Standard Insurance Company v. United States/Opinion of the Court

The petitioner is surety on a post office construction bond given pursuant to the Act of Congress approved August 13, 1894, c. 280, 28 Stat. 278, as amended, title 40 U.S.C.A. § 270, which provides:

'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 obligation that such contractor or contractors shall promptly make payments to all persons supplying him or them with labor and materials in the prosecution of the work provided for in such contract; and any person, company, or corporation who has furnished labor or materials used in the construction or repair of any public building or public work, and payment for which has not been made, shall have the right to intervene and be made a party to any action instituted by the United States on the bond of the contractor, and to have their rights and claims adjudicated in such action and judgment rendered thereon, subject, however, to the priority of the claim and judgment of the United States.'

Respondent, common carrier by railroad, having transported material for the structure, sued on the bond to recover freight charges and prevailed in both courts below. They held it was a 'corporation who has furnished labor or materials used in the construction' of a public building. The correctness of this conclusion is the only question before us.

The cause is here because of conflicting opinions in Circuit Courts of Appeals. United States, etc., v. Hyatt, 5 Cir., 92 F. 442; Title Guaranty & Trust Co. v. Puget Sound Engine Works, 9 Cir., 163 F. 168; Mandel et al. v. United States, etc., 3 Cir., 4 F.2d 629; Maryland Casualty Co. v. Ohio River Gravel Co., 4 Cir., 20 F.2d 514; City of Stuart, for Use and Benefit of Florida East Coast R. Co. v. American Surety Co., 5 Cir., 38 F.2d 193; Standard Accident Insurance Co. v. United States, etc., 5 Cir., 89 F.2d 658.

Petitioner maintains that freight cannot be considered as 'labor or material' without doing violence to the words of the statute; also that Congress did not intend to extend further protection to carriers who could enforce their lien for charges by retaining and selling the materials.

City of Stuart, etc., v. American Surety Co., supra, Circuit Court of Appeals Fifth Circuit, 1930, carefully considered and denied these defenses and stated reasons therefor which we deem adequate. This was followed by the court below in present cause.

The statute often has been before us. Guaranty Company v. Pressed Brick Co., 191 U.S. 416, 24 S.Ct. 142, 48 L.Ed. 242; United States, for Use of Hill, v. American Surety Co. of New York, 200 U.S. 197, 201, 26 S.Ct. 168, 50 L.Ed. 437; Title Guaranty & Trust Co. v. Crane Company, 219 U.S. 24, 31 S.Ct. 140, 55 L.Ed. 72; United States Fidelity & Guaranty Co. v. United States, etc., 231 U.S. 237, 34 S.Ct. 88, 58 L.Ed. 200; Equitable Surety Co. v. United States, etc., 234 U.S. 448, 456, 34 S.Ct. 803, 58 L.Ed. 1394; Illinois Surety Co. v. John Davis Co., 244 U.S. 376, 383, 37 S.Ct. 614, 61 L.Ed. 1206; Brogan v. National Surety Co., 246 U.S. 257, 262, 38 S.Ct. 250, 62 L.Ed. 703, L.R.A.1918D, 776. And we are committed to the doctrine that it should be liberally construed in aid of the evident public object security to those who contribute labor or material for public works.

Certainly labor is required for loading freight on railroad cars, moving these over the road, and unloading at destination. A carrier who has procured the doing of all this in respect of material has 'furnished labor.' If a contractor had employed men to move the same kind of material in wheelbarrows, there could be no doubt that he furnished labor. In principle the mere use of cars and track and a longer haul creates no materially different situation.

Nor do we find reason for excluding the carrier from the benefit of the bond because it might have enforced payment by withholding delivery. The words of the enactment are broad enough to include a carrier with a lien. Nothing in its purpose requires exclusion of a railroad. Refusal by the carrier to deliver material until all charges were paid might seriously impede the progress of public works, possibly frustrate an important undertaking.

State for Use of Pennsylvania R. Co. v. Aetna Casualty & Surety Co. (1929) 4 W.W.Harr., Del., 158, 145 A. 172, gave much consideration to a similar statute. The conclusion there reached accords with our view.

The judgment of the court below must be affirmed.