Petition for Writ of Certiorari — Swanee Paper Corp. v. Federal Trade Commission

neafoes Office-Supreme Court, U.S.

SUPREME COURT. U. &

JAN 20 196?

In the Supreme Court of fits ose

United States _

Ocroser Term, 1961

No. 626

Uni ep STATEs oF AMERICA, ex rel., CARTER-

SCHNEIDER-NELSON, INc., a Corporation,

Appellant,

vs.

Jack T. Campset_, Doing Business as

CaMpBELL CoNSTRUCTION AND EgQuip-

MENT Company, and Parornix Assur-

ANCE Company oF NEw York, a Corpo-

ration,

Appellees.

Brief in Opposition to

Petition for Writ of Certiorari

ArTHUR M. BouHNerT, JR.

369 Pine Street

San Franciseo 4, California

Attorney for Appellees

Of Counsel

Bounert & McCartuy

Duprey HARKLEROAD

Barrett Lucey anp HARKLEROAD

369 Pine Street

San Francisco 4, California

oS

SORG PRINTING COMPANY OF CALIFORNIA, 180 FIRST STREET. SAN FRANCISCO 5

SUBJECT INDEX

Introduction

Statement of Facts and Pleadings Pertinent to Opposition te

the Petition

Reasons for Denying the Petition tor Certiorari

J. The Decision in the ease at bar is net contrary in any

respect to the decisions of the Unittdt States Supreme

Court, the Court of Appeals of other Cireuits or the

Court of Appeals of the 9th Cireuit.

HI. The deeision in the ease at har is in complete accord

with the Miller Act. the decisions of the United States

Supreme Court and the decisions of the several Courts

of Appeals

IE}. Response to miscellancous general statements contamed

in the petition.

IV. No error was committed in holding that use plaintiffs

Exhibit 4 was inadequate notice

Summary

Pave

a

13

14

TABLE OF AUTHORITIES CITED

CASES

Bowden v. United States (9th Cir. December 31, 1956), 239

Pages

Pea. 2d S72; cert. dented 77 &. Ct. BB4.............i0..0.0ccccccen.. 8, 10, 11

Coffee v. United States for the use and benefit of Gordon (5

ac ng en I tn 8S ie es i tere ne ncheanericess, se 5, 6

Douds vy. Seafarers International Union, 148 F. Supp. 953. 11

Fleisher Engineering & Construction Company v. United

States of Ameriea for the use and benefit of George S. Hal-

lenback, 311 U.S. 15, 61S. Ct. 81, 85 L. Bd. 22... 4,5, 10

Houston Fire and Casualty Ins. Co. vo U.S. for the use of

Trane Co. (Sth Cir. 1954), 217 Fed. 2d 7227............................ 6

Kunglig v. Dexter & Carpenter, Ine.. 32 Fed. 2d 1952000000000... 11

MaeKvoy Company v. United States of America for the use of

Calvin Tomkins Company, 322 U.S. 102, 64.8. Ct. 890, 88

I lees ahs SEW ES BAA 10

MeWaters & Bartlett v. U.S. for the use of Wilson (10th Cir.

(Son, Sta eee: 2a Wel. cas 7

United States for the use and benefit of Hopper Bros. Quarries

v. Peerless Cas. Co. (Sth Cir, 1998). 255 Fed. 2d) 137. 6,7

United States v. Campbell, 293 Fed. 2d S16... eee <

US. v. Northwestern Enginecring oSth Cir. 1941), 122 Fed.

2d 600 .. 7

STATUTES

The Miller Act, 40 USC 270¢b > 33, 4.8.9, 10, 01, 18. 14

OTHER AUTHORITIES

Hl. Rep. No. 1263, page 57s (74th Cong. Lst Sess.» Ht)

In the Supreme Court of the

United States

OcroberR TERM, 1961

Unxirep States or America, ex rel, Carter-

SCH NEIRER- NELSON, ENc., a Corporation,

Appellant,

Vs.

Jack T. Camepsece, Doing Business as

CAMPBELL CONSTRUCTION AND EQuip-

MENT Company, and Prormxix Assur-

ANCE Company of New York, a Corpo-

ration,

Appellees.

