United States for Use of Hills-Dale Rock Co. v. Cortelyou & Cole, Inc.

581 F.2d 239
CourtCourt of Appeals for the Ninth Circuit
DecidedAugust 31, 1978
DocketNo. 75-3594
StatusPublished
Cited by8 cases

This text of 581 F.2d 239 (United States for Use of Hills-Dale Rock Co. v. Cortelyou & Cole, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States for Use of Hills-Dale Rock Co. v. Cortelyou & Cole, Inc., 581 F.2d 239 (9th Cir. 1978).

Opinion

KUNZIG, Judge:

This action, involving an attempt by Hillsdale Rock Co., Inc., plaintiff/appellee, (hereinafter Hillsdale or plaintiff) to recover $8,401.25 on a “payment bond” furnished jointly to the United States and Stanford University (Stanford) by the defendant/appellants (or appellants) Cortelyou & Cole, Inc. (hereinafter C&C) and United Pacific Insurance Group (hereinafter UPIG) for construction work performed in connection with a contract between Stanford and the Atomic Energy Commission (AEC), is before this court on appeal from a decision of the United States District Court for the Northern District of California which allowed the recovery sought by Hillsdale. Because we agree with the reasoning of the District Court that the bond in question here is, in fact, a Miller Act bond (essentially complying with all requirements of the Miller Act, 40 U.S.C. §§ 270a-270d (1970)) and that recovery under such a bond is justified, we affirm.

On April 26,1962, Stanford entered into a written contract with the AEC. Pursuant to this contract, Stanford subcontracted with C&C for the accomplishment of certain construction work at the site of the Stanford Linear Accelerator Center. Although Stanford did none of the actual construction work itself, one of Stanford’s obligations under its contract with the AEC was to develop procedures concerning subcontracts which would allow the actual construction work to be done. One of the procedures developed, with the coincident knowledge and approval of the United States, required that all bonds of subcontractors be written for the benefit of both Stanford and the United States. Accordingly, C&C and UPIG submitted a bond, on the form developed by Stanford, entitled “payment bond,” in favor of Stanford and the United States, by which it guaranteed payment to “all persons supplying labor and material in the prosecution of the . contract.”

C&C then contracted with Frank Bottari Co., Inc. (Bottari) which, in turn, contracted with Hillsdale. The exact contractual relationship of the parties has been agreed upon as follows:

The United States Atomic Energy Commission contracted with Stanford University which subcontracted with Cortelyou & Cole, Inc., which subcontracted with Frank Bottari Co., Inc. which purchased materials from, but did not pay, Hillsdale Rock Company, Inc., use-plaintiff herein.

Following completion of its work and the failure of Bottari to pay for this work, plaintiff mailed (though not by registered mail) a “Stop Notice and Notice to Withhold Funds” to Stanford, and a separate letter, explicitly outlining its problems with Bottari to UPIG, with a copy to C&C. When C&C and UPIG elected not to pay on the bond, Hillsdale filed the instant action in district court, seeking recovery of the money that it had not been paid by Bottari, alleging jurisdiction under the Miller Act.

The District Court for the Northern District of California (Wollenberg, J.) at first ordered the action dismissed for lack of jurisdiction because Hillsdale had alleged [241]*241insufficient facts concerning notice for the court to determine whether the bond in question, in fact, complied with the Miller Act, on which plaintiff had predicated jurisdiction. On a previous appeal, this court, without reaching the question of whether the bond in suit was actually a Miller Act bond, remanded for further proceedings and directed that plaintiff be allowed leave to amend its original complaint, suggesting that plaintiff could establish jurisdiction under 28 U.S.C. § 1352 (1970). In its amended complaint, Hillsdale alleged jurisdiction under both the Miller Act and 28 U.S.C. § 1352. However, plaintiff also alleged sufficient facts concerning notice to C&C and UPIG that the district court was able to determine that the bond in question was in fact a Miller Act bond and allowed recovery under that Act. Appellants now appeal that decision, and this court assumes jurisdiction pursuant to 28 U.S.C. § 1291 (1970).

Appellants’ position before this court centers on two basic arguments: (1) That the bond furnished by C&C, as principal, and UPIG, as surety, was not a Miller Act bond; and (2) That if the bond was a Miller Act bond, the notice given by Hillsdale was insufficient to satisfy the notice requirements of the Miller Act.

Appellants, in arguing that C&C’s “payment bond” was not a Miller Act bond, make four basic assertions. First, it is contended that since C&C was not a prime contractor for the United States, and since the Miller Act contemplated only bonds by prime contractors, the bond here is not a Miller Act bond, but a common law bond under which plaintiff, who had no direct contract with C&C, may not recover. This argument boils down to the simple fact that the bond was not given to the United States by the person contracting directly with the United States. Appellants’ second argument relies on the fact that the “payment bond” given by C&C was not identical in form with Standard Form 25A, the U.S. Standard Form of a Miller Act bond. They point out that, in other cases where bonds given by parties not in privy with the United States have been considered to be Miller Act bonds, the form of the bond, at least, was identical with Standard Form 25A. Appellants’ third assertion, that C&C is not a person covered by the Miller Act because it was not a “first tier” or “prime contraer tor” in direct privity with the United States, is essentially a restatement, or at best a distillation, of its first argument above. Appellants’ fourth contention is that the work performed by Hillsdale was not the type of work for which reimbursement was envisioned by the Miller Act. They argue that Hillsdale has made no showing that the paving work for which the claim was made involved the “construction, alteration, or repair of any public building or public work of the United States” as required by 40 U.S.C. § 270a.

C&C’s and UPIG’s second major point is that, even if we found the “payment bond” here in issue to be a Miller Act bond, the notice given by Hillsdale was insufficient under that Act. They note that Hillsdale has conceded that it did not use certified mail, as required by 40 U.S.C. § 270b, and argue that since plaintiff failed literally to comply with the Act, it should not be allowed to recover.

Plaintiff effectively counters each of the defendant/appellants’ arguments. It argues that C&C’s bond was a Miller Act bond, noting that this court has previously stated that a sub-contractor could execute a Miller Act bond to the United States jointly with another party, who was, in name, the prime contractor. Hillsdale reasons that Stanford, in the case at hand, although nominally the prime contractor, and in privity with the United States, was really acting as an agent of the AEC. Stanford performed none of the construction functions, but acted in the. place of the AEC to develop procedures and to contract for the construction of the Stanford Linear Accelerator Center.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Mai Steel Service Inc. v. Blake Construction Co.
981 F.2d 414 (Ninth Circuit, 1992)
Eastern Insulating Glass Co. v. Raymon R. Heddon & Co.
21 Pa. D. & C.3d 611 (Lackawanna County Court of Common Pleas, 1980)
United States v. Cortelyou & Cole, Inc.
581 F.2d 239 (First Circuit, 1978)

Cite This Page — Counsel Stack

Bluebook (online)
581 F.2d 239, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-for-use-of-hills-dale-rock-co-v-cortelyou-cole-inc-ca9-1978.