*1 al. steps et having the negligent TOWN OF RIVER JUNCTION was not in not CO. CASUALTY MARYLAND time sprinkled at the or cinders sand also, v. Uni See, No. 9259. Ponton accident. R.I., Rys. Co., ted 200 A. Electric Appeals, Circuit. Fifth Circuit Court R. 518; & O. A.L.R. v. Baltimore Moore March 1940. 162; Fitch Co., Super. 7 A.2d 132 Pa. May 20, 1940. Writ Denied of Certiorari Co., 64 A. R. v. Central N.J.L. 1077, 84 L.Ed See 60 S.Ct. . — There was no substantial evidence negligence, and defendants’ moti.on directed a tained. verdict should sus have urged It is now defendants that the lower we direct court to enter merits, judgment for them on the and in support sharp contention this ly (b) call attention to our Rule Rules of Civil Procedure for the District States, Courts of the United 28 U.S.C.A. 723c, reading following section as follows: “(b) Reservation of Decision on Motion.
Whenever a motion for a dwected verdict made at the close of all the evidence is de granted, nied or for reason is not court is deemed to have submitted the ac jury subject tion mination of the later deter legal questions raised days the motion. Within 10 re verdict, party ception of a who has moved may for a directed verdict move have judgment verdict and entered judgment thereon set aside and to have entered in accordance with his motion for * * a directed verdict *. If a verdict judg
was returned the court allow the ment reopen judgment to stand or and either order a new trial or direct entry judgment requested ifas ver ” * * * dict had been directed. Under rule the trial this court is now
deemed to have submitted the action to jury, subject to a later determination of legal questions raised the motion Hence, for a directed express verdict. necessary. reservation is now Duncan v.
Montgomery Ward & 108 F.2d 848; Massachusetts Protective Ass’n v.
Mouber, Cir., 110F.2d 203. In this instant case, meticulously the defendants com- have plied provisions with the of this rule of hence, court and on the record now be- fore us under the circumstances dis- thereby, closed are entitled on reversal to case remanded with directions to judgment enter for the defendants. judgment appealed from there- reversed and cause fore remanded with
directions to enter for the de- fendants on the merits. *2 Judgment reversed and cause remanded
for further proceedings. Waller, C. L. Fla., Tallahassee, Taylor, H. M. Quincy, Fla., for appel- lants. Holt, Francis M. Fla., of Jacksonville, appellee. SIBLEY, HUTCHESON, Before HOLMES, Judges. Circuit SIBLEY, Judge. Circuit of River Town was build- Junction system sewerage ing a aid from the Administration; Works Public Gadsden County lending the contrac- tor his labor and material bills; Maryland Casualty Company contractor’s bond. Towards job the contractor got the end from $4,000, $400, on an as- $400 28, 1937, signment to it dated of his check” estimate and used “June pay for labor and materials. The June issued, promptly check was not and on Aug. the contractor defaulted and the surety job at an event of under completed claim default was called outlay payments bond un- there- all due or to due $2,000. The become of about interest, der sure- the contract” shall made to the claim with after $5,105. the Bank its ty. exonerate in order to *3 outstanding material bills against itself partial say next The answers the petition a contractor, brought against the payment ninety percent which the to Town, Bank, contractor the the the contractor was entitled at end each the materialmen, thirty-six that the $10,700, praying and day period thirty any trust or free of money about in the Town’s lien; surety’s right it did control to $8,200 percentages retained which included not, under the unless contract arise contract, applied building be to the under or until the contractor inwas default. On bills, $5,105 paid the material and 28, 1937,when the contractor had not June applied. The be and likewise Bank restored contract, defaulted in his and separately and the Bank answered Town progress payment for the work done in the payment Bank, but on defending the day period thirty May from to June stricken. On a motion these defenses were already earned and accrued been summary judgment, motion for paid be- not be could thirty-six obligations to materialmen engineer in charge had not made cause the disposed of, paid they having been were by and states) (the and because Town the estimate in surety a fa- decree rendered delay securing in its had occurred a there surety against of the the Town for vor $15,810. contractor, he pay went to given While $4,000, $400, Bank and borrowed and $400 Bank, $5,- against the it stands lose pay payrolls all ma- it his and and used payment receiving for from the bills, terial for all-of which the gave indemnifying an The Town main bond. liable and of which obtained benefit. is whether the security As the contractor executed