Brief in Opposition to

Petition for Writ of Certiorari

INTRODUCTION

The petition for certiorari deals with two distinetly sep-

arate cases and in each case an entirely different question

ix raised. This brief in opposition to the petition is on behalf

of the defendant parties to the Miller Act bond on the con-

tract for Nike installations at Travis Air Force Base. This

action in the District Court was No. 56746, and before the

Court of Appeals was Appeal 17182. While the Travis Air

Force Base case was consolidated with another case involy-

9

ing Fort Funston for the purpose of trial, separate opinions

and separate judgments were rendered by the trial court

judge. The Court of Appeals wrote only one opinion, but

carefully dealt separately with each case. }

The District Court and the Court of Appeals both held

that use plaintiff had not given timely notice of his claim

as required by the Miller Act.

The sole question presented, insofar as this action ix con.

cerned in connection with the petition for certiorari, is

whether or not the courts below so erred in holding that

the notice was not timely or prover under the Miller Act

as to cause this Court to grant a petition for certiorari,

It is the position of these successful defendant. parties to

the action involving Travis Air Force Base that the courts

below did not conuait csror and that both decisions below

are in full accord with the decisions of this Honorable Court,

the decisions of the Ceart of Appeals of other Circuits, and

prior decisions of the Court of Appeals of the 9th Cireuit.

STATEMENT OF FACTS AND PLEADINGS PERTINENT TO

OPPOSITION TO THE PETITION

The claim of use plaintiff is for equipment supplied to

a subcontractor. By stipwation, December 5, 1956 was the

last day that any of the equipment was at the jobsite or

available for use (Volume Tl, Reeord Page 164: United

States v. Campbell, 293 Fed, 2d S16 at 820), By the evidence,

December 3, 1956 was the last day *) > * ony of the equipment

was used on the job (plaintiff, ' iT).

Nowhere in the record is there © o serap or iota of evi-

dence that the general contractor, or the surety, on. the

Travis Air Force Base job knew, or had any reason to he-

heve, that equipment owned by use plaintiff was being used

on the job, The equipment did not even bear any identifving

marks,

3

Paragraph XN of the complaint in this action (Volume 1,

Record Page 8) sets forth the notice upon which use plaintiff,

uader oath, relied. This notice was dated Mareh 8, 1957

more than ninety days after December 5, 1956), and was

alleged to be a notice mailed by registered mail, addressed

to the general contractor, stating with substantial aecuracy

the amount of rental acerued and unpaid. This is not the

notice relied upon as the basis for this petition and set forth

on pages | and 2 of the appendix to the petition. No amend-

ment has ever been offered by use plaintiff to its pleading,

and use plaintiff is bound by the verified allegations of its

compiaint.

The notice set forth on pages 1 and 2 of the appendix te

the petition is addressed to the surety (not even the general

contractor) on the other job, Fort Funston, involved in the

companion case. Further, plaintiffs Exhibit 4 on pages 1

and 2 of the appendix to the petition is artfully incomplete.

The actual letter of January 21, 1957, was on the letterhead

: of Anderson-MePharlin & Conners and signed by a partner

in that firm, Eldon V. MePharlin. By request for admission

16 and the answer thereto and by reference to the transeript

Volume Tl, Record 203, it is admited that this firm Cand

‘Eldon V. MePharlin, the attorney signing the letter) is

admittedly ae of the leading firms of attorneys for contrac-

tors and bonding companies in the State of California.

REASONS FOR DENYING THE PETITION FOR CERTIORARI

1. The Decision in the case at bar is not contrary in any respect

to the decisions of the United States Supreme Court, the Court

of Appeals of other Circuits or the Court of Appeals of the

9th Circuit.

Petitioner has argued that the deetsion in the case at bar

ix not in accord with decisions of this Court and several

Courts of Appeals announcing the rule that the Miller Aet

+

must receive a liberal interpretation and holding, in very

proper cases, that the notice requirements of the Act should

specifically receive liberal interpretation.

