Petition for Writ of Certiorari — Cook v. United States

INDEX

PaGz

Petition for Writ of Certiorari to the United States Court

of Appeals for the Eighth Circuit .............. 1

Ce a i ie pees exenbureeees 2

Jurisdiction of the Supreme Court ............... 2

Pere rey ee eT ee 2

Summary of the matter involved ................ 3

eo ER rn re eer 5

Reasons for granting the writ ................... 6

er nee een ee Og ETT 13

Appendix A

Opinion of the United States Court of Appeals for

oe Ee rer er Tere Tee ae ere 15

Appendix B

Judgment of the United States Court of Appeals for

UR ere ere ere eee ee 17

Appendix C

Capehart Act

ee es OR. BOIF o eriink cette swe ces -18

Appendix D

Miller Act

UE WP SFG, OU BIO oe vce weinceneave 31

Appendix E

pe Bs | ay) > a re ear aaa 35

AUTHORITIES CITED

Cases:

Allsop Lumber Company v. Continental Casualty Com-

Se MED 0 0-046 cos cesccesseeecs 8

Continental Casualty Company v. Allsop Lumber Com-

pany (CA-8 1964), 336 F. 2d 445 ............. 6

Continental Casualty Company v. U. S. for the Use of

Robertson Lumber Company (CA-8 1962), 305 F.

Be FO Wik #060 br 04004 see ud 4004 3, 4, 5, 6, 8

Ex Parte in the Matter of the Public National Bank of

New York, 278 U.S. 101, 73 L. Ed. 202, 49 S. Ct.

ee er ee a ea Ee 13

Ireland Lumber Yard v. Progressive Contractors, et al.

Cos Se ts re Ne oon cddseccceneces 7, 10

Koppers Company, Inc. v. Continental Casualty Com-

pany, Inc. (CA-8 1964), 337 F. 2d 499 ...6, 11, 12

Lasley v. U. S. for the Use of Westerman (CA-5

8 EE Pe reer ee eee rere ee 8

Missouri-Ilinois Tractor and Equipment Company v. D

& L Construction Company, et al. (CA-8 1964),

UE 4:cGcbns ehebeceWu has se ceceeees 6

Richards v. U. S., 82 S. Ct. 585, 369 U.S. 1, 7 L. Ed.

eg Daa naa 5 DAN 9590 400 13

Travis Equipment v. D & L Construction Company

(D.C. Missouri, 1963), 224 F. Supp. 410 ........ 9

U. S. v. Aetna Casualty and Surety Company (CA-2

. & 2 & | Eee 9

U. S. for the Use of Miles Lumber v. Harrison and

Grimshaw Construction (CA-10 1962), 305 F. 2d

Bo ALR RE oe TAR ha Cy ee 8

Statutes:

28 U. S. Code, Sec. 1254(1) (62 Stat. 928) ........ 2

28 U. S. Code, Sec. 1352 (62 Stat. 934) ..3, 5, 10, 12

40 U. S. Code, Sec. 270 (49 Stat. 794) (Miller Act)...

42 U. S. Code, Sec. 1594 (69 Stat. 651, 70 Stat. 1110)

IE FD oe ova oc ce ete nsciccsscevees 3

In the

Supreme Court of the Anited States

OCTOBER TERM 1965

No.

THE UNITED STATES Or AMERICA FOR THE USE AND BENEFIT

OF THE ROBERTSON LUMBER COMPANY, A CORPORATION

Petitioner

vs.

CONTINENTAL CASUALTY COMPANY; U. S. FIRE INSURANCE

COMPANY, FOREIGN CORPORATIONS

Respondents

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

To the Honorable, the Chief Justice and the Associate Jus-

tices of the Supreme Court of the United States:

The United States of America, for the use and benefit

of The Robertson Lumber Company, a corporation, the

petitioner herein, prays that a writ of certiorari issue to re-

view the judgment of the United States Court of Appeals

for the Eighth Circuit entered‘in the above entitled case on

February 1, 1965.

2

OPINIONS BELOW

The United States Court of Appeals for the Eighth Cir-

cuit eniered its opinion and judgment on the first day of

February, 1965, as reported in 340 F. 2d 958, and is found

in Appendix A. The opinion of the Court below was ren-

dered on an appeal from a decision of the United States

District Court for the District of North Dakota, Northwest-

ern Division, dated November 26, 1963, and is found in

the record (pp. 29-37), and from a judgment of dismissal

as to the respondents hercin, entered by the United States

District Court on December 26, 1963, and amended on

September 23, 1964, which decision is reported at 223 F.

Supp. 435.

JURISDICTION OF THE SUPREME COURT

The judgment of the Court of Appeals for the Eighth

Circuit was entered on the first day of February, 1965

(Appendix B). The jurisdiction of the United States Su-

preme Court is invoked under Title 28 United States

Code, Section 1254(1) (62 Stat. 928, June 15, 1948, ch.

646).

FEDERAL JURISDICTION

The petitioner herein originally brought suit in the United

States District Court, District of North Dakota, Northwest-

ern Division, against the respondents herein, Continental

Casualty Company and U. S. Fire Insurance Company,

and three contracting companies as principals on bonds is-

sued by the respondents herein. The petitioner’s claim is

for the value of materials and merchandise sold and de-

livered to a Capehart housing project at the Minot Air

Force Base, Minot, North Dakota. Suit was brought under

3

the jurisdictional portion of the Miller Act, 40 United

States Code, Section 270 (49 Stat. 794, August 24, 1935,

ch. 642). Jurisdiction in the federal court also attached by

virtue of Title 28 United States Code, Section 1352 (62

Stat. 934, June 25, 1948, ch. 646).

SUMMARY OF THE MATTER INVOLVED

Suit was brought by the United States of America on be-

half of The Robertson Lumber Company against a general

contractor, Cedric Sanders Company, a foreign corpora-

tion; Sanders-Keiter, a joint venture; and Cedric Sanders-

Sanders-Coast, a joint venture, and their sureties, Continen-

tal Casualty Company and U. S. Fire Insuratice Company

for materials furnished by The Robertson Lumber Com-

pany and delivered to a Capehart Housing project at the

Minot Air Force Base, Minot, North Dakota, in 1960.* Suit

was one count or claim for the sm of Thirty-two Thousand

“wo Hundred Ninety-eight and 89/100 ($32,298.89) Dol-

lars, with interest thereon from November 30, 1960. Suit

was originally brought under the Miller Act, 40 United

States Code, Section 270b (49 Stat. 794, August 24, 1935, —

ch. 642(2)).? All of the defendants in said action, including

the respondents herein, filed answers to the plaintiff's com-

plaint.

