire, of counsel. The defendants Republic Construction & Maintenance Co., Inc., and Arango & Lyons, S. A. were represented by Almeric Christian, Esquire, and defendant Maryland Casualty Co. by Dudley, Hoffman and McGowan, George H. T. Dudley, Esquire, of counsel. Following the hearing on the motion time was granted for the submission of briefs by counsel on the questions of law raised therein.
The use plaintiff, World Commerce Corporation, S. A. (hereinafter referred to as the plaintiff or "World Commerce" is suing for $57,887.73 plus interest from February 11, 1954, as the balance due for supplies, materials and equipment furnished defendants Republic Construction & Maintenance Co., Inc., and Arango & Lyons, S. A. (hereinafter referred to as "Republic" and "Arango" respectively) for the building of two hospitals in St. Croix, Virgin Islands, for the United States Government and pursuant to a written agreement between World Commerce and Republic.
Defendant Maryland Casualty Company (hereinafter referred to as "Maryland") moved to be dismissed from the action on the ground that plaintiff has failed to state a claim upon which relief can be granted as to it, as it appears on the face of the pleadings that:
(a) Plaintiff agreed, by contract of October 4, 1951, to furnish the defendant Republic "a line of credit not exceeding $75,000.00 for shipment of equipment and materials to be purchased from World Commerce Corporation and sold by the companies listed on Enclosure 1" (See Exhibit D.);
(b) Defendant Maryland on September 24, 1951 engaged with defendants Republic to bond them in the sum of $585,000 for performance of contract No. IT-72, dated September 24, 1951, and also, in a separate bond, for payment of "all persons supplying labor and material in the prosecution of the work provided for in said contract" (See Exhibit B.);
(c) Neither the performance nor the payment bond covers any claim arising out of the contract of October 4, 1951 between plaintiff and defendants Republic and Arango.
The facts of the case as appear from the allegations of the complaint are as follows:
1. On September 24, 1951, Republic entered into a contract (No. IT-72) for $585,000 with the United States Government (Department of Interior) to construct two hospitals in St. Croix, Virgin Islands: a 60-bed hospital in Christiansted and a 12-bed hospital in Frederiksted. See plaintiff's Exhibit A.
2. On September 24, 1951, Republic and Arango, as joint principals, and Maryland Casualty, as surety, executed and delivered to the United States, pursuant to Act of Congress of August 24, 1935, c. 642, § 1, 49 Stat. 793, 40 U.S.C.A. § 270a (commonly called the Miller Act) a payment bond, No. 90-110643-4, in the penal sum of $585,000 conditioned upon the prompt payment by the principals to all persons supplying labor and material for the prosecution of the work provided for in the contract and any authorized modifications thereof. See plaintiff's Exhibit B. (In addition to this payment bond, Maryland also bonded the joint venturers for the performance of their contract.)
3. On October 22, 1951, defendants Republic and Arango entered into a joint venture agreement which provided, in part, that each of them jointly and severally committed themselves to the accomplishment of the above-mentioned construction projects in the Virgin Islands; that each agreed jointly and severally to guarantee all purchases, loans and credit documents made to the joint venture in the interests of the accomplishment of the joint venture projects; and that each was to be "considered jointly responsible to all suppliers and on all notes and letters of credit accomplished in the interest of performing the joint venture projects." It was also agreed that the business of the joint venture would be conducted in the name of Republic Construction and Maintenance Company, Inc. See plaintiff's Exhibit C.
4. On October 4, 1951, Republic entered into an agreement with World Commerce, termed a "financing agreement" for the supply of equipment and materials for the project in St. Croix. See plaintiff's Exhibit D.
5. Republic did proceed with the construction in St. Croix and performance of the contract was completed.
6. The materials furnished by World Commerce pursuant to the agreement of October 4, 1951, were used by Republic in connection with the construction of the two hospitals and more than 90 days have elapsed since the last of said materials were supplied by World Commerce.
7. By reason of the above-mentioned financing agreement, defendants Republic and Arango owed plaintiff the sum of $72,643.16 on September 1, 1953. On February 11, 1954, defendants paid $16,753.03 to World Commerce in partial payment of its debt, leaving a balance due, with interest thereon, of $57,887.73.
Plaintiff filed this suit against the surety of the contractors by virtue of the provision of the Miller Act, 40 U.S.C.A. § 270a, which prescribes that before any contract is awarded to any person for the construction or repair of any public building or public work of the United States, such person or contractor shall furnish (1) a performance bond for the protection of the United States and (2) a payment bond "for the protection of all persons supplying labor and material in the prosecution of the work provided for in said contract for the use of each such person."
In compliance with the requirements of this Act, Republic furnished the two bonds specified with the Maryland Casualty Co. as surety in both bonds. The payment bond, the only one involved in this case, recites the provision of the Miller Act as the condition of payment under the bond, to wit:
Plaintiff, World Commerce, sues for recovery or payment under this bond on the theory that it is a supplier of materials such as is protected by the Miller Act and the terms of the bond. Defendant denies that plaintiff is a supplier of materials, asserting that it is evident on the face of the pleadings that plaintiff is a mere lender of credit and not a supplier of materials such as is contemplated and protected by the Miller Act or the condition stipulated in the bond.
For the Court to grant defendant's motion to be dismissed it must appear with certainty from the pleadings that World Commerce does not come under the coverage of the Miller Act or the bond issued pursuant thereto. Des Isles v. Evans, 5 Cir., 200 F.2d 614; Kingwood Oil Co. v. Bell, 7 Cir., 204 F.2d 8.
The documents involved in the case were made a part of plaintiff's complaint and cited above as plaintiff's exhibits. In addition, both defendant and plaintiff have submitted affidavits from the principals involved in support of, or in opposition to their respective positions on the motion.
Plaintiff claims protection under the payment bond by virtue of its contract with Republic, its actual relations with Republic, and also by virtue of the fact that the surety, Maryland, had knowledge of its arrangements with Republic.
Defendant Maryland denies having any knowledge of the agreement between Republic and plaintiff prior to February, 1953, and asserts that under the instrument of October 4, 1951, plaintiff is not a materialman or a supplier of materials as understood or intended by the Miller Act, supra, plaintiff being a mere financing agent of Republic. Defendant claims that this is so apparent on the face of the pleadings that defendant Maryland must be dismissed since plaintiff cannot qualify under its bond. On the other hand, plaintiff argues that the motion to dismiss cannot be granted at this time for the reason that a number of factual questions have been put in issue by the affidavits filed herein.
The following are the questions raised:
Plaintiff claims that the answer to each of the above...
To continue reading
Request your trial
-
U.S. for United Statese & Benefit of World Commerce Corp. v. Republic Constr.
...CASUALTY COMPANY, DefendantsCivil No. 27District Court of the Virgin Islands Div. of St. Croix at ChristianstedMarch 4, 1955See, also, 129 F. Supp. 651 Action against contractors and surety on payment bond issued under the Miller Act in connection with materials furnished to contractors for......