United States v. THOMAS EARLE & SONS

• Decision Date: 17 October 1938
• Docket Number: No. 6601.,6601.
• Citation: 99 F.2d 898
• Parties: UNITED STATES, to Use of McHUGH ELECTRIC CO., v. THOMAS EARLE & SONS, Inc., et al.
• Court: U.S. Court of Appeals — Third Circuit

99 F.2d 898 (1938)

UNITED STATES, to Use of McHUGH ELECTRIC CO., v. THOMAS EARLE & SONS, Inc., et al.

No. 6601.

Circuit Court of Appeals, Third Circuit.

October 17, 1938.

Hugh M. Morris and Ivan Culbertson, both of Wilmington, Del., for appellant.

Josiah Marvel, Jr., and Marvel, Morford, Ward & Logan, all of Wilmington, Del., for appellees.

Before BUFFINGTON and BIGGS, Circuit Judges, and DICKINSON, District Judge.

BIGGS, Circuit Judge.

Upon February 6, 1933, the United States, through its Engineer Corps, entered into a contract with Triest & Earle, Inc., hereafter referred to as the contractor, for the construction of a movable span highway bridge across the branch channel of the Chesapeake and Delaware Canal at Delaware City, Delaware, and gave bond by the appellee United States Guarantee Company for the faithful performance of its contract as required by the Act of August 13, 1894, c. 280, 28 Stat. 278, as amended by the Act of February 24, 1905, c. 778, 33 Stat. 811, and March 3, 1911, c. 231, Sec. 291, 36 Stat. 1167, 40 U.S.C.A. § 270, commonly known as the Heard Act. This bond was conditioned in the usual terms for the benefit of material men and laborers.

On February 20, 1933, the contractor purchased from the appellant, McHugh Electric Company, for the sum of $7,250, certain electrical equipment required for the completion of the span. The equipment was duly delivered, was incorporated in the bridge, but of the purchase price the sum of $4,074.89 remains unpaid. The United States instituted no suit or suits under the Heard Act, and upon March 3, 1936, the appellant sued the contractor and the bonding company in the United States District Court for the District of Delaware to recover the unpaid balance. Upon the conclusion of the appellant's case, the learned trial judge directed a verdict in favor of the appellees upon the ground that the suit had not been commenced within one year from the date of final settlement between the United States and the contractor as required by law.

The pertinent provisions of the Heard Act are as follows:

"If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials shall * * * have a right of action * * * provided, That * * * it * * * shall be commenced within one year after the performance and final settlement of said contract, and not later * * *".

It is agreed by the parties that the work of the contractor in building the bridge was subject to the supervision and direction of the United States Engineer Office, a division of the War Department. It is undisputed that the contract was completed and the span was accepted on January 20, 1934.

On March 14, 1934, the United States Engineer Office in Philadelphia prepared a voucher at the head of which was printed "Public Voucher for Purchases, and Services other than Personal". Above this was typed the following words, "11th and Final Payment under Contract". This voucher, which in itself consisted of two pages, was addressed to the contractor and showed at the end of the accounting column upon the second page under the heading "Amount", the sum of $2,729.72, as "Balance withheld pending adjustment of liquidated damages ($1,829.72) and removal of sunken barge ($900.00)". It appears that the contractor claimed that additional payments totalling in excess of $25,000 were due it under the contract. The contractor signed the voucher with the notation, "Signed subject to claims for additional payment in accordance with our letter of 5/2/34." Following the two pages of the voucher proper and as part of the same exhibit, viz., No. 3, are three other pages which contain a "Summary of Work Earned and Paid to Contractor under the Contract", a "Summary of Findings Due to Delay in Completion of the Work", and finally certain comments by the Colonel commanding that portion of the Corps of Engineers charged with the completion of the bridge, in respect to conditions causing delay in the work which were without fault or negligence upon the part of the contractor. A total of sixty-one days appears upon this summary, during which work could not be carried on by the contractor due to unfavorable weather conditions. The document ends with the comment that on April 5, 1934, the sunken scow for which $900 was stated as being withheld upon the voucher had been removed and satisfactorily disposed of without expense to the United States.

Upon July 26, 1934, the United States Engineer Office sent a letter, received in evidence as Exhibit No. 4, to the Chief of Engineers of the United States Army in regard to the contractor's claim for extra compensation. This letter recommends that the voucher and the claim of the contractor be referred to the Comptroller General for "direct settlement" and further recommends that liquidated damages for sixty-one days at the rate of $50 per day "be remitted" in accordance with findings attached to the voucher and referred to above. The letter also recommends that the contractor's claim for additional compensation in the amount of $26,295.47 be disallowed.

Upon March 4, 1935, the General Accounting Office sent a certificate of settlement to the contractor stating that there was due from the United States to the contractor the sum of $3,979.72 and directing the sending of check and warrant in this sum to the contractor. The payment was made as directed.

The certificate of settlement refers to the amount of additional compensation claimed by the contractor which is stated to be in the sum of $29,954.62 and disallows $25,974.90 thereof, leaving a balance of $3,979.72, which is stated to be "payable to claimant". It then refers to the obligation of the contract requiring completion of the work within one hundred seventy-five calendar days and the provision for assessment of liquidated damages against the contractor at the rate of $50 for each day of delay. The certificate of assessment also states that it appears and the "contracting officer has so found" that sixty-one days' delay were due to certain facts beyond the contractor's control or reasonable anticipation and that therefore the contractor is "entitled to a remission of $3,050, being liquidated damages for sixty-one days' delay instead of $7,050, as claimed." The certificate also states that the contractor is "allowed the amount of $929.72 retained for unperformed details and pending final settlement since it is shown that all work has been satisfactorily completed." The certificate concludes by stating that no portion of the remaining amount claimed by the contractor may be allowed to it for reasons which are stated thereafter in detail.

Now it should be noted that the sum of $3,979.72, paid to the contractor at some date after March 4, 1935, pursuant to the certificate of settlement, is equal approximately to the sum of two items, namely, sixty-one days remission of penalty for delay at the rate of $50 a day, or $3,050, plus $900...