On May 14, 1963, the respondent surety companies

The Capehart Act is found at Title,42 United States Code, Section

1594 “€* Stat. 651, August 11, 1955, ch. 783, Title IV, Section 403;

Aug. 5c, ch. 1029, Title V, Section 506(b)-(d), 507, 70 Stat. 1110)

andis .vut at Appendix C.

2This action was commenced but not tried prior to the decision of

the Court of Appeals for the Eighth Ci cuit in Continental Casualty Com-

pany v. U. S. for the Use of Rebertson Lumber Company (CA-8 1962)

ng 2d 7$4, certiorari denied 371 U. S. 922, 83 S. Cx. 290, 9 L.

Ed. 2d 231.

4

made and filed a motion for dismissal of the action as to

them upon the grounds that the bond involved in the par-

ticular proceeding contained provisions for notice to be giv-

en by materialmen as a condition precedent to a right of

action on the bond; that the plaintiff had wholly failed to

give the notice required by the bond and that such failure

constituted a complete defense, and further that the Miller

Act, Title 40 United States Code, Sections 27Va and b (49

Stat. 794, August 24, 1935, ch. 642) did net provide for

jurisdiction over actions brought on a Capekart bond.

The United States District Court granted the motion to

dismiss as to the surety companies, the respondents here-

in, holding that the notice provisions of the bond were not

satisfied and that such failure precludes recovery under the

bond.

An appeal was taken to the United States Court of Ap-

peals for the Eighth Circuit on the order of the District

Court dismissing the surety companies (the respondents

herein) from the action. On appeal, the appellant, The

Robertson Lumber Company (the petitioner herein), con-

tended:

1. That the Miller Act, Title 40 U.S.C., Sections

270a and b (49 Stat. 794, August 24, 1935, ch. 642)°

applies to actions on bonds issued under the Cape-

hart Act in its entirety,

or

2. In the alternative, and if the Miller Act did not

3Holding that the Miller Act applied to actions under a Capehart bond

would require, for the purposes of this action, a reversa’ by the Court

of Appeals for the Eighth Circuit of the position taken in Continental

Casualty v. U. S. for the Use of Robertson Lumber Company (8th Cir-

cuit, 1962), 305 F. 2d 794, certiorari denied, 371 U.S. 922, 83 S. Ct.

290, 9 L. Ed. 2d 231.

5

apply, the jurisdiction of the United States Dictrict

Court in actions on a Capehart bond were concurrent

with the State Court pursuant to Title 28 United

States Code, Section 1352 (62 Stat. 934, June 25,

1948, ch. 646).*

and

3. Therefore, and because of the concurrent ju-

risdiction between the federal courts and the state

courts, actions on Capehart bonds should be deter-

mined by the law in effect in the state where the con-

tract involved was performed.

The Court of Appeals for the Eighth Circuit affirmed

the lower court without discussing the points raised by the

appellant (the petitioner herein) on the appeal. A petition

for rehearing and a request for a review en banc was filed,

and was denied by the Court on February 26, 1965.

QUESTIONS PRESENTED

1. Do the courts of the several states have concurrent

jurisdiction with the United States District Courts in suits

brought on bonds issued under the Capehart Act pursuant

to Title 28 United States Code, Section 1352 (62 Stat.

924, June 25, 1948, ch. 646)?

2. Are suits brought under Capehart bonds, either in

the United States District Courts or in the courts of the sev-

eral states, governed by the laws of the state where the work

covered by the bond was performed?

‘This is in accord with the holding of the Eighth Circuit Court of

Appeals in Continental Casualty v. U. S. for the Use of Robertson Lum-

ber Co., supra.

6

REASONS FOR GRANTING THE WRIT

Since the Court of Appeals for the Eighth Circuit de-

cided Continental Casualty v. Uruted States for the Use of

Robertson Lumber Company, 305 F. 2d 794, certiorari

denied, 371 U.S. 922, 83 S. Ct. 290, 9 L. Ed. 2d 231, the

same Court of Appeals has decided three other cases, in

addition to the present matter, on the question of the ex-

clusive jurisdiction of the District Court vis-a-vis the con-

current jurisdiction of the United States District Court and

the state courts 2s provided by Title 28 U.S.C., Section

1352 which bear significantly on both questions raised in

this appeal. These three cases, together with the first Rebert-

son case are cited as the authority of the Eighth Circuit

Court in affirming the decision of the District Court in this

matter. These three cases in the order they were decided

are: Continental Casualty Company v. Allsop Lumber

Company (CA-8, 1964), 336 F. 2d 445, certiorari denied,

379 U.S. 968, 85 S. Ct. 662, 13 L. Ed. 2d 561; Koppers

Company, Inc. v. Continental Casualty Company, Inc.

(CA-8 1964), 337 F. 2d 499; and Missouri-Illinois Tractor

and Equipment Company v. D & L Construcsion Com-

pany, et al. (CA-8 1964), 337 F. 2d 507.

Because of the failure on the part of the court below in

their affirming opinion to discuss or pass on the points

raised in this appeal, and because the affirming opinion of

the court below rests directly on the four decisions cited

above, it would seem appropriate to set out here that por-

tion of the most recent opinion of the Court of Appeals for

the Eighth Circuit which expresses the doctrine on the

point raised in this appeal as it is presently established in

the Eighth Circuit. This is best expressed in the Koppers

case which was decided October 22, 1964. That holding is

as follows:

1.

7

“We therefore adhere to our holding in Allsop. That

case, this one, the result we reached in Robertson,

and our comparion Misscuri-Illinois decision, 337 F.

2d 507, estabtish av: the present law of this Circuit

with respect to Carenart payment bond actions the

following: The prope: federal court has jurisdiction

under Title 28 U.S.C. Section 1352 over an action on

a Capehart bond. Section 2(b) of the Miller Act, 40

U.S.C. Section 270tb), lias appiication to a Cape-

hart bond action and vests jutisdiction over that action

exclusively in the federai court. Out-of-state service is

effective. The limitation period set forth in Section

2(b) of the Miller Act is applicable despite the pres-

ence of a specified longer period in the bond itself.

