United States v. Shea-Adamson Co., 3712.

• Decision Date: 18 December 1937
• Docket Number: No. 3712.,3712.
• Parties: UNITED STATES, for Use and Benefit of FARWELL, OZMUN, KIRK & CO. v. SHEA-ADAMSON CO. et al. (CONDITIONEDAIRE, INC., et al., Interveners).
• Court: U.S. District Court — District of Minnesota

21 F. Supp. 831

UNITED STATES, for Use and Benefit of FARWELL, OZMUN, KIRK & CO. v. SHEA-ADAMSON CO. et al. (CONDITIONEDAIRE, INC., et al., Interveners).

No. 3712.

District Court, D. Minnesota, Fourth Division.

December 18, 1937.

Kelehan & Dady, of St. Paul, Minn., for plaintiff.

Kerr, O'Neill & Cragg, of St. Paul, Minn., for defendant Shea-Adamson Co. Jacob Yaffe, of Chicago, Ill., and Louis H. Joss, of Minneapolis, Minn., for defendants Nils P. Severin and Alfred N. Severin, copartners doing business as N. P. Severin Co., and defendant Royal Indemnity Co.

Coursolle, Preus & Maag, of Minneapolis, Minn., for intervener Emil A. March.

Brill & Maslon, of Minneapolis, Minn., appeared as attorneys for the intervenor, Conditionedaire, Inc.

SULLIVAN, District Judge.

This is an action by the United States of America, for the Use and Benefit of Farwell, Ozmun, Kirk & Co., a corporation, against Shea-Adamson Company, a corporation, Nils P. Severin and Alfred N. Severin, copartners doing business under the name and style of N. P. Severin Company, and Royal Indemnity Company, a corporation, under the provisions of the Heard Act, 40 U.S.C.A. ß 270.

This suit is brought by the plaintiff materialman to recover the unpaid balance on certain materials furnished to the Shea-Adamson Company, the subcontractor, in the performance of its contract in constructing and installing a ventilating system in the post office building in Minneapolis, Minn.

N. P. Severin Company is the general contractor. The defendant Royal Indemnity Company is the surety on its bond given in connection with said job contract, and Shea-Adamson Company is one of the subcontractors on said job for the ventilating system.

The Heard Act, 40 U.S.C.A. ß 270, authorizes a cause of action in the form in which this one is brought, in favor of subcontractors, laborers, and materialmen, and the time within which they must bring the suit is limited to one year after the completion of the work and "final settlement" of the contract, but it may not be brought within the first six months of such period, which is reserved to the United States to sue on its own account.

This suit was started on the 30th day of December, 1936, and the final settlement of the general contract for the construction of said post office building was made May 14, 1936. When one action has been brought, all the other creditors must intervene therein within one year from the date of the final settlement. 40 U.S.C.A. ß 270; United States, for Use of Joseph Tino & Co., Inc., v. Rangely Const. Co., Inc., et al., D.C., 288 F. 76.

Two complaints in intervention within the time allowed by law were filed:

(a) The claim of Emil A. March. During the progress of the trial, a stipulation of settlement and dismissal of said claim was filed.

(b) The claim of Conditionedaire, Inc.

The claim of the plaintiff was duly settled and dismissed during the progress of the trial.

The complaint in intervention of Conditionedaire, Inc., is divided into four claims, all of which said claims were duly sold and assigned by the original claimants, materialmen, and laborers, to the intervener, Conditionedaire, Inc., before the bringing of this action.

The different claims of Conditionedaire, Inc., will be taken up in order, viz.:

Minneapolis Roofing Company.

William H. Gausewitz and Louis C. Provencial, copartners doing business as the Minneapolis Roofing Company, on February 28, 1934, sold and delivered directly to the N. P. Severin Company certain building materials, which were incorporated in the Minneapolis post office building, and on which a balance of $133 is due, payment thereof being demanded on or before March 10, 1934. This claim has been established, and no evidence in opposition thereto was offered or received at the trial.

Minnesota Steel Supply Company.

This company sold and delivered, between February 12, 1934, and June 7, 1934, to the Shea-Adamson Company certain materials which were incorporated in the ventilating job in said Minneapolis post office building, upon which there is a balance due of $346.87, payment of the balance having been duly demanded on or before November 10, 1934. The amount of the account is undisputed, and it is conceded that said materials went into the Minneapolis post office ventilating job. It is further conceded that demand for the payment of the said balance was made on the Shea-Adamson Company on March 10, 1934.