The point, however, is this: in each decision referred to

in the petition for certiorari, the Supreme Court or the par-

ticular Court of Appeals was dealing witha factual situation

where the general contractor did in fact have actual notice

of the use of the equipment and of the potential claim of

the use plaintiff. In such cases, the parties to the Miller Act

bond (the general contractor and the surety) sought nakedly

to rely on the technicai failure of some uninformed supplier

of material or equipment to send notice in exactly the man-

ner required by the Aet. Such a factual situation is not here

present. eds

The cases cited by petitioner will be reviewed separately

and briefly to illustrate to this Honorable Court that there

is no reason for granting a petition for certiorari:

(1) Fleisher Enginecring & Construction Company r.

United States of America for the use and benefit of George

S. Hallenback, 211 U.S. 15, 61S. Ct. 81, 85 L. Fd. 12, also

reported before the Court of Appeals at 107 F.2d 925:—The

sole question before the Supreme Court of the United States

ix stated by the court, at page 17 of the U.S. Reports and

at page 14 of the Law Edition Reports to be:

“The question is whether the giving of the required

written notice to the contractor was sufficient, as it was

not sent by ‘registered mail’.”

It was conceded in the case that there was actual written

notice, though not registered, and that the contents of the

notice were adequate.

The Supreme Court stated:

“The Cireuit Court of Appeals held that as the receipt

of written notice was conceded and the contents of the

notice were adequate, the statute was satisfied.”

5

The Court of Appeals, at page 92S, stated :

“It ix admittedthat the notice was in writing and sent

by mail and reached one of the two contractors.”

In the primary case relied upon by petitioners, there ts

then absolutely no confliet for the questions raised in the

case at bar and in this petition were not even considered

by the Supreme Court or the Court of Appeais.

(2) Coffee vr. United States for the use and benefit of

Gordon (5 Cir, 1946), 157 Fed. 2d 968:--The sole question

in this case involved the method of service or transmittal

of actual notice to the general contractor, Coffee. The deci’

sion of the Court of Appeals affirms the judgment below and

the findings of the trial judge ax follows:

“About the middle of June, 1944, well within the 90 daa

period, Gordon called on C. G. Coffee, one of the part-

ners of Coffee Construction Company ... and advised

Coffee of the balance dune from Smith and Rose (the

subcontractors) to Gordox At the same time Gordo

handed Coffee a statement ia writing of the sums

Gordon claimed to be due him from Smith and Rose

on account of the work above mentioned. The various

items of indebtedness were summarized on the written

statement which showed that Smith and Rose owed

Gordon $8,279.58 and Gordon explained to Coffee the

entire situation and discused the account with him.

Coffee had aétual manual possession of the written

statement and full opportunity to examine it, baring

held it in his hand during the dise. <sion. ra

The court in Coffee then held, following the Supreme

Court in Fleisher Engineering & Construction Co, v. United

States, supra, at 970 in effect, that “registered mail notice”

Was not necessary and that “a writing containing the infor-

mation Which the statute requires, exhibited to the eontrae-

tor by the claimant a» a notice of his claim and which the

6

contractor examines and discusses and might have taken

if he desired, was a written notice sufficiently served” (par-

ticularly in the light of certain Florida statutes authorizing

the service of a summons by reading the summons to the

‘person to be served), Absolutely nothing more is involved

in the Coffee case than that which we have staied and the

court did not even consider the question of timeliness of the

notice or adequacy of the notice.

(3) Houston Fire and Casualty Ins, Co. v. U.S. for the

use of Trane Co. (oth Cir, 1954), 217 Fed. 2d 727: in this

case there was concededly no written notice whatsoever:

there was concededly oral notice and the general contractor

had written to the claimant fully acknowledging the notice

and giving full recognition to the indebtedness of the sub-

contractor to Trane. The Court of Appeals states:

““(This) ... was more effective than if a written notice

had been sent by the materialmen and fully complied

with the essential statutory requirements of bringing

home in writing ‘o the principal contractor the requi-

site knowledge of the claim and debt.”

Here again, as distinguished from the case at bar, the

general contractor had full actual and complete notice of

the claim.

(4) United States for the use and benefit of Hopper Bros.