But the dual notice requirement of a Capehart bond,

being more stringent than the notice provisions of the

Miller Act, is valid and effective.”

The opinion of the Court of Appeals for the Eighth

Circuit on the question of exclusive jurisdiction of the fed-

eral court in an action on a Capehart bond is in direct con-

flict with the decision of the Supreme Court of the State of

North Dakota in /reland Lumber Yard -. Progressive Con-

tractors, et al. (ND), 122 N. W. 2d 554 where the Court

held (at p. 559 of the opinion):

“* * * Nevertheless, the District Court of the United

States had jurisdiction under the concurrent jurisdic-

tion conferred upon it by 28 U.S.C.A. Section 1352,

which provides that the District Courts of the United

States shall have original jurisdiction concurrent with

state courts of any action on a bond executed under

any law of the United States. The case does not hold

that the State court does not have jurisdiction.”

And then, at page 561 of the opinion, the Supreme Court

of the State of North Dakota held:

8

“We believe it is well established that the Capehart

Act bead is not controlled by the Miller Act and that

the State District Cowrt in and for the county of the

state in which the project, or any part thereof, is situat-

ed, has jurisdiction as provided by the bond.”

The opinion of the lower court is in conflict with the Su-

preme Court of the State of New Mexico in Allsop Lumber

Company v. Continental Casualty Company, 385 Pac. 2d

625, where that Court held, beginning at page 628 of the

opinion:

“We are aware that the two circuit court opinions re-

ferred to’ did not directly hold that the state courts had

concurrent jurisdiction in actions such as the instant

one. However, no other possible result could be

reached on this question in the light of the conclusion

arrived at by these courts that compliance with the

provisions of the Miller Act as to notice were not ap-

plicable to Capehart bonds.”

The opinion of the court below is in conflict with Lasley

v. U. S. for the Use of Westerman (CA-5 1960), 285 F.

2d 98 where the Court held:

“However, even assuming, arguendo, that this is not

true, we find that the district court nevertheless had

jurisdiction to entertain this suit under the concurrent

jurisdiction conferred upon it by 28 U.S.C.A. Section

1352. For this reason there is no merit in the argu-

ments put forth by appellants.”

5The two cases referred to by the court are U. S. for the Use of

Miles Lumber v. Harrison and Grimshaw Construction (CA-10 1962),

305 F. 2d 363, certiorari denied 371 U.S. 920, 83 S. Ct. 287, 9 L. Ed.

2d 229, and Continental Casualty v. U. S. for the Use of Robertson

Lumber Company (CA-8 1962), 305 F. 2d 794, certiorari denied 371

U.S. 922, 83 S. Ct. 290, 9 L. Ed. 2d 231.

9

The opinion of the court below is in apparent conflict on

this question with the Court of Appeals for the Second

Circuit in U. S. v. Aetna Casualty and Surety Company

(CA-2 1962), 297 F. 2d 665.

2. The opinion of the court below, and its companion

decisions on the question of jurisdiction of the United

States District Court in actions on Capehart bonds, and

the conflicting decisions of the state courts of North Da-

. kota and the State of New Mexico as hereinbefore set forth,

raise a question of paramount importance which should be

review and determined by this Court.

The confusion resulting from the present state of the law

on the question presented in this matter is best illustrated

in the following cases:

A. Travis Equipment v. D & L Construction

Company (District Court Missouri—1963), 224 F.

Supp. 410. The District Court dismissed from its cal-

endar at least four cases brought on a Capehart bond

which were commenced in the’ State court for the

State of Missouri, and removed to the federal court.

The basis for the removal was lack of jurisdiction in

the state court and subsequent lack of jurisdiction in

the federal court on a removed case. In so doing the

district court, speaking through Judge Oliver, said:

“We note in passing that the possibility of the

‘judicial chaos’ to which we alluded on page 474

of 215 F. Supp. is developing at a predictably

rapid rate. Not only are several of the United

States Courts of Appeal in open and complete

conflict, but the first two of the potential fifty

states appellate courts to decide the basic ques-

tion of jurisdiction over the subject matter are

also in open conflict. * * *”

ne re

10

B. In unreported cases in North Dakota, the

United States District Court for the District of North

Dakota, Northeastern Division, remanded to the state

court, on its own motion, two actions brought on Cape-

hart bonds commenced in the state court and removed

to the federal court.°

C. In the State of North Dakota one case, Ireland

Lumber Yard v. Progressive Contractors, et al. (ND),

122 N. W. 2d 554, was remanded by the Supreme

Court of that state for further proceedings in the Dis-

trict Court, and is still pending before the District

Court for proceedings as directed by the Supreme

Court of North Dakota.

The opinion of the court below has therefore resulted

in the federal courts within the Eighth Circuit holding that

jurisdiction in suits on Capehart bonds is exclusively in the

federal court. The state courts of New Mexico and North

Dakota have held that the state courts can assume juris-

diction of actions on Capehart bonds by virtue of Title 28,

Section 1352 of the United States Code. The trial court in

this matter was aware of this uncertainty at the time the

respondents herein were dismissed, when the trial court,

speaking through Hon. George S. Register, said:

“The law in North Dakota on this point existing at

the time of the decision in Ireland’s was also in exist-

*The two actions are The Robertson Lumber Company, a corpora-

tion, v. Progressive Contractors, Inc., a corporation, and Continental

Casualty Company, a corporation, and Fidelity and Casualty Company

of New York, a corporation, U. S. District Court, District of North

Dakota, Northeastern Division, Civil No. 3883; and, The Robertson Lum-

ber Company v. Wilshire Contractors, Inc., a corporation, and Continental

Casualty Company, a corporation, United States District Court, District

of North Dakota, Northeastern Division, Civil No. 3882.

11

ence at the time Robertson Lumber Company was be-

fore the trial court and the Court of Appeals for this

circuit. I have found no reference to any such state

law (regarding notice to sureties) and neither of the

Robertson Lumber Company opinions reported at

196 F. Supp. 171 and 305 F. 2d 794, and apparently

the point was not raised therein. It is indeed unfor-

tunate that this uncertainty exists, as there is at the

present time a substantial amount of litigation in this

court involving Capehart housing” (R. p. 36).