to. good surety. the Bank was Mayor Bank an order “Will addressed you kindly send our Sewer Esti- June ruling controlling The is that strik cheque County mate direct to the Gadsden ing the answers. Under Rules of Civil Bank for our account the same State when alleged the facts must be taken Procedure paid”, and on the same sheet ready to be If no motion is for as true. definite be taken at their face value. made more we received “For value assignment: statement, general averments must sell, transfer, assign the above and hereby By 9(b) Rule or amount thereof cheque, described required following 723c, (c),- section 28'U.S.C.A. in- pay sum of of fraud averments and mistake must further sums same for terest on such particularized, be but the occurrence of County Bank Gadsden State that the precedent Though conditions not identical stance, be. need not ma- payment of labor and to us for advance agree the two answers in sub duly notified The terial." Town and are follows: it, nei- assignment, acquiesced said contract exhibited The construction knowing nor the Bank ther the Town provides It for a petition is admitted. surety. The amount assignment to the payment to the contractor within partial paid estimate was due on the to be June days of calendar each first fifteen enough to the claims more than preceding month for work done the month of the through no fault it was Bank, and estimate, ninety percent to be certified on a wás sea- estimate Bank percent until ten paid paid. The sonably made and completion. By the 20th of the month final better it had the on advice ninety is to all labor and contractor the percent had defaulted right, after materials, cost of tools and of the Aug. 18, 1937. or about preced- equipment delivered expendible before the facts then are month, payment is a These such ing calendar July it that on to take are bound receiving next us. We precedent condition pay its last advanced application payment. partial not failed money, contractor had also roll for the bond contractor building of the any obligation. The scheme say exhibited, it was though the answers end of each is that at the calendar In it the con- contract to the defendants. unknown tractor, 28th to have indemnify seems (the the month 25th agreeing to besides be an esti there should date) taken as the surety against loss, assigns all into put and material tools, equipment mate made labor date hereof” all “as of the month, by the during that and “in the work job; material to be used obligation on implied ninety percent probably there day next month of the 15th insolvent, contractor, especially if he he contractor; and thereof should job, from the pay not to divert money to the 20th he should use equity. ma- enforced percent his ninety ail labor and here, But immaterial for the he that is If month estimated. terial bills for the diverted, was not proceeds not be en- fail do this he would used for payment. ar- titled the next draw for the job and importance. faithful furtherance of the rangement practical vital is of has, protection surety. month percent ten retained each The since the decision in Prairie arrange with his hank Can States, United 164 U.S. 17 S.Ct. assigning payrolls by cash needed *4 412, L.Ed. established to be an 41 been particular already progress payment a agreed security by to be held the owner earned, stopping till to save work from protection surety, for the of himself payment assign- shall he Will made? just though pledged as the contractor had by ment, acquiesced to and in notified many Liberty so Bonds. This is but surety owner, good against hold if the application general principle that a If defaults in a later contractor the answer is month? surety in all has a beneficial interest col- No, safely lend. hanks cannot prin- lateral pledged to the creditor quit. must wait or Laborers must Contractors Surety, cipal C.J., Prin. debtor. 50 & §§ fail, often more more and sureties be 381, percentages 384. In these retained in, delay often called added ex- superior give right contractor can no one a pense to the work. The matter of whole surety’s right to that of tile public seriously contracts will be affected. making dates from the contract Yes, If the answer is the work and the which pledged them. will be in- workers facilitated and no one jured. object The cannot prog clearly monthly as Just ground might that the contractor divert the the con agreed go to payments are ress money, agreed for he has to trust the con- financing in him tractor to used be present tractor until he defaults. In the work, The in no default. long so he is as surety got case the arrangement, benefit of full party a to the build surety agrees to this as if permission had appears in the also ing This contract. asked advance been would have been in doubt it we cannot bond, for while for the private application given. immediate stipulates therein he though equipment