It is, however, contended on the part of the defendants N. P. Severin Company and Royal Indemnity Company that they are not liable on said claim by reason of the fact that a waiver or release of the claim was executed by the Minnesota Steel Supply Company and delivered by it to the Shea-Adamson Company, which in turn delivered it to the N. P. Severin Company.

(a) The question arises as to whether or not the release of the Minnesota Steel Supply Company bars it from a recovery against the general contractor and its surety. The release is dated December 30, 1933, and was on the same date delivered to the Shea-Adamson Company. The release, among other things, reads as follows, "* * * do hereby waive and release any and all liens, claims, or right of liens on said above described building and premises, and do further release N. P. Severin Company and their sureties and the owners of the above described building on all claims and demands whatsoever, on account of labor or materials, or both, furnished or which may be furnished by the undersigned for said building or premises," and the release in other parts refers to the United States post office at Minneapolis, Minn.

It appears from the record that there was no actual intention to waive any known right. In fact, at the time of the execution of said release, there was in existence no right in favor of claimant as against Shea-Adamson Company, the general contractor, or its surety. At the time the so-called release or waiver was signed, the material which was involved in this action had not been furnished or ordered. The items in the claim of the Minnesota Steel Supply Company evidence sale and delivery of materials on February 12, 1934, May 16, 1934, and June 7, 1934.

To waive or release a lien right, it must appear to be supported by a consideration. Abbott v. Nash, 35 Minn. 451, 452, 29 N.W. 65.

There was no consideration in the instant case for the release, nor does the record disclose any grounds of estoppel barring the intervener from asserting this claim. No receipt was ever given by the Minnesota Steel Supply Company for the payment of the account. All that was given was a writing in the form of a release of lien on the lands and buildings, of course such release of lien being with reference to the building, the Minneapolis post office, was without any force or effect, since claimant would under no circumstances have a right to file a lien against a government building, and a release of right of claim as against the general contractor and its surety, but was in no manner a release of any claim against the Shea-Adamson Company, or was it in satisfaction of any claim against the Shea-Adamson Company. The release is not a bar to a recovery on this claim. See Kubu v. Kabes, 142 Minn. 433, 172 N.W. 496; Ohio Confection Co. v. Eimon Mercantile Co., 154 Minn. 420, 191 N.W. 910, 31 A.L.R. 952; Duncanson v. Chicago Title & Trust Co., 188 Ill.App. 551; Empire State Surety Co. v. Hanson, 8 Cir., 184 F. 58; Antrim Lumber Co. v. Neal et al., 172 Okl. 292, 44 P.2d 939; Johnson v. Spencer, 49 Ind.App. 166, 96 N.E. 1041; Cellized Floors, Inc., v. Glens Falls Indemnity Co. of New York, 156 A. 845, 9 N.J.Misc. 1111.

The record shows that the general contractor had supervisors and foreman on the job, and that it either had knowledge of the truth of the fact that at the time of the delivery of the waiver or release that said materials referred to in said itemized statement had not been delivered on the job or furnished to the Shea-Adamson Company, or in any event, the general contractor had the means by which, with the use of reasonable diligence, it could acquire this knowledge. There was no showing that the general contractor or its surety suffered any damage by reason of the so-called release, or waiver.

Minneapolis Roofing Company — Second Claim.

A second account of the Minneapolis Roofing Company, being the account with Shea-Adamson Company, is evidenced by a claim for an unpaid balance in the sum of $2,336.01, being for dampers delivered by it to the Shea-Adamson Company in the performance of its contract, and incorporated in the Minneapolis post office building, and is undisputed. The only question with reference to this claim is as to the date when interest on said account commences to run.

The contract between the Minneapolis Roofing Company and the Shea-Adamson Company contains this clause: "Payments as noted above to be made when and as paid by the N. P. Severin Company." The contract further provides that payments were to be made on the 1st and 15th of the month following date of delivery. The last substantial payment by the general contractor to the Shea-Adamson Company on the contract was on April 30, 1934, at which time there was paid by the general contractor to the Shea-Adamson Company the sum of $1,975.52. The dampers, etc., furnished by the Minneapolis Roofing Company had long theretofore been furnished to the subcontractor and installed in the ventilating job. Payment of the claim was demanded by the Minneapolis Roofing Company of Shea-Adamson Company prior to December 1, 1934, but the terms of the contract were known to all of the interested parties, the contract was completed on May 1, 1934, and interest should run from that date.

Cook's Claim.

This cause of action is to recover the unpaid contract price which accrued before and after the discharge of Mr. Cook from the services of the defendant Shea-Adamson Company, for the period of time this defendant had agreed to employ him,...