100 F. 400 | 9th Cir. | 1900
An act of congress approved August 13, 1894, entitled “An act for the protection of persons furnishing materials and labor for the construction of public works,” provided that thereafter “any person or persons entering into a formal contract with the United States for the construction of any public building, or the prosecution and completion of any public work or for repairs upon any public building or public work, shall be required before commencing such work to execute the usual penal bond, with good and sufficient sureties, with the additional -obligations that such contractor or contractors shall promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in such contract; and any person or persons making application therefor, and furnishing affidavit to the department under the direction of which said work is being, or has been, prosecuted, that labor or materials for the prosecution of such work has been supplied by him or them, and payment for which has not been made, shall be furnished with a certified copy of said contract
The effect of the instruction stated was to tell the jury that, if the proper completion of the contract by the sureties cost them $10,000, or more, over and above the contract price, then, and in that event, their liability upon the bond was exhausted, and the plaintiff could not recover: In this there was error. The liability created by the bond was in no respect affected by what it cost to complete the work in accordance with the contract, whether completed by the contractor himself or his sureties. Full performance of its terms and conditions was what the contract called for, and to secure which the bond wa's exacted and executed. The United States, having received such full performance, received all that it was entitled to, and therefore had no cause of action upon the bond; but it received nothing more than it was entitled to, however much it may have cost the contractor or’ his sureties to completely perform the contract. The bond was, «however, as was said by the circuit court of appeals for the Eighth circuit in U. S. v. National Surety Co., 34 C. C. A. 526, 92 Fed. 549, “intended to perform a double function, — in the first place, to secure to the government, as before, the faithful performance of all obligations which a contractor might assume towards it; and, in the second place, to protect third persons from whom the contractor obtained materials or labor. Viewed in its latter aspect, the bond, by virtue of the operation of the ' statute, contains an agreement between the obligors therein and such third parties that they shall be paid for whatever labor or materials they may supply to enable the principal in the bond to execute his contract with the United States.
The undisputed facts of the present case are such that it is not necessary to consider the question presented in the court below, and argued here, whether, if the United States had any cause of action upon the bond in suit, its claim should be preferred to that of the laborers and material men; Cor, as has already been observed, the United States received full performance of the contract, and therefore has no cause of complaint.
In respect to the remaining affirmative defense the evidence is conflicting. Therefore, for the error already pointed out, the judgment must be reversed, and the cause remanded for a new trial, unless it be, as contended on behalf of the defendants in error, that file obligation sued on was limited to the laborers and material men personally, and that their rights in respect to it could not pass by assignment. This is too narrow a construction of the legislation in question. We agree with what was said by the court in the case of U. S, v. National Surety Co., supra, regarding iis purpose, that congress thereby intended “to afford full protection to all persons who supplied materials or labor in the construed ion of public buildings or other public works, inasmuch as such persons could claim no lien thereon, whatever the local law might be for the labor and materials so supplied. There was no occasion for legislation on the subject to which the act relates, except for the protection of those who might furnish materials or labor (o persons having contracts with the government.” See, also, U. S. v. Kimpland (C. C.) 93 Fed. 403. The general rule is ihat an assignment of a debt carries with it the security. The application of this general principle to such cases as the present accords with the obvious purpose of the statute, while the limited construction contended for by the defendants in error might very well deprive those for whom the security was intended from realizing' on their claims by assignment.
The views above expressed render if: unnecessary to consider any other question argued by counsel. The judgment is reversed, and cause remanded to the court below for a uew trial.