The uncertainty referred to by the trial court in its opin-

ion above quoted has not resolved this question as between

the United States District Courts and the courts of the sev-

eral states. It is submitted that this question is of significant

importance. There is an obvious conflict between the court

below and the supreme courts of two states so as to justify

this court in granting this petition and determining the mat-

ter.

3. The opinion in the court belqw is in conflict with

applicable decisions of this Court as to the interpretation of

the statutes involved. The controlling doctrine in this case

as decided by the court below is found in the Koppers case

(supra) which is quoted herein. The court below in the

Koppers case says:

“The proper federal court has jurisdiction under Title

28 U.S.C. Section 1352 over an action on a Capehart

bond. Section 2(b) of the Miller Act, 40 U.S.C. Sec-

tion 270b(b) has applicat‘on to a Capehart bond ac-

tion and vests jurisdiction over that action exclusively

in the federal court. * * *”

The above quoted portion of the opinion of the court

below in the Koppers case applies a portion of the Miller

ere 2

RE ERS RTS ST me

12

Act, 40 U.S.C., Sections 270a and 27b to actions on Cape-

hart bones, and is thus contrary to the previous expres-

sions of the court below already alluded to. It is also con-

trary to the provisions of Title 28 U.S.C., Section 1352

which confers concurrent jurisdiction upon the United

States District Court and the courts of the several states.

The Court then says in the Koppers decision:

“The limitation stage set forth in Section 2(b) of the

Miller Act is applicable despite the presence of a spec-

ified longer period in the bond itself. But the dual

notice requirement of a Capehart bond, being more

stringent than the notice provisions of the Miller Act,

is valid and effective.”

The court below is here applying a portion of the Mil-

ler Act relating to the limitation period and ignores a con-

trary provision in the Capehart bond itself. The court be-

low then applies the notice requirement as provided in the

Capehart bond, and ignores the notice provisions of the Mil-

ler Act.

The result of the opinion of the court below, as ex-

pressed in the Koppers case which has been applied as the

controlling doctrine in this action, is to apply so much of

Title 28 U.S.C., Section 1352 as gives jurisdiction to United

States District Court, and ignore the remaining portion of

the statute which confers ¢«< ncurrent jurisdiction upon the

state courts. Further, the court below applies only that

portion of tae Miller Act which vests exclusive jurisdiction

in the United States District Court.

Admittedly, the comments of the court below as to the

limitation period and the dual notice are not germane to

the questions presented by this petition but it illustrates

that the court below has used a portion of Title 28 U.S.C..,

13

Section 1352, a portion of the MilleraAct, 40 U.S.C., Sec-

tions 270a and 270b, and a portion of the Capehart bond

itself in formulating what the court below proclaims to be

the controlling doctrine in actions brought on Capehart

bonds.

This interpretation by the court below is in conflict with

the decisions of this Court in Richards v. U. S., 82 S. Ct.

585, 369 U.S. 1, 7 L. Ed. 2d 492, and Ex Parte in the

Matter of the Public National Bank of New York, 278

U.S. 101 and 104, 73 L. Ed. 202, 49 S. Ct. 43, at pg. 44,

where this Court has rejected piecemeal or isolated interpre-

tations of statutes. This Court has required courts to look

at the provisions of the whole law, and to its object and

policy. It is submitted that the opinion of the court below

so far departs from the basic rules of statutory construction

so as to justify this Court in reviewing this matter or in

determining the issue.

CONCLUSION ,

For the foregoing reasons this petition for a writ of cer-

tiorari to the Court of Appeals for the E:ghth Circuit should

be granted.

Respectfully submitted,

HAROLD D. SHAFT

315 First Avenue North

Grand Forks, North Dakota

ROBERT VAALER

593 Valley Bank Building

Grand Forks, North Dakota

Attorneys for Petitioner

JAMES L. LAMB

201 Red River National Bank Building

Grand Forks, North Dakota

Counsel of Record for Respondents in Court

of Appeals, Eighth Circuit

15

APPENDIX A

UNITED STATES COURT OF APPEALS

For the Eighth Circuit

No. 17,603

United States of America, for the Use and Benefit of The

Robertson Lumber Company, a North Dakota Corpora-

tion,

Appellant,

v.

Continental Casualty Company, U. S. Fire Insurance Com-

pany, Foreign Corrcrations,

Appellees.

[February 1, 1965.]

Before Vogel, Matthes and Ridge, Circuit Judges.

Appeal from the United States District Court for the Dis-

trict of North Dakota.

Per Curiam.

The judgment of the District Court, mandated at 223

F. Supp. 435, l.e. 438, is affirméd on the basis of the Dis-

trict Court’s opinion there set forth; and this Court’s opin-

ions in Continental Casualty Company v. United States for

the use of Robertson Lumber Company (8 Cir. 1962), 305

16

F. 2d 794, cert. den. 371 U.S. 922; Continental Casualty

Company v. Allsop Lumber Co., Inc. (8 Cir. 1964), 336

F. 2d 445, cert. den. Jan. i$, 1965; Koppers Company

v. Continental Casualty Company (8 Cir. 1964), 337 F.

2d 499; and Missouri-Illinois Tractor & Equipment Co. v.

D & L Const. Co. & Associates, et al., (8 Cir. 1964), 337

F. 2d 507.

A true copy.

Attest:

Clerk, U. S. Court of Appeals, Eighth Circuit.

17

APPENDIX B

(Judgment)

United States Court of Appeals

For the Eighth Circuit

No. 17,603. September Term, 1964

United States of America, for the Use and Benefit of The

Robertson Lumber Company, a North Dakota Corpora-

tion,

Appellant,

vs.

Continental Casualty Company, and U. S. Fire Insurance

Company, Foreign Corporations.

Appeel from the United States District Court for the Dis-

trict of North Dakota.

This Cause cam: on to be heard on the record from the

United States District Court for the District of North Da-

kota, and was argued by counsel.

On Consideration Whereof. Is is now here Ordered and

Adjudged by this Court that the judgment of the said Dis-

trict Court, in this cause, be, and the same is hereby, af-

firmed.

