United States Fidelity Guaranty Company v. United States (209 U.S. 306)/Opinion of the Court

The demurrer put in by the plaintiff in error is founded upon an amendment of the above-mentioned act, which, it is contended, applies to the case before us. The amendment is set forth in the margin.

The record shows that the contract between Flaherty and the United States was entered into December 10, 1903, and the material was furnished to Flaherty by the Struthers Wells Company in March, 1904. It thus appears that the bond was executed under the provisions of the original act of Congress, and the materials were furnished Flaherty while that act was in force and before its amendment. The legal rights of the Struthers Wells Company had become vested before the enactment of the amendment. It is contended on the part of the plaintiff in error that the passage of the amendment (February 24, 1905) made it necessary for the defendant in error to follow its provisions when it commenced this action on the 12th of April, 1905. It is argued that the amendment prescribes the procedure to be followed by materialmen in enforcing claims against a surety on a bond of the nature of the one in suit; that, as amended, the law prohibited a materialman from commencing any action in any district other than that in which the contract was to be performed (in this case the Maryland district of the fourth circuit), and also not until after the complete performance of the contract for the performance of which the bond was given, and until the expiration of six months after such completion, during which time the United States alone has the right to commence an action. The plaintiff in error insists that, although the cause of action herein arose before the passage of the amendment, the action itself not having been commenced until after that time, all the provisions of the amendment regulating the enforcement of such cause of action apply to the action before us, as they do not affect the cause of action itself, but only the method of enforcing the same. In other words, it is contended that he amendment is to have retroactive effect in all matters relative to procedure, and that, as so construed, this action was improperly brought in the circuit court of the United States for the eastern district of New York, and that it was prematurely brought because it does not appear that at the time of the commencement of this action the contract had been completed, or that six months had expired since its completion, or that the United States had not itself sued on the bond.

The act which is amended consists of but one material section, the 2d section providing only for the comparatively unimportant matter of security for costs. The act amending the section also consists of but one section. The question is whether the amended act applies to this case.

There are certain principles which have been adhered to with great strictness by the courts in relation to the construction of statutes, as to whether they are or are not retroactive in their effect. The presumption is very strong that a statute was not meant to act retrospectively, and it ought never to receive such a construction if it is susceptible of any other. It ought not to receive such a construction unless the words used are so clear, strong, and imperative that no other meaning can be annexed to them, or unless the intention of the legislature cannot be otherwise satisfied. Dash v. Van Kleeck, 7 Johns. 499, 5 Am. Dec. 291; Jackson ex dem. Hicks v. Van Zandt, 12 Johns. 169; United States v. Heth, 3 Cranch, 399, 414, 2 L. ed. 479, 484; Southwestern Coal & Improv. Co. v. McBride, 185 U.S. 499, 503, 46 L. ed. 1010, 1012, 22 Sup. Ct. Rep. 763; United States v. American Sugar Ref. Co. 202 U.S. 563, 577, 50 L. ed. 1149, 1152, 26 Sup. Ct. Rep. 717.

The language of the amended act is prospective, as it provides 'that hereafter any person or persons entering into a formal contract with the United States,' etc. That language, standing alone, would leave little doubt as to the intention of Congress in the matter of the taking effect of the amendment.

It is urged, however, that as the amendment in this respect but reiterates the language of the original act, the use of the word 'hereafter' in the commencement of the amendment ought not to have the significance which would otherwise attach to it, because it is simply in this particular re-enacting the law as it already stood.

There is considerable force in the suggestion that the word 'hereafter' is not to receive the weight which, in other circumstances, it ought to have. The question is, however, one as to the intention of Congress, and when we come to look at the provisions of the statute, as amended, we are convinced that Congress did not intend that the amendment should apply to cases where the bond had already been executed, the work done, the respective rights of the parties settled, and the cause of action already in existence. If Congress had intended otherwise, we think it would have still further amended the original act by providing in plain language that the amendment should apply to all cases, and not be confined to the future.

The plaintiff in error contends that where an amendment to an act relates only to procedure, it takes effect upon causes of action existing when the amendment was passed; and hence that part of the amendment in question applies and prevents the taking of jurisdiction by the circuit court for the eastern district of New York. It is admitted by the plaintiff in error that the act is not confined to procedure, but deals with substantive rights in some instances, one of which is the provision granting a preference to the United States over all other creditors. In such case counsel admits that the provision must be construed and held to apply to bonds executed subsequent to the enactment of the statute, and to such bonds alone. Under the statute of 1894 no such preference could be obtained. American Surety Co. v. Lawrenceville Cement Co. 96 Fed. 25; United States v. Heaton, 63 C. C. A. 156, 128 Fed. 414.

It would follow necessarily that, if the full amount of the liability of the surety on the bond were insufficient to pay all the claims and demands, the provision that, after paying the full amount due the United States, the remainder only should be distributed pro rata among the interveners, would also be a substantive amendment, and not one of procedure. Hence counsel admits that the full amount which may be due the United States depends upon whether the bond was executed prior or subsequent to the amendment of the statute; that, if the bond were executed prior thereto, the government is only entitled to its pro rata share, while, if executed subsequently, the full amount of its claim, regardless of the claims of the other creditors, would be the amount due. In other words, these provisions, contained in the single section of the act, are to be considered as prospective only, and as applicable to bonds executed subsequently to the passage of the amendment.

There is another most important amendment, by which the materialman's right to sue is suspended until after the completion of the work and final settlement and for six months thereafter, during which the United States can alone sue upon the bond. Instead of a right to sue at once upon the nonpayment of his claim, he is precluded from doing so, perhaps for years.

Although the time in which to commence action may be shortened and made applicable to causes of action already accrued, provided a reasonable time is left in which such actions may be commenced (Terry v. Anderson, 95 U.S. 628, 24 L. ed. 365; Wilson v. Iseminger, 185 U.S. 55, 46 L. ed. 804, 22 Sup. Ct. Rep. 573), yet that is a different principle from taking away absolutely a present right to sue until a period of time, measured possibly by years, shall have elapsed.

These various provisions are all contained in the same section of the statute, and there is not much of it left to be made retrospective, as matter of procedure, after these other provisions have been held to be prospective only. If the limitation as to the district in which the suit upon the bond could be brought were to be regarded as simply matter of procedure (which we do not assert), we still think it is not to be construed as applying retrospectively. As it is only a question of intention we are not prepared to hold that the section is prospective in its operation in regard to all its other provisions, but retrospective in the one instance, as to the district in which the suit is to be commenced. Even matters of procedure are not necessarily retrospective in their operation in a statute, and we see no reason for holding that this statute, of but one section, should be split up in its construction, and one portion of it made applicable to cases already existing and other portions applicable only to the future. We are convinced Congress did not intend such separation. Viewing the whole section, we think Congress meant that only in future cases should the provisions of the amendment apply, although some trifling portion of those provisions might be regarded, technically, as in the nature of procedure. It is therefore wiser to hold the entire section governed by the usual rule and as applying only to the future.

The judgment of the Circuit Court of Appeals was right, and is affirmed.