*1
the extent
aggregate
satisfied to
put
position pecuniarily
good
must be
in as
leaving
December
property
as if his
had
been taken.”
principal
Corp., an
balance of
v. General Motors
United States
$99,061.87.
interest,
373, 379,
total
$594.09
89 L.
S.Ct.
Ed.
put higher sale indicate a much
value than been has used the award plaintiff. bid lowest exceeded the sum of award and the small amount SAV. BANK v. HARDIN COUNTY received for the left requisi- residue after STATES. UNITED tion. CO. BONDING INS. MASSACHUSETTS lively appears to have been a There v. SAME. factory terest in the offer of the for sale. plaintiff argues bidding that the al. v. et KELLEHER SAME. Department Navy “chilled” pending requisition. of Claims. Court manufacturing equip- But all subject requisition ment was to Federal the bids were this instance accepted until the District Court
considered the matter. The knew bidders they amply protected. were
We find that is en compensation
titled the basic sum of
$165,000, which, requisition, but for the gotten market,
could open less sum plain obtained property tiff remaining requi sition, a $161,371.55. net sum of amount, $161,371.55, On allowed, in order to him afford com- pensation just, that is four per an- April
num approximately the requisitions, date of
effective De- cember award, date of
centage amounting aggre-
gate *2 C., Hardin
D. brief), on for County Sav. Bank. C. Joseph Washington, D. Carey, A. C,
(Russell Washington, D. Hardy, of the brief), plaintiff Massachusetts for Bonding & Co. Ins. Kelleher, re- appearance No M. for D. McCormick,
ceiver, trustee and Elmo E. bankruptcy Hogenson's estate. B. of Ben Ill., Chicago, and Clapp, of Newell A. Atty. Gen., Sonnett, for de F. Asst. John fendant. WHALEY, Justice, and Chief Before WHITAKER, LITTLETON, JONES, and MADDEN, Judges.
LITTLETON, Judge. before the court under case is now Code, section Title Judicial merits C.A. of the conflict- County Savings Hardin Bonding Massachusetts and the $Z8,- to a balance of Insurance part one of 655.12 due in whole or parties construction contract Hogenson one Ben B. and the between through Quarter- acting Corps, Army, Depart- master U. S. War County Savings ment. Hardin See States, 102 et al. v. United Ct.Cl. Hogenson The contract between and the Government was dated part Judge, dissenting JONES, called the construction field office, of a C. M. includ- thereto, at the Savanna utilities Illinois, Depot, Ground, Proving Ordnance consideration, modified, lump for a sum $42,130. plaintiff, Massachusetts Company, and Insurance Bonding herein- referred to as the “Bond- sometimes ing Co.,” “Surety,” and as became contract and on July on this delivered executed and performance bond and a bond sum (finding 4). each in the Hogenson entered was unable thereby work called because of difficulties about financial Octo- plaintiff, ber work, had to take over expense III, own Partridge, Washington, and it did so Daniel (findings of its Kilpatrick, terms and conditions bonds Washington, (Mills D. C. shall, monthly centage during the estimates 15-23). last Prior thereto carried terms of said payment of claims negotiations plaintiff, and the pay- labor, re- material become hereinafter sometimes *3 “Bank,” a loan or able.” ferred for to Bank, among agreed give loans and the to pro- Hogenson’s contract Article 16 of others, contract under his made payments will be “partial vided that job. with the Government for the Savanna of each at the end progresses the work as Hogenson’s application for credit formal month, thereafter as soon calendar presented was the to Bank late ap- and made practicable, estimates as on by and the loan the first Bank officer,” less contracting proved by the 1941, was August 5, (finding 6) retained of each estimate to which, together with further loans and acceptance of until final and October amounted to provided further work. This all article $20,012.50 (findings 6-13). total Cer- acceptance all “upon and that payments tain amounting $6,762.50 on hereunder, required due the amount these loans Bank were received the be- contractor will the under this contract 18, 1941, tween and October 10 tabulated proper- paid upon presentation the of a in finding totals reduced the voucher duly certified ly executed and $13,250, the pay- loans to and no further ** operations under Hogenson’s ments have been received the Bank. job contract for Savanna meantime, agreed July, continued until sometime