United States v. Robinson

• Decision Date: 07 April 1914
• Docket Number: 211.
• Citation: 214 F. 38
• Parties: UNITED STATES ex rel. BROWN-KETCHAM IRON WORKS et al. v. ROBINSON et al.
• Court: U.S. Court of Appeals — Second Circuit

214 F. 38

UNITED STATES ex rel. BROWN-KETCHAM IRON WORKS et al. v. ROBINSON et al.

No. 211.

United States Court of Appeals, Second Circuit.

April 7, 1914

F Hulse, of New York City, for Ivins and others.

F. M Brown, of New York City, for Robinson.

J. B Coleman, of New York City, for Yawger.

M. L Fearey, of New York City, for Brown-Ketcham Iron Works and others.

Before LACOMBE, COXE, and WARD, Circuit Judges.

LACOMBE Circuit Judge.

The sole question to be determined here is the meaning of the phrase 'final settlement of the contract' between the original contractor and the government. Does it mean that all outstanding controversies between the government and the contractor arising out of the contract must be finally determined? Or is it sufficient if the government has officially indicated that it intends to make no effort to collect anything further from the contractor or from the bond? The statute is awkwardly and inartificially expressed, but it seems to us it may be easily construed by applying the well-recognized rule of ascertaining first what was the difficulty to remedy which the statute was passed and second what was the method adopted to remedy such difficulty.

Under the old act, the United States was exposed to a loss of the security it had provided to secure a proper execution of the contracts it had let, in cases where the contractor became insolvent. Subcontractors and materialmen, sometimes before the work was even near completion, could proceed independently to secure their pay out of the proceeds of the bond, thereby reducing it to such an extent that the government might get nothing. Manifestly this was improvident legislation and it was undoubtedly to remedy this difficulty that the act was passed. The new act provided in the first place that suit to enforce the bond should be brought by the United States and materialmen be allowed merely to intervene in that suit. There might, of course, be instances where the government, making no claim against its contractor to recover damages would bring no suit on the bond. In that case the new act provides that the materialmen may themselves bring such suit. These provisions deal more particularly with the practice.

The more important part of the new act is found in the clauses which provide in substance that no materialman shall take one dollar out of the fund which the bond produces, until every dollar due the United States under the contract shall be fully paid. Keeping these clauses in mind, it seems to us that a reasonable interpretation of the disputed phrase is to be readily found. In determining the time when materialmen may begin suit, it would not do to fix it at some day 'after complete performance' merely. Defective work, damages for delay, and other matters might give the United States some claim which it might not decide to prosecute until some time after the work was turned over, apparently complete. The date was, therefore, fixed relatively to 'complete performance of the contract and final settlement thereof. ' We take it that these italicized words refer to the time when the proper government officer, who has the final discretion in such matters, after examination of the facts, satisfies himself that the government will accept the work, as it is, without making any claim against the contractor for unfinished or imperfect work, damages for delay or what not, and records that decision in some orderly way. Six months after that date, materialmen may begin suit. This construction protects the government against the defect of the old act, viz., that its suit to recover might prove barren, because the money is gone. We can see no reason why Congress should have provided that, when the government claims nothing from contractor or sureties, all others must wait still further until some claim of the contractor against the government for having underpaid him reaches a conclusion. Such suit can in no way affect the fund provided by the bond out of which the government might have satisfied its claim, if it had any. In other words we see no reason...