February 1, 1965.

18

APPENDIX C

Capehart Act

Title 42, U. S. Code, Section 1594

Subche pter XI—Housing for Military Personnel. Section

1594. Contracts for Construction.

(a) Contract provisions; competitive bids.

The Secretary of Defense or his designee is authorized

to enter into contracts with any eligible bidder to provide

for the construction of urgently needed housing on lands

owned or leased by the United States and situated on or

near a military reservation or installation for the purpose of

providing suitable living accommodations for military per-

sonnel of the armed services assigned to duty at the military

installation at or in the area where the housing is situated.

Any such contract shall provide that each housing unit in

the project shall be placed under the control of the Secre-

tary of Defense, or his designee, as soon as the unit is avail-

able for occupancy as determined by the Commissioner.

Any such contract shall also provide that, except for stock

held by the Commissioner, the capital stock of the mortga-

gor (where the mortgagor is a corporation) be transferred to

the Secretary of Defense, or his designee, when the housing

has been completed as determined by the Commissioner.

Any such contract shall contain such terms and conditions

as the Secretary may determine to be necessary to protect

the interests of the United States. Any such contract shall

provide for the furnishing by the contractor of a perform-

ance payment bond with a surety or sureties satisfactory to

the Secretary of Defense, or his designee, and the furnishing

of such bonds shall be deemed a sufficient compliance with

the provisions of Section 270a of Title 40, and no addi-

19

X

tional bonds shall be required under such section. Before

the secretary shall enter into any contract as authorized by

this section for the construction of housing, he shall invite

the submission of competitive bids after advertising in the

manner prescribed in Section 152 of Title 41.

(b) Definition of “eligible bidder.”

For the purposes of this subchapter, the term “eligible

bidder” means a person, partnership, firm, or corporation

determined by the Secretary after consult.uion with the

Commissioner (1) to be qualified by experience and finan-

cial responsibility to construct housing of the type de-

scribed in subsection (a) of this section, and (2) to have

submitted the lowest acceptable bid.

(c) Acquisition of capital stock of property covered by

mortgage.

Notwithstanding any other provisi¢n of law, the Secre-

tary of Defense or his designee is authorized to acquire the

capital stock of mortgagors holding property covered by a

mortgage insured under sections 1748-1748g and 1748h-1

of Title 12, and to exercise the rights as holder of such

capital stock during the life of such mortgage and, upon ~

the termination of the mortgage, to dissolve the corpora-

tion; to guarantee the payment of notes or other legal in-

struments required by the Commissioner of such mortga-

gors; to make payments thereon; and to guarantee and in-

demnify the Armed Services Housing Mortgage Insurance

Fund against loss in cases where so required. All housing

facilities placed under the control of the Sccretary of De-

fense pursuant to the provisions of this subchapter shall be

deemed to be housing facilities under the jurisdiction of

the military department to which they are assigned.

20

(d) Opinion as to title to property; guarantee; title

search and title inst rance.

On request by the Secretary of Defense, the Attorney

General shall furnish to the Secretary of Defense, or his

designee, an opinion as to the sufficiency of title to any

property on which it is proposed to construct housing, or

on which housing has been constructed, under this section.

If the opinion of the Attorney General is that the title to

any such property is good and sufficient, the Secretary of

Defense is authorized to guarantee, or enter into a commit-

ment to guarantee, the mortgagee, under a mortgage on

such property which is insured under sections 1748-1748g

and 1748h-1 to 1748h-3 of Title 12, against any losses that

may thereafter arise from adverse claims to title. None of

the proceeds of any mortgage loan hereafter insured under

such sections 1748-1748g and 1748h-1 to 1748h-3 of Title

12 shall be used for title search and title insurance costs:

Provided, That if the Secretary of Defense, or his designee,

determines in the case of any housing project, that the fi-

nancing of the construction of such project is impossible

unless title insurance is provided, the Secretary may pro-

vide for the payment of the reasonable costs necessary for

obtaining title search and title insurance. Any payments by

the Secretary hereunder shall be made from the revolving

fund established under section 1594a(g) of this title. Any

determination by the Secretary under the foregoing provi-

so shall be set forth in writing, together with the reasons

therefor. The committees on Armed Services of the Senate

and House of Representatives shall be promptly notified of

each such determination, and of the amount of any pay-

ment made by the Secretary for title search and title insur-

ance costs. Aug. 11, 1955, c. 783, Title IV, Sec. 493, 69

21

Stat. 651; Aug. 7, 1956, c. 1029, Title V, Sections 506(b)-

(d), 507, 70 Stat. 1110; Aug. 10, 1959, Pub. L. 86-149,

Title IV, Sec. 415, 73 Stat. 323.

,

Section 15942. Acquisition of Land or Housing Financ-

ed Under Armed Services Housing Mortgage Insurance

Fund.

(a) Purchase price.

Whenever the Secretary of Defense or his designee deems

it necessary for the purpose of this subchapter, he may ac-

quire by purchase, donation, condemnation, or other

means of transfer, any land or (with the approval of the

Federal Housing Commissioner) any housing financed with

mortgages ‘asured under th¢ provisions of sections 1748-

1748h of Title 12 as in effect prior to August 11, 1955: The

purchase price of any such housing shall not exceed the

Federal Housing Commissioner’s estimate of the replace-

ment cost of such housing and related property (not in-

cluding the value of any improvements installed or con-

structed with appropriated funds) as of the date of final

endorsement for mortgage insurance reduced by an appro-

priate allowance representing the estimated cost of re-

pairs and replacements necessary to restore the property to

sound physical condition, as determined by the Secretary

of Defense or his designee upon the advice of the Com-

missioner: Provided, That in any case where the Secretary

or his designee acquires a project held by the Commission-

er, the price paid shall not exceed the face value of the de-

bentures (plus accrued interest thereon) which the Com-

missioner issued in acquiring such project.

22

(b) Hoasing at or near a military installatica.

Notwithstanding any provision of subsection (a) of this

section to the contrary, the Secretary of Defense or his des-

ignee shall, in the manner provided in subscction (a) of

this section, acquire by purchase, donation, or other means

of transfer or, if the parties cannot agree upon terms for

acquisition by such means, by condemnation, any housing

constructed under the mortgage insurance provisions of

section 1748-1748h of Title 12 (as in effect prior to Au-

gust 11, 1955) which is located at or near a military in-

stallation where the construction of housing under the

Armed Services Housing Mortgage Insurance Program has

been approved by the Secretary.

