Opinion — United States Ex Rel. Texas Portland Cement Co. v. McCord

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UNITED STATES EX REL. TEXAS PORTLAND

CEMENT COMPANY v. McCORD.

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR

THE THIRD CIRCUIT.

No. 234. Argued March 6, 1914.—Decided April 6, 1914.

When the purpose of Congress is stated in such plain terms that there

is no uncertainty, and no construction is required, it is unnecessary

to inquire into the motives which induced the legislation. The only

province of the courts in such a case is to enforce the statute in ac-

cordance with its terms.

Limitations specified in the statute creating a new liability are a part

of the right conferred and compliance therewith is essential to the

assertion of the right conferred by the statute.

An amendment dates back to the filing of the petition and is to supply

defects in the petition with reference to the cause of action then

existing, or at most to bring into the suit grounds of action which did

exist at the beginning of the case.

Under the act of August 13, 1894, as amended by the act of Febru-

ary 24, 1905, a materialman or laborer may not bring suit on the con-

tractor’s bond in the Federal court in the name of the United States

for his use and benefit, within six months from completion and

settlement, even though the United States has not asserted any, and

has no, claim against the contractor or his sureties.

Where the original bill was prematurely filed,an intervention after the

six month, and before the twelve month, period is not effectual as

such or as an original bill.

An amended bill filed more than one year after completion of the work

and settlement, if treated as an original bill, is filed too late.

Tue facts, which involve the construction of the mate-

rialman’s act of February 24, 1905, and the rights of con-

tractors thereunder, are stated in the opinion.

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2A RAN OARS SEED

158 OCTOBER TERM, 1913.

Opinion of the Court. 233 U.S.

Mr. Francis Marion Etheridge, with whom Mr. Joseph

Manson McCormick was on the brief, for the relators,

Texas Portland Cement Company et al.

Mr. Charles W. Starling, with whom Mr. W. F. Robert-

son was on the brief, for McCord and National Surety

Company of New York.

Mr. Justice Day delivered the opinion of the court.

This case is here upon a certificate from the United

States Cireuit Court of Appeals for the Fifth Circuit.

The pertinent facts certified are:

The United States upon the relation and for the use and

benefit of the Texas Portland Cement Company and others

brought suit in the United States Circuit Court for the

Northern District of Texas, on January 3, 1910, against

D. C. MeCord, as the principal, and the National Surety

Company of New York, as surety, on a certain bond

dated March 19, 1906, given in conformity io the act of

February 24, 1905 (ec. 778, 33 Stat. S11), for the perform-

ance by MeCord of a contract for the erection of certain

publie works for which they had furnished labor and ma-

terial. The petition was filed after the completion of the

contract and final settlement between the contractor and

the United States, and it was alleged that the United

States had no claim or cause of action against the de-

fendants and would not bring suit within six months from

the completion and settlement of the contract, nor at any

other time. An appropriate order for service and publi-

cation was had. Many creditors intervened in the case,

among others W. Illingsworth, who on May 25, 1910

(more than six and less than twelve months after final

completion and settlement) filed an intervention in accord-

ance with the act, which constituted a complete bill, pur-

porting to be also for the benefit of the plaintiffs in the

wees hat

TEXAS CEMENT CO. v. McCORD. 159

233 U.S. Opinion of the Court.

original suit and others intervening in the cause, and in

which he prayed, if the recovery on the bond should be

inadequate to pay all claims in full, for a pro rata judgment.

Subsequently, on January 9, 1911, the original plaintiffs

filed an amended original petition, elal orating the allega-

tions of their original petition and averring among other

things that the Government had no claim against the de-

fendants and therefore had not within six months from

the completion and settlement of the contract, brought

suit against them, and did not have the legal right to

maintain such suit, except upon the relation of a creditor.

Ilingsworth dismissed his intervention on February 2,

1911, and thereafter the eourt ordered that his petition

and petition in intervention be dismissed.

The allegations of the petition were sustained by proof,

and a plea in abatement filed by the Surety Company was

heard upon an agreement and statement in open court

to the effect that the contract was completed on Octo-

ber 12, 1909, and settlement was made on November li,

1909, and that the Government thereafter neither had nor

asserted any claim, demand or cause of action against the

defendants on the contract or bond. The Circuit Court

thereupon dismissed the suit, and the case was taken to

the Cireuit Court of Appeals upon error.

The questions certified are:

“First. Under the provisions of the Act of August 13,

1894 (28 Stat. 278), as amended by the Act of February 24,

1905 (33 Stat. 811), may persons, who furnish material

and perform labor in the construction of governmental

works, bring suit, on the bond of the contractor in the

Federal Court in the name of the United States for their

use and benefit, within six months from the completion

of the works and final settlement of the contract, where it

appears of record and was agreed by the parties In open

court, that after performance and settlement of the con-

tract, the United States neither had nor asserted any

160 OCTOBER TERM, 1913.

Opinion of the Court. 233 U. S.

claims, demands or cause of action either against the con-

tractor or the sureties on his bond?

