U S FOR USE OF ALEXANDER BRYANT CO. v. NEW YORK STEAM FITTING CO.(1914)
[235 U.S. 327, 328] Mr. George B. Class for plaintiff in error.
[235 U.S. 327, 329] Messrs. John R. Halsey and Adrian T. Kiernan for defendants in error.
Mr. Justice McKenna delivered the opinion of the court:
The United States, suing for the use of the Alexander Bryant Company, plaintiff in error, was plaintiff in the court below, and the defendants in error defendants.
The complaint alleged the following facts: The New York Steam Fitting Company entered into a contract with the United States for the mechanical equipment of the New York custom house at New York. It gave bond for the faithful performance of its contract with defendant in error the Title Guaranty & Surety Company, as surety. One of the conditions of the bond was that the Steam Fitting Company would, among other things, promptly make a payment to all persons supplying it labor and material in the prosecution of the work contemplated by the contract of the Steam Fitting Company with the United States.
The bond was accepted and the work undertaken and duly completed on or about February 19, 1908, the Alexander Bryant Company having, in pursuance of a contract with the Steam Fitting Company, furnished all the materials and performed all of the work, upon which there is a balance due to the Bryant Company of $5,431.18. Under the terms of the agreement between it and the Steam Fitting Company it should have been paid as the government paid the former; and as final payment was made by the government February 15, 1908, interest is demanded.
No action, it is alleged, had been brought by the United States against defendant within six months after, nor had one year elapsed since, the performance and final settle- [235 U.S. 327, 331] ment of the contract by the New York Steam Fitting Company prior to the commencement of this action.
It is alleged that, in pursuance of the requirements of the act of Congress of August 13, 1894 (28 Stat. at L. 278, chap. 280), as amended February 24, 1905 (33 Stat. at L. 811, chap. 778, Comp. Stat. 1913, 6923 ), under and by virtue of which this action is brought, complainant served personal notice of the pendency of this action upon all known creditors, informing them of their right to intervene as the court might order, and in addition thereto published the notice in a newspaper of general circulation in the city, county, and state of New York for three successive weeks, the last publication of which was three months before the time limited therefor as in the acts of Congress provided.
A bill of particulars was furnished defendants, of which the following is a copy:
Copies of the notices are inserted in the margin. It
Both notices were signed by plaintiff's attorney. [235 U.S. 327, 333] was stipulated that certain of the creditors who were served with personal notice appeared in the action and filed pleas of intervention. The action was subsequently discontinued as to them, they having been settled with by the Surety Company.
The answer of the Surety Company is unimportant except so far as it raises the issue, which is the crux of the case, whether the action was brought in time, or whether proper notice of it was given to other creditors.
The answer of the Steam Fitting Company is also unimportant.
The case, by consent of the parties, was referred to a referee, upon whose report judgment was to be entered 'as if said cause had been heard before the court.'
The referee found and reported the basic facts of liability of the Surety Company, but found besides that the action was not commenced in time, as provided by the acts of Congress, nor was notice given to creditors as required, and therefore directed a judgment dismissing the complaint. A judgment was subsequently entered by the court after motion for a new trial was denied by the referee.
The following facts appear from the report of the referee: The date of final settlement between the United States and the Steam Fitting Company was February 19, 1908, and to show compliance with the provisions of the act of Congress set out below, the Bryant Company [235 U.S. 327, 334] offered evidence of the publication of notice to creditors in the New York press, beginning November 5, 1908, and also introduced in evidence a stipulation between it and the defendants made November 21, 1908, by which defendants' time to move of plead was extended, and by which it was stipulated as follows:
Prior to the execution of the stipulation the Bryant Company had personally served all known creditors with notice in the form hereinbefore given. Notwithstanding the stipulation, notice by publication continued for the full twenty-one days, to and including November 25, 1908.
The Surety Company moved to strike out the evidence of publication as incompetent, irrelevant, and immaterial on the grounds: (1) That there was no order of the court obtained for the giving of the notice. (2) That under the act of Congress the last publication of such a notice must expire three months before the end of the year after the final completion of the contract; that is, on November 18th, 1908, whereas the last publication of the notice offered in evidence was on November 25, 1908, seven days beyond the time.
The motion was based on certain provisos of the act of Congress already referred to. The act is entitled, 'An Act for the Protection of Persons Furnishing Materials and Labor for the Construction of Public Works.' It provides for the execution of a bond by any person entering into any formal contract with the United States for any public work, and that in any action instituted by the United States any person who has furnished materials or labor to the contractor may intervene and become a party to the action. If no action be brought by the United States within six months from the completion and final settle- [235 U.S. 327, 335] ment of the contract, then any person furnishing materials or labor may bring suit in the name of the United States in the circuit court of the United States [now district court] in the district in which the contract was to be performed and executed, irrespective of the amount in controversy, and not elsewhere, for his or their use and benefit, against the contractor and his sureties.