(c) Condemnation; procedures; deposit; payment; in-

terest.

(d) Occupancy; use, or improvement of property before

approval of title.

Property acquired under this section may be occupied,

used, and improved for the purposes of this section prior

to the approval of title by the Attorney General as required

by section 255 of Title 40.

(e) Release of accrual requirements for replacement,

taxes, and hazard insurance reserves.

The Secretary or his designee may, in the case of any

housing acquired or to be acquired under this section, make

arrangements with the mortgagee whereby such mortgagee

will agree to release and waive all requirements of accruals

for reserves for replacement, taxes, and hazard insurance

provided for under the corporate charter and indenture

y

agreement with respect to such housing, upon the execu-

tion of a written agreement by the Secretary or his designee

that the purposes for which such reserves and other funds

were accrued will be carried out.

(f) Use as public quarters or lease of housing; deposit

of amounts and rental charges.

Any housing acquired under this section may be (1) as-

signed as public quarters to military personnel and their

dependents; or (2) leased to military and civiliar. person-

nel for occupancy by them and their dependents, upon such

terms and conditions as will in the judgment of the Secre-

tary of Defense or his designee be in the best interest of

the United States, without loss to military personnel of their

basic allowance for quarters or appropriate allotments.

Amounts equal to the quarters allowances or appropriate

allotments of military personnel to whom such Fonsing is

assigned as public quarters under clause (1), and the rental

charges realized under clause (2), shall be deposited in the

revolving fund created by subsection (g) of this section.

(g) Creation of revolving fund; purpose; deposits.

There is created a fund which shall be used by the

Secretary of Defense or his designee as a revolving fund

for the purpose of paying for housing and related property

acquired under this scction, paying interest, principal, mort-

gage insurance premiums, and other obligations (except

those for maintenance and operation) with respect to such

housing, and paying expenses incurred in the alteration,

improvement, rehabilitation, and repair of such housing.

The amounts and charges referred to in the last sentence

of subsection (f) of this section, and any savings realized

EY SOL AT RLM AT ON AE TEE PTT LTE IE LOL LA ARNE LT LR PEELE OAL IEEE FPR sr 0

24

in the operation of Section 1594b of this title, shall be de-

posited in such fund. For the purposes of the preceding

sentence, the term “savings realized in the operation of

section 1594b of this title” means the difference between

the amount made available for payments under section

1594b of this title and the amount actually used in mak-

ing such payments.

(h) Capital for revolving fund.

The Secretary of the Treasury is authorized and directed

to establish on the books of the Treasury Department the

revolving fund created pursuant to the authority of this

section. To provide capital for such fund, there is author-

ized to be appropriated a sum not to exceed $50,000,000.-

00 and the Secretary of Defense, with the approval of the

President, is authorized to transfer from unexpected bal-

ances of any appropriations of the military departments

not carried to the surplus fund of the Treasury such sums

as may be determined by the Secretary of Defense to be

necessary to provide adequate capital for the revolving

fund. (Aug. 11, 1955, ch. 783, title TV, Sec. 404, 69 Stat.

652; Aug. 3, 1956, ch. 939, title IV, Sec. 420, 70 Stat.

1019; Aug. 7, 1956, ch. 1029, title V, Sec. 512, 70 Stat.

1111; July 12, 1957, Pub. L. 85-104, title V, Sec. 504,

71 Stat. 303; Aug. 20, 1958, Pub. L. 85-685, title V, Sec.

513 (d), 72 Stat. 773.)

Section 1594b. Maintenance and operation of housing;

use of quarters; payment of principal, interest, and

other obligations.

The Secretary of Defense or his designee is «uthorized

to maintain and operate any housing acquired under this

25

subchapter and assign quarters therein to military and

civilian personnel and their dependents. Appropriations for

quarters allowances or appropriate allotments, and rental

charges to civilian personnel, may be utilized by the mili-

tary department concerned for the payment of principal,

interest, and other obligations, except those of maintenance

and operations, of the mortgagor corporation with respect

to such housing projects. Such payments shall not exceed

an average of $90 a month per housing unit and total pay-

ments for all housing so acquired shall not exceed $21,000,-

000 per month: Provided, that, in case of the United

States Coast Guard, total payments for all housing so ac-

quired shall not exceed $90,000 per month. (Aug. 11,

1955, ch. 783, title IV, Sec. 405, 69 Stat. 653; Aug. 7,

1956, ch. 1029, title V, Sec. 508, 70 Stat. 1110.)

Section 1594c. Services of architects and engineers; use

of appropriations; acquisition of sites.

Whenever the Secretary of Defense or his designee de-

termines that it is desirable in order to effectuate the pur-

poses of this subchapter, the Secretary is authorized, with-

out regard to the civil service and classification laws, to

procure, by negotiation or otherwise, the services of archi-

tects and engineers, or organizations thereof, under such

arrangements as he deems desirable, but at an expense not

in excess of that permissible under the schedule of fees

allowed from time to time by the Public Housing Adminis-

tration in connection with projects assisted under the United

States Housing Act of 1937, as amended. Such services

may include the development of plans, drawings, and speci-

fications for family housing under this subchapter and oth-

er services in connection therewith: Provided, That such

RR OR RE RAR ORES PPR IS One SPREE Pte - oe

26

plans, drawings, and specifications may include the use

on any project to be constructed under this subchapter of

alternate materials or alternate types of construction, in-

cluding prefabrication, that provide substantially equal

value and conform to standards established by the Federal

Housing Commissioner: Provided, further, That such

plans, drawings, and specifications when developed pursu-

ant to arrangements made under this section after August

7, 1956. shall follow the principle cf modular measure, in

order that the housing may be built by conventional con-

struction, on-site fabrication, factory precutting, factory

fabrication, or any combination of these construction meth-

ods: Provided further, That the Secretary may designate

certain sites or parts thereof for family housing to be fur-

nished from prefabricated houses or housing components.

