Williams Construction Co. v. Construction Equipment, Inc.

Singley, J., delivered the opinion of the Court. Chapter 10 of the Laws of 1959 1 enacted what has come to be known as Maryland’s “Little Miller Act”, Maryland Code (1957, 1964 Repl. Vol.) Art. 90 § 11 (the Act). Any contractor who is awarded a public works contract in the amount of more than $5,000 is required by § 11 (a) of the Act 2 to furnish the State or political subdivision with a performance bond for the protection of the public body and “a payment bond * * * for the protection of all persons supplying labor and materials to the contractor or his subcontractor in the prosecution of the work provided for in the contract. * * *” In 1962, the appellant, Williams Construction Co., Inc. (Williams), which had been awarded the prime contract for the construction of a portion of the Northeastern Expressway (now John F. Kennedy Memorial Highway) in Harford County, arranged for a payment bond in the penal sum of $9,651,059.70 ⁶² (the amount of the contract) to be written by the appellant, Fireman’s Fund Insurance Company (Fireman’s Fund).

The bond referred to the Act, and provided: “* * * [T]he condition of this obligation is such that if the [Principal] shall promptly make payments to all persons supplying labor and/or material to the Principal and to any Subcontractor of the Principal or any Subcontractor of the Principal in the prosecution of the work provided for in said Contract * * * then this obligation shall be void; * * *” Thereafter, Williams entered into a subcontract with J. G. Prentis & Co., Inc. (Prentis) for the erection of three bridges, and Prentis leased certain equipment to be used in the performance of the subcontract from the appellee, Construction Equipment, Inc. (Construction Equipment). The leased equipment was operated by Prentis’ employees. When Construction Equipment’s charges aggregating $32,578.02 3 were not paid by Prentis, Construction Equipment gave notice as required by the Act and then instituted suit in the Circuit Court for Baltimore County against Williams and Fireman’s Fund. Williams and Fireman’s Fund moved for summary judgment, alleging that a lessor of equipment is not a person “supplying labor and materials * * * in the prosecution of the work” and was therefore not protected by the Act.

The motion for summary judgment was denied, as were a motion for a directed verdict at the end of the entire case and a motion for a judgment n.o.v., which raised the same question. This appeal was taken from a judgment absolute for $32,578.02 entered in Construction Equipment’s favor against Williams and Fireman’s Fund. Construction Equipment’s argument has the simplistic appeal of a syllogism: the language of Maryland’s Act, “all persons supplying labor or materials to the contractor or his subcontractor in the prosecution of the work provided for in the con ⁶³ tract, in respect of which a payment bond is furnished * * *” is substantially identical with that of the Miller Act, 49 Stat. 793 , 40 U.S.C.A. 270 a (2). Equipment rentals can be recovered under the Miller Act.

U. S. v. Campbell, 293 F. 2d 816 (9th Cir. 1961) cert. den. 368 U. S. 987 ; U. S. v. Nat’l Surety Corp., 268 F. 2d 610 (5th Cir. 1959); Continental Cas. Co. v. Clarence L. Boyd Co., 140 F. 2d 115 (10th Cir. 1944); U. S. v. Chester Const. Co., 104 F. 2d 648 (2d Cir. 1939). The interpretation given a statute in the jurisdiction in which it was first adopted is presumed to have been adopted with it, or should be given great weight, relying on Public Service Comm’n v. Balto.

Transit Co., 207 Md. 524 , 114 A. 2d 834 (1955); Continental Oil Co. v. Horsey, 177 Md. 383, 385 , 9 A. 2d 607 (1939); Heyn v. Fidelity Trust Co., 174 Md. 639 , 197 A. 292 (1938); Zell v. Safe Deposit & Trust Co., 173 Md. 518 , 196 A. 298 (1938). Therefore, equipment rentals can be recovered under the Maryland Act. Appealing as this argument is, it will not survive a critical examination made in the light of our prior decisions. The statutory progenitor of the Miller Act was the Heard Act, 28 Stat. 278 , 40 U.S.C.A. 270, passed in 1894.

