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the total amount payable by the terms of the contract. Whenever the total amount payable by the terms of the contract shall be more than $5,000,000 the said payment bond shall be in the sum 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 bond for so much of the work under such contract as is 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 performance bond or other security in addition to those, or in cases other than the cases specified in subsection (a) of this section. Sec. 1, act of Aug. 24, 1935 (49 Stat. 793); 40 U. S. C. 270a.
(a) Every person who has furnished labor or material in the prosecution of the work provided for in such contract, in respect of which a payment bond is furnished under this Act 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 balance thereof, unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment for the sum or sums justly due him: Provided, however, That any person having direct contractual relationship with a subcontractor but no contractual relationship express or implied with the contractor furnishing said payment bond shall have a right of action upon the said payment 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, stating 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 mailing the same by registered mail, postage prepaid, in an envelop addressed to the contractor at any place he maintains an office or conducts 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) Every 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 District Court for any district in which the contract was to be performed and executed and not elsewhere, irrespective of the amount in controversy in such suit, but no such suit shall be commenced after the expiration of one year after the date of final settlement of such contract. The United States shall not be liable for the payment of any costs or expenses of any such suit. Sec. 2, act of Aug. 24. 1935 (49 Stat. 794); 40 U. S. C. 2706.
The Comptroller General is authorized and directed to furnish, to any person making application therefor who submits an affidavit that he has supplied labor or materials 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, execution, and delivery of the original, and, in case final settlement of such contract has been made, a certified statement of the date of such settlement, which shall be conclusive as to such date upon the parties. Applicants shall pay for such certified copies and certified statements such fees as the Comptroller General fixes to cover the cost of preparation thereof. Sec. 3, act of Aug. 24, 1935 (49 Stat. 794) ; 40 U. S. C. 270c.
The term "person" and the masculine pronoun as used throughout this Act shall include all persons whether individuals, associations, copartnerships, or corporations. Sec. 4, act of Aug. 24, 1935 (49 Stat. 794); 40 U. 8. C. 270d.
This act shall take effect upon the expiration of sixty days after the date of its enactment, but shall not apply to any contract awarded pursuant to any invitation for bids issued on or before the date it takes effect, or to any persons or bonds in respect of any such contract. The Act entitled "An Act for the protection of persons furnishing materials and labor for the construction of public works," approved August 13, 1894, as amended (U. S. C., title 40, sec. 270), is repealed, except that such Act shall remain in force with respect to contracts for which invitations for bids have been issued on or before the date this Act takes effect, and to persons or bonds in respect of such contracts. Sec. 5, act of Aug. 24, 1935 (49 Stat. 794); 40 U. S. C. 270a-270d.
The 1929 text of this section was specifically repealed by section 6, supra. The subject matter is covered by the above provisions.
A similar statute applicable to contracts with the District of Columbia for public buildings or other public works was enacted July 7, 1932 (47 Stat. 608).
Notes of Decisions
Beneficiaries of statute.-Those furnishing for payment of labor and material claims, labor and materials to subcontractors for these are not protected even though there Government work are protected by bond given be statute requiring their protection. Id. by contractors securing payments of persons Persons furnishing materials for construcsupplying labor and materials in prosecution of Government buildings are protected tion of work. Trimount Dredging Co., et al., by contractor's statutory bond, though matev. U. S. Fidelity & Guaranty Co. (Md., 1934), rials were supplied to subcontractor and bond 171 A. 700. expressly covers only materials furnished contractor (Heard Act, 40 U. S. C. A., sec. 270). U. S. v. James Baird Co. (App. D. C., 1934), 73 F. (2d) 652.
Statute giving person supplying labor or materials action on Government contractor's bond should be liberally construed to protect such person. Equitable Casualty & Surety Co. et al. v. Helena Wholesale Grocery Co. (C. C. A., 1932), 60 F. (2d) 380.
A bond given to the United States, pursuant to U. S. C. 40: 270, for the faithful performance of a construction contract and for the making of prompt payment to all persons supplying the principal with labor and materials in the prosecution of the work, inures to the laborers and materialmen as obligees, together with the United States, though the claims of the Government have priority. American Surety Co. v. Westinghouse Electric Manufacturing Co. (1935), 296 U. S. 133 (affirming (C. C. A., 1935), 75 F. (2d) 377).
Government contractor suing for use of laborers and materialmen whom subcontractor did not pay, could not recover against surety on subcontractor's bond, where contractor, though it inserted in its contract and bond to Government required clause for payment of labor and materials, did not repeat clause in subcontract and subcontractor's bond. Trimount Dredging Co. et al. v. U. S. Fidelity & Guaranty Co. (Md., 1934), 171 A. 700.