week during signment by Hogenson Bank, under of October when work under 15-22, authority of article 22 Contract Hogenson’s employes stopped contract the Assignment of Claims Act of Hogenson was with- job left the because Act of Oct Stat. funds and the out prepared C.A. was and executed payment payroll stopped on certain checks Hogenson August 16, (finding 9). on by Hogenson given which had been be- was, so far as here ma- Hogenson’s funds in cause bank had terial, as follows: A number been exhausted. of subcontrac- “Whereas, Hogenson Construction Com- their pay were unable to meet rolls. tors pany Iowa, Belmond, has entered into point plaintiff Bonding At this Com- a contract construct a Field C. M. Of- pany, upon Hogenson finding could fice, Depot, Savanna Ordnance Proving complete intend not and did not Ground, Illinois, building is now in work, began making arrangements to take process construction, and which has over and the contract and was ad- yet accepted, finally been by the Gov- constructing officer vised about Oc- ernment America, States of 19), (finding tober “that there no- body job and that unless something “Whereas, Ben B. immediately army desires to was done would have assign all funds now due or to arrangements become job make to take over the due, including both the percentage completed, retained monthly and all estimates under said con- job itself.” County tract to the Savings Bank, Hardin August Pursuant Eldora, Iowa, purpose for of obtain- supra, defendant ing credit bank. at said progress payment estimates Nos. Therefore, “Now, the Constructing per- 2 and for totaling Quartermaster, Depot, placed Savanna Ordnance job on formed material Ground, Illinois, Proving hereby prior direct- default payment September 3; $2,- ed make all funds September due said become under 109.46 and, Bank, exception Eldora, October progress Iowa, payment times as the said such retained out No. superintend- prepared to 3 payments defendant’s placed three signed engineer, and ent and checking account construction Hogenson’s in his credit before representative, October bank. On payment September performed during period progress estimate further prepared showing net October Hogenson’s period. Government, plaintiff earned or was due However, testified, No. became estimate president partial payment by con- approved financial condi- was Hogenson’s nervous about tracting officer, on his withheld it “found out [Ho- 18th,” progress it order because the contractor’s genson] was busted *4 unsat- thereupon the was checking toward of Hogenson’s closed out ter- isfactory, crediting the bal- account in and on October by the Bank proceed right to unpaid minated of therein to the loans. the contractor’s ance $450 This, from Upon further advice other loans the work. with the credits with 3, supra, which bond that it progress payment the on the contractor’s from No. 10, 1941,left a bal- take had been made did desire to over October interest, $13,250, of the defendant relet contract ance due the unpaid Bank, by Hogenson of The on account November 1941. Industrial August assignee, by it $20,012.50 payment as totaling loans between demanded $19,622.68 defendant of net amount and October 1941. of the $21,809.98 by of had been earned the which $13,250plus It is this amount of interest contractor and the Bank claimed was which paid, the from March until at rate assignee payable due and as for work to it percent annum, per provided in of as Ho- performed by assignee prior contractor the notes, genson’s which Bank seeks de- to declaration default. Defendant of to recover out the contract balance of of pay portion earned clined said of $28,655.12in defendant’s hands. The bal- $21,809.98 bank, the of of Hogenson’s ance indebtedness to the it, together used and stead plus from interest March total of the retained amounts of 10 (date judg- of prior payments, cent on the the cost of ment), of the called question presented by the facts of original damages contract and sustained case, rights far as Bank’s un- so completion. delayed reason of After de- concerned, der the are is the ducting original price from the contract of principle question presented same $74,389.03 partial payments the two total- in the case and decided of Modern Indus- ing the Industrial Bank trial Bank United 101 CtCL 808. assignee, $46,- of completion the cost contractor, In that commenc- damages actual sus- plus July made an work about tained delay, defendant