Trimount Dredging Co. Ex Rel. Brown & Hooff v. United States Fidelity & Guaranty Co.

Bond, C. J., delivered the opinion of the Court. A general contractor for work done for the United States government sues the surety on a bond given to it, the general contractor, by a subcontractor, to recover the cost of labor and materials furnished to that subcontractor bnt not paid for by him. The work was, completed and accepted, but the- subcontractor executed an assignment for the benefit of his creditors before these debts for labor and materials were paid. The question is whether there was any obligation undertaken by the subcontractor’s surety to indemnify the genera! contractor against loss, by reason of its undertaking with the government that all laborers and materialmen should be promptly paid.

At the conclusion of the trial the court directed a verdict for the defendant, judgment was entered accordingly, and the plaintiff has appealed. The whole of the work undertaken by the general contractor, the Trimount Company, was that of clearing, dredging, and construction, in connection with a .marine corps-flying field at Quantico, Virginia, and was within the provision of the Heard Act (Act Feb. 24th, 1905, ch. 778, 33 Stat. 811 , amending Act Aug. 13th, 1894, ch. 280, 28 Stat. 278 , 40 U. S. Code, Aim., see. 270), that any person or persons entering into, formal contracts with the United States for public work shall execute the usual penal bond, with the additional obligation that the contractor or contractors “shall promptly make payments to all persons supplying him or. them with labor and materials in the prosecution of the work.” The Trimount Company executed a contract with the government based on specifications containing a provision that a bond be furnished to the government in a penal sum equal to thirty per cent, of the contract price-, conditioned upon the faithful performance- of the contract, “and ⁵⁵⁸ the prompt payment- of persons furnishing labor and materials in the prosecution of the work.” A bond with the stipulation contained was furnished accordingly, with the Globe Indemnity Company as surety. It is settled that those who furnish labor and materials to subcontractors for government work are protected by the bond so given. United States, use of Hill v. American Surety Co., 200 U. S. 197, 203 , 26 S. Ct. 168 , 50 L. Ed. 437 .

Final settlement for this whole work was made with the general contractor on May 4th, 1933. All labor and material would seem to have been paid for by that time, but the record does not disclose the source of the payment. Suit against the surety on the bond of this subcontractor is filed, as stated, by the general-contractor, or in its name, for the use of labor and material-men whom the subcontractor did not pay. It is not a suit in which the general contractor, as a secondary obligor, required by virtue- of his bond to the government to- see all labor and material paid, seeks subrogation against the primary obligor, the subcontractor.

No- relief is here sought ¡against the subcontractor or his assets. Recourse is had .solely against a bond taken by the general contractor from •the subcontractor, and recovery depends upon the undertaking of the surety in that bond. The subcontract was with E. Roy James of Maryland, ¡subcontractor, and it recited that the Trimont Company had ¡entered into a contract with the United States for the work, according to specifications numbered /6182, and ¡entitled “EUling at the Marine Barracks, Quantico, Virginia,” which specifications and plans accompanying them were- embodied by reference, and that James was desirous o-f doing certain of the work included, more particularly that described, contemplated, and included under designated sections concerning bridge and approaches, drains and water,line, and a water main. Counsel here have referred to- it as the construction of a bridge.

James agreed to do all the work described, to carry workmen’s compensation and public liability insurance, and then undertook as follows: ⁵⁵⁹ “(3) To indemnify and save harmless the company of and from any and all claims, demands, damages, actions or causes of action, and claims of any kind or nature which any person or persons can have or maintain by reason of any injury to persons, or damages to property resultant from any failure on the part of James to properly perform the work to he performed by him under this agreement. “(4) To commence forthwith the work to be performed under this agreement and to prosecute said work diligently and to complete the same within one hundred ten (110) calendar days from the date of this agreement. “(!>) To forthwith procure and furnish to the company a surety company bond in tbe amount of Thirty-One Thousand Dollars ($31,000.00) and in form satisfactory to the company, guaranteeing the faithful performance of James under this agreement.” The undertaking was, in terms, “to indemnify and save harmless the said obligee (the general contractor) from any pecuniary loss resulting from breach of any of the terms» covenants and conditions of the said contract on the part, of the said principal (the subcontractor) to be performed.”' In itself, it is only the usual penal bond for completion of' work, and does not contain an additional obligation, such as; the Heard Act requires in bonds given to the government. Compare Babcock & Wilcox v. American Surety Co. (C. C. A.) 236 Fed. 340, 342 ; United Slates v. Montgomery Co. (C. C. A.) 255 Fed. 683 ; United States v. Starr (C. C. A.) 20 Fed. (2nd) 803. If the obligation has been incurred, it must be by its inclusion in the subcontract secured. In all this James undertook merely to; do his portion of the whole work, as described in the plans and specifications, to provide insurance against liability to workmen or to tbe public, to indemnify the Trimount Company against any claims for injuries to person or property, and to furnish a bond