United States v. Title Guaranty & Sur. Co.

• Decision Date: 10 December 1918
• Docket Number: 2618.
• Citation: 254 F. 958
• Parties: UNITED STATES, for Use of R. HAAS ELECTRIC & MFG. CO. et al., v. TITLE GUARANTY & SURETY CO. et al.
• Court: U.S. Court of Appeals — Seventh Circuit

254 F. 958

UNITED STATES, for Use of R. HAAS ELECTRIC & MFG. CO. et al., v. TITLE GUARANTY & SURETY CO. et al.

No. 2618.

United States Court of Appeals, Seventh Circuit.

December 10, 1918

Almon W. Bulkley, of Chicago, Ill., counsel for plaintiffs in error.

Charles Y. Freeman, of Chicago, Ill., counsel for defendants in error.

Before BAKER, ALSCHULER, and EVANS, Circuit Judges.

EVAN A EVANS, Circuit Judge.

Defendant in error executed its bond to the United States conditioned among other things, that the contractor 'shall promptly make payments to all persons supplying it labor and materials in the prosecution of the work' in constructing the main hospital building of the naval training station at Great Lakes. The R. Haas Electric & Manufacturing Company 'and other parties similarly situated,' for whose benefit this action was brought, were creditors of the contractor, Noel Construction Company, having furnished labor and material for which they had not been paid.

Plaintiff alleged that more than six months had expired since the 'completion and final settlement of the contract,' which allegation was denied by defendant, and upon determination of this issue the decision turns.

The action was begun December 5, 1912. The building was 'completed' January 16, 1912. Plaintiff asserts that a 'final settlement' of the contract occurred on April 6, 1912. On this date the acting chief of the Bureau of Medicine and Surgery of the United States Navy approved what the civil engineer of the United States Navy termed the final voucher. In this letter bearing date March 29, 1912, the engineer wrote as follows:

Re Voucher #31.

March 29, 1912.

Sirs There is forwarded herewith final voucher, less the five per cent. reservation to be withheld for a period of one year under contract M. & S. No. 1, for the construction of the hospital building at this station. This final voucher covers all additions and deductions under the contract.

It is requested that this voucher be signed in the usual manner, after the certificate 'Certified correct and just, payment not received,' and then returned to this office, as additional signatures from this office must be attached previous to transmittal to the department.

To this letter the construction company made reply on April 1, 1912, notifying the Public Works Office that the voucher had been executed and returned as requested. This voucher, No. 31, reached the Department of the Navy and was approved on April 6, 1912, by the acting chief of the Bureau of Medicine and Surgery.

The summary of this final voucher was as follows:

Extension of items . . . $233,409.49

Deductions . . . 222.71

$233,186.78

Less 5 per cent. reservation to be withheld until January 16, 1913 . . .11,659.34

$221,527.44

Less amount previously paid . . . 209,468.52

Amount due . . . $ 12,058.92

Unless this voucher constitutes a final settlement, it is admitted the action was prematurely brought.

In determining whether a 'final settlement' occurred on this date, we cannot overlook the plain purpose of 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 (Comp. St. Sec 6923), which was to make more certain the payment of claimants furnishing labor or materials to the government contractors. The title of the original act reads:

'An act for the protection of persons furnishing materials and labor for the construction of public works.'

And a part of the amended act reads:

'That hereafter any person * * * entering into a formal contract with the United States for the construction of any public building, * * * shall be required, before commencing such work, to execute the usual penal bond, * * * with the additional obligation that such contractor * * * shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work,' etc.

It is apparent, therefore, that the purpose of the act and the object of the bond given in the present case was to secure to the plaintiffs in error and others similarly situated the prompt payment of their claims. Illinois Surety Co. v. John Davis Co., 244 U.S. 376, 37 Sup.Ct. 614, 61 L.Ed. 1206.

Three significant provisions of the act herewith numerically numbered are:

(1) '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 * * * shall be, and are hereby, authorized to bring suit in the name of the United States * * * for his or their use and benefit, against said contractor and his sureties, and to prosecute the same to final judgment and execution.'

(2) 'Provided, that where suit is instituted by any of such creditors on the bond of the contractor it shall not be commenced until after the complete performance of said contract and final settlement thereof, and shall be commenced within one year after the performance and final settlement of said contract, and not later.'

(3) 'And provided further, that where suit is so instituted by a creditor or by creditors, only one action shall be brought, and any creditor may file his claim in such action and be made party thereto within one year from the completion of the work under said contract, and not later.' Claimants' embarrassment, if their present position be untenable, is obvious from a reading of provisions (1), (2), and (3). If no final settlement occurred on April 6, 1912, but did occur as claimed by defendant on December 30, 1912, then no action was maintainable until six months thereafter...