Such arrangements may include provision for advance or

progress payments, for payment by third parties, for pay-

ment by the Government of any such compensation as is

not paid for by third parties, and shall include provision

for reimbursement by third parties to the Government of

any compensation or other expenses paid by the Govern-

ment pursuant to this section, and may include other pro-

visions for compensation. Any public works appropriations

now or hereafter available to the Departments of the Army,

Navy, or Air Force or the Coast Guard may be obligated

by the respective departments or the Coast Guard for

these purposes. Reimbursements to the Government on ac-

count of payments made pursuant to this section shall be

made to appropriations against which such payments were

charged. The Secretary is further authorized to advance or

pay to the Federal Housing Administration ,its “Appraisal

and Eligibility Statement” fees in connection with such fam-

ily housing. The Secretary is further authorized to enter

27

into arrangements by contract or otherwise for eventual ac-

quisition by the Government, without cost to the Govern-

ment of all right, title, and interest in sites on which hous-

ing is constructed pursuant to this subchapter and im-

provements thereon. (Aug. 11, 1955, ch. 783, title IV, Sec.

406, 69 Stat. 653; Aug. 7, 1956, ch. 1029, title V, Sec.

509, 70 Stat. 1110.)

Section 1594d. Appropriations; use of quarters allow-

ances,

(a) There are authorized to be appropriated such sums

as may be necessary to carry out the provisions of sections

1594-1594c of this title.

(b) Any funds heretofore or hereafter authorized to be

expended by any of the military departments or the Coast

Guard for the payment of allowances for quarters for mili-

tary personnel may be used for the purposes specified in

subsection (a) of this section. (Aug.‘ 11, 1955, ch. 783,

title IV, Sec. 407, 69 Stat. 653.)

Section 1594e. Definitions.

(a) Wherever the terms “Secretary of Defense” or “Sec-

retary” or “Secretary of the Army, Navy, or Air Force” ap-

pear in this subchapter or in sections 1748-17482 and

1748h-1 of Title 12, they shall be deemed to mean the

Secretary of the Treasury in the case of the application of

the provisions of this subchapter or of sections 1748-1748g

and 1748h-1 of Title 12, for the benefit of the United States

Coast Guard.

(b) Wherever the term “armed services” appears in this

subchapter it shall be deemed to include the United States

Coast Guard. (Aug. 11, 1955, ch. 783, title IV, Sec. 409,

69 Stat. 654.)

FA APT, AINA EME LE SN ES DA EER MET MGR COME OREN REE IP OFT Tes muse

28

Section 1594f. Net floor area limitations.

In the construction of housing under the authority of this

subchapter and sections 1748-1748g and 1748h-1 of Title

12, the maximum limitations on net floor area for each

unit shall be the same as the net floor area limitations pre-

scribed by law (at the time plans and specifications for

such construction are begun) for public quarters built with

appropriated funds under military construction authority.

(Aug 11, 1955, ch. 783, title IV, Sec. 410, as added Aug.

7, 1956, ch. 1029, title V, Sec. 510, 70 Stat. 1110, and

amended July 12, 1957, Pub. L. 85-104, title V, Sec. 503,

71 Stat. 303.)

Section 1594h. Purchase of family housing for assign-

ment as public quarters; space and cost limitations.

The Secretary of the Army is authorized to purchase out

of appropriations available for military construction family

housing including necessary land at, or near, military tac-

tical installations for assignment as public quarters to mili-

tary personnel and their dependents. Not more than 300

units of such housing may be purchased under this section.

Space limitations per unit will be in accordance with sub-

sections (a), (b), and (c) of section 4774 of Title 10, and

cost limitations as now or hereafter established for military

housing constructed with appropriated funds. (Pub. L. 85-

241, title I, Sec. 103, Aug. 30, 1957, 71 Stat. 534.)

Section 1594i. Authorization of number of family hous-

ing units.

Notwithstanding the provisions of any other law, and

effective July 1, 1958, no family housing units shall be

coatracted for or acquired at or in support of military in-

29 /

stallation or activities unless the actual number of units in-

volved has been specifically authorized by an annual mili-

tary construction authorization Act except (1) housing

units acquired pursuant to the provisions of section 1594a

of this title (2) housing units leased, utilizing available op-

eration and maintenance appropriations, for terms of one

year, whether renewable or not, or for terms of not more

than five years pursuant to the provisions of section 1712-3

of Title 5. (Pub. L. 85-241, title IV, Sec. 406 (a), Aug.

30, 1957, 71 Stat. 556; Pub. L. 85-685, title V, Sec. 512,

Aug. 20, 1958, 72 Stat. 662.)

Section 1594j. Inadequate quarters.

(a) Occupancy on rental basis without loss of basic

allowance for quarters.

* * x * *

(b) Administration. ba

The provisions of this section shall be administered un-

der regulations approved by the President.

(c) Designaticz as rental housing.

The Secretaries of the Army, Navy, and Air Force for

the respective military departments, the Secretary of the

Treasury for the Coast Guard when the Coast Guard is op-

erating as a service in the Treasury Department, the Sec-

retary of Commerce for the Coast and Geodetic Survey,

and the Secretary of Health, Education and Welfare for

the Public Health Service (hereafter referred to as the “Sec-

retaries”), are each authorized, subject to standards estab-

lished pursuant to subsection (b) of this section, to des‘g-

nate as rental housing such housing as he may determine

to be inadequate as public quarters.

30

(d) Leasing of housing units.

The Secretaries are each further authorized, subject to

standards established pursuant to subsection (b) of this sec-

tion, to lease inadequate housing to personnel of any of

the mentioned services for occupancy by them and their

dependents. The housing facilities lezsed, as herein provid-

ed, shall not be required to have been constructed with

funds derived from aporopriations specifically made for the

purpose of the construction of rental housing for personnel

of the services mentioned.

(ce) Alteration, improvement, or disposition of hous-

ing units.

All housing units determined pursuant to subsection (c)

of this section to be inadequate shall, prior to July 1, 1961,

either be altered or improved so as to qualify as public quar-

ters, or be demolished or otherwise disposed of.

(f) Housing financed with mortgages insured under

title VIII of the National Housing Act.

This section shall have no application to any housing

finan.cd with mortgages insured under the provisions of

title VIII of the National Housing Act as in effect prior

to the enactment of the Housing Amendments of 1955.

