By acts of May 7, 1943 (57- Stat. 80) and July 1, 1943 (57 Stat. 294), the Civil Aeronautics Administration War Training Service was authorized during the fiscal years 1943 and 1944, respectively, to pay fifty dollars per month to pilot trainees subject to service in the Army, but not on active duty, while undergoing or awaiting training. It was not repeated in the appropriation act for the fiscal year 1945. * 526. Renewal.- -*** Hereafter every officer whose duty it is to take and approve official bonds shall cause all such bonds to be renewed every four years after their dates, but he may require such bonds to be renewed or strengthened oftener if he deem such action necessary. In the discretion of such officer the requirement of a new bond may be waived for the period of service of a bonded officer after the expiration of a four-year term of service pending the appointment and qualification of his successor: Provided, That the payment and acceptance of the annual premium on corporate surety bonds furnished by postal officers and employees [,] officers and employees of other civilian agencies of the United States and bonded officers and enlisted men of the Army, Navy, Marine Corps, and Coast Guard shall be a compliance with the requirement for the renewal of such bonds within the meaning of this Act. Sec. 5, act of Mar. 2, 1895 (28 Stat. 808); act of Mar. 8, 1928 (45 Stat. 247); act of Mar. 31, 1944 (58 Stat. 135); 6 U. S. C. 3. The first paragraph of this section has been amended as above. 534. Surety companies; deposit of charter and statement of assets and liabilities. Notes of Decisions Paid-up capital. Sec. 3, act of Aug. 13, | States against losses. mutual company, whose capital required by State law is equivalent to capital stock of a stock company. (1939), 39 Op. Atty. Gen. 1894 (28 Stat. 279), as amended, requiring The "Paid-up capital" requirement, supra, a corporate surety to have a paid-up capital is satisfied, under conditions stated, by a of not less than $50,000 was apparently intended to insure the financial integrity of a surety company and to require the maintenance of a fixed fund to protect the United 310. 541. Bidders' bonds. Notes of Decisions Requirement in general.-Invitation for stated that performance bond in full amount sealed bids by United States for construction of building at coast guard station, stating that "bid security" in certain sum would be required, meant under the evidence, that a deposit was required of the bidder in order to assure the Government of the seriousness of the bid, the deposit to be forfeited if the bidder should withdraw his bid before the Government had accepted it, the phrase not being a phrase of art having a precise meaning in the law of contracts. United States v. Conti (C. C. A. 1, 1941), 119 F. (2d) 652. Where invitation for sealed bids for construction of building at coast guard station of bid price would be required and that a 542. Bonds of contractors. Cost-plus contracts for construction at military posts were exempted from the requirements of this section by 946a, post. The activities of the United States Maritime Commission were exempted from the requirements of this section by section 2, act of February 6, 1941 (55 Stat. 6), and by section 2 (c), act of May 2, 1941 (55 Stat. 149), continued in effect until six months after the termination of the war by act of June 16, 1942 (56 Stat. 370). Notes of Decisions I. Contracts within statute.-The work of payment bond in the name of the United raising sunken towboat from canal under States against the general contractor and a contract with United States was "public nonresident surety in the District Court of work," within statute authorizing recovery the United States for the District of Columon contractor's bond to pay persons supply- bia. Irwin et al. v. U. S., to Use of Noland ing labor and material in prosecution of Co., Inc. (App. D. C., 1941), 122 F. (2d) such work. 40 U. S. C. A., sec. 270b. U. S., 73; reversed (1942), 316 U. S. 23. for Use and Benefit of Shlager et al. v. MacNeil Bros. Co. et al. (D. C., 1939), 27 F. Supp. 180. The term "public work", as used in Heard Act requiring any person contracting with the United States for prosecution and completion of any public work to execute a bond, must be understood in its plain, obvious, and rational sense, and includes any work in which the United States is interested and which is done for the public and for which the United States is authorized to expend funds. Peterson et al. v. U. S. for Use of Marsh Lumber Co. (C. C. A. 6, 1941), 119 F. (2d) 145. en Where the Secretary of the Interior improperly required a general contractor gaged to construct a library building at Howard