United States Ex Rel. SGB Universal Builders Supply, Inc. v. Fidelity & Deposit Co.United States Ex Rel. SGB Universal Builders Supply, Inc. v. Fidelity & Deposit Co.
MEMORANDUM AND ORDER
Thе use plaintiff (herein called plaintiff) brought this action under the so-called Miller Act,
On March 11, 1976 Falco Construction Corporation (“Falco”) and the United States government entered into a contract for thе job. Defendant supplied the bond for “payment to all persons supplying labor and material in the prosecution of the work.”
On April 19, 1977 plaintiff made an agreement with Tino Masonry Corр. (“Tino”), a subcontractor of Falco, renting to Tino certain scaffolding and shoring equipment to be used in the work. The lease, on plaintiff’s printed form, provided for a specified rеntal to be paid every four weeks, the rental period to “commence on the date of delivery to the job site” and to “terminate on the date of redelivery” of the equiрment to plaintiff. The form also recited that equipment not returned “shall be considered sold to the customer at the list price established” by plaintiff and that should the customer fail to pay the rent promptly plaintiff might retake the equipment and bill the customer for the cost of doing so. A similar rental agreement for further equipment was made on May 24, 1977.
In addition to the scаffolding and shoring materials rented to Tino for use on the government job involved in this case plaintiff leased Tino equipment for use on four other jobs. Evidently in the summer of 1977 Tino found itself in financial diffiсulty. By August 12, 1977, it owed plaintiff a total of $7,648 on the rentals at all five jobs. On that date it paid plaintiff $1,600 but this amount was not allocated by either Tino or plaintiff to any particular job. Tino never , madе any further payments to plaintiff. Finally Tino abandoned the subcontract with Falco. The last day Tino did any work on the project was September 23, 1977.
Apparently plaintiff soon became aware of this because it sent no further bills for rental to Tino after that date. Moreover, on November 8, 1977, plaintiff wrote to Falco confirming a telephone conversation of the same day, enclosing a list of plaintiff’s equipment on the site, and asking cooperation “in assisting us to pick up our material at the site.” However, at that time plaintiff did nothing furthеr to retake its equipment.
On November 16, 1977, plaintiff’s attorneys wrote by registered mail to Falco and the Director of Finance of the Merchant Marine Academy stating that plaintiff had а claim against Tino for $11,233.20 for material delivered and for $1,223.70 in unpaid rentals and asking for information as to any surety bond. On December 19, 1977, the attorneys wrote by registered mail to defendant clаiming those amounts.
Eventually on March 28, 1978, Falco wrote to plaintiff saying that materials abandoned by Tino were obstructing the progress of the work and that if plaintiff claimed and could prоve ownership and would hold Falco harmless as to any claims with regard to the materials, plaintiff should remove them or they would be scrapped. On May 4, 1978 plaintiff removed certain еquipment from the site, having executed an indemnification to Falco against any claim to ownership by others.
Plaintiff now claims $1,345.95, the alleged value of the equipment originally delivered to the site but not recovered by plaintiff, and $2,545.62 representing rentals through March 23, 1978.
The relevant statutory provision is
*674 Plaintiff contends that it continued to “furnish or supply” the equipment until the March 1978 date when Falco asked for their removal аnd that defendant is responsible for rentals to that date. Plaintiff also asserts that it may recover the value of the materials not returned, relying on the provision of its contract with Tino stating that equipment received on the site but not returned would be deemed sold to Tino at list price.
Ever since
Illinois Surety Co. v. John Davis Co.,
Any such reading would be fatuous. During the period of ninety days after delivery the lessee may well make all rental payments in strict accordance with the lease. Yet the notice required of the claimant must state, among other things, the amount claimed against the subcontractor. Plainly therefore the legislation does not contemplate that the ninety day period will commencе on the date a lessor makes delivery. The only sensible interpretation of the notice requirement in the case of rentals is that the equipment continues to be “furnished or supplied” by the lessor for some period after delivery. Every court which appears to have considered the matter has reached the same conclusion.
See, e. g., United States ex rel. Carter-Schneider-Nelson, Inc. v. Campbell,
So much is evident. But the precise event which causes the ninety day period to commence is less clear. The statutory languagе says it shall 'begin on “the date on which” the claimant “furnished or supplied the last of the material.”
The purpose of the notice provision is to protect the prime contractor where he has no contractual relationship with the claimant.
United States ex rel. J. A. Edwards & Co. v. Thompson Construction Corp.,
But
However, the lessor can hardly be said to be “furnishing or supplying” the equipment to a subcontractor who hаs deserted .the project and has ceased to use the equipment. The court therefore holds that the notice period commences when, as here, the subcontraсtor abandons the work and no longer is using or has use for the equipment in the prosecution of the work.
To make the period begin on that date respects the statutory language and is not unfair to the lessor, who will, or should be required to, ascertain the abandonment within ninety days, or to the prime contractor who will know of its subcontractor’s disappearancе. When the equipment has been abandoned for ninety days the prime *675 contractor should be allowed safely to assume that the lessor has received whatever moneys are duе it from the subcontractor.
In this case the lessee worked on the project until September 23, 1977. Therefore both plaintiff’s registered letters, dated November 16, 1977 and December 19, 1977, gave timely notice. Plaintiff is entitled to recover the rental payments up to September 23, 1977, but, for the reasons already stated, not the rentals accruing thereafter.
There is some suggеstion in the correspondence that Falco itself used the equipment subsequent to Tino’s ceasing work and that plaintiff may recover on the bond for that period of use. But there wаs no proof of Faleo’s use, and plaintiff’s written notices only claim against Tino. In this action plaintiff may not recover against Falco on a quantum meruit theory or otherwise.
Plaintiff is not entitled to the value of thе equipment not returned. Falco was not party to plaintiff’s contract with Tino and so is not bound by the provision reciting that equipment not returned will be deemed sold to Tino.
The payment оf $1,600 by Tino should be allocated to the rental payments claimed here in the same proportion that the rentals on this job on August 12, 1977 bear to the total amount then due on all five jobs. On thаt date Tino owed plaintiff a total of $7,648, and the rentals due on the contract here amounted to $893.22. Thus, plaintiff’s claim for $1,223.70 of unpaid rentals to September 23, 1977 is reduced by $187.20. Plaintiff is entitled to a judgment of $1,036.50 with interest. Each party is to bear its own costs.
The foregoing constitutes the court’s findings of fact and conclusions of law.
So ordered.