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United States v. Massachusetts Bonding and Insurance Co.

UNITED STATES COURT OF APPEALS, THIRD CIRCUIT.


November 20, 1959

UNITED STATES OF AMERICA FOR USE OF OLD DOMINION IRON & STEEL CORPORATION, PLAINTIFF-APPELLEE,
v.
MASSACHUSETTS BONDING AND INSURANCE COMPANY, A CORPORATION, DEFENDANT-APPELLANT.

Author: Wood

Before GOODRICH, and KALODNER, Circuit Judges, and WOOD, District Judge.

WOOD, D. J.: The question to be decided is whether sufficient notice of sums owing to a supplier was given by the supplier to a prime contractor so as to permit the supplier to recover against the bonding company under the provisions of the Miller Act.*fn1

Foster-Newman Contracting Co., Inc., entered into a written contract with the United States of America for construction at the McGuire Air Force Base in the State of New Jersey.Massachusetts Bonding and Insurance Company became surety in accordance with the aforesaid Act. Foster-Newman subcontracted with Benjamin Lessner Co., Inc. Lessner purchased material from plaintiff-appellee, Old Dominion Iron and Steel Corporation.

Lessner failed to pay plaintiff for the material supplied. Plaintiff now invokes the provisions of the Miller Act, claiming that sufficient notice was given the prime contractor, within the time prescribed by the Act, so as to permit the plaintiff to recover on the bond.*fn2 The plaintiff seeks recovery of $3300, the value of the material supplied the subcontractor.

We are brought to the crux of the case by a review of the plaintiff's evidence which plaintiff contends constitutes sufficient notice under the Act.

On January 22, 1957, within the 90-day period, Lessner wrote a letter*fn3 to Foster-Newman, advising them of outstanding claims, including plaintiff's claim, against Lessner. The letter also stated that Lessner would "indemnify" and "hold harmless" Foster-Newman from any such claims. It is admitted that the plaintiff at that time had no knowledge of this letter.*fn4 Later, however, on February 12, 1957, Lessner wrote to the plaintiff*fn5 advising plaintiff "we have a considerable amount of money coming to us" and "we have even gone so far as to list the accounts with the prime contractor * * * so that your interests would be protected." This letter was admitted in evidence in the court below, over objection, to show that the plaintiff had notice that the letter of January 22, 1957 had gone to the prime contractor.

Briefly stated, the plaintiff's argument is that since the subcontractor advised the prime contractor that he (subcontractor) had a number of creditors, of which plaintiff was one, and that since the subcontractor had told the plaintiff that he (subcontractor) had listed plaintiff's claim with the prime contractor, the notice requirements of the Miller Act were satisfied.

We cannot agree. Having in mind that the applicable section of the Miller Act is "remedial" and should be liberally construed,*fn6 nevertheless we find that the plaintiff here did nothing to secure the protection and benefits afforded him by the Act. As was stated in the Bowden case,*fn7 the provisions of the Act require a minimum of attention and effort.

In the Fleisher case,*fn8 the Supreme Court said:

"We think a distinction should be drawn between the provisions explicitly stating the condition precedent to the right to sue and the provisions as to the manner of serving notice."

(At p. 18.) Certainly that case, in which there was written notice from the plaintiff-supplier to the prime contractor, does not relieve the plaintiff here of the responsibility of giving some notice himself.

The letter of February 12, 1957,*fn9 does not avoid the explicit result of the Bowden case, supra . In neither the Bowden case nor the case at bar did the plaintiff-supplier take any action to protect his interests by complying with the Act. The mere writing of a letter by the subcontractor to the plaintiff, informing plaintiff that his claim had been listed with the prime contractor, cannot cure the fatal defect in plaintiff's case.

It must be noted that in the Coffee case, supra, there was a written "exhibition to the contractor by the claimant as a notice of his claim." In the Houston case*fn10 there was "oral notice to principal contractor" from the claimant, and a written "acknowledgment of the request and full recognition of Denton's (subcontractor) indebtedness to Trane (materialman)." In the Fleisher case, supra, and the Birmingham Slag case, supra, there was also written notice from the claimant to the prime contractor.

The judgment is reversed and the cause remanded with directions to enter judgment for the appellant with costs to be paid by appellee.


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