University to furnish performance and payment bonds under the Miller Act, lack of authority in the secretary to require payment bond could be set up as a defense in an action on that bond, as against contention that secretary's action was not subject to judicial review. Id. Even if the building of a library at Howard University, a private corporation, involved the extension of a project previously carried on with public aid to serve the interests of the general public, Congress by including it within a "public works" program under the National Industrial Recovery Act did not mean to change the well established definition of public buildings and works as those terms have been invariably understood in statutes requiring security for the performance of contracts made with the United States. Id. A contract, entered into by the United States for the construction of a railroad roadbed and tunnel in connection with relocation of railroad tracks and roadbed which was made necessary by Federal project for food control and improvement of navigation on rivers undertaken pursuant to agreement with a political subdivision of State of Ohio, was a contract for prosecution of That sufficient funds for the construction "public work" within the Heard Act, as of a library building at Howard University, amended, even though the work benefited a private corporation, were allocated under a privately owned railroad, and hence bond executed by contractor who received contract for construction of the roadbed and tunnel was valid. Id. The Heard Act, requiring any person contracting with the United States for prosecution and completion of any public work to execute a bond, must be liberally construed. Id. The words "public work," as used in Heard Act requiring any person contracting with the United States for prosecution and completion of any public work to execute a bond, include work done on property belonging to the United States and all fixed works constructed for public use at the expense of the U. S. Id. section of the National Industrial Recovery requiring performance and payment bonds II. Right of action. The Miller Act of 1935, requiring contractors for public work of the United States to furnish a payment bond for the protection of persons supplying labor or materials, provides that a supplier having contractual relationship not with the contractor furnishing such bond but with a subcontractor, "shall have a right of action upon the said payment bond upon giving written notice to said contractor. Where the Secretary of the Interior improperly required general contractor engaged to construct a library building at Howard University to furnish performance and payment bonds under the Miller Act, a subcontractor's materialman which had not been Act further provides that "such notice shall paid could not maintain an action on the be served by mailing the same by registered "3 The mail..." Held that a suit under the Act was maintainable although the notice was sent by ordinary mail and not by registered mail, where it was otherwise sufficient and actually reached one of two joint and several contractors. With respect to the manner of giving the prescribed notice, the act should be liberally construed in aid of its remedial purpose. The Miller Act of August 24, 1935, 40 U. S. C. 270b. Fleisher Co. บ. U. S. (1940), 311 U. S. 15; affirming (C. C. A. 2, 1939), 107 F. (2d) 925. vances created by subcontractor so that he may be protected on final settlement. Id. A contractor for public work can waive 90-day notice required prior to action on contractor's bond, especially if he has all information which notice would otherwise give him or deals directly with those who might otherwise be expected to give notice, and if he impliedly assumes subcontractor's contract, directs work, and promises payment to those doing work if they will continue, his liability becomes fixed and surety's liability is co-extensive with his. 40 U. S. C. 270b. Id. in The Statute requiring bonds of contractors for public work is liberally construed interest of materialmen and laborers, and its purpose is to provide security for payment of all such persons. 40 U. S. C. 270a. Id. The Statute requiring persons perform ing work under a contract with the United States to give bonds and providing for suit on payment bond is intended to provide security for the payment of all persons who supply labor or materials in a public work, and the Statute and the bonds given under it should be construed liberally in order to effectuate the purpose of Congress as de- In action by the United States upon bond clared in the Statute. 