and assigment of secret is the It of the June site, he for no materials on the contracts gives standing. estimate that The progress payments right these unless meaning of the whole instrument is that the claim is defaults or Bank, until the contractor a entire go to the bond. made under the which is to take out what it advance right the contractor’s Until then it is have and is his account the contractor for the re duty these to administer mainder. There no splitting de payments. Kane v. This court held in mand being Town. It as Bank, Cir., 534, National F.2d 85 signment already First 5 56 of an existing obligation, authorities, 362, A.L.R. on a review of the legal is a rather whole it and of them that there no trust attached to though the equitable assignment, than an be for one could issued support equally and that a check good when latter would though the paper commercial negotiated present considera valuable a of it was ed as here matter its source. The duly given taker knew Notice tion. Bank in Third National gone over The Bank’s again Town, acquiesced. which Co., 5 Surety Fidelity fixed, & v. Detroit money Miami became receive right to 548, that a Cir., it was held paid by F.2d It July 15. have been and it should material- assignments from His longer due to the contractor. bank could take was no could not the as paid and succeed undo thereafter laborers default men and failure to make and have recog signment. Ilis the bond. We rights against their estimate, fail and the Town’s approved an however, acquires no sub a bank nize, pay, ought not to de have by ure to labor or material rogation to claims Equity regard assignment. them, feat application mere ought to have which been as done voluntary lender never subro because Realty Aronberg- Theatre Co. v. done. in Prairie gated, held as was 383, page F.2d Fried States, supra. also that We think United being insolvent, pro- and cases cited. It tor and being established both really due to be tect took materialmen. nothing. has recogni- tion of assignment, ought not the Town Indemnity Union A case from Florida is surety again. have to The more City Smyrna, Fla. Co. v. New clearly is this true involved since is no Florida stat- 455. There 130 So. actually only went to what the regarding assignments except that the ute true would owed party in interest sue. General been made. applicable. authorities are Mc- considered Century Estates, 568, 120 Clure v. Fla. petition up set in the Smyrna In the case the So. New prior agreement it the assignment to assignment “conveyed court held the pay application about the ments due the contractor. for the bond greater right bank no the funds point As before city hands than that which out, operative till de it was not ed making had at the time [contractor] fault, Town and assignment.” The case involved notice of till months after Bank’s percentages, rights money was not became fixed. This assign- affect. The bank’s but to the Bank. then due to the contractor *5 ment was to secure an antecedent debt. It assign Moreover as between successive ofwas out of estimate, and ments of first the same June the contractor defaulted and the prevails. Am.Jur., Assign giving notice 4 job by 22, took over the so that the ments, Especially so should this be 107. § contractor never par- earned what had he assignment of which notice is tially assigned. given first legal is a for full and one value equitable only the second is First National Bank of Dothan v. Ameri- attempted thing Co., Cir., before the was in exist Surety can 5 746, 53 F.2d held ence; purchaser only because a bona fide that a bank which loaned to a without value notice will not be interfered contractor to his bills could not sue equity. with court a on the bond. It had no subro- gation paid. to the claims so contrary urged to the Of the authorities leading case is is like this. The Co., no case City First National Bank v. Trust States, 164 Bank v. United U. 529, Prairie State noteworthy 9 F. 114 is for its 142, 227, L.Ed. It dealt 412. assumption S.Ct. 41 mistaken S. 17 that under the de- percentages and held the reserved with cision in the Prairie State Bank case there pledged from date to be the. them contract as tractor superior is no per- difference between security in a which the con centages progress payments. and Justice -give not bank a claim McKenna, could who presiding, dissented surety’s right subroga accurately and stated ruling in the void tion. The bank’s be Prairie majority, case. The however, claim is cause a United States probably right were in thinking equitable assignable. not As a matter of the bank not good a assignment, for subrogation had no the bank because equitable it was an assignment in solido of voluntary lender. No one doubts to a four months’ any estimates made before this, applies holdings. of these None earned, only passed and two months case. before the contractor defaulted