National Surety Corporation v. United States

shоwing plaintiff ties the amount due Taking into consideration computed opin- in accordance with this general Mexi characteristics ion. age, Virginian, their can vessels, comparable we prices of sales LARA- buyer willing would conclude MORE, MADDEN, LITTLETON, willing $320,000 for the given seller Judges, concur. Virginian. $300,000 Mexican, for the the sum recover Plaintiff representing bal- $2,510,577.79, compensation the tak- just

ance of vessels,

ing plaintiff’s in ten of each following amounts, which are just com- found to be

amounts we have vessel, taking pensation of each for the NATIONAL SURETY CORPORATION already paid: amounts less the v. ......

lUinoian Mexicаn ...... Pennsylvanian ...... Nevadan Nebraskan Iowan .. Kentuckian ...... ... Columbian Dakotan ......... Virginian .... ... $336,401.50 253.603.50 349,614.17 279.184.75 221,702.00 184,377.05 258,533 257.024.75 188.712.50 181,424.07; The UNITED STATES. The First Nation- The UNITED FIDELITY AND DEPOSIT COMPANY al Bank in al Bank ‍‌​‌‌​‌‌​​​​‌‌​‌​‌​‌‌​​​​‌​​​‌​​‌‌​​‌‌​‌​​‌‌​​‌‌‌‍OF MARYLAND STATES, Defendant. Houston, Houston, The First Nation- Third Intervenor. Party 419-52, Nos. 149-53. delay compensation for and as of Claims. ment, computed per per annum at 4 cent 12, July findings 48 on out in the amоunts set taking of each and 50 from the date of vessels, Decem- the Nebraskan on 1942, 2, Dakotdn December

ber 26,

12, 1942, Iowan on December 1943,

1942, January 17, Nevadan on Pennsylvanian on June Ken- Illinoian on June 30, 1944,

tuckian the Columbian on June May January Mexican on May 23, 1946,

14, 1946, Virginian on payment per of 75 cent

to the date determined the War amount just compen-

Shipping as Administration findings

sation, set out in 4 and

plus im- interest the amounts set out

mediately above from the date findings

payments made as set out

and 5 the date of the

judgment herein.

Entry judgment suspended pend- filing stipulation by par-

ing of a Harris, City, Emanuel New York for Surety Corp. & De posit Maryland, Kjor Co. of and M. U. S. laug, Houston, Tex., for First ‍‌​‌‌​‌‌​​​​‌‌​‌​‌​‌‌​​​​‌​​​‌​​‌‌​​‌‌​‌​​‌‌​​‌‌‌‍Nat. Greenberg, in Houston. Max E. New City, Boyles Billingsley,

York Houston, Tex., on the briefs. Jr., Kiechel, Washington, C., Walter D. Burger, Atty. Gen., Warren E. Asst. defendant. Before and LIT-

TLETON, WHITAKER, MADDEN and Judges. LARAMORE, WHITAKER, Judge.