(Pub. L. 85-241, Title ITV; Sec. 407, Aug. 30, 1957, 71

Stat. 556; Pub. L. 85-685, Title V, Sec. 516, Aug. 20,

1958, 72 Stat. 664.)

31

APPENDIX D

Miller Act

Title 40, U. S. C., Section 272.

Section 270a. Bonds of «catractors for public buildings

or works; waiver 61 1022s covering contract perform-

ed in foreign country.

(a) Before any contract, exceeding $2,000 in amount,

for the censtruction, alteration, or repair of any pubiic

building or public work of the United States is awarded to

any person, such person shall furnish to the United States

the following bonds, which shall become binding upon the

award of the contract to such person, who is hereinafter

designated as “contractor”;

(1) A performance bond with a surety or sureties

satisfactory to the officer awardiag such contract, and

in such amount as he shall deem adequate, for the

protection of the United States. (2) A payment bond

with a surety or sureties satisfactory to such officer

for the protection of all persons supplying labor

and material in the prosecution of the work provided

for in said contract for the use of each such person.

Whenever the total amount payable by the terms of

the contract shall be not more than $1,000,000 «he

said payment bond shall be in a sum of one-half the

total amount payabic by the terms of the contract.

Whenever the total] amount payable by the terms of

the contract shall be more than $1,000,000 and not

move than $5,000,000, the said payment bond shall

be in a sum of 40 per centum of the total amount

payable by the terms of the contract. Whenever the

total amount payable by the terms of the contract shall

32

be more than $5,000,000 the said payment bond

shall be in the :um of $2,500,000.

(b) The contracting officer in respect of any contract

is authorized to waive the requirement of a performance _

bond and payment + ud for so much of the work under

such contract as i. to be performed in a foreign country

if he finds that it is impracticable for the contractor to

furnish such bonds.

(c) Nothing in this section shall be construed to limit

the authority of any contracting officer to require a per-

formance bond or other security in addition to those, or in

cases other than the cases specified in subsection (a) of this

section. (Aug. 24, 1935, ch. 642, Sec. 1, 49 Stat. 793.)

Section 270b. Same; rights of persons furnishing iabor

or material.

(a) Every person who has furnished labor or material

in the prosecution of the work provided for in such con-

tract, in respect of which a payment bond is furnished un-

der section 270a of this title and who has not been paid in

full therefor before the expiration of a period of ninety

days after the day on which the last of the labor was done

or performed by him or material was furnished or supplied

by him for which such claim is made, shall have the right

to sue on such payment bond for the amount, or the bal-

ance thereof, unpaid at the time of institution of such suit

and to prosecute said action to final execution and judg-

ment for the sum or sums justly due him: Provided, how-

ever, That any person having direct contractual relation-

ship with a subcontractor but no contractual relationship

express or implied with the contractor furnishing said pay-

ment bond shall have a right of action upon the said pay-

33

ment bond upon giving written notice to said contractor

within ninety days from the date on which such person did

or performed the last of the labor or furnished or supplied

the last of the material for which such claim is made, stat-

ing with substantial accuracy the amount claimed and the

name of the party to whom the material was furnished or

supplied or for whom the labor was done or performed.

Such notice shall be served by mail'ng the same by regis-

tered mail, postage prepaid, in an envelope addressed to

the contractor at any piace he maintains an office or con-

ducts his business, or his residence, or in any manner in

which the United States marshal! of the district in which

the public improvement is situated is authorized by law, to

serve summons.

(b) Evcry suit instituted under this section shall be

brought in the name of the United States for the use of the

person suing, in the United States Distyict Court for any

district in which the contract was to be performed and ex-

ecuted and not elsewhere, irrespective of the amount in con-

troversy in such suit, but no such suit shall be commenced

after the expiration of one year after the day on which the

last of the labor was performed or material was supplied

by iim. The United States shall not be liable for the pay-

ment of any costs or expenses of any such suit. (Aug 24,

1935, ch. 642, Sec. 2, 49 Stat. 794; Aug. 4, 1959, Pub.

L. 86-135, Sec. 1, 73 Stat. 279.)

Section 270c. Same; right of person furnishing labor or

material to copy of bond.

The Comptroller General is authorized and directed to

furnish, to any person making application therefor who sub-

mits an affidavit that he has supplied labor or materials

34

for such work and payment therefor has not been made or

that he is being sued on any such bond, a certified copy of

such bond and the contract for which it was given, which

copy shall be prima facie evidence of the contents, execu-

tion, and delivery of the original. Applicants shall pay for

such certified copies and certified statements such fees as

the Comptroller General fixes to cover the cost of prepara-

tion thereof. (Aug. 24, 1935, ch. 642, Sec. 3, 49 Stat. 794;

Aug. 4, 1959, Pub. L. 86-135, Sec. 2, 73 Stat. 279.)

Section 270d. Same; definition of “person”.

The term “person” and the masculine pronoun as used

in sections 270a-270c of this title shall include all persons

whether individuals, associations, copartncrships, or cu1-

porations. (Aug. 24, 1935, ch. 642, Sec. 4, 49 Stat. 794 )

Section 270e. Same; waiver of sections 270a-270d with

respect to Army, Navy, Air Force, or Coast Guard con-

tracts.

The Secretary of the Army, the Secretary of the Navy,

the Secretary of the Air Force, or the Secretary of the

Treasury may waive sections 270a-270d of this title with

_ Tespect to cost-plus-a-fixed fee and other cost-type contracts

for the construction, alteration, or repair of any public

building or public work of the United States and with re-

spect to contracts for the manufacturing, producing, fur-

nishing, construction, alteration, repair, processing, or as-

sembling of vessels, aircraft, munitions, materiel, or sup-

plies of any kind or nature for the Army, Navy, Air Force,

or Coast Guard, respectively, regardless of the terms of

such contracts as to payment or title. (April 29, 1941, ch.

81, 55 Stat. 147; June 3, 1955, ch. 129, 69 Stat. 83.)

Re REAR ECO ep PA HET Sams

35

APPENDIX E

Titie 28, U.S. C., Section 1352.

Section 1352. Bonds executed under federal law.

The district courts shall have original jurisdiction, con-

current with State courts, of any action on a bond executed

under any law of the United States. (June 25, 1948, c.

646, 62 Stat. 934.)