and the surety took the work over. Henningsen In United F. & v. States G. Co., 404, 389, 28 52 U.S. S.Ct. L.Ed. Hayes, Cir., In Bank v. Farmers’ F. with the United a contract States 34, 37, the court held the bank had no 2d involved, again assignment general and the bank a only assignment but a revocable order to payments “all due be- to it till further mail checks notice. Its assignment was come due”. The void. The statement that the “lien of broad the sure Bank case was followed in Prairie State per not ty” extends the retained holding subrogation, entitled centages but also “to sums earned under the bank as a volunteer not so entitled. and retained the owner” can contract Surety Martin National as to 300 U.S. not be sustained an earned sum valid again ly assigned S.Ct. 81 L.Ed. in- another contractor be government default, contract acquies volved the con- with notice to fore assignments void, especially tractor’s were owner; but there cence where the agreements given were which were effect full benefit of receives the the as interloper, faith signment. a bad the contrac- evidence, nothing in argued proved is never offered In the at bar case ob- them would been admissible appears have enough from what if there jection admitted summary judgment if And hearing offered. proof for dis would still that the interrogatories be no in the answers Aug. 18, finally paid in was in 1937. covery show the default before $17,000 or contractor’s more of the us the sure- properly On facts before hills, must of these some material equitable ty’s rights superior not June, existed and been default acquired legal right Bank’s for full allegations pleadings of the stricken present If value and notice. what cannot thus be overridden. When the mo alleged proven, ought Town summary tion for judgment under Rule 56 adjudged to be liable to was heard allegations the stricken were no again already what has part longer pleadings. That rule surety’s protection and benefit. contemplates that judge shall take portions For striking error in the and pleadings they shaped have been to see answers make, issues of they what fact and then judgment is reversed and cause re- “depositions, shall and admis consider the manded for further proceedings consistent together file, sions on to with the affidavits” opinion. this gen such real and see issues are not, given If uine. (dissent- HUTCHESON, Judge Circuit without further was In this case there trial. ing)- left material issue the Town’s by us on determined Bank’s answers. Oral evidence was appeal simply, under admitted thirty- heard as the claims of other this facts, undisputed parties six two objection over the of the Town and testants, surety on construction *6 reception the Bank. Its on summary money to advanced judgment ty irregular, bond, or a irregulari bank which but the superior right to contractor, by has the was cured the ruling the of the court unpaid moneys, $15,810.08 the $5,105.77, that it not of against admitted the Town and and the hands Bank. The the contract on Town of River evidence cannot now be owner, the Junction, considered rogatories when them. also the So inter completed the for and discovery propounded the took over under moneys paid the Rule to the the town Mayor contract. These Town’s and the from it for receiving President after securities Bank’s are bank not available. Nei long indemnity, protection town’s and the Town nor ther the notice of had completed the the after had and opportunity interrogatories to or the cross by work for accepted the called especially Mayor an other. The town the the asked swered knowledge that contract, full and and not only from information moneys in its security all the claimed documents were original No the hands. knowledge. paid paid the moneys so were admissions copies. The produced of three and interest principal the bind the as party would not other. bank of one $4,800, for one aggregating exploratory, in interrogatories notes Such and July others dated the and witnesses dated find facts and tended to June each, by contractor given the for propounder so the there $400 documents by moneys him bank on loaned the prove to in an for prepare his case order purporting secured “depositions” dates to be and ly They those are not' re manner. assignment of the Esti- by an Sewer on to in Rule 56 as to be considered ferred June per check letter1 and mate as They summary judgment. were fact agreeable Mayor Town of Barnes, This to River Junc- F. Dr. B. tion, Junction, Fla. River hereby received, sell, For value we Barnes: Dr. Dear assign kindly you transfer and the above described send our June Sewer Will cheque required Cheque or amount thereof the Gadsden direct Estimate County Four the sum of Thousand Dol- our for account when State ready paid. and on the lars interest and for same the same very truly, that such further County sums said Gadsden Yours advance us Lackawanna Construction Company Labor and of Material. (S) Bishop, Lackawanna Construction Homer G. Company Secretary-Treas. By Bishop, (S) Homer G. Secretary-Treas. 