Undertaking of surety on subcontractor's bond is confined to terms of its contract, and is not amplified by equitable rights against its principal extraneous to such contract. Id.
Where contract with government for construction of post office building required payment of prevailing wage scale and contractors agreed to pay such wage regardless of contractual relationship between contractor and laborer, subcontractor who agreed to do electrical work for fixed price held entitled to recover prevailing wage for work which he performed himself (Heard Act, 40 U. S. C. A., sec. 270). U. S. ex rel. Southern G-F Co. v. Landis & Young (D. C., 1935), 16 F. Supp. 832.
Contracts within the statute.-Contract for clearing, dredging, and construction in connection with Marine Corps flying field, held within statute providing contractors for public work should execute bond that contractors should pay persons supplying labor and materials. Trimount Dredging Co. et al. v. U. S. Fidelity & Guaranty Co. (Md., 1934), 171 A. 700.
Test of "public work" within statute requiring contractor for public work of United States to furnish bond for payment of materialmen is whether the work during its progress belonged to a representative of the public, though it need not be attached to the soil (Heard Act, 40 U. S. C. A. 270). U. S. v. Metropolitan Body Co. (C. C. A., 1935), 79 F. (2d) 177.
Under statute requiring person contracting with United States for construction of "pub
Where neither contract nor bond provides lic buildings" or completion of "public
able materials, in light of general and normal use of trucks, since question was determinable in light of work actually done by particular trucks in question, which evidence showed to be of extraordinarily wearing character (40 U. S. C. A. sec. 270). Id.
works," to execute bond conditioned that con- | considered replacements rather than consumtractor should make prompt payment to all persons supplying him with labor and materials, "public buildings" and "public works" mean buildings or works of United States, precluding liability on bond where United States did not own building (Heard Act, U. S. C. 40:270). Maiatico Const. Co. v. U. S. (App. D. C., 1985), 79 F. (2d) 418; certiorari denied (1935), 296 U. S. 649.
Whether or not a work is "public" within the meaning of the phrase "For the construction, alteration, or repair of any public work of the United States" as used in this section, does not depend on its being attached to the soil. If it belongs to the representative of the public, it is public. Therefore, contracts exceeding $2,000 in amount for alteration or repair of vessels, boats, and aircraft belonging to the United States or for the construction of such craft where it is provided that title shall pass to the United States during the progress of the work as partial pay ments are made, are within the statute. (1936) 38 Op. Atty. Gen. 418.
This section is applicable to contracts in excess of $2,000 for remaking Government owned mattresses and for manufacture of uniforms from Government-owned cloth. (1936) 38 Op. Atty. Gen. 424.
Materials covered.-Provisions Government contractor and subcontractor for feeding laborers, where location of work ren. dered furnishing of board necessary, held "materials in prosecution of work provided for in contract within" statute giving materialmen action on bonds. Equitable Casualty & Surety Co. et al. v. Helena Wholesale Grocery Co. (C. C. A., 1932), 60 F. (2d) 380.
Right of recovery on Government contractor's bond by one furnishing subcontractor with lumber for concrete forms, which lumber was at least partially exhausted and not returned, held question for jury under evidence (40 U. S. C. A. sec. 270). U. S. v. Tompkins Co. (App. D. C., 1934), 72 F. (2d) 383.
Gasoline and heavy oil, supplied to State highway contractor for operation of trucks, rollers, etc., and rayolight oil, used to furnish light in danger signals, held "materials furnished in the prosecution of the work" within statute and contractor's bond (36 PS sec. 142). Commonwealth v. Ciccone (Penna., 1934), 173 A. 642.
Words "labor and materials in the prose cution of the work," used to define coverage of Government contractor's bond, should be given liberal construction (40 U. S. C. A. sec. 270). Mass. Bonding & Ins. Co. v. U. S. (C. C. A., 1937), 88 F. (2d) 388.
Government levee contractor's bond held to cover claim for parts for trucks used by contractor, including rebuilt and new motors and almost every part of truck, as against contention that parts furnished were to be
Government levee contractor's bond held to cover claim for truck rental, notwithstanding trucks rented were same ones previously sold to contractor by claimant and taken back by claimant for balance of purchase price when contractor defaulted and seemed about to fail, but only covered claim to extent that it represented really fair and actual rental, and did not cover entire amount of rental agreed upon, which equaled balance of purchase price (40 U. S. C. A. sec. 270). Id.