40 U. S. C. 270a to given by general contractor under con270d. United States for Use and Benefit, struction contract with the United States, of J. H. Welch Co., Inc. v. Fleisher Engineer- conditioned on payment of what is due to ing & Construction Co. et al. (D. C., W. workmen or materialmen, denial that anyD. N. Y., 1939), 30 F. Supp. 961. thing was due made the action one for work done and goods sold and delivered. 40 U. S. C. 270a et seq. U. S. v. Edward Fay & Son (D. C., E. D. Pa., 1939), 31 F. Supp. 413. The Statute requiring persons performing work under a contract with the United States, to give bonds and providing for suit on payment bond is highly remedial and must be construed liberally. 40 U. S. C. 270a to 270d. Id. The statutory provision that one having direct contractual relationship with subcontractor but no contractural relationship Under Statute requiring notice of a claim express or implied with public contractor against a contractor performing work under furnishing payment bond shall have right a contract with the United States to be of action on payment bond upon giving served by registered mail or as the United written notice to the contractor within 90 States marshal is authorized to serve sum- days from date on which last of labor or mons, a letter directed to contractor sent by supplies was furnished, is without ambiunregistered mail and referring to an en- guity and requires notice as a jurisdictional closed invoice showing amount claimed, ma- prerequisite to an action for use and benefit terials furnished, and persons to whom of a subcontractor against the principal furnished, was sufficient, since the evident contractor and his surety. 40 U. S. C. A. purpose of requiring registration is to insure 270a, 270b-(a). United States for the Use delivery, and it would be presumed that and Benefit of John A. Denie's Sons Co. v. contractor received notice. 40 U. S. C. 270b Bass et al. (C. C. A. 6, 1940), 111 F. (2d) (a). Id. 965. Service of notice of a materialman's claim on either of two joint contractors for the construction of a government structure was sufficient. 40 U. S. C. 270b (a). Id. One furnishing materials to subcontractor on public project had no right of action against contractor and surety on contractor's payment bond, as a matter of common right, A contract between contractors for Gov- because of lack of contractural relationship, ernment dam and canal work and partner- unless right of action existed by virtue of ship which agreed to furnish labor and sup- special statutory authorization. United States, plies, and contractor's bond, were subject for Use of Birmingham Slag Co., v. Perry to Statute giving right of action on bond, et al. (C. C. A. 5, 1940), 115 F. (2d) 724. with one-year limitation, to run from final Under Statute vesting right of action on settlement of contract, and authorizing contractor's payment bond in materialmen Comptroller General to fix date of final who deal only with a subcontractor on a settlement. United States ex rel, and for public project provided contractor is given Use and Benefit of Korosh et al. v. Otis Williams & Co. et al.; United States, for use of Nelson, v. Williams et al. (D. C., D. Idaho, E. D., 1939), 30 F. Supp. 590. The 90-day notice required prior to action on bond of contractor for public work applies to contractor and not to surety, whose liability is coextensive with original contractor, and is intended to advise contractor of any ad written notice by registered mail or in any manner in which the United States marshal is authorized by law to serve summons, actual notice to contractor by ordinary mail was sufficient to entitle one furnishing materials to subcontractor to maintain action on contractor's payment bond. Id. Action on the relation of a materialman on a payment bond. The prime contractor, which was constructing housing for the Government, | the benefit of creditors. It was intended that subcontracted the interior decoration. The the surety would assume certain risks, but not subcontractor received its paint from the the risk that a part or the whole of the conplaintiff. Part of the paint was not used in tract price will be "paid," not in money but the work and was wrongfully rejected by the by a bookkeeping process of crediting these subcontractor, whereupon the materialman sums against other debts of the contractor gave timely notice of nonpayment to the prime not related to the contract, to the prejudice contractor and later brought suit on the of the surety. The bond and the transaction, prime contractor's bond furnished under the as a whole, implied a promise on the part of Miller Act. Judgment for plaintiff. Held: the Government to the surety that it would It is not essential to a recovery by a material- not so settle the accounts