28á city periodical payments conced- town to the and the 28. The bank of June contractor;3 so fact, that as to on concede here self-evident below ed and record, of the the moneys hands that in the when the contractor made much of the bank, percentages, his notes and assignment represented there town the unpaid date were surety’s as of the bills for claim attached materials furnished bond, job could not the ing unpaid moneys and excess of all its execution of the then remain- owner, contract; on displaced by any fact act of They that insisted no estimate assignee. or or his other contractor estimate here, that, except final, all of after however, insist below was ever made up by hands, moneys approval by contractor for the owner’s engineer, and given, moneys that no assignments further *7 name, own the of the in its either the balance time surety, or the and having none, it assign job could claims In the all material support none. finish of position, this surety pointed the pocket outlay of below and with an out of against here; of points obligations Finally, to the guarantee bond points its the $20,194.68. it to fact it would performance that the of long after the been com- work had that contract, including towit, May year, the of all pleted, following
the in of the materials; for labor and to rights accepted and, claims its subject only pay- the equitable exoneration subrogation, of job, against all material claims the of ment contractor, and conventional surety as to the became entitled to balance in the the equitable owner; provi- hands,' as to the voluntarily, the the town’s the town of sions the contract the that contractor only taking indemnity against full after the provide materials, all claim, should labor $5,105.77 of the bank 2 Deposit Trust, Surety Compa Prairie State National Bank v. United Safe & States, 227, 142, 164 ny, Cir., U.S. 17 S.Ct. 41 L. 114 9 F. 529. 412; Henningsen 3 provided among Ed. v. United States The contract other Fidelity Guaranty 404, things, pro- & 208 U.S. the contractor 547; 389, labor, 28 etc., S.Ct. 52 Martin v. materials, L.Ed. vide all and should cent, Surety Company, 588, pay ninety per National 300 U.S. of of all the cost 822; 531, day 57 S.Ct. In 81 L.Ed. Union materials on or before the 20th of demnity Company City Smyr delivery following month, New v. of the there- 453; na, 980, project. provided 100 Fla. 130 So. First Na of It also payments periodical by Bank of Dotham v. American tional the town Surety York, days Cir., Co. of New 53 5 F. contractor within the of first 15 746; Maryland perform- 2d Bank of v. Ruleville each calendar month “for work Casualty Co., Cir., 378; during preceding month, 5 23 F.2d ed calendar Hayes, Cir., contractor, Bank Farmers’ 34; v. 58 6 F.2d on estimates certified Id., 602, 8, inspector.” 287 U.S. 53 S.Ct. 77 the owner Government 524; City L.Ed. First National v.
285 authorities, they apply do not insisted that withhold- it had been $15,810.08,which They citing Kane First Na urged, here. v. con- performance of the ing to secure Bank, 534, A.L.R. below, Cir., tional 362, F.2d 85 insists 5 56 surety insisted tract. v. Detroit and Third National Bank of its in violation this was here, that 548, Co., Cir., Fidelity Surety & con- 5 65 F.2d succeed, upon discharge its to tractor’s that, earned since the estimate was position the town’s obligations, to issued, though never the contractor and and the contractor’s against contractor position the bank stand in same of town, as of the date position against the would have stood had the bond, in in authorities the execution note actually surety here, before the below, supra. it relies It relied took pointing over. The upon holding in the Prairie that the Kane and Third National cases case, 240, page at page 17 at S.Ct. 164 U.S. point, not at all in was not insisted that the matter could 41 the contractor L.Ed. open one, very question an that the rights greater not transfer to in bank had been decided in the bank these possessed, its fund it itself than cases, Hayes, Cir., Farmers’ Bank v. F. of 6 58 rights subordinate to those 34; City Trust, 2d First National Bank v. surety. in town and And that the Union Safety Deposit Co., Cir., Surety & case, 114 F. Indemnity Company 456, page at So. 529; Lacy Maryland Casualty Co., surety case bound “In this 48; 32 F.2d Henningsen v. United States and mate- claims for labor Fidelity Guaranty Co., & con- U.S. holding the construction rial tracted for. furnished in 547; undertook L.Ed. all S.Ct. When over, construction, it be- default and took completion of moneys subrogated, rights are the same as to all retain necessary came extent regard loss, rights which ed the owner’s to all the protect it from moneys are against