United States v. Skinner & Ruddock

• Decision Date: 22 August 1958
• Docket Number: Civ. A. 4852.
• Citation: 164 F. Supp. 616
• Court: U.S. District Court — District of South Carolina
• Parties: UNITED STATES of America, for the use and benefit of NOLAND COMPANY, Inc., Plaintiff, v. SKINNER & RUDDOCK, Inc. and United States Guarantee Company, Defendants.

164 F. Supp. 616

UNITED STATES of America, for the use and benefit of NOLAND COMPANY, Inc., Plaintiff, v. SKINNER & RUDDOCK, Inc. and United States Guarantee Company, Defendants.

Civ. A. 4852.

United States District Court E. D. South Carolina, Charleston Division.

August 22, 1958.

Robinson, McFadden & Dreher, James F. Dreher, Columbia, S. C., for plaintiff.

Meyer, Goldberg, Hollings, Lempesis & Uricchio, Robert M. Hollings, Charleston, S. C., for defendant.

WYCHE, District Judge.

This suit was commenced on April 9, 1955, by Noland Company, Inc. as use-plaintiff in the name of the United States of America, pursuant to the provisions of the Miller Act (40 U.S.C.A. § 270a et seq.) for certain amounts due to the use-plaintiff for materials sold to Williams Piping and Heating Company, for which indebtedness the defendant Skinner & Ruddock, Inc. and its bonding company, the defendant United States Guarantee Company were alleged to be liable under the Miller Act and under a bond given by the defendants pursuant to the Act.

On March 29, 1956, the Honorable Ashton H. Williams, United States District Judge, referred the claim to James B. Heyward, Esq., Standing Master, to take testimony and to report his Findings of Fact and Conclusions of Law thereon.

The Master filed his Report in which he found, among other things, that the total balance owed by Williams Piping and Heating Company to the use-plaintiff was Three Thousand, Three Hundred, Twelve and 11/100 ($3,312.11) Dollars; that a certain letter dated November 2, 1953, sent by the use-plaintiff to the defendant Skinner & Ruddock was sufficient in form to constitute notice of a claim under the Miller Act so as to render the defendants liable to the use-plaintiff for the indebtedness of Williams Piping and Heating Company, but that, in equity, the defendants should not bear the entire indebtedness, and he recommended that the plaintiff have judgment against the defendants for one-half of the amount. To this Report, both the plaintiffs and the defendants filed objections, and these objections to the Master's Report are now before me.

After hearing arguments and reviewing the objections to the Master's Report, I have reached the conclusion urged upon me by counsel for each of the parties herein, that the Master was not correct in recommending judgment for the plaintiff for one-half of the amount due. The claim herein asserted is under the Miller Act; this statute prescribes the measure of recovery, and if liability under it exists then the liability is for the full amount due.

The United States Supreme Court in United States for Use of Texas Portland Cement Co. v. McCord, 1914, 233 U.S. 157, 34 S.Ct. 550, 552, 58 L.Ed. 893, held: "By this statute (a predecessor of the Miller Act) a right of action upon the bond is created in favor of certain creditors of the contractor. The cause of action did not exist before and is the creature of the statute. The act does not place a limitation upon the cause of action theretofore existing, but creates a new one upon the terms named in the statute."

The right of action under the Miller Act is a creature of the statute and is not available even under equitable principles and this remedy on ordinary principles of jurisprudence cannot be whittled down or cut back by equitable considerations. Therefore, if the plaintiff has complied with the Miller Act in the case at bar, it would be entitled to full recovery of the amount due.

The main question in this controversy is whether the use-plaintiff has so complied with the Miller Act as to have a cause of action against the defendants. This question is raised by the defendants' third objection to the Master's Report wherein they objected to the Master's finding as a matter of law that the letter of November 2, 1953, was sufficient "in form" to constitute notice of a claim under the Miller Act and wherein they objected to his basing said conclusion on mere findings that said letter accurately stated the amount due and the party to whom the material was furnished, in that said elements alone are not sufficient compliance with the Miller Act and in that, as a matter of law, there was no compliance with the additional requirement of the Miller Act, since the letter failed, in substance, to advise that the use-plaintiff was looking to the defendant Skinner & Ruddock for the payment of Williams' account.

The Miller Act is as follows, 40 U.S.C. A. § 270b: "(a) 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 under section 270a of this title 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. Such notice shall be served by mailing the same by registered mail, postage prepaid, in an envelop addressed to the contractor at any place he maintains an office or conducts his business, or his residence, or in any manner in which the United States marshal of the district in which the public improvement is situated is authorized by law to serve summons.

"(b) Every suit instituted under this section shall be brought in the name of the United States for the use of the person suing, in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere, irrespective of the amount in controversy in such suit, but no such suit shall be commenced after the expiration of one year after the date of final settlement of such contract. The United States shall not be liable for the payment of any costs or expenses of any such suit."

On November 2, 1953, the plaintiff sent to the defendant Skinner & Ruddock the following letter: "Noland Company Incorporated 1409 Taylor Street Columbia 1, South Carolina November 2, 1953 Skinner and Ruddock Construction Company Charleston, South Carolina Att: Mr. Benton Gentlemen: In accordance with a request made by your Mr. Skinner, this is to advise that as of this date Williams Piping and Heating Company owes the Noland Company $3,128.11 on the Officers Mess job at Charleston Airbase which monies were due and payable in October. We feel sure that this customer will pay us as soon as sufficient collections are effected, and we are glad to work with you in any way for the mutual betterment of everyone concerned. Very truly yours, Noland Company, Inc. S/B.H. McGehee B. H. McGehee Credit Manager"

It is stipulated that this letter was received by the defendants Skinner & Ruddock and that it was the only written notice of the indebtedness sent to the said defendant.

The first case in which the sufficiency of notice under the Miller Act was considered by the United States Supreme Court is Fleisher Engineering & Construction Co. v. United States for Use and Benefit of Hallenbeck, 1940, 311 U.S. 15, 61 S.Ct. 81, 83, 85 L.Ed. 12. In that case the Supreme Court pointed out that the Miller Act statute requiring notice was physically divisible into two functional parts. The first part spelled out "the essence of jurisdiction over the case" or the "condition of the liability" on the bond, and was "clearly made a condition precedent to the right to sue". The second part of the Act set forth the mode by which the statutory requirements of notice set out in the first part should be complied with. Compliance in substance with the first part was absolutely essential to jurisdiction, whereas the second part...