“Second. If the original bill was prematurely filed, was

a right of action saved to the parties, so filing the same, by

the intervention of Illingsworth, which was filed after the

six months but before the expiration of the twelve months’

period, and the amended bill, filed more than one year

after the completion and settlement of the contract be-

tween the Government and the contractor?”

The differences in the act of February 24, 1905, and the

former statute of August 13, 1894, c. 280, 28 Stat. 278,

were pointed out by this court in the case of Mankin v.

Ludowici-Celadon Ce., 215 U. 8. 533, and need not be re-

peated here. The act of 1905 ' provides that the persons

! That hereafter any person or persons entering into a formal contract

with the United States for the construction of any public building, or

the prosecution and completion of any public work, or for repairs

upon any public building or public work, shall be required, before

commencing such work, to execute the usual penal bond, with good

and sufficient sureties, with the additional obligation that such con-

tractor or contractors shall promptly make payments to all persons

supplying him or them with labor and materials in the prosecution of

the work provided for in such contract; and any person, company,

or corporation who has furnished labor or materials used in the construc-

tion or repair of any public building or public work, and payment for

which has not been made, shall have the right to intervene and be made

a party to any action instituted by the United States on the bond of

the contractor, and to have their rights and claims adjudicated in such

action and judgment rendered thereon, subject, however, to the prior-

ity of the claim and judgment of the United States. If the full amount

of the liability of the surety on said bond is insufficient to pay the full

amount of said claims and demands, then, after paying the full amount

due the United States, the remainder shall be distributed pro rata

among said interveners. If no suit should be brought by the United

States within six months from the completion and final settlement of

said contract, then the person or persons supplying the contractor

with labor and materials shall, upon application therefor, and furnish-

ing affidavit to the Department under the direction of which said work

has been prosecuted that labor or materials for the prosecution of

oo

TEXAS CEMENT CO. v. MeCORD. 161

233 U.S. Opinion of the Court.

named as beneficiaries under the bond may intervene and

have their rights adjudicated in an action instituted by the

United States in which priority of claim is to be given to the

United States for any judgment recovered in the case. It

is also provided that, “if no suit should be brought by the

United States within six months from the completion and

final settlement of said contract,” then the persons supply-

such work has been supplied by him or them, and payment for which

has not been made, be furnished with a certified copy of said contract

and bond, upon which he or they shall have a right of action and shall

be, and are hereby, authorized to bring suit in the name of the United

States in the cireuit court of the United States in the district in which

said contract was to be performed and executed, irrespective of the

amount in controversy in such suit, and not elsewhere, for his or their

use and benefit, against said contractor and his sureties, and to prose-

cute the same to final judgment and execution: Provided, That where

suit is instituted by any of such creditors on the bond of the contractor

jt shall not be commenced until after the complete performance of

said contract and final settlement thereof, and shall be commenced

within one year after the performance and final settlement of said

contract, and not later: And provided further, That where suit is so

instituted by a creditor or by creditors, only one action shall be brought,

and any creditor may file his claim in such action 2nd be made party

thereto within one year from the completion of the work under said

contract, and not later. If the recovery on the bond should be inade-

quate to pay the amounts found due to all of said ereditors, judgment

shall be given to each creditor pro rata of the amount of the recovery.

The surety on said bond may pay into court, for distribution among

said claimants and creditors, the full amount of the sureties’ liability,

to wit, the penalty named in the bond, less any amount which said

surety may have had to pay to the United States by reason of the exe-

cution of said bond, and upon so doing the surety will be relieved from

further liability: Provided further, That in all suits instituted under

the provisions of this Act such personal notice of the pendency of such

suits, informing them of their right to intervene as the court may order,

shall be given to all known creditors, and in addition thereto notice

of publication in some newspaper of general circulation, published in

the State or town where the contract is being performed, for at least

three successive weeks, the last publication to be at least three months

before the time limited therefor.

VOL. cexxxt—11

PERLE NE SOBA RR NNN ty RP TE NP NAL RM a AT

162 OCTOBER TERM, 1913.

Opinion of the Court. 233 UL S.

ing labor, ete., upon taking certain steps to get a certified

copy of the bond, ‘are hereby authorized to bring suit in

the name of the United States,” ete., provided that suits

by creditors of the contractor “shall not be commenced

until after the complete performance of said contract and

final settlement thereof, and shall be commenced within

one year after the performance and final settlement of

said contract, and not later.” And it is further provided

“that where suit is so instituted by a creditor or creditors,

only one action shall be brought, and any creditor may

file his claim in such action and be made party thereto

within one year from the completion of the work under

said contract, and not later.” [t is further provided that

in all suits instituted under the act such personal notice

of the pendency of the suit shall be given as the court may

order, informing known creditors of their right to in-

tervene, and newspaper publication, to serve as notice of

pendency of the suit to other creditors, shall also be made.