for there re- signment August in all similar re- mained a orig- balance of involved, spects assignment here to the price inal contract representing the val- “all to become monies due or due work of por- ue to contract the unused United States.” orig- total amount earned to the security Industrial a performed prior inal contractor for work loan and the basis to October 1941. advanced total of contrac- August claimed, tor between Industrial Bank received assignee claims, from the Govern- Hardin County Bank here progress assignee payable ment a total of on two that as all un- approved defendant, payments, showing der contract was entitled under such payable Assignment that amount Claims performed repaid for work Act of 1940 to be contractor ma- amount of price; terial furnished its loans out of the contract period September 16, 1941. On October Government should looked to partial surety on progress and estimate bond for the No. cost rights as arisen completion; great “A has hank’s deal confusion as sub- superior the sure- the case treating those of Hitchcock assignee were rogated con- merely rights not have ‘in ty did and that the Government [the fund, Sundberg contract Co.’ right to use the amount & tractor] which, effect, remain- price saying that he was earned contractor subrogated Hitch- upon contractor’s default to no whatever. right subrogation, fund as to cause such to cock’s when became way capable surety. In de- enforcement, right enure re- to the benefit that the as sort to the securities we held and remedies nying claim assignee, acquired greater rights re- the creditor (the States) ca- pable debtor, spect of amounts due under the asserting Sund- assignor, security berg than its had the not satisfied obligation contractors; right that the to demand one payment by right the Government of amount of such was the based remedies performed due from the original appropriate it for the 10 cent, subject contract was retained in its hands. If the Unit- contractor obligations. contractual ed compelled States had been *5 right its per forfeit 10 The decision in the Modern Indus cent, and apply the in accumulations reduc- applicable trial Bank is on the facts damage sustained remained. surety, the case at bar and the Massa right subrogation, of Hitchcock to Co., chusetts and Insurance hav therefore, him, clearly when, entitle stepped completed in and the contract surety, obligation he fulfilled the upon original default of contrac Co., Sundberg government, & tor, entitled, against is Har rights substituted to the which the United din assignee might States have asserted to recover the balance due fund. used and unearned toward thereby. from the completion, Since the Government portion the earned as well as the of the contract surety the contract having might called for price com vances tract were calculated to be beneficial to the sureties, can be of no avail. “The [******] beyond argument, stipulations however, that of the con- the ad- pleted called for the contract [******] entitled to is the balance of the contract “Applying principles, which are so
price due. clearly authorities, settled the foregoing bar, to the case at it is manifest that if the In Prairie National Bank of Chica- State February, transaction in which the go 227, 232, 233, v. United 164U.S. acquired alleged Prairie its lien on 17 S.Ct. 41 L.Ed. possessed the fund contended effect court said: bank, by the it would necessarily operate “ * * * question, therefore, The sole impair alter and rights acquired by the equitable lien, is whether the which the surety original contract. has, bank without reference to “Sundberg Co.& could not question its subrogation, para- greater bank any rights in right mount to the the fund subrogation which un- they possessed. than themselves questionably exists in favor Their of Hitchcock surety]. rights were words, subordinate to rights other those [the parties depend upon whether States and Hitch- United Depend- sureties. subrogation cock’s therefore, must be ing, solely considered rights claimed from, arising relating February, been derived back to have of, original contract, by express date contract with or as taking Sundberg & origin solely its the date equity, results that the necessarily any, the ad- if vance acquired him. by the Prairie Bank in the 10 cent, any assignment pursuant Assign- to the thereafter in existence fund then equity ment of Claims Act of 1940shall constitute to