The provisos are as follows:
It was admitted that no court order was obtained specifying the kind of notice to be given creditors, or giving directions as to publication.
The referee decided that an order of the court was necessary, and that 'the publication proved did not come within the time limit of the statute.'
The argument of the referee was that the conditions [235 U.S. 327, 336] of suit by the creditors of a contractor were (1) the omission of the United States to sue within six months from the completion and final settlement; (2) an action by a creditor must be commenced within one year after such performance and final settlement; (3) only one action can be brought, in which any creditor may file his claim and be made a party thereto within one year from the completion of the work under said contract, and not later; (4) personal notice must be given to known creditors, and in addition notice by publication, the last publication to be at least three months before the time limited therefor. In other words, and succinctly, the referee held that the time for a suit by creditors must be within one year from the complete performance of the contract and its final settlement, and as there could be only one action, this time was the limit within which other creditors could file their claims, and that notice to them, whether personal or by publication, must be in such time as to enable this to be done. He held further that this was a jurisdictional requirement. In this ruling the district court concurred and certified 'that the jurisdiction of the court over the persons and subject-matter in this action is in issue,' and that this was done in accordance with the provisions of 238 of the Judicial Code [36 Stat. at L. 1157, chap. 231, Comp. Stat. 1913, 1215].
Defendants in error, however, move to dismiss the writ of error on the ground 'that no question as to the jurisdiction of the court below to hear and determine the cause is in issue.'
Under 238 of the Judicial Code a case may be brought here directly from a district court if the jurisdiction of the court was in issue, that question alone to be certified.
The present case satisfies this requirement. The controversy between the parties must have been understood by the referee and the district court to involve the jurisdiction of the court. Indeed, such was the explicit contention of the Surety Company, and both referee and [235 U.S. 327, 337] court in the decision of the issue thus presented dismissed the action. The Bryant Company combated the conclusion and still combats it. The issue of jurisdiction was and is, therefore, plainly marked. It may be that the referee and the court were in error in their decision, but this could not be asserted or demonstrated except by proceedings in error, to be taken as prescribed by law, and to this court. We cannot make the possible error of the court a ground for refusing to review it. The right of review is given to correct the error, if error there be, and the decision of the question involved is given to this court by 238 of the Judicial Code. We are brought, therefore, to the consideration of the correctness of the ruling.
The act of Congress is undoubtedly ambiguous. Indeed, considering the letter only of the three provisos with which we are concerned, they absolutely repel accommodation. We must try, however, to give coherence to them, and accomplish the intention of Congress. The act is intended to be highly remedial. Its purpose is simple and beneficial. It is to give a remedy to materialmen and laborers on the bond of the original contractor, and a reasonable time to enforce it, and in a single proceeding to unite all claimants. It, however, imposes a limitation of time on all claimants, the time beginning to run from the same event. From this the complexity in the construction of the act arises.
By the first proviso of the act a creditor cannot institute suit until after the complete performance of the contract and its final settlement; but after such events he may do so (the United States not having sued) within one year from their fulfilment. This is clear enough. The next proviso introduces ambiguity. 'Only one action shall be brought,' is its provision, in which 'any creditor may file his claim . . . and be made a party thereto within one year from the completion of the work, and not later.' The words in italics are disturbing. 'This [235 U.S. 327, 338] right to intervene and file a claim, conferred by the statute, presupposes an action duly brought under its terms.' United States ex rel. Texas Protland Cement Co. v. McCord, 233 U.S. 157, 163 , 58 S. L. ed. 893, 897, 34 Sup. Ct. Rep. 550. But by its terms the instituting creditor has one year from the designated events to commence his action. If he file it on the last day of the designated time, what then becomes of the rights of other creditors who must file their claim within the same limit of time, and not later? The question is not easy to answer and any answer may be disputed. It presents a puzzle for judicial resolution apparently insolvable.
There is more ambiguity when we bring forward the next, and third, proviso. Notice of the suit must be given to creditors personally if they be known, and by publication besides, informing them 'of their right to intervene as the court may order.' Passing what the quoted words may mean, and coming to the requirement of notice, it is provided that it must be 'for at least three successive weeks, the last publication to be at least three months before the time limited therefor.'
This seemingly brings us to an impasse. How can the instituting creditor (so called for convenience) have a year to commence his suit and yet give the notice required?-and it is to be remembered that the intervening creditor must file his claim also within a year.
The Surety Company sees the difficulty and seizes it to press its contention that the year's time for bringing suit is not an authorization of such time, but a permission, and must be availed of so as to permit of the notice to creditors provided for; in other words, that the time in which to bring suit or file a claim, which is explicitly given, is cut down by the provision for notice; that is, the instituting creditor is given not one year from the indicated events to institute a suit, but one year to institute suit and serve notice of it, which notice must precede the expiration of the year by at least three months and three weeks. This [235 U.S. 327, 339] limitation of time is brought about, it is contended, with all of its embarrassment to the creditor who institutes the suit and to the creditors who may want to intervene in it, by the third proviso, which is made all- dominating, bending the other provisions to it, and made even a jurisdictional condition of suit against the sureties of the contractor.