of the contractor man on the payment bond required under the as to leave the surety in the position of paying Miller Act that the materials furnished to a the contractor's taxes. Globe Indemnity Co. v. subcontractor by delivery at the site of the United States, 84 Ct. Cls. 587, is distinguished, work be thereafter actually incorporated into as in that case the contractor's claim against the project. The Heard Act (28 Stat. 278), the Government had been forfeited for fraud. as amended in 1905 (33 Stat. 811), which was Maryland Casualty Company v. U. S. (1944), the predecessor of the present act, stated that 100 Ct. Cl. 513. a person could sue on the payment bond if he had furnished "materials used in the construction." However, the Miller Act provides payment bond (substantially in statutory form) of prime contractors. It was alleged that the for action by a person who has "furnished or supplied" materials, and contains no require-U. S. Engineer in charge had ordered plainment that the materials be actually incorpor- tiff not to proceed with work on a portion of ated into the work. United States ex rel. Purity Paint Products Corps. v. Aetna Casualty & Surety Co. (D. C., D. Conn., 1943), 56 F. Supp. 431. A Government contractor purchased certain building materials from X, who in turn had purchased them from Y. X failed to payY. It was not alleged that X agreed to perform or IIb. Damages.-Action by subcontractor on the project but ordered it not to remove its plant and equipment. Plaintiff claimed damages (rental or use value) on account of the time its equipment had to remain idle as an extra and unexpected and unforeseen item not contemplated by the contract. The contractors were not parties; and the rights of the plaintiff against the prime contractors and the Government, over and above any responsibility of the surety company, were not involved. Motion by defendant for summary judgment granted. Held: The nature of the demand is not such as to disclose a right to recover did perform any part of the work on the project, nor is it disputed that the contractor paid X. Y brought suit against the surety on the payment bond of the contractor. The District Court granted a motion to dismiss and that judgment was reversed by the Circuit Court of Appeals. Reversed. Held: X, the materialman, to whom Y sold the goods was not a subcontractor within the meaning of the provision of section 2 (a) of the Miller Act (49 Stat. 793), and accordingly Y stands in too remote a relationship to secure the benefits of the bond. Clifford F. MacEvoy Co. rental paid to owners of the equipment, if it v. U. S. (1944), 322 U. S. 102. Ila. Disposition of funds withheld by Government. (1st, 2d, and 3d paragraphs.)-Change citation to read: Philadelphia Nat. Bank v. McKinlay (App. D. C., 1934), 72 F. (2d) 89; certiorari denied (1934), 293 U. S. 583. against the surety for labor and materials furnished. The obligation under a payment bond does not include liability for damages resulting from breach of contract (Friestedt v. U. S. (C.C.A. 10), 125 F. (2d) 1010). It cannot be decided in this appeal whether plaintiff could recover in an appropriate action for had had to rent such equipment. United III. Materials and services covered.-Where United States employed contractor to install boilers on United States Army transport and contractor was required to repair installation work due to alleged improper operation by United States, claim for repair work was claim which contractor under statute was entitled to assert against United States. Jud. Code, sec. 24 (20), 28 U. S. C. A., sec. 41 (20). U. S. to Use and for Benefit of Foster Wheeler Corp. v. American Surety Co. of New York et al. (D. C., 1938), 25 F. Supp. 700. Claim by the surety for reimbursement of payments made on payment bond furnished by claimant under the provisions of the Miller Act (49 Stat. 793). Before the work was completed the contractor became insolvent and the claimant made payments under the bond to materialmen and laborers. The Comptroller General (who was not advised of the insolvency) set off the balance due the contractor against certain Federal taxes due from One who on oral request of subcontractor the contractor and applied the sum in liquid- furnished extra labor and material in prosation of the taxes. No tax lien was shown.ecution of public work under Federal conClaim approved. Held: The set-off may not be tract secured by payment therefor, notwithmade. R. S. 3466 (31 U. S. C. 191) gives a preference to the Government only in cases of bankruptcy, receivership, or assignment for standing provision in contractor's contract with United States that no charge for extra work or material would be allowed unless |