120 F.2d 742 | 5th Cir. | 1941
Lead Opinion
These are appeals from orders dismissing plaintiff’s petitions for want of jurisdiction. Plaintiff is here insisting as to each case that there was jurisdiction, defendants that there was not, but if there was jurisdiction, there was no equity in the bill and it should have been dismissed on this ground.
Plaintiff, a corporation and citizen of Indiana, is surety on a contractor’s statutory bond,
The slightest reflection upon the nature of the statutory suit will demonstrate, we think, that the surety may not maintain it. For, in terms, the statute provides for its bringing only by the authorities, or by a claimant, and as shown by provisions of the statute quoted in the margin, where as here, it is admitted that the surety is solvent and the bond is sufficient in amount to pay the claims, the public authority is entitled to be discharged from the suit, leaving it to proceed as between the claimants, the contractor and surety. This makes it plain beyond question that the purpose of the bond is primarily to protect the public authorities from suit and that for the surety to bring the owner in to litigate in concursus, claims the surety has assumed and agreed to pay, is to defeat the purpose and condition of the bond. In Seal v. Gano, 160 La. 636, 107 So. 473, 474, the purpose and nature of the statutory concursus is set out. “It is a special remedy afforded a certain class of creditors for the concurrent enforcement of their claims and to regulate their rights as between themselves and against a contractor doing public work, and the surety on his bond. It is a statutory concursus authorized to be instituted under certain conditions by the public authorities letting the contract for the public work, or by any person having a properly recorded claim against the contractor who performed the work or caused the same to be done, in the event the authorities failed or neglected to exercise the right. The bond furnished by the corUractor for the benefit of the authorities having the work done and for the benefit of claimants against the contractor represents the fund upon and against which the rights of the creditors of the particular work are to be regulated and enforced.” (Emphasis supplied.)
While in Graphic Arts Bldg. Co. v. Union Indemnity Co., 163 La. 1, 111 So. 470, 471, the purpose and effect of the proceed
The surety being by its own allegations sufficient and solvent, its effort, while it stands in default on its bond, to bring the Board in by a concursus proceeding and compel it to account and to pay into court all of the funds that are or should be in its hands for distribution under the further orders of the court, is in the very teeth of the statute, providing, that if the bond is solvent and sufficient, the owner is discharged and that it is only when the surety is insolvent or insufficient that the owner may be held.
When we turn to its other claim that its suit must be considered one cither under the Federal Interpleader Act or under the general equity jurisdiction of the court, appellant stands no better. The Federal Interpleader Statute
When finally appellant, invoking such cases as Fidelity & Deposit Co. v. Claiborne Parish School Board, D.C., 11 F.2d 404; Id., D.C., 35 F.2d 376; Id., 5 Cir., 40 F.2d 577; Republic National Bank v. Massachusetts Bonding Co., 5 Cir., 68 F.2d 445; and Glades Comity, Florida, v. Detroit Fidelity & Surety Co., 5 Cir., 57 F.2d 449, grounds its right to maintain the suit on the general equities of the petition, his case is even more hopeless. For, none of those cases were in any respect like this one. In all of them there was strong special equities; that the contractor was insolvent; that there had been diversion of funds; and that there were admitted retained percentages which under the terms of the contract had been withheld for the payment of claimants. In the Claiborne Parish case the action was at law for the recovery of amounts paid by the surety to certain laborers and materialmen. The contractor had completed the work and there was due him in the hands of the school board $12,000, which upon his order the school board had paid to a bank as his assignee. As stated in the appellate court, the claim of the appellee was “that the payment to the bank by the appellant on the order of the contractor was an unlawful diversion of the fund as to it by the appellant and this was the basis of the suit.”
It was properly held there that the surety as claimant was entitled to judgment against the parish for the amount of the claims it had paid. In the Glades County case, the contractor was insolvent; the suit was upon the equity of exoneration that retained percentages due, should be paid to the materialmen rather than to the contractor, or otherwise diverted to the surety’s prejudice. The Republic National Bank case was a suit by the surety against the Republic National Bank as assignee of an insolvent contractor, the city and others, upon its equity of exoneration, to compel the application of admittedly retained percentages under the contract to material claims and prevent their being paid to the bank or otherwise diverted.
Petitioner in this suit alleges nothing of this kind. It does not allege that the contractors are insolvent; or that they or the indemnity they gave the surety are not fully responsible to its demand.
