National Surety Co. v. United States ex rel. Pittsburgh & Buffalo Co.

228 F. 577, 1916 U.S. App. LEXIS 2393
CourtCourt of Appeals for the Sixth Circuit
DecidedJanuary 14, 1916
DocketNo. 2651
StatusPublished
Cited by38 cases

This text of 228 F. 577 (National Surety Co. v. United States ex rel. Pittsburgh & Buffalo Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Surety Co. v. United States ex rel. Pittsburgh & Buffalo Co., 228 F. 577, 1916 U.S. App. LEXIS 2393 (6th Cir. 1916).

Opinion

DENISON, Circuit Judge

(after stating the facts as above). [1] We pass by, without deciding, certain considerations affecting the right of the Surety Company to insist that a court of equity had exclusive jurisdiction, and assume that it had — and has — the full right to be heard on that question. Its contention is fully supported by the opinion of the Circuit Court of Appeals of the Second Circuit in Illinois Surety Co. v. United States, 212 Fed. 136, 129 C. C. A. 584, filed since the hearing of this case below. The contrary result has been [580]*580reached in the Seventh Circuit. Illinois Surety Co. v. United States, 226 Fed. 653, 664, -C. C. A.-. In the present case the bond is not sufficient to. pay all the claims, and if, upon a .writ of error attacking only certain claims, they are set aside, whereby the fund becomes sufficient to pay all, the other claimants who have not assigned error can get no benefit, according to the common-law rule affecting1 several judgments. In such a case the defendant surety might go free of part of its liability; and so there is direct force in the argument that a court of equity is the appropriate tribunal, and that therefore it will be presumed that Congress intended to put the jurisdiction there; yet, even since the amendment of the statute, so many courts — and the Supreme Court so many times1 — have assumed that there was - jurisdiction in the law court that we are reluctant to consider all these, decisions inadvertent. It is enough to turn the scale when we observe, as was done in the Seventh Circuit, that, by the enactment of June, 1915-, section 274a of the Judicial Code — and which enactment applies to pending cases — the only effect of holding in this case that the true jurisdiction, was in equity, would be to send the case back to be transferred to the equity side and heard over again by the same judge upon probably the same proofs. Upon the whole we are better satisfied to say that the court below had jurisdiction.

[2] The statute involved has been many times considered, but the Supreme Court has never had occasion to declare broadly the meaning of “labor and materials.” The standard lien statutes with reference to buildings, in force, probably, in every state, contemplate materials and labor which directly enter into the structure itself. We are not aware of any decisions extending these state statutes so as to reach and create liens for labor or materials which contribute to the construction so indirectly as do. the supplies consumed by the contractor in operating his plant. Of course, where the statute, by its words or by judicial interpretation, gives a lien for labor or materials furnished to subcontractors, it carries us one step away from the structure itself; but this does not necessarily mean more than that the rule of direct contribution is to be applied to the work of the subcontractors.

The language of. the present federal statute, does not seem to be materially different from the typical state lien statute. There is a distinction between the original and the amended act. The act of 1894 directed that the bond given to the United States to secure the completion of the contract should have “the additional obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them labor or materials in .the prosecution of the work,” and further specified that suit might be brought and recovery had upon this bond by any person who had supplied “labor or materials for the prosecution of such work.” When the statute was amended in 1905, there was no change in the language fixing the condition of the bond, but it was specified that recovery thereon could be [581]*581Rad by the person who had “furnished labor or materials used in the construction or repair” of the work. The substitution of this language, which adopted the usual phraseology of the lien statutes, in the place of the former more general reference to “materials for the prosecution of the work,” is not to be overlooked, and at least has a tendency to bring this statute into harmony with the lien statutes of the states. Some of the decisions, even since the amendment to the statute, speak as if it contained only the provisions fixing the form of the bond, and reached all persons “supplying the contractor with labor and materials in the prosecution of the work,” regardless of whether these things were “used in the construction”; but it is obvious that the two clauses must be read together, and that the provision which gives a right to an intervener only in case he has furnished labor and materials “used in the construction or repair” must receive its due force in interpreting the statute as a whole.

The Supreme Court has repeatedly declared that the bond provided for by this statute is a substitute for the lien of the mechanic’s lien laws (Guaranty Co. v. Pressed Brick Co., 191 U. S. 416, 425, 24 Sup. Ct. 142, 48 L. Ed. 242; Hill v. Surety Co., 200 U. S. 197, 203, 26 Sup. Ct. 168, 50 L. Ed. 437; United States v. Ansonia Co., 218 U. S. 452, 471, 31 Sup. Ct. 49, 54 L. Ed. 1107; Title Co. v. Crane Co., 219 U. S. 24, 32, 31 Sup. Ct. 140, 55 L. Ed. 72; Equitable Co. v. United States, 234 U. S. 448, 455, 34 Sup. Ct. 803, 58 L. Ed. 1394); and this declaration of purpose at least suggests that the scope as well as the purpose may be discerned from comparison with the state statutes. The Supreme Court in the Pressed Brick Company Case extended the protection of the statute to subcontractors, in the Hill Case to materials furnished to a subcontractor, and in the Equitable Company Case, to a contract which had been somewhat changed after the surety’s undertaking was made. In each of these cases there is a statement or intimation that the statute is to be construed liberally to accomplish its purpose, rather than strictly; but in each case the labor or material involved was of the class which entered directly into the work, and no one of these cases decides whether or not this liberality of construction will avail to reach classes of materials not commonly thought within state statutes.2

The subject of what specific materials are included we find touched upon by that court in only two cases, Title Co. v. Crane, supra, and United States, etc., Co. v. Bartlett, 231 U. S. 237, 34 Sup. Ct. 88, 58 L. Ed. 200. In the former case, certain claims for cartage and towage are approved as leading to liability under the bond. Page 34 of 219 U. S., page 140 of 31 Sup. Ct., 55 L. Ed. 72. The contract related to building a boat; the towage and cartage claims were, apparently, for hauling some materials. The facts show that they could not have been for [582]*582labor, and so they must have been for materials.

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Bluebook (online)
228 F. 577, 1916 U.S. App. LEXIS 2393, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-surety-co-v-united-states-ex-rel-pittsburgh-buffalo-co-ca6-1916.