These cases involve contests between surety companies defaulting on a con- traсtor’s bonds and a bank which sues under an given by due on contracts contractor to secure loans the cases, default of the con- tractor, the sureties laborers materialmen whom the contractor was They surety company v. United court in recent pany United ment. mаrily 208 U.S. ed in the In United States at indebted for labor and material 891, 117 decided County 332 U.S. cago dem. Co. United Supp. 1017, Ct. Court physical come from the advance of ^[*] tracts to be eys L.Ed. ognized of Y. claim of those Nat. Bank States, S.Ct. ‍‌​‌‌​‌‌​​​​‌‌​‌​‌​‌‌​​​​‌​​​‌​​‌‌​​‌‌​‌​​‌‌​​‌‌‌‍page the bank under a 142, 41 “ * * * From Prairie State N. v. United ^[*] Contests between a bank said: in Prairie State Nat. United States ahead upon are Modern Industrial Sav. that the 1602, States, Ct.Cl. *»» 404, 234, a States 164 U.S. superior v. so completion number of cases. L.Ed. 106 Ct.Cl. 90 L.Ed. the decisions Sampsell, holding, 91 to American at 28 736. In each case we have States, 101 equity Fidelity Guaranty L.Ed. page 240, S.Ct. others whose claims peculiarly equitable have been v. United 412; 227, 17 responsible for the v. from available Chicago Ct.Cl. States, Munsey we have relied valid 164 U.S. 577, 2022, 389, 327 U.S. and to the the bonds. and & building to their rights we have rec S.Ct. 67 S.Ct. and 808; 52 L.Ed. 547. Surety Bank of legal assign v. United States, Henningsen before surety 93 Trust The most contracts. 227, money. Royal Supreme Supreme acquired Bank v. furnish- Hardin mon con and Co. 65 F. 1599, 17 41 com 66 Chi this pri Co., Co., In S. a building had the claims; hence, if a contractor fails to contract between whether the who materialmen were United States is payment case was based on the holding Henningsen case. The decision in ers and materialmen have a lien on the United a perior contractor had building, U.S. United States v. hands to tion tractor’s it as or some bank to whom the surety assignment to the bank. that all it is held in ty having completed fault of the contractor. ecuted thе is not true in the case of entitled to the But No one This is surety 234, gets it pay complete right and assignee. bond. The seems to to secure Customarily, in a construction contrary 67 S.Ct. is is bond, Prairie State Nat. Bank States, the bank because its laborers and subrogated if interested laborers sаid, notwithstanding equitable obligation Henningsen case, money. assigned to use arose at the it see that the laborers Munsey under no private parties, gets it, paid. deny and the United States 1599, of a bank as the con- payment theory left in its discharge by was it. Hence, contract, was it does not 91 was entitled Trust holding a materialmen, materialmen, bond legal obliga- prior L.Ed. surety because, time is that the getting defaulting rights of their rights Co., hands, it rights labor in its it ex- 2022, sure- case, on a care 332 su- de- its pay materialmen, laborers and opinion owner our former reiterate privatе building right of a has the surety company use equity of the any money owing to the contractor to dis superior to the of the bank ac charge obligation his assignment, laborers and quired under an whether the materialmen. His to do this is su are derived from the dis perior assignee. to of an liability charge a But its building erected payment United bond. In Prairie or on bond lien, is not to a Bank, supra, had