arise was subordinate purposes,” the a valid Con- for all in favor had, May, arisen gress rights intended that the an as- It follows surety, Hitchcock. signee holding superior should be held to those of not err of Claims did Court the surety undertakings fund, entitled Hitchcock was to the extent made of advances affirmed.” judgment therefore signee. agree. We cannot We have ex- Henningsen also, effect See, to the same history amined the arid find noth- act Guaranty Fidelity and v. United States in it provi- which shows that Baltimore, 208 U.S. Maryland, Congress sion anything intended more than 547; Harda- S.Ct. that an should “stand the shoes” Co., 211 Surety way National v. assignor, v. 321; Martin Na- 202, 53 L.Ed. 29 S.Ct. conformity with act should not al., Co. et Surety tional provi- declared invalid because of the Maryland 822; Casual- 531, 81 L.Ed. sions of R.S. Sections al., Cir., Dulaney et Lumber Co. ty v.Co. 203; U.S.C.A. 41 U.S.C.A. 15. An § Maryland 380; Lacy Cas- 23 F.2d a contractor be valid 48, 53; Cir., Morgen- Co., 4 32 F.2d ualty purposes inoperative for all to ex- Deposit Fidelity Co. of al. v. thau et tinguish the contractual of the Gov- 632; App.D.C. 94 F.2d Maryland, 68 and those ernment the con- Detroit, Ins. Co. Accident Standard cannot, therefore, tractor’s bond. Shaw- Bank of National v. Federal Mich. Congress said that intended overturn 692, 694. Cir., 112 F.2d nee. 10 *6 rule of law announced in far as of unimportant, It so is give decided cases and an concerned, in that are claimants greater rights than have had if not for- had the Government instant case Sections 3477 and 3737 R.S. had not been contractor, Hogenson, declared the mally enacted. had been established before Casualty Du- Maryland Co. v. in default. Assignment 1940 Claims Act of of in fact default- Co., supra. He had laney enacted that contractor could not an a 19, 1941, at a prior to ed or assignment amounts due under his con- of payable was due and time any greater rights convey tract with re- stopped work before and had to him- spect possessed thereto than he under his Co., Bonding over the took assignee making contract and that an ad- was known and this fact faith vancements on the Bank, and the Government. Company, the risk assumed the incident failure to surety under plaintiff Bonding such contractor fulfill his to contractual ob- cost, completed at a ; would, therefore, ligations require clear obligations defaulted specific language justify the conclu- material, labor Congress sion that intended act of the balance was more than the legislate contrary. 1940 price of Un- original contract quoted provision an that above as- and con- uniform rule established der the signment pursuant provisions the cases hereinbe- sistently followed “constitute valid act should cited, plaintiff Massachusetts fore purposes” was for all doubtless intended Company en- Bonding and Insurance interpretation technical prevent balance, payment of this and it titled to the and to situations such as were act avoid recover the same in entitled to is therefore volved National Commerce v. this action. Trustee, Downie, 345, 218 U.S. 1065, 89, L.Ed. says that 31 54 20 Ann.Cas. held Assignment it was of Claims Act reason of
provision in the
where
R.S.,
assignment by
a con-
41 U.S.C.A.
Section
54 Stat.
3477
§
completed
tractor,
“Notwithstanding any
his contract
law the con
who
Government,
payable
assignments,
with
trary
validity
governing
him
Code,
under the contract was not a valid Section 148
as amend-
Judicial
ed,
against
Kelleher,
general
creditors of
D.
U.S.C.A.
M.
§
bankruptcy.
the contractor in
Receiver
estate of Ben B.
court,
proceeding
pages
involuntary bankruptcy
in an
page
S.Ct. at
Finance,
said:
filed notice
U.
with the Chief of
“ * *
Army,
S.
de-
proceeding
of such
and made
States,
*.
In Erwin
for payment
him,
mand
as such receiv-
er, of the balance due from the Govern-
court, speaking by
Field,
Mr.
aft-
Justice
ment under Hogenson’s
Elmo
contract.
referring
er
the act
1853 embodied
appointed
E.
subsequently
McCormick
Statutes,
now
Revised
§
Bankruptcy. Upon
Trustee in
motion of
prevent
Treasury,
frauds
said that
the Attorney
in Bank-
General the Trustee
‘applies only
voluntary
cases
ruptcy
given
op-
due notice and an
signment
govern-
against
of demands
portunity to
heard herein
under section
ment.
It does not embrace cases where
14(b),
act
58 Stat.
by opera-
there has been a
of title
transfer
114(b).
U.S.C.A.
See