By this statute a right of action upon the bond is created

in favor of certain creditors of the contractor. The cause

of action did not exist before and is the creature of the

statute. The act does not place a limitation upon a cause

of action theretofore existing, but creates a new one upon

the terms named in the statute. The right of action given

to creditors is specifically conditioned upon the fact that

no suit shall be brought by the United States within the

six months named, for it is only in that event that the

creditors shall have a right of action and may bring a suit

in the manner provided. The statute thus creates a new

liability and gives a special remedy for it, and upon wel!

settled principles the limitations upon such liability be-

come a part of the right conferred and compliance with

them is made essential to the assertion and benefit of the

liability itself. Pollard y. Bailey, 20 Wall. 520, 526-7:

Bank v. Francklyn, 120 U. 8. 747, 756: Globe Newspaper |

Co. v. Walker, 210 U.S. 356; United States vy. Boomer, 183

oe ee oe eR! OT Ne aI «oO

TEXAS CEMENT CO. v. MeCORD. 163

233 U.S. Opinion of the Court.

Fed. Rep. 726 (Cireuit Court of Appeals for the Eighth

Cirevt).

The purpose of Congress to give the United States the

exclusive right to bring suit within six months is stated

in terms too plain to be mistaken or to require construc-

tion, because of any possible uncertainty in their meaning.

When this is so it becomes unnecessary to inquire into the

reasons which induced the legislation. It may be that

Congress wished to give the Government six months in

which to test the work and fully ascertain its character and

whether it fulfilled the contract or not. Whatever the

motive, the language used clearly expresses the legislative

intention and admits of no doubt as to its meaning. This

being so, it is only the province of the courts to enforce

the statute in accordance with its terms. Lake County v.

Rollins, 130 U. 8. 662, 670; United States v. Lexington

Mill Co., 232 U. 8. 399, 409.

We think, therefore, that the action was prematurely

brought, in view of the facts stated in the certificate. This

view of the statute was also taken in a well considered

opinon in the Cireuit Court of Appeals for the Third

Cipenit, Stitzer v. United States, 182 Fed. Rep. 513.

\ to the intervention of Ilingsworth, in which, it is

claimed, other ereditors’ claims were incorporated: with-

out passing upon the effect of the dismissal of Illingsworth’s

intervention, we fail to see that this mends the matter.

The right to intervene is given in the statute when the

action is brought by the United States, and the creditors

may have their rights adjudicated in such action. And in

the ease of an action begun by a creditor in accordance

with the statute, the right to file a claim is given to cred-

itors. These rights to intervene and to file a claim, con-

ferred by the statute, presuppose an action duly brought

under its terms. In this ease the cause of action had not

accrued to the ereditors who undertook to bring the suit

originally. The intervention could not cure this vice in the

sabes ee |

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164 OCTOBER TERM, 1913.

Opinion of the Court. 233 U.S.

original suit. Nor do we think that the intervention could

be treated as an original suit. No service was made or

attempted to be had upon it, as required by the statute

when original actions are begun by ereditors. As we read

the certificate, the intervention was what it purported to

be, an appearance in the original suit, already brought,

and in our view must abide the fate of that suit.

As to the effect of the filing of the amendment by the

original plaintiffs on January 9, 1911, it is elementary that

an amendment dates back to the filing of the petition and

is to supply defects in the cause of action then existing, or

at most to bring into the suit grounds of aetion which

existed at the beginning of the case. In this case there was

no cause of action to amend. Nor was the amendment of

January 9, 1911, the introduction of a new cause of action

existing at the beginning of the suit. See in this connec-

tion, American Bonding & Trust Co. v. Gibson County,

145 Fed. Rep. 871 (Cireuit Court of Appeals for the Sixth

Circuit, opinion by Mr. Justice Lurton). If this amended

petition can be regarded as an intervention in a pending

suit, and it is contended that it may be, it was too late,

as it was filed more than a year after the final settlement

under the contract to which time such rights of action are

limited by the statute. Eberhart v. United States, 204

Fed. Rep. 884. The same objection would lie if the

amended petition could be regarded as the bringing of an

original suit. See Baker Contract Co. v. United States,

204 Fed. Rep. 390.

It follows that both questions certified must be answered

in the negative.

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