Title Guaranty Trust Company v. Crane Company/Opinion of the Court

This is an action brought under the act of August 13, 1894, chap. 280, 28 Stat. at L. 278, U.S.C.omp. Stat. 1901, p. 2523, as amended by the act of February 24, 1905, chap. 778, 33 Stat. at L. 811, U.S.C.omp. Stat. Supp. 1909, p. 948, upon a bond given to the United States, as required by that act. The contract to secure which the bond was given was a contract by the Puget Sound Engine Works to build and deliver a single screw wooden steamer for the United States, and the main question in the case is whether the statute applies to a contract for such a chattel. If not, parties like the plaintiffs, who furnished labor or materials for the work, have no standing to maintain the suit. We proceed, as soon as may be, to dispose of that question, leaving details and minor objections to be taken up later in turn. It was raised by demurrer to the declaration, and subsequently by what was entitled an affirmative defense pleaded by the surety and a demurrer by the plaintiffs. The decision was for the plaintiffs, against the surety, in the circuit court of appeals. 89 C. C. A. 618, 163 Fed. 168.

The amended statute requires any person '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,. . . to execute the usual penal bond. . . 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.' It gives any person who has furnished labor or materials used in the construction or repair of any public work, which have not been paid for, the right to intervene in a suit upon the bond. In short, besides securing the United States, the act is intended to protect persons furnishing materials or labor 'for the construction of public works,' as the title declares. The question narrows itself accordingly to whether the steamer was a 'public work' within the meaning of the words as used.

As a preliminary to the answer, it is relevant to mention that by article 3 of the contract, partial payments are provided for as the 'labor and materials furnished' equal certain percentages of the total, and that by article 4 'the portion of the vessel completed and paid for under said method of partial payments shall become the property of the United States,' although the contractor remains responsible for the care of the portion paid for, and by article 2 there is to be a final test of the vessel when completed. The vessel has been built and accepted, and is now in possession of the United States. Notwithstanding these facts, it was argued that the statute did not apply to the contract, because the laborers and materials had a lien by the state law; and that, even if the statute applied, they had lost their rights by not asserting them before the delivery of the vessel, as before that, it is said, the title did not pass to the United States. Among other things, this ended the right to subrogation that the surety might have claimed. But the very recent decision in United States v. Ansonia Brass & Copper Co. 218 U.S. 452, 54 L. ed. 1107, 31 Sup. Ct. Rep. 49 [Nov. 28, 1910] establishes that the title to the completed portion of the vessel passed, as provided in article 4, and that the laborers and materialmen could not have asserted the lien supposed to exist.

The case cited shows, therefore, that such claimants are within the policy of the statute. It also contains a strong intimation that they are within the meaning of its words. For it refers to the statute, and says that it was in recognition of the inability of such persons to take liens upon the public property of the United States that Congress passed the act, and adds that, in view of this purpose to provide protection for those who could not protect themselves, the statute has been given liberal construction by this court. See also United States use of Hill v. American Surety Co. 200 U.S. 197, 50 L. ed. 437, 26 Sup. Ct. Rep. 168. The reference and comment when the attempt was made to enforce a lien under state laws would have had no relevance unless they had been intended to point out the true remedy available in such a case. The argument that the vessel was not a public work loses most of its force when it appears that the title was in the United States as soon as the first payment was made. Of course, public works usually are of a permanent nature, and that fact leads to a certain degree of association between the notion of permanence and the phrase. But the association is only empirical, not one of logic. Whether a work is public or not does not depend upon its being attached to the soil; if it belongs to the representative of the public, it is public, and we do not think that the arbitrary association that we have mentioned amounts to a coalescence of the more limited idea with speech so absolute that we are bound to read 'any public work' as confined to work on land. It is not necessary to discuss in detail some opinions from the Attorney General's office in cases where the title to the vessel did not pass that looked rather in the opposite direction. It is enough to say that there has been no such clear and established construction as to cause us to yield our own view. On the other hand, the decision of some other courts has been in accord with the judgment below and with what we now decide. United States use of Tidewater Steel Co. v. Perth Amboy Shipbuilding & Engineering Co. 137 Fed. 689, 693; American Surety Co. v. Lawrenceville Cement Co. 110 Fed. 717, 719; United States use of Standard Furniture Co. v. AEtna Indemnity Co. 40 Wash. 87, 82 Pac. 171.

Another defense, set up in the same manner as the first, is that the United States should have been made a party; and, in connection with this, a further one, that the suit cannot be maintained unless the plaintiff has applied, as provided in the statute, for a copy of the bond, and furnished an affidavit that labor or materials have been supplied by him for the prosecution of the work. The latter is the more substantial, as, of course, the suit was begun in the name of the United States, to the real plaintiffs use. But the objection is not serious in either form. No suit had been brought by the United States for more than six months from the completion of the work, affidavits were made and copies filed by interveners, and in the circumstances the omission was only a formal defect. The language of the statute that, after giving the affidavit, the party should be furnished with a certified copy of the contract and bond, 'upon which he or they shall have a right of action,' etc., may be read as meaning 'upon which bond' as easily as 'upon doing which,' and hardly can be construed as making a condition precedent. The conditions are attached in the form of provisos by later words.

Next it is objected that certain claimants are not entitled to the benefit of the bond, either because they had a lien or because the service was too remote. Of the former class are claims for cartage and towage to the spot where the work was going on. We agree with Judge Putnam in American Surety Co. v. Lawrenceville Cement Co. 110 Fed. 717, that in these smaller matters the objection, if carried to an extreme, would defeat the purpose of the statute, that such liens ordinarily are not insisted upon, and that it would be unreasonable to let the statute 'interfere with the convenience of minor dealings in such methods as the usual practices establish.' Of the other class are the claims for patterns furnished to the molding department of the Puget Sound Engine Works. As was said by the judge below, those who furnish the patterns have as fair a claim to be protected as those who erect the scaffolding upon which the carpenters stand in doing their work upon the ship.

Next it is said that the bond was without consideration because the contract was made on February 17, and the bond not executed until February 27, ten days later. But the transactions may be regarded as simultaneous in a practical sense, and the bond being under seal, consideration is presumed.

The assignment of some of the claims did not affect the remedy. United States use of Fidelity Nat. Bank v. Rundle, 40 C. C. A. 450, 100 Fed. 400.

The allowance of a docket fee of $10 to each claimant appears to us to be correct. Rev. Stat. § 824, U.S.C.omp. Stat. 1901, p. 632. The claims are several and represent distinct causes of action in different parties, although consolidated in a single suit.

Judgment affirmed.