It provided for one bond to protect both the United States and those furnishing labor or materials for the prosecution of the work, so that subcontractors necessarily shared pro rata with the United States. An amendment of 1905, 33 Stat. 811 , merely provided procedural mechanics, giving a preferred position to the government, which had previously shared ratably with subcontractors. The pertinent language of the Heard Act was that the contractor’s bond must include the obligation to “promptly make payments to all persons supplying him * * * with labor and materials in the prosecution of the work provided for in such contract * * The Supreme Court had before it in 1917 in Illinois Surety Co. v. John Davis Co., 244 U. S. 376 , 61 L. Ed. 1206 , 37 S. Ct. 614 (1917) the question we now have. It said (Brandeis, J.) : “The purpose of the act was to provide security for the payment of all persons who provide labor or material on public work.

This was done by giving a claim under the bond in lieu of the lien upon land and build ⁶⁴ ings customary where property is owned by private persons.” 244 U. S. at 380 . and held: “The specific objection made to the claim of the United States Equipment Company, for rental of cars, track and equipment used at the Naval Training Station and the expense of loading the plant and freight thereon to and from the station is also unfounded. The Surety Company contends that this is not supplying ‘labor and materials.’ The equipment was used in the prosecution of the work. Material was thus supplied, although, a loan serving the purpose, no purchase of it was made.” 244 U. S. at 383 . By Ch. 721 of the Laws of Maryland of 1910, “An act to amend Section 32 of Art. 91 of the Code of 1904 ** * * subtitle Public Roads * * * and requiring bonds given by contractors to cover claims for work done and materials provided in the construction of roads,” it was provided that contracts should be let by the then State Roads Commission by competitive bidding and awarded by formal contract under which the successful bidder must execute and deliver a bond for the contract price in which the obligors bind themselves “to the payment of all just debts for the labor and materials incurred by the bidder in the construction and improvement of the road contracted for.” 4 This provision came before this Court in State v. Nat'l Surety Co., 148 Md. 221 , 128 A. 916 (1925), where Gwynns Falls Quarry had leased to a subcontractor a steam shovel which the subcontractor used in the construction of a road.

Gwynns Falls, being unpaid, sued the surety on the bond. Our predecessors reached a result diametrically opposite that reached by the Supreme Court in Illinois Surety. Although the Supreme Court had said the phrase “supplying * * * labor and materials in the prosecu ⁶⁵ tion of the work” encompassed the rent owed by a subcontractor on leased equipment, this Court concluded that neither the language of the statute nor the phrase used in the bond, “furnishing material or performing labor in and about the construction of said roadway” included the rent of the shovel. The Court, speaking through Judge Urner, said and held: “* * * In Basshor v. Balto. & O. R. R. Co., 65 Md. 99 [ 3 A. 285 (1886)], it was held that machinery and appliances sold to a contractor, for crushing and carrying stone for the building of concrete bridges, were not materials within the purview of the provision in the mechanics’ lien law that a lien was obtainable for materials furnished ‘for or about’ such construction. ‘The machinery thus used,’ the court said, ‘is the plant of the contractor, and can in no sense be said to be materials furnished or used in building the bridges.’ In Gill v. Mullan, 140 Md. 1 , [ 116 A. 563 (1922)], it was held that oil and fuel used in the operation of a steam shovel, and its depreciation, did not constitute materials for the purposes of the mechanics’ lien law.

It is said in 18 R. C. L. 926: ‘As a general rule, one who rents or hires teams, tools or other appliances, to a contractor for use in erecting a building or other structure has, under mechanics’ lien laws, no lien upon the building or structure for the rent or hire of the teams or appliances unless specifically authorized by statute.’ The case of Basshor v. Balto. & O. R. R. Co., supra, is cited in support of a statement to the same general effect in 27 Cyc. 46. “The steam shovel leased by the appellant in this case was merely an implement utilized by the lessees in the work for which they were employed. It formed a part of their equipment for the business in which they were regularly engaged. The monthly rent accruing to the appellant was payable regardless of the extent to which the steam shovel was actually used or of the place where it was operated. The appellant’s claim is obviously not for labor performed on the highway, since the work in which the leased machine was used ⁶⁶ on the road was done exclusively by the lessee, and we think it also clear that the use and depreciation of the steam shovel, and its transportation to the appellant, should not be regarded as materials furnished in the construction of the roadway, within the terms of the contractor’s bond and of the statute by which it was prescribed.” 148 Md. at 224-25 .

In 1935, when the Miller Act superseded the Heard Act, the, really significant change was one of structure. The Miller Act required two bonds: a performance bond for the