the whether these retained the re might have asserted city percentages or tained earned funds. attached its hands. Such made, the time the contract at progress, the suit While the sure- rights which ac- valuable and is one ty paid properly chargeable off all bills becoming obli- surety upon its crued work, showing and made a that the such, rights and these cannot be gated as $15,810.08, whole of the hands fund defeated the hands job, town when the took secure a loan owner to short of its exoneration. The money. The Judge, agreeing District with the acquire greater right reason could of that bank stood in the contractor’s the contrac- than that which and that shoes used the pay the fact that the contractor might tor assert the own- himself him bank loaned (Italics supplied.) er." claims, off material immaterial the contest between the bank, relying, points So out that because the if he had so *8 claiming moneys tractor were here question, funds, his own advanced could not have ground that it used prevailed against struck the an- equivalent amount of funds to its own seeking to make this swer of the bank de- off material claims would which the finding arrange- And fense. have paid if not the contractor had bank, payment to the for the ments town them, it would have be admitted protected, completely and in ef- for, this, do could not fect, hands, gave in its still held the indemnify it against contracted has surety against for the both town claim loss, it cannot and bank. in the owner’s hands any balance appealed, bank town and both fully exonerat- While until appeal is borne burden since the the bank, therefore, that con- ed. It insists paid claim, the town has could not make the he cannot tractor moneys except another, give his claim to that all assigning bank, that, and as to $5,105.77 right to make other the completely secured. assignor’s always in his shoes. stands Judge. to District agree While bank, admitting I that if The town and cases have had do with re- moneys most the funds many not, of them did percentages, percentages, tained of the retained above, some of those cited have direct- position under the and would be unanswerable 3y held that there difference surety’s rights as percentages to retained funds, earned long as necessary hands of the owner and surety’s protection and exoneration. But, aside, authorities I think it clear upon principle, For, that this must be so. it were not then being lay moneys careful to out no of his own of his esti- obtain, and to assignments mates, moneys needs, that he could de- prive pro- the owner tection, has, always the owner payments, stopping apparent when it is complete contractor will not or cannot contract, is or will be in default. This was the situation here gave assignment. was com- work
pleted exception with the of a small addi- amount, tional and there was then due and owing, more in material bills than the
amounts retained in the town’s hands. Rea- son, justice sense, think, common I spire to teach that of the owner to protect himself surety by withhold- ing funds in his hands when the contractor default, is in impaired or taken away by any act of the contractor so situ- They, conspire
ated. to teach that the con- tractor cannot, by funds, assigning give to his assignee upon claims them which the contractor himself did not have.
The judgment right. MILLS,
NORTHWEST STEEL ROLLING Inc., v. COMMISSIONER OF INTER- NAL REVENUE.
No. 9207. Appeals,
Circuit Court of Ninth Circuit. *9 March notes com- ing to the percentages, were contractor on job, above the retained of the because of bills, his default in paying con- city claims and that the free material on them, August 4, freely assign called on might tractor draw and to see job town, freely pay finished, contractor thereafter no accountability his or the contractor on ac- part count any kind to of the work except small sums town, assignee. They it from the contractor or time to payrolls time for on orders particular surety; mon- especially insisted that the to the fact that after the to, eys in and due job were earned taken completely over, asignment contractor when up made final his esti- made, and, city’s mate though still in hands on October it showed total unpaid, they earned, were, com- because actually bills, for materials incor- lienable moneys pletely subject his tp unpaid $17,964.40, job, in the porated trol, with the town moneys excess of all the in the sum in them from withhold him. complete job town’s the bills, representing other and actually bills part on its insisted below and $6,- job, on materials 442; used here, upon’ insists principles, settled es- the fact that town called after the below, tablished the cases set out completion upon August on see facts, undisputed had no thereafter, part of the job it did of the time, unpaid in or to in the hands of the name of the contractor and for town, which town could enforce