United States ex rel. Brown Bros. Grading Co. v. F. D. Rich Co.

285 F. Supp. 572, 1968 U.S. Dist. LEXIS 9800
CourtDistrict Court, D. South Carolina
DecidedJune 21, 1968
DocketCiv. A. No. 68-461
StatusPublished
Cited by6 cases

This text of 285 F. Supp. 572 (United States ex rel. Brown Bros. Grading Co. v. F. D. Rich Co.) is published on Counsel Stack Legal Research, covering District Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States ex rel. Brown Bros. Grading Co. v. F. D. Rich Co., 285 F. Supp. 572, 1968 U.S. Dist. LEXIS 9800 (D.S.C. 1968).

Opinion

HEMPHILL, District Judge.

Pressed by the Use plaintiff, as subcontractor, to issue a preliminary injunction to prohibit the prime contractor, defendant P. D. Rich Co., Inc., from disbursing funds paid or to be paid to it, by the United States for construction, this court examines critical rights to such relief. Defendants have moved for denial of the preliminary injunction and dismissal of a temporary restraining order presently controlling.

On May 29, 1968 Use plaintiff filed its complaint. The first cause of action pursued the statutory remedy under the Miller Act, 40 U.S.C. § 270a1 et seq., prayed relief in the form of money judgment for $131,338.91. A second cause of action [574]*574initiated claim for a lien under Laborers’ Lien provisions of the South Carolina Code, particularly S.C. Code 1962 Anno. 45-301 and 45-302:

§ 45-301. Contractors to pay laborers out of money received for contract; laborers’ lien on contract price. — Any contractor in the erection, alteration or repairing of buildings in this State shall pay all laborers, subcontractors and materialmen for their lawful services and materials furnished out of the money received for the erection, alteration or repairs of building upon which such laborers, subcontractors and materialmen are employed or interested and such laborers, as well as all subcontractors and persons who shall furnish material for any such building, shall have a first lien on the money received by such contractor for the erection, alteration or repair of such building in proportion to the amount of their respective claims. Nothing herein contained shall make the owner of the building responsible in any way and nothing contained in this section shall be construed to prevent any contractor or subcontractor from borrowing money on any such contract.
§ 45-302. Same; penalty for failure so to do. — Any contractor or subcontractor who shall, for other purposes than paying the money loaned upon such contract, expend and on that account fail to pay to any laborer, subcontractor or materialman out of the money received as provided in § 45-301 shall be guilty of a misdemeanor and, upon conviction, when the consideration for such work and material shall exceed the value of one hundred dollars shall be fined not less than one hundred dollars nor more than five hundred dollars or imprisoned not less than three months nor more than twelve months and when such consideration shall not exceed the value of one hundred dollars shall be fined not more than one hundred dollars or imprisoned not longer than thirty days.

The relief sought under this cause of action is (a) enforcement of plaintiff’s alleged lien upon funds of the principal contractor in the hands of the United States, (b) all funds on hand or hereafter received by and of Rich in South Carolina (c) for a temporary restraining order prohibiting disposal of either funds, and (d) for an injunction pendente lite against such disposal. Upon the verified complaint, and attached exhibits of (1) the contract between the use plaintiff (hereinafter called Brown) and defendant F. D. Rich Co., Inc. (hereinafter called Rich), (2) a summary of the work Brown allegedly performed, this court issued its temporary restraining order prohibiting any of defendants from spending or disposal of any funds applicable and ruled defendants to show cause why an injunction pendente lite should not issue.2 Defendants in due time filed returns to the rule, answered and moved to vacate the temporary restraining order. They joined in emphatic denial that use plaintiff is entitled to the collateral of injunctive relief. A hearing on the rule precipitated this decision.

Initially, defendants insist that the inclusion of the second cause is improper and that the Miller Act3 effectively preempts relief under such statutes as the South Carolina lien statutes.4 Defendants further argue that the use plaintiff is not entitled to equitable relief because of an adequate remedy at law.

The Miller Act was intended to protect, provide for, those who furnish labor and materials for government construction as distinguished from private construction. The United States Fourth [575]*575Circuit Court of Appeals has so ruled in United States for Use of Gibson v. Harman, 192 F.2d 999, 1000 (4th Cir. 1951):

The act, like its predecessor, the Hurd Act, was intended to provide for those who furnish labor and materials for government construction protection analogous to that afforded by mechanics’ and material furnishers’ liens in the case of private construction; and no one would suggest that such liens cover damages on account of personal injuries sustained by laborers or awards for compensation under workmen’s compensation acts.
Public contractors are required by the Miller Act to furnish two separate bonds, one a “performance” bond for the protection of the United States, the other a “payment” bond for the protection of “persons supplying labor and material in the prosecution of the work.” 40 U.S.C.A. § 270a. That the payment bond thus required was intended merely to provide for payment of claims for labor and materials that such persons may furnish, and not for the payment of other claims that may arise in their behalf, would seem to be clear enough from the language of the section of the statute requiring the bond to be given; but, if there could be any doubt as to this, it is removed when other provisions of the statute are considered. Thus 40 U.S.C.A. § 270b(a), which gives the right to sue on the bond, provides: “(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: * *

More recently, in ruling that the subcontractor is not a party to the government contract and is obligated only to perform its contract with the prime contractor without fault the Fourth Circuit Court has held:

Having properly performed and having had its work inspected and approved by both the prime contractor and the Government, the subcontractor was entitled to collect his money and go about his business. By the terms of the contract he was entitled to his pay ‘on demand for his work or materials as far as executed and fixed in place, less the retained percentage, at the time the certificate should issue, even though the Architect fails to issue it for any cause not the fault of the Subcontractor.’ Here the certificate had issued. If the subcontractor is not paid, his only remedy is a suit under the Miller Act. He has no lien and no claim against the Government. This is the reason for the Act * * *.5

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285 F. Supp. 572, 1968 U.S. Dist. LEXIS 9800, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-brown-bros-grading-co-v-f-d-rich-co-scd-1968.