It does not allege that there are any sums admittedly due which are about to be diverted on the orders, or through the
While, therefore, we have not found it necessary to determine and have not determined that the court below was correct in allowing the dismissal on jurisdictional grounds, we are in no doubt that the judgments dismissing the causes were correct and should be affirmed.
Affirmed.
In addition, to its condition for the faithful performance of the contract, the bond contained an obligation for “the payment by the contractor and by all of the sub-contractors for all work done, labor performed or material furnished in the construction of the building.”
This Act provides that any person to whom any money shall be due on account of having done any work, performed any labor, or furnished any material in the construction of a public building, shall within 45 days after acceptance of the work by the public body or within 45 days after default, file with the owner a sworn statement of the amount due and record it with the recorder of mortgages.
Section 5 of the Act, Dart’s, § 5127, provides for preference as to the claims of the state or public body and that if the public authority does not, within the time stated, file a proceeding, any claimant may do so.
Section 6 of the Act, Dart’s, § 5128, provides that if no objections are made by any claimant to the insolvency or suf-
ficiency of the bond, the authorities may ten days after the service of notice of the concursus proceeding on each claimant having recorded claims, obtain from the clerk, a certificate to that effect and the certificate “shall relieve the * * * authorities of any personal liability, and the Recorder of Mortgages shall cancel all claims recorded as aforesaid.”
If objections are made to the solvency or sufficiency of the bond they shall be tried summarily and if the surety is found not solvent or sufficient to cover the full amount or if there is no bond or the authority fails to record it, then it shall be in default and shall be liable to the same extent as the surety would have been. “The surety on the bond shall be limited to such defenses only as the principal on the bond.”
28 U.S.C.A. § 41 gives jurisdiction whore one or moro adverse claimants, citizens of different states, are claiming to bo entitled to such money on property or to any one or more of the benefits arising by virtue of the bond.
Concurrence Opinion
(concurring)'.
The bond is ample to pay all claimants. There is no ground for a federal inter-pleader.
If the case were in a jurisdiction where English equity is administered, the surety, though he has paid out nothing, would be entitled to go against his principal for exoneration and have brought in for application to the creditors’ claims the unpaid balance due on the building contract, making the claimants parties merely to receive their money, and not to delay or impede them. 21 R.C.L.Princ. & Sur., Sects. 146, 150; 50 C.J., Prin. & Sur., Sect. 396. Glades County v. Detroit Fid. & Surety Co., 5 Cir., 57 F.2d 449; Republic Natl. Bank v. Massachusetts Bonding & Ins. Co., 5 Cir., 68 F.2d 445. But English equity is not administered in Louisiana, and no equivalent of the equity of exoneration is found in the Civil Code. But I think the surety may provoke a statutory concursus. The surety was allowed to do this under Louisiana statute relating to private building contracts in National Sash & Door Co. v. Continental Casualty Co., 5 Cir., 37 F.2d 342. The public building statute here involved does not expressly say the contract- or or the surety may provoke the concursus, but does not forbid it. A concursus 'brought by the surety was entertained without objection in United States Fidelity & Guaranty Co., 178 La. 87, 150 So. 840. In Mahoney v. Louisiana Highway Commission, 154 La. 383, 97 So. 582, it was held that where there are outstanding claims the contractor not only can provoke a conscursus under the statute, but cannot sue the owner for the balance due in any other way. The contractor here is doing nothing towards settling the business, and I think the surety has the same right and duty to provoke the concursus.
But he cannot proceed in the federal court for lack of diversity in citizenship between the parties to the controversies he sets forth. The principal controversy he alleges is whether the University owes the contractor, and how much. The contractor’s interests are adverse to the University and he must be aligned with the plaintiff; and having the same citizenship as the University, diversity fails. Again the surety denies that the contractor owes the claimants who are joined, and in the controversies with each of them the contractor must be aligned with the surety, and again diversity of citizenship is defeated. There is not federal jurisdiction, and the action was properly dismissed on that ground.
Dissenting Opinion
(dissenting).
The petition for rehearing for the first time calls attention to Article 3057 of the Civil Code of Louisiana, which makes provision for a surety to seek indemnity from his principal before paying the debt, quite similar in its substance to the remedy for exoneration in English equity. It seems to me that Continental Casualty Company may have a good right under this Article of the Code to some of the protection it seeks in this petition. It would be the duty of this Court to effectuate any right the Casualty Company may have against Summa Caldwell in this respect, their citizenship being diverse. I think a rehearing ought to be had for the purpose of exploring more perfectly this question.
Rehearing
On Petition for Rehearing.
The petition for rehearing is denied.