"Final settlement" within statute.-Where the administrative officer having the work in charge (in this case the Secretary of the Interior) has found that the contract has been performed and has stated the amount due the contractor, and approved his claim therefor, this is "final settlement" within the meaning of the statute, although the officer, instead of ordering payment, refer the claim "for direct settlement," to the General Accounting Office. Globe Indemnity Co. v. U. S. (1934), 291 U. S. 476, reversing (C. C. A. 1933) 66 F. (2d) 302. Words "final settlement," within statute authorizing materialmen to sue on Government contractor's bond after complete performance of contract and "final settlement" thereof, mean final determination by proper governmental authority of amount which Government is finally bound to pay or entitled to receive under the contract (40 U. S. C. A. sec. 270). U. S. v. Hampton Roads Shipbuilding Corp. (C. C. A. 1934), 72 F. (2d) 943.
Where new contractor, to which contract for lighthouse tender was let on original contractor's default, had not yet completed and delivered the vessel, materialmen's action on bond of original contractor held premature, since there was no "complete performance and final settlement" of original contract though Government had terminated original contract and completion contract was let for less than unpaid balance on original contract. (40 U. S. C. A. sec. 270).
Action was premature, since nothing had been done to indicate that Government would not look to surety of original contractor for reimbursement for any loss it might suffer, and since, if there should be default on part of new contractor and Government should have additional expense in securing completion of vessel, Government would have the right to look to bond of original contractor to indemnify it and had done nothing to preclude it from asserting such right. Id.
Where administrative department in for
warding claim makes every determination | such claims have been settled in full; such prerequisite to payment, there is a "final an equity does not arise from the doctrine settlement" within statute governing subcontractors' suits on contractor's bond under Government contract, notwithstanding Comptroller General may not approve administrative determination in his auditing of accounts (Heard Act, as amended, 40 U. S. C. A. sec. 270; Budget and Accounting Act 1921, sec. 304, 31 U. S. C. A. sec. 44). Christman Co. v. Michigan Gypsum Co. (C. C. A. 1936), 85 F. (2d) 474.
Letter written in behalf of Chief of Engineers to Government General Accounting Office, transmitting voucher for direct settlement in favor of contractor covering final payment, and inclosing itemized statement of work done, held "final settlement" within statute limiting time for suit on Government contractor's bond (Heard Act, 40 U. S. C. 270). Corell v. U. S. (C. C. A., 1935), 77 F. (2d) 161.
Multiple suits.-Under statute authorizing single suit by creditor in name of United States on bond of contractor for public works, court is without jurisdiction of second suit, which is treated as a nullity (Heard Act, as amended, 40 U. S. C. A. 270). U. S. v. Century Indemnity Co. (D. C., 1935), 9 F. Supp. 809.
Disposition of funds withheld by Government.-Labor and material claimants were subrogated to lien of surety on general contractor's bond against balance of contract price retained by Government, and had exclusive right thereto, where contractor became bankrupt, and surety, which completed project, was insolvent, and amount of claims exceeded amount of retained funds. Philadelphia Nat. Bank v. McKinlay (App. D. C., 1934), 72 F. (2d) 89.
of subrogation, nor from an express contract of the principal, made before he became insolvent, to indemnify the surety out of those particular funds-in this case the "retained percentage" due the principal under a construction contract. American Surety Co. v. Westinghouse Electric Manufacturing Co. (1935), 296 U. S. 133 (affirming (C. C. A.. 1935), 75 F. (2d) 377).
Moneys due by the Government as deferred payments under a building contract were paid over by the Government to the contractor, although the contractor had failed to perform the obligation imposed on him by the Materialmen's Act, 40 U. S. C. 270, and by his bond, to pay persons who supplied labor and materials in the progress of the work. The contractor, in obtaining his bond, had promised the surety in writing that he would not assign any such payments to any third person and had, on the contrary, undertaken to assign them to the surety to the end that, in the event of any breach or default in the Government contract, such money might be credited upon any loss or damage sustained by the surety under the bond. Held that an equitable lien arose from the assignment in favor of the surety to have the moneys received by the contractor from the Government applied to the satisfaction of the claims of laborers and materialmen, and that this equity was superior to the claim of one who, with notice, had lent money to the contractor and under power of attorney from the contractor, had collected the deferred payments from the Government and applied them to his loan. Martin v. National Surety Co. (1937), 300 U. S. 588.
Jurisdiction of courts.-Federal court of district where work was done had jurisdiction in suit on Government contractor's
district, and State court, which had decreed surety's dissolution and appointed receivers had not authorized suit against receivers (40 U. S. C. A. sec. 270). U. S. v. Union Indemnity Co. (D. C., 1934), 6 F. Supp. 360.