Quarries v. Peerless Cas, Co, (Sth Cir, 1958), 255 Fed. 2d

137: Here again the general contractor had actual notice and

acted on it as if there had been proper notice. The language

of the court at page 142 is as follows:

“Under the circumstances of this case the plaintiff's

letter to the contractor of August 6, 1953, received by

the contractor the next day and answered on the fol-

lowing day, must be deemed a giving of written notice

by the materialman to the contractor. The contractor

accepted it as such and in accordance with it notified

.

7

Anton, Hammond, Dunn, Inc. that the plaintiff mate.

rialman had not been paid by the subcontractor and

was making demand for pasment”.

It is also noteworthy that in the Peerless case the bonding

company involved for all parties was the same and that the

court, on page 146 recognized that stricter cases such as

US. 4. Northiestern Enainecring (Sth Cir, WAL), 122 Fed.

24 600 should not control where the general contractor ad.

mittedly had, or should have had, some actual notice within

the 90-day period. The facts and holding of Peerless Cas.

ualty are clearly different from those in the ease at bar.

(5) McWaters & Bartlett +. U.S. for the use of Wilson

(10th Cir, 1959), 272 Fed. 2d 291+ the appeal on the Miller

Act feature of the ease deals solely with the sufficieney of

the evidence regarding the giving of notice, No substantial

question of Jaw was involved at all. The court stated, at

page 294:

“While, of course, there is other evidence from whieh

appellant seeks te draw its conelusions, we think the

evidence outlined above is) sufficient to support. the

court’s finding that written notice of Wilson's claim

was served upon MeWaters and was brought home to

him. 2... Uf the above evidence is believed. as it was

by the court, it establishes that a written claim was

served on Me Waters. He saw the writing, and knew that

the amount was claimed from Clark. his subcontractor,

for work and labor performed in’ fulfillment of the

contract.”

As distinguished from the case at bar, there was again

actual notice to the general contractor, [tis alse interesting

to note that claimant Wilson was apparently a small spe

cialized contractor supplying labor and material toa general

vontractor and his attempts at netice (which very pointedds

resulted ino actual netics) may be viewed with seme svin

8

pathy; whereas in the case at bar the attempts of attorney

McPharlin, a leading bonding company attorney, at giving

notice do not demand much in the way of sympathy, par-

ticularly where no actual netice could have come from any

other source in connection with the Travis Air Force Base

job.

(6) Bowden v. United States (9th Cir. December 31,

1956), 239 Fed. 2d 572; cert. denied 77 S. Ct. 864:—It is odd

that petitioner seeks to rely on some conflict between the

holding of the Court of Appeals of the 9th Cireuit in the

case at bar and in the earlier case of Bowden vr. United

States. Judge Burke in his District Court decision and the

Court of Appeals in its decision in the case at bar cite,

meticulously follow and rely on Bowden v. United States.

It is alse noteworthy that Bowden v. United States reversed

the District Court, holding that a letter addressed by a

subcontractor to the general contractor and listing the claim

of a potential supplier or sub-subcontractor and requesting

the general contractor to pay the claim was not proper notice

under the Miller Act. In Bowden the use claimant, who

prevailed below, asserted on appeal that the Act required

liberal construction and argued that the letter from the

subcontractor (not the claimant) to the general contractor

gave the general contractor all of the information that it

would have obtained if the use plaintiff-claimant had given

it the written notice provided by the statute. The court

states:

“But this argument goes too far, too fast. It overlooks

entirely the fact that the statute makes the requirement

of written notice from the supplier a condition preceden:

toa right of action on the bond; and no rule of liberality

in construction can justify reading out of the statute

the very condition which Congress laid down as pre-

requisite to the cause of action. ... Tt is not consistent

9

with either this intent er the mechanies of the statute

if a prime contractor is required to choose between

Withholding payment to his subcontractors indefinitely

or acting on peril of learning thereafter that some writ-

img. hy sone person, loented somewhere in his files,

contains sufficient information regarding accounts be-

tween a supplier and the subcontractor to render him

_hiable tor the subeontractor’s bill... We do not believe

that Congress intended to have it held that such little

expenditure of effort is too much diligence to require

of a supplier in order that he may secure his right of

action on the payment bond.”

The court then cites in its footnote at page 578 H. Rep.

