# Petition for Writ of Certiorari — Cook v. United States

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0589%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1965
- **Citation:** 381 U.S. 939

## Text

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.)

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385602_0589%3A2. Public record. Not legal advice.