There are grounds for the contention, but there are opposing grounds, which, we think, are supported by the better reason, all things considered. As we have said, the act of Congress is highly remedial, and its provisions must be adapted to fulfil its whole purpose.
In Vermont Marble Co. v. National Surety Co. 213 Fed. 429, the circuit court of appeals for the third circuit had occasion to pass upon the act of Congress under consideration. The court, Circuit Judge Gray speaking for it, decided against the contention now made by the Surety Company. The careful review and exposition of the statute there made leave little else to be said.
That case illustrates the consequences of the contention of defendants in error. Here the contention is urged to defeat a suit by the instituting creditor against the surety of the contractor; there it was urged to defeat a claim of an intervening creditor.
The suit was on a contractor's bond by one who furnished materials to the contractor. The work was completed and final settlement made June 14, 1912. The suit was brought February 28, 1913, within one year from the completion of the work. Notice to creditors was given by publication, the last publication being on April 9, 1913, twenty-three days prior to the expiration of the time within which the suit could have been brought. The Vermont Marble Company intervened and filed its statement of claim within the time prescribed by the statute. The claim was resisted on the ground that publication of notice [235 U.S. 327, 340] to creditors should have been so made that the last publication would have been at least three months before the time limited for bringing the suit, and therefore should have been started not later than February 21, 1913 ( it was started February 28th, as we have seen), so that the last publication should have been on or before March 14, 1913, three months before June 14, 1913, the time when the right to bring suit expired. It was contended that the suit not having been brought nor publication made within the time required by the act, it could not be maintained either by the original plaintiff or the Vermont Marble Company or other intervening creditors. The contention found favor with the district court; it was rejected by the court of appeals. The latter court concluded that the third proviso was directory, and not a limitation upon the right of action given by the other provisos.
United States ex rel. Texas Portland Cement Co. v. McCord, 233 U.S. 157 , 58 L. ed. 893, 34 Sup. Ct. Rep. 550, does not militate against that conclusion. In the latter case it was decided that no right of action accrued to a materialman until the time reserved to the United States to sue had expired, and that this condition was expressed too clearly to be mistaken.
It is urged that it is a consequence of our construction that an action may be commenced on the last day of the year, and that all opportunity for intervention may be precluded; for, counsel say, 'intervention cannot be conducted in a day,' and it would seem as if the act intended 'to afford creditors an interval of three months within which to secure an intervention.' Even if this be the consequence, some of the provisions of the act, as we have intimated, must give way. We can only select those which we consider the fittest to prevail to accomplish the purposes of the statute; and at the very start comes the suggestion that even if it be granted that the diligent creditor is under obligation to give notice to a waiting or tardy, or, it may be, unwilling one, how is the surety of [235 U.S. 327, 341] the contractor concerned with the discharge of the obligation? At the most its concern is only to be protected against claims delayed beyond the limit of time provided by the act. We may refer again to Vermont Marble Co. v. National Surety Co. The court in that case, in careful distinction between the purposes of the provisos, said that the first and second confer a substantive right of action or intervention limited only by a time for assertion; that is, one year from the completion of the work; and that that time was 'obviously for the benefit of the sureties on the bond;' while the last proviso (the third) was 'just as obviously for the benefit of the creditors alone.' It was pointed out that indeed it was to the interest of the sureties not to bring in the other creditors, and yet they contended that the provision for notice to the creditors was mandatory and jurisdictional, and not simply directory. The same contention is made in this case. In other words, it is in effect contended that a provision which it is to the interest of the Surety Company not to have observed the statute gave it a right to have observed. Such a contradiction of interests and rights we cannot assume the statute intended to create, nor that it was intended to give to the Surety Company a right to have done that which it is its interest not to have performed. The provision for notice, therefore, is not of the essence of jurisdiction over the case, nor a condition of the liability of the Surety Company. We need not go farther in this case.
In the cited case it was held that the third proviso was directory only, and the conclusion has reason to sustain it. There can be no sacrifice of rights in it, neither of surety companies nor of creditors. Every creditor has the same rights and may institute the action provided for in the first proviso. If he does not choose to do so it is his own affair; and he may guard against surprise or deception. He knows the time limit of suit and of intervention. He knows [235 U.S. 327, 342] that the suit must be brought in the district court of the United States in the distract where the contract was performed. It would seem as if the law owed him no further care. If he chooses he may institute proceedings if another has not done so. If another has, he knows in what court and within what time, and he may intervene. He has, therefore, the means of suit or the means of intervention. An attentive waiting is all that is necessary for either, and indeed is his ultimate safeguard, as intervention must depend on a suit previously instituted.
Judgment reversed and cause remanded for further proceedings in accordance with this opinion.