No. 1263 (74th Cong. Ist Sess: ) :

“One protected by the bond must be vigilant in’ the

prosecution of his rights thereunder or take the chance

of finding the bond depleted by the executions of those

more prompt than he, or perhaps find the door entirely

closed against his suHW be limitation. *Hquity aids the

vigilant’ ”.

ll. The decision in the case at bar is in complete accord with the

Miller Act, the decisions of the United States Supreme Court

and the decisions of the several Courts of Appeals.

The foregoing section of this Brief has illustrated that

there is no contlict between the case at bar and previous

decisions of this Honorable Court and of the several Courts

of Appeals of the various Cirenits. [ois respeetfully: sub

mitted that not only does ne contliet exist. Sut the Miller

Act itself and the decisions of this Honorable Court and

the various Cireuits all support the holding in the ease at

bar.

The Miller Act, 40 USC 2700b). certainly, in clear and

concise language, specities that one not having a contractual

relationship with the ceneral contractor inust give notice

10

to the general contractor within 90) days and further pre-

scribes the method by which this notice is to be given, No

court has ever held that the general contractor need not

have any notice. Several courts have held that if the general

contractor does have full and actual notice, the court can,

and will in a proper case, relax the technical method of

giving notice, which would then be an idle act. These cases

dg not hold, and for that matter do not intimate, that the

notice provisions of the Miller Act may be completely dis-

regarded or judicially dispensed with.

In liberally construing the Miller Act this Honorable

Court has never ignored the statute and in MacEroy Com-

pany v. United States of America for the use of Calvin

Tomkins Company, 322 U.S. 102, 64S. Ct. 890, 88 L. Ed.

1163, it was stated:

/The Miller Act, like the Heard Act, is highly remedial

in nature. It is entitled to a liberal construction and

application in order proper'y to effectuate the Con-

gressional intent to protect those whose labor and

materials go into publie projects. (Fleisher Engineer-

ing & Construction Co, vs. United States, 311 US 15,

17, 18, 85 L. Ed. 12, 14, 15, GIS. Ct. SI: United States

use of Noland Co, vs. Irvin, 316 US 28, 29, 30, 86 L. Ed.

1241, 1245, 1246, 62S. Ct. 899.) But sueh a salutary

policy does not justify ignoring plain words of limita-

tion and imposing wholesale liability. on payment

bonds.”

To the same effect in Fleisher Engineering & Construction

Co. v. United States for the use of Hallenbeck, supra, a case

upon which petitioner relies, the court stated :

“And at this bar, the actual receipt of the notice and the

sufficiency of its statements have not been challenged.”

Finally, and more recently this Honorable Court denied

Certiorari in Bowden ¢. US. supra, 77S. Ct. S64, 553 US.

11

O57. 11. Md. 2d 968 indicating ne contliet between the several

circuits and an unwillingness to disregard completely the

language of the Net.

The decisions of the various Courts of Appeals need not

he reviewed. None of them holds that the notice require:

ments of the Miller Net may be totally ignored, Some of the

decisions have given a liberal interpretation of the Aet,

stating that the method of giving notice becomes relatively

Unimpertant if in facet the general contractor had actual

notice: the cases hold nothing more.

Ill. Response to miscellaneous general statements contained in

the petition.

On page 5 of the petition, certain misleading and in fact

untrue statements are made by use plaintiff,

The fact is that use plaintiff instituted two separate

actions each alleging and demanding under oath sums in

exe?ss of $40,000.00 for equipment used at each job. The

pleading in the earlier action involving the Fort: Funston

job, action 36450, appeal TIST. ts verified under oath by

the attorney for use plaintiff. Being verified, it is admissible

and was admitted in evidence (Volume #1 Record, Page YOL)

as an admission, by one not only presumptively authorized,

but one actuaily authorized, aceording to the testimony of

the principal officer of use plaintiff, itis binding upon use

plaintiff. (Volume TT Record Pare I). Dowd. o Scatarers

International Union, aS F.Supp. 995: Aacalig o. Derte

& Carpenter, Tne. 32 Ped. 2d 19.

