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under the bond. He sues on causes of action to recover overcharges arising under the Arkansas statutes. His right to sue, suspended by the injunctions improvidently granted, revived as soon as the permanent injunction was dissolved by the decree dismissing the bill. Although the injunctions enjoined all shippers and travellers, and therefore him, from instituting suits on account of alleged overcharges, Gallup did not in fact become a party to the suit in the District Court; and he could not, after the mandate directed dismissal of the bill, be compelled to submit to that court the adjudication of his claim.
The contention of the Railway Company that the “supplemental bill” should be sustained to prevent multiplicity of suits is also unfounded. Unless it is maintainable as an ancillary bill, the federal court was without jurisdiction as there was no diversity of citizenship. But it was not ancillary to any relief properly within the scope of the decree dismissing the original bill. As an independent bill it is also without equity. The only common issue between the Railway Company and the several shippers and travellers, (namely, whether the rates promulgated by the Railroad Commission were confiscatory), had been settled by the decision of this court. In no other respect have shippers and travellers a common interest. The claims of each present a separate controversy unconnected with that of any of the others. This is obviously true as to all issues of fact which will arise in considering their several claims. And the bill contains no allegation or even suggestion that a controverted question of law, common to all the claims, is involved, which will determine their right to recover or even that there is involved a question of law not fundamental in which they have a
have any effect, and complainant is not liable for any damage that may have accrued to any passenger or shipper on its line of railroad after the rendition of the final decree perpetuating and making the temporary injunction permanent."
common interest. It might be a convenience to the Railway Company to have these numerous claims of shippers determined by the master in the District Court; but such a course would certainly involve great inconvenience to many of the shippers. The bill cannot be maintained as one to prevent multiplicity of suits.
ILLINOIS SURETY COMPANY v. THE JOHN DAVIS
COMPANY ET AL.
ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE
No. 235. Argued April 27, 1917.-Decided June 4, 1917.
The purpose of the Act of February 24, 1905, 33 Stat. 811, is to pro
vide security for the claims of all persons who furnish labor or material on public works of the United States; the act, and bonds given under it, are to be construed liberally to effectuate this purpose; and the release of sureties through mere technicalities is not to be en
couraged. S, while conducting his business under supervision of a creditors'
committee, entered into a contract with the United States for the doing of certain work, and gave bond with surety to secure claims for labor and materials under the Act of February 24, 1905, supra. After part performance of the contract, he and the creditors formed a corporation to take over his affairs, which, without the consent of the United States or the surety, received a transfer of all his business and assets, and thereafter under the management of S, as president, and the control of the creditors through the board of directors, continued for a time to perform the contract. Held: (1) That in view of 8 3737, Rev. Stats., the transfer could not effect an assignment of
the contract but amounted at most to a subletting. (2) That as the responsibility of the contractor under the contract
and the actual management of the business were not changed, nor
the surety prejudiced, the transfer did not operate to discharge the
surety from past or future liability. (3) That labor and materials furnished in the prosecution of the work
under the contract, after the transfer of the contractor's business to the corporation, were to be regarded as furnished to him, within the meaning of the Act of February 24, 1905, supra, as well as to the corporation, and that the latter, besides, might be deemed the successor of the contractor within the condition of the bond, binding
him "his heirs, successors,” etc. Questions of liability to pay interest under a bond given to secure pay
ment for labor and materials, furnished under a construction contract with the United States, are determinable by the law of the
State in which the contract and bond were made and to be performed. Under the law of Illinois the liability of a surety on a bond is extended
beyond the penalty by way of interest from the date when the liabil
ity on the bond accrued. Where claims are all liquidated and amounts are not disputed, but
only liability under the bond, the surety, which has not elected to pay into court, is properly chargeable with interest from commencement of suit upon the aggregate of the claims allowed as reduced to
the penal amount of the bond. Acts of creditors upon which the surety neither acted nor relied, which
did not affect it and which are not inconsistent with a resort to the security of the bond, afford no basis for an equitable estoppel in favor
of the surety. The renting of a plant of cars, track and equipment actually used in
the construction of public work for the United States is a furnishing of “materials ”within the meaning of the Act of February 24, 1905; and the rent reserved, together with the loading and freight expenses incident to bringing the plant to and from the place of use, are lia
bilities covered by the contractor's bond. 226 Fed. Rep. 653, affirmed.
The case is stated in the opinion.
Mr. Albert J. Hopkins for plaintiff in error.
Mr. William D. McKenzie and Mr. Worth Allen, with whom Mr. Newton Wyeth, Mr. Robert J. Cary, Mr. F. Harold Schmitt and Mr. Charles S. Holt were on the briefs, for defendants in error.
MR. JUSTICE BRANDEIS delivered the opinion of the court.
This is an action against the Illinois Surety Company on a bond given by one Schott under Act of Congress, February, 24 1905, 33 Stat. 811, to secure performance of his contract for work on the Naval Training Station at Chicago. It is brought for the benefit of persons who furnished labor or materials. The bond provides:
“The condition of the above bond is such, that if the said above bounden principal, W. H. Schott, his or their heirs, successors, executors, or administrators shall promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in the aforesaid contract, then this obligation to be void and of no effect; otherwise to remain in full force and virtue."
The bond was given on August 3, 1908. Schott was then heavily indebted; and his business was being conducted under the supervision of a creditors' committee. Later, on the advice of that committee, the Schott Engineering Company was incorporated to take over the business; and on January 2, 1909, all the assets were transferred to it. Schott became president, the members
The act, which is entitled “An Act for the protection of persons furnishing materials and labor for the construction of public works " provides that a contractor's bond shall include the obligation to: "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 construction 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 priority of the claim and judgment of the United States."
of the creditors' committee directors. Substantially all the capital stock was issued to Schott, and all was retained by him except $36,000 preferred stock which was later sold—the proceeds being used to pay debts. Neither the Government nor the Surety Company was advised of the transfer, which left the management and the conduct of the business unchanged; and the work was proceeded with continuously from the execution of the bond until January 14, 1910, when both Schott and the Company were adjudicated bankrupt. After a short interruption, the work was resumed by the Receiver under authority of the court; and settlement was made with the Government. Twenty-seven creditors, six of whom furnished labor or materials prior to January 2, 1909, the rest of whom had claims arising between that date and the bankruptcy, sought to recover on the bond.
The District Court allowed recovery on five of the claims aggregating $15,333.24, which accrued prior to the transfer of the business to the Schott Engineering Company. The Circuit Court of Appeals reversed that judgment and allowed the claims of all who joined in the writ of error to that court-nineteen aggregating $38,121.02; but it reduced them pro rata to make the aggregate equal the penalty of the bond—$31,047.18. It then allowed interest on all from the date of the commencement of the suit. 226 Fed. Rep. 653. The Surety Company appealed to this court and contends:
(1) As to each claim that it was released from liability by the transfer of the business to the Schott Engineering Company during the progress of the work.
(2) As to each claim that interest should not begin to run before the date when the amount payable on all claims was ascertained by the judgment of the Circuit Court of Appeals.
(3) As to certain claims, that the creditors are estopped by specific acts from enforcing the liability upon the bond.