Nat. State discharged legal liability liability States is under no on a its ‍‌​‌‌​‌‌​​​​‌‌​‌​‌​‌‌​​​​‌​​​‌​​‌‌​​‌‌​‌​​‌‌​​‌‌‌‍supra, Henningsen, materialmen; bond, laborers and its lia but it is un equitable payment der an bility bond. to do on a so. To 384 obligation, frеquently discharge equitable Con- ant. It has been held that priority Act, equitable gress to these passed 49 Stat. the Miller general carrying seq., for- over the creditors of the 270a et § 40 U.S.C.A. (cid:127) assignees. enlarging them, contractor and over his acts ward Lawrence, Cir., Greenville Sav. 4 requires of a Bank v. the execution 545; McGarry Son, 76 F. payable In re P. United States bond ment letting Cir., 400; Belknap precedent Hardware & F. a condition Mfg. Co., such Under Co. River Contract v. Ohio contract. aof Government Cir., 144; guarantees 271 F. American Co. bond Mfg. Westinghouse materialmen, upon New Yоrk v. Electric of laborers obligation, Co., Cir., it re- 75 F.2d affirmed 296 U.S. performance of this equita- 56 S.Ct. 80 L.Ed. and Martin its from the United States lieves Surety Co., Cir., F.2d obligation v. National laborers that the to see ble affirmed 300 U.S. paid. this rea- 57 S.Ct. For materialmen are and right subrogated 81 L.Ed. the 822. to the it son is money apрly to the to United States opinion See our also Hadden v. Unit materialmen, of laborers States, Ct.Cl., ed obliga- discharge equitable of its in the Munsey Co., In United States v. Trust although un- tion, the United States supra, Supreme the the said that legal liability to do Since so. der no legally United States was not liable to la- right to so use the States of the United materialmen, borers and it not but did superior money to the bank’s say that laborers and materialmen could right assignee, as the contractor’s equitable moneys not assert an to claim superior surety pays to them is who payable in the hands of the United States right. the bank’s under the contract. We think can. to no doubt There would seem be permit way To them to do so in no inter- right to use the con- States United with the feres full exercise of the sov- discharge money to in its hands tractor’s ereign powers of the United States. obligation to laborers contractor’s not the defendant liabili- does to obligations One of the and materialmen. ty beyond it hands the amount has its under his the contractor assumed confessedly owing somebody. due States was contract with United light, Looked at from another the sure If and materialmen. he laborers ty’s superior are to the so, has the the United States fails to do right the bank: It is settled that the money do he due him to what to use rights arising by or substi agreed inequitable for It would be to do. relate to the date of the exe tution back to retain the benеfits surety cution of the Prairie State bonds. materialmen the laborers what States, supra; Nat. Bank v. United Hen pay to some one else it and had done for money ningsen v. United States & should have Guaranty Co., supra; and the fol cases Henningsen v. United See to them. lowing Thereupon, decisions. those Co., supra. Fidelity Guaranty surety equitable there accrues to right under an States is Since moneys to the from Gov obligation to that laborers equitable see to the érnment contractor extent paid, as held and materialmen Henningsen surety discharges the contrac case, supra, the laborers and obligation to the Government. tor’s right equitable have the