The later verified? contrary allegations contamed in the

complaint in action 36746, all of the contrary evidence and

the present argument. are tnequivecally impeached and

eliminated by the earher statements under oath in action

36430, j

12

Petitioner also intimates that it wa: deprived of judgment

for some $33,000.00. This is not the case. Petitioner, use

plaintiff below, offered no evidence of any nature (beyond

its contention from the stipulation entered into between use

plaintiff and the defendants in the other job to use on that

other job) of use of its equipment on the Travis Air Force

Base job. It was, however, at the trial coneeded by use

plaintiff that there was no privity whatsoever between the

general contractor and use plaintiff and that the liability

of the parties here opposing the petition could arrive, if

at all, only under the Miller Act bond (Volume IT Reeord

Page 105, 106, and 205). By no stretch of the imagination

is it the problem of the general contractor and surety on

the Travis Air Force Base job to show what days the equip-

ment in question was used. The fact that the general con-

tractor and surety on the other job were willing to stipulate

to less than the total amount of use claimed on its job (while

it might be greatly to the advantage of the defendants in

that action), has nothing whatsoever to do with use en the

Travis job or the burden of proof that use plaintiff must

meet.

While the position taken in the foregoing paragraph

is primarily directed at the amount of dollars and the

extent of use of the equipment, the same thing applies to

the matter of timely and proper notice under the Miller

Act. The fact that proper notice niav have been given in

connection with the Fort Funston job or the fact that the

general contractor and surety did not contest notice on

that job does not dispense with the requirement that there

be timely and proper notice in connection with the Travis

Air Force Base job.

While it does not property pertain to a petition for a

writ of certiorari, use plaintiff, at page Sof its brief. has

13

mislead the Court regarding the jinaneial damage to use

plaintiff. An examination of the record in the District

Court will clearly show that use plaintiff has lost nothing.

Use plaintiff was willing to sell the equipment to the

subcontractor for the amount stipulated ino the lease. Tf

the 1225200 admitted) paid is added te the $i275.08

recovered against Fidelity & Casualty Company of New

York on the Fort Funston job and the sale price or reason

able value of the equipment after it was all repossessed

as testified to by the principal officer of use plaintiff, the

total equals or exceeds the initial agreed sale price in the

lease, Accordingly, it is petitioner here who seeks another

double recovery just as it sougi.t when it filed the two

separate actions in the District Court ander verified com:

plaints.

IV. No error was committed in holding that use plaintiffs Exhibit 4

was inadequate notice.

The Miller Act and the cases thereunder require that

the notice inform the prime contractor that the sapplier

ix looking to him for payinent of the subeontractor’s bill,

that the notice be in writing addressed to the prime eon-

tractor and that the writing state with substantial aceu-

racy the amount of rental claimed in connection with the

equipment on the job in question. .

While we contend that the only notice that) should be

considered: by this Court is that referred to in the com

plaint. whieh is net Exhibit 4, we nonetheless point out te

the Court that Exhibit 4 by ne stretch of the imagination

ean satisfy the requirement of the Net and cases there

under, Exhibit 4 is addressed not to the prime contractor,

but toon different surets ono a different toll While it does

take reference to the Travis Air Feoree Base job. it totalls

14

fails to comply with the statutory language to state “with

substantial accuracy” the amount of rental claimed in

connection with the equipment on the job in question. Use

plaintiff exhibited, and this can be seen by referring to the

various notices given, a complete familiarity with the pro-

visions of 40 USC 270(b).

As stated by the District Judge in his opinion, Record

Volume | Page 30:

“A different construction of the circumstances can only

be arrived at in the light of plaintiff's attempts to rise

by their own bootstraps. .. . Plaintiff has failed to

convinee this court that there is any ground or justi-

fication for relieving him from compliance with the

notice requirements of the Miller Act which are a pre-

requisite to his right to recover against the surety.”

SUMMARY

It is respectfully submitted that certiorari should not

be granted in connection with the case involving the

Travis Air Foree Base job for the following reasons:

a) Neither the District Court nor the Court of Appeals

for the 9th Circuit have committed any error.

b) The holdings of the court below are completely in

aceord with the holdings of this Honorable Court and of

the several Courts of Appeal.

Respectfully submitted,

ARTHUR M. BonNert, Jr.

Attorney for Appellees

Of Counsel -

Bounert & McCartuy

Dvp._ry HarRKLEROAD

Barrett Lucey & HARK LEROAD