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NATIONAL SUR. CORP. v. GLOBE INDEM. CO.

August 26, 1971

NATIONAL SURETY CORPORATION
v.
GLOBE INDEMNITY COMPANY


John W. Lord, Jr., Chief Judge.


The opinion of the court was delivered by: LORD, JR.

Plaintiff, a surety writing company, has requested the Court to grant interpleader among the parties, pursuant to 28 U.S.C.A. § 1335, in order that a number of conflicts concerning $22,211.82 may be resolved. For reasons set forth within the opinion, we refuse the motion.

 National Surety Corporation (hereinafter National) executed Performance Bonds and Labor and Material Bonds with James J. O'Brien and Daniel L. Redmond, Jr., trading as O'Brien and Redmond (hereinafter Bankrupts), as principal, and the Commonwealth of Pennsylvania as obligee. This was done in connection with six contracts between the latter two parties for road construction in certain counties of the Commonwealth. Because of the failure of the Bankrupts to pay labor and material claims, plaintiff paid out $159,629.54 to parties who had furnished labor and material to the Bankrupts.

 National then instituted suit in the Court of Common Pleas of Dauphin County, Pennsylvania, to recover from certain officers of the Commonwealth the balance due on certain of the aforementioned construction contracts, as well as balances on three other contracts involving the Bankrupts and Erie, Beaver and Delaware counties. This claim was based upon the Bankrupts' assignment to National and the filing of the forms under the Code.

 As a result of the suit, National was paid the balance due on the first set of six contracts, which it had bonded, as well as the balance of $52,991.13, due under the second set of three contracts with Erie, Beaver and Delaware counties. At the time of payment, National executed a Bond of Indemnity to indemnify the Commonwealth against any loss suffered by reason of the payments to it.

 Plaintiff subsequently made two disbursements from the fund created by the contracts with Erie, Beaver and Delaware counties. First Massachusetts Bonding and Indemnity Company (now Hanover Insurance Company, and hereinafter referred to as Hanover), which had bonded the contracts between the Bankrupts and two of the counties, made a claim against National for part of the contract balance received under the Delaware County contract, and for all of the contract balance on the Beaver County contract. Hanover's claim, which was paid by National, arose out of their subrogation rights resulting from payments made by it to persons who furnished labor and materials on the two contracts.

 National paid $10,100 to the law firm of Saul, Ewing, Remick & Saul as a result of a claim under an Attorneys' Charging Lien, based on funds received by National on the Delaware, Beaver and Erie County contracts. At the time of this payment, Saul, Ewing, Remick & Saul agreed to indemnify National against loss by reason of said payment to them. By reason of these two disbursements, National is in possession of $22,211.82 which it claims is the amount which should be the total sum involved in the interpleader action.

 A number of law suits have since been filed, which we enumerate while proceeding toward the body of the complaint. Globe instituted suit against certain officers of the Commonwealth for money allegedly paid by Globe under the Beaver County contract.

 Martin, trustee of the Bankrupts, instituted suit in the Philadelphia Court of Common Pleas claiming all of the funds received by National from the Commonwealth, including the funds received from the three county contracts above described.

 Globe brought suit in the Philadelphia Court of Common Pleas claiming the amount allegedly paid by Globe under its Labor and Material Bond, with interest, under the Erie county contract.

 The United States of America instituted an action in the United States District Court for the Eastern District of Pennsylvania against the Pennsylvania Highway Department, claiming the contract balances, with interest, due from the three enumerated county contracts. This was based upon a levy stated to have been made by the United States against the Commonwealth, pursuant to Section 7401 of the Internal Revenue Code of 1954. The liability creating whatever lien the United States might have arises from obligations of the Bankrupts.

 The United States has filed tax liens; the Commonwealth has threatened to hold National liable under plaintiff's letter of indemnification for moneys paid to Globe; and it is alleged that the Commonwealth may bring in National as a Third-Party Defendant in the suit by the United States against the Commonwealth.

 National has brought this interpleader alleging that the various suits in which it has become embroiled have left it with conflicting claims to be satisfied, and doubts as to what amounts, if any, are due to the various parties. National states that it ...


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