Person furnishing labor and material for Government project has equitable lien on contract price until fund is paid to general Government contractor, irrespective of statu-bond, though surety was domiciled in another tory bond (40 U. S. C. A. sec. 270). Id. Claimants furnishing labor and materials to original Government contractor who became bankrupt, and whose surety completed work under a new Government contract, held entitled to maintain suit in District of Columbia Supreme Court for distribution of portion of contract price retained by Government, where surety also became insolvent (40 U. S. C. A. 270). Id.
Where a bond securing payment of the claims of materialmen was required by statute, and its full amount has been paid by the surety and applied in part satisfaction of such claims, the surety, against such claimants, has no equity to reimbursement from funds of its insolvent principal until
Surety taking over work.A bondsman, in taking over a Government contractor's work as assignee of the contract, stands in the position of the assignor and as against the Government can assert no greater rights than that of the assignor.
A surety on a contract with the United States is in contractual relations with the United States from the time of the execution of the bond. Southern Surety Co. v. U. S. (1932), 75 Ct. Cl. 47.
543. For text of this section as published in the 1929 Edition, see 581, 582, post.
544. Bonds; officers of the Quartermaster and Finance Departments.-All officers of the Quartermaster's, Subsistence, and Pay Departments, the chief
medical purveyor, and assistant medical purveyors, and all storekeepers shall, before entering upon the duties of their respective offices, give good and sufficient bonds to the United States, in such sums as the Secretary of War may direct, faithfully to account for all public moneys and property which they may receive. The President may, at any time, increase the sums so prescribed. But the Quartermaster General shall not be liable for any money or property that may come into the hands of the subordinate officers of his department. R. S. 1191; sec. 1, act of Feb. 27, 1877 (19 Stat. 243); 10 U. S. C. 1312.
* Provided further, That hereafter the provision of section eleven hundred and ninety-one of the Revised Statutes of the United States may, in discretion of the Secretary of War, be waived in the cases of officers of the Quartermaster Corps who are not accountable for public funds or public property. Sec. 1, act of Aug. 29, 1916 (39 Stat. 626); 10 U. S. C. 1313.
* The President is authorized, if in his opinion the interest of the United States requires the same, to regulate and increase the sums for which bonds are, or may be, required by law, of all district attorneys, collectors of customs, naval officers, and surveyors of customs, Navy agents, receivers and registers of public lands, paymasters in the Army, Commissary-General, and by all other officers employed in the disbursement of the public moneys, under the direction of the War or Navy Departments. R. S. 3639; 31 U. S. C. 521.
The War Department recommends express repeal of so much of the first paragraph of this section, based on R. S. 1191 as amended; 10 U. S. C. 1312, as relates to medical purveyors and storekeepers, which has been eliminated from the United States Code.
By act of Sept. 21, 1922 (42 Stat. 974), naval officers of customs were designated "comptrollers of customs." By act of Mar. 3, 1925 (43 Stat. 1145), the offices of "register" and "receiver" of public lands were consolidated. By act of Aug. 24, 1912 (37 Stat. 591), the office of the commissary general was consolidated with that of the Quartermaster General. By act of Apr. 27, 1914 (38 Stat. 356), the Chief of the Quartermaster Corps was designated "Quartermaster General of the Army." The Finance Department was created by enactment embodied in 68, ante. 545. Bonds; deputies of disbursing officers.——* Provided, That every deputy so designated for a disbursing officer who is bonded shall, if not already under bond, give bond as required by the head of the department concerned. Act of July 3, 1926 (44 Stat. 888); 31 U. S. C. 103a.
546. Bonds; special disbursing agents.-Whenever it becomes necessary for the head of any department or office to employ special agents, other than officers of the Army or Navy, who may be charged with the disbursement of public moneys, such agents shall before entering upon duty give bond in such form and with such security as the head of the department or office employing them may approve. R. S. 3614; 31 U. S. C. 481.
547. For text of this section as published in the 1929 Edition, see 1315, post. 548. Bonds; officers of the National Guard.-* * Provided further, That officers of the organized militia who may hereafter be furnished, under proper authority, with funds for the purchase of coffee, or other components of the travel ration for the use of their respective commands, shall not be required to furnish bonds for the safe-keeping and disbursement of the same. Act of May 11, 1908 (35 Stat. 117); 32 U. S. C. 48.
549. For text of this section as published in the 1929 Edition, see 2030, post. 550. Bonds; District of Columbia Schools.* Provided, That a bond shall not be required on account of military supplies or equipment issued by the War Department for military instruction and practice by the students of high schools in the District of Columbia. Sec. 1, act of Feb. 25, 1929 (45 Stat. 1278), making appropriations for the District of Columbia.
A similar provision has appeared in prior and subsequent appropriation acts.