United States ex rel. Teichert & Son, Inc. v. Anchor Contractors, Inc.

257 F. Supp. 474, 1966 U.S. Dist. LEXIS 7966
CourtDistrict Court, N.D. California
DecidedJuly 8, 1966
DocketCiv. No. 8875
StatusPublished
Cited by1 cases

This text of 257 F. Supp. 474 (United States ex rel. Teichert & Son, Inc. v. Anchor Contractors, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. California 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. Teichert & Son, Inc. v. Anchor Contractors, Inc., 257 F. Supp. 474, 1966 U.S. Dist. LEXIS 7966 (N.D. Cal. 1966).

Opinion

MEMORANDUM AND ORDER

HALBERT, District Judge.

In this action, brought pursuant to the Miller Act (Title 40 U.S.C. § 270a et seq.), plaintiff seeks to establish defendant’s liability under a bond which purports to secure payment to those supplying goods and services to a federal construction project. Trial was had before the Court sitting without a jury. Following the filing of post-trial memo-randa, the matter was submitted for decision.

On or about October 25, 1962, defendant Jack R. Meyers, doing business as City Appliance & Electric (hereinafter called Meyers), entered into a written contract with the Federal Aviation Agency for the construction of a transmitter and light service station at the [476]*476Stockton Municipal Airport at Stockton, California. Meyers then secured, pursuant to the Miller Act, a surety bond from defendant Hartford Accident and Indemnity Company (hereinafter called Hartford) in an amount equal to fifty percent of the contract price. The bond, executed on November 2, 1962, on a standard government form (G.S.A. Form 25A, November 1950 edition), provides security for those supplying goods and services to the project in question. The instructions on the back of the form provide in part:

“4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital they are partners composing a firm, naming it, and all members of the firm shall execute the bond as individuals.”

The significance of that provision will later become apparent.

Three days following the execution of the bond, Meyers entered into a contract with defendant Anchor Contractors, Inc. (hereinafter called Anchor) by which Anchor agreed to assume the responsibility for a complete facility other than the electrical installation. That contract provided that Meyers and Anchor were to share all expenses and profits, though the exact nature of the relationship thus created was not clearly expressed. Thereafter, in the course of its work, Anchor became indebted to use plaintiff for the purchase of construction materials. Upon Anchor’s failure to pay the amount due, use plaintiff brought suit against Meyers and Anchor, and a default judgment was entered against them on February 24, 1965. This proceeding is an attempt by use plaintiff to recover upon the surety bond issued by defendant Hartford pursuant to the Miller Act.

The basic issue is use plaintiff’s assertion that due to the relationship between Anchor and Meyers (which use plaintiff characterizes as a “joint venture”) the admitted failure to give notice pursuant to the Miller Act does not preclude an action upon the bond. The proper legal classification, if one there be, of the relationship between Meyers and Anchor, is at best academic, and the issue here to be resolved does not depend upon that answer. It is assumed, arguendo, that Anchor and Meyers were, in lawyer’s terms, joint adventurers or partners for a single purpose.

The issue thus presented, so far as can be determined, is one of first impression. Broadly phrased, the question is: May a partnership, formed after the execution of a Miller Act bond for a public works contract, be deemed a partnership for the purposes of defining the legal rights which evolve from that contract and bond? In the absence of authoritative guidance, the answer to that question must be found in the broad policies which underlie the statute in question.

In the often-cited case of Clifford F. MacEvoy Co. v. United States, for Use and Benefit of Calvin Tomkins Co., 322 U.S. 102, 64 S.Ct. 890, 88 L.Ed. 1163, Mr. Justice Murphy noted:

“The Miller Act * * * is highly remedial in nature. It is entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects.” (322 U.S. at 107, 64 S.Ct. at 893)

And, in United States for Benefit and on Behalf of Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776, Mr. Justice Burton added the observation that:

“The essence of its policy is to provide a surety who, by force of the Act, must make good the obligations of a defaulting contractor to his suppliers of labor and material. Thus the Act provides a broad but not unlimited protection.” (353 U.S. at 216-217, 77 S.Ct. at 797)

Implicit in the above policy is the legislative conclusion that security for those who supply labor and material for public projects will induce the orderly and speedy completion of public works. In that sense legislation such as the Miller Act provides an incentive by insuring compensation to those who contribute [477]*477to the project. To that end, the Act extends protection by way of a direct action on the bond to:

“Every person who has furnished labor or material [for a project secured by a Miller Act Bond] * * *. 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 * * * giving written notice to said contractor * * (Title 40 U.S.C. § 270b(a); with emphasis added.)

The critical question raised by the ease at bar is whether or not use plaintiff comes within the terms of the proviso noted above. If it does, the admitted failure to provide statutory notice will preclude maintenance of the present suit (See: United States for Use of General Elec. Co. v. Gunnar I. Johnson & Son, Inc., 8 Cir., 310 F.2d 899, 902 and cases there cited). The statute itself poses the two basic questions in that regard:

1. Did use plaintiff have a “direct contractual relationship with a subcontractor * * * ?”; and

2. Did use plaintiff have “no contractual relationship express or implied with the contractor furnishing said payment bond * * * ?”

Clearly, Anchor (regardless of the category into which its arrangement with Meyers might be placed) comes within the meaning of the term “subcontractor” set forth in the MacEvoy case, supra, where it was held that a subcontractor for purposes of the Miller Act is one “who performs for or takes from the prime contractor a specific part of the labor or material requirements of the original contract.” (322 U.S. at 109, 64 S.Ct. at 894). It is thus apparent, so far as the Miller Act is concerned, that use plaintiff had a direct contractual relationship with a concern that meets the broad definition of subcontractor. Use plaintiff, however, asserts that Anchor was something more than a “subcontractor,” in fact, a full partner in the project. That assertion brings into play the second of the two questions noted above.

Preliminarily, it should be noted that the juxtaposition of the terms “subcontractor” and “contractor” exclude the possibility of resort to an intermediate position.

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257 F. Supp. 474, 1966 U.S. Dist. LEXIS 7966, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-teichert-son-inc-v-anchor-contractors-inc-cand-1966.