materialmen Subsequently, contractor, moneys un in the hands of a claim assert obligation der the burden to the contrac- are due defendant goes surety, money. to a bank to borrow surety pays the laborers tor. When subrogated that the bank he has this con 'He tells materialmen, it becomes the Government equitable tract with offers to an to assert to their moneys assign bank become due defend- hands permitted finan- do so to a may Act he was not tell the mаy or He thereunder. However, as- cial signment, under the se- institution. bonds executed he has. bank bank, insofar ob- con- performance of the faithful cure the ligations concerned, no does, received were he not tract, or whether but gotten thereof, than it had Re- be- more would have charged notice with bank and 3737 not en- Miller vised Statutes ‍‌​‌‌​‌‌​​​​‌‌​‌​‌​‌‌​​​​‌​​​‌​​‌‌​​‌‌​‌​​‌‌​​‌‌‌‍3477 been requirement of the cause charg- only acted. bank Act, supra. is the Not thereof, incon- it is but notice ed with Notwithstanding passage notice have actual not it did ceivable amendment, passage the issue since its Hence, lends the bank when thereof. is the same it when the Prairie as was money, him the lends it contractor Henning- State Nat. knowledge he has fact that with previously decided, wit, sen case were who has surety obligated himself superior equity, the or the bank. any to which hе to it to turn over recognize that the Fifth Circuit contract, to indem- under the is entitled contrary takes the view in Coconut Grove may any sus- nify loss it Exchange Bank v. New Amsterdam Cas. an This is tain on the bonds. Co., 149 F.2d and General Cas. Co. therefore, any and, ob- already incurred Houston, America v. Seсond Nat. Bank of may ligation as- contractor which the 178 F.2d 679. his to must be to the bank sume surety. bank, prior The to the Surety 2. In the National Co. money therefore, the risk under lends the case, the First National in Bank Houston enough left to will not be that there assignment also under an claims executed prior obli- after the contractor’s its debt gation 260-1 of under article Vernon’s Civil satisfied. has been the Statutes of State of Texas. This as- affirmatively signment Furthermore, January 30, it does not executed was on appear or not the in case whether The contract in the National Sure- this 1950. money ty Company used from the bank was case was entered into on borrowed contracts, September 1950, and, hence, of these stat- in the and, the pur- upon applicable so, The if of the two. ute relied is not because which assignment pose to the As- it the 1940 аmendment relates of accounts of existing signment Act, 61 Stat. “under of Claims due or to become due an having 41, 41 was to enable contract.” contract not Stat. U.S.C.A. This been § money assign- to finance contractor to obtain in existence at time of the the ment, If his contracts with thе United States. amounts due under it are not cov- assignment. by used in borrowed was not the the so ered was held contract, by Appeals of the the lender of the Texas Court Civil in equitably Salley, to the benefit is not entitled Keeran v. S.W.2d 663. The assignment. thing by same was held Jersey District Court for New concern- reiterate what we have said ing statute, a similar in the case of Sea- prior cases that the 1940 amendment Surety board kota, v. State of Co. North Da- Assignment Act, supra, of Claims surety’s 177. The as- nothing intended to do more than was signment by operation law, was which prohibition to embоdied in remove appear by not to does be covered 3477, 31 Revised Statutes U.S.C.A. § Texas statute. assignment 3737, against and against Fidelity Deposit Company United States in the Maryland ease, lending bank relies also a financial institution to a. assignment upon the executed under ar- contractor with the Government. Prior passage amendment, ticle 260-1 of Vernon’s Civil Statutes of assign of Texas. That the State contract was contractor could not his claims prior against and, Government, executed under but $120,- by defendant on contracts contract hence, under accounts assign- by 730.37. been covered would have ment, surety’s arose when agreed but $45,429.58due the It is that the was with the apportioned the contract be defendant taxes shall assign- signed, was by which the defend- the amounts due between hence, and, to the bank (29-l)-838 ment rights AT AT ant on contraсt's superior. are proportion (29-l)-994 in to the amounts on each contract. says are due the sureties The bank assignees claiming only as the On each contract the sureties contractor, bankruptcy trustee largely of the amounts in excess amounts Inc., Associatеs, Bryan Thomas on said con- now due defendant therefore, re- that, tracts. only is entitled to if cover recover, According stipulation says contractor is and it Government, including parties, recover not entitled (29-l)-994, AT which assignment to the of its because bank surety, Corporation National was inis error. due, taxes, the sum of there before assign bankruptcy did trustee The (29-1)- AT $100,918.34. On contract on the to the balance “all claim Deposit Com- Surety Corpo- to National above contract Maryland surety, pany there hereby consent and does ration According $65,241.61. due the sum of said balance said therefore, stipulation, there is to Surety Corporation.” the sureties assignment; But $100,918.34, deducted from the be rely upon alone do not Surety Corporation plaintiff National rely upon they their of recover, $27,- the sum of is entitled bonds, on the сontractor’s as the sureties taxes, 591.95 for and there is be de- long prior to the as- arose $65,241.61, from the amount ducted nothing signment bank. There is Deposit Fidelity Company which the accepted when the sureties to show Maryland recover, in bank- from the trustee the ruptcy $17,837.63 taxes. sum forеgo all intended to their will, Judgment be entered favor of rights. other Surety Corporation for the National bankrupt- in the court The order $73,326.39, and in favor of sum of Fidelity thé cy proceedings no reference made Company Deposit Mary- conflicting claims of the sureties $47,403.98. the sum land in Comрany Deposit LITTLETON, Judges, MADDEN and 4. The Maryland was the concur. on contract bonds ment LARAMORE, Judge (dissenting). (29-l)-838, AT per- Corporation on the was the respectfully for the sáme I dissent rea my bonds dissenting formance set forth in as those sons opinion parties stip- The (29-1)-994. AT Hadden, of John A. by the the amount due de- States, Ct.Cl., ulated F. Trustee of these contracts is Supp. fendant $45,429.58 $166,159.95,less an amount -joins owes the defendant fore- going dissent. an amount . leaves for taxes.

Case Details

Case Name: National Surety Corporation v. United States

Court Name: United States Court of Claims

Date Published: Jul 12, 1955

Citation: 133 F. Supp. 381

Docket Number: 419-52, 149-53

Court Abbreviation: Ct. Cl.