Document: 332 U.S. 234 67 S.Ct. 1599 91 L.Ed. 2022 UNITED STATESv.MUNSEY TRUST CO. OF WASHINGTON, D.C. No. 847. Argued May 6, 1947. Decided June 23, [Syllabus from pages 234-236 intentionally omitted] Mr. Philip Elman, of Washington, D.C., for petitioner. Messrs. W. B. Dew, Hartford, Conn., and Alexander M. Heron, respondent. Justice JACKSON delivered the opinion Court. 1 This case presents a problem arising out contracts public building construction repair. The rights inter sese contractor, surety, assignees government have been productive much litigation, but we not heretofore had to decide whether percentages retained pursuant contract by United States may be subjected its set-off claims despite surety who has paid laborers materialmen. 2 In July, 1940, six were made between Federal Contracting Corporation, in which corporate contractor agreed paint repair certain federal buildings. Each conformed requirements statute, 49 Stat. 793, 40 U.S.C. § 270a et seq., U.S.C.A. providing two bonds, one conditioned on completion work within period, other payment those furnishing labor material contractor. Aetna Casualty Surety Company signed each assigned it contractor's against sums due whenever should compelled default fulfill obligations.1 was completed apparently accepted government. therefore called upon make good promise performance bonds. But did pay $13,065.93 owed persons supplied five contracts. indebtedness April September, 1941 as bonds obliged do. 3 Under customary terms contracts, progress payments money, acceptance work, amounted $12,445.03, disbursed. On October 18, Corporation submitted bid another painting job, St. Louis. That accepted, then failed enter into work. Another painted price left considerably more out-of-pocket than would undertaken at price. It is undisputed that $6,731.50 amount damages sustained after applied deposit $415.00 reduction. 4 Almost inevitably, court process begun untangle money still A stockholder asked District Court Columbia appoint receiver2 collect money. party action. Respondent here, Munsey Trust Company, appointed receiver with directions demand authority receive proceeds order appointment also recited 'the all collections Receiver this shall held reimbursement defendant expenditures furnishers under several Corporation.' 5 amounts due, General Accounting Office deducted government's claim over $5,713.53. Aetna, letter Comptroller General, protested settlement asserted right an additional $3,568.23.3 demanded $3,143.23 surety. relied Maryland Co. v. States, 100 Ct.Cl. 513; Id., Ct.Cl., 53 F.Supp. 436. Acting declined follow Claims, absence ruling Court, rejected protests. When reported efforts district court, ordered turn collected, less $500. sum prosecution suit Claims recovery whatever moneys 'may action begun, gave judgment $3,568.23 976. We granted petition certiorari because importance novelty question cumulative effect supra, decision below. 330 .S. 814, 6 7 863. these cases, usual largely derivative or subrogated ones. Decision will attended unnecessary confusion difficulty if clear whose are being them. treated though plaintiff. directed bring suit. Its representative although Aetna. second authorized might voluntarily pay. Certainly, sued least Federal, since benefit assert surety's also. Samuel Olson & Voorhees, Cir., 292 F. 113, 115. If opposed only present no difficulty. same 'which belongs every creditor, apply unappropriated his debtor, hands, extinguishment debts him.' Gratiot 15 Pet. 336, 370, 10 759; McKnight 98 179, 186, 25 More that, statute gives jurisdiction hear determine 'All set-offs, counterclaims, damages, liquidated unliquidated, demands whatsoever part Government any claimant said * *.' Judicial Code 145, 28 250 (2), 250(2). power given strike balance credits government, logical implication do same, subject review court. Insofar suitor title dispute, statutory duty recognize States. Cherry Cotton Mills, Inc., 327 536, 66 729, 90 835. 8 urges materialmen whom From Prairie State Nat. Bank Chicago 164 227, 17 142, 41 412, American Sampsell, 269, 571, 663, recognized peculiarly equitable responsible physical available ahead others come advance owner mere stakeholder own assert. tells us here position general holds does creditor 9 At time receiver, Louis extant some time. disbursing officers, therefore, concede they entire distribution others. And appropriation necessary create fund creditors creditor. He lessen chance recovering what him setting up undiminished claim, so share him. fact, he best secure credit ors; security justified refusal owes until infirmity respondent's goes deeper. obligated unpaid discharged obligation could subrogation. nothing enforceable their compensation. Cf. H. Herfurth, Jr., 89 122; see Schmoll 63 753, 105 415, 455; 436, 440. They cannot acquire lien buildings, Use Hill, Co., 200 197, 203, 26 168, 170, 50 437; Equitable McMillan Son, 448, 455, 34 803, 805, 58 1394, substitute protection, various statutes passed require guarantee payment. Of these, last now force Miller Act drawn. 11 says, nevertheless, lien, something nature percentages. argument runs difficulties. For asserts assurance perform paying completing long remain unpaid, refusing disburse percentages.4 case, how legally keep? Surely intended aware paid, interpretation can there restrictions retained. released restrictions. relying materialmen, however, must establish existed before paid. elementary subrogation have. Once either fund. entitled look unavailable very reason relies when nonexistent 'rights.' One rests stands place giving rise made. See Life Insurance Town Middleport, 124 534, 548, 625, 629, 31 537. jump back forth himself once again, conditions changed 12 need percentages, both Even do, certainly hypothesis done earn 13 yet prevail substitution contention too devolved payments. told assure obligations indemnify itself performing obligations. analogy rule obligee, satisfaction secures. Pomeroy, Equity Jurisprudence, 5th Ed., 1075. assumed, purposes argument, reasons retaining seems likely motive. California Fidelity Guaranty 129 F.2d 751; page 439. hardly reasonable withhold perhaps earned. event, prepared law relating exist claim. 14 Finally, reference suggests argues among earned job. However, set-off. Respondent's comes this: requiring furnish assurances deliberately decreased ordinary safeguards enforce it. words lead conclusion. contrary, provisions separate bond enacted benefit, detriment required take risk. warrant increase risks completed, chose complete it, liable complete, Moreover, addition situation similar. job incomplete, expend funds get done, excess pays defaulted. Therefore, rarely undertake incurred risk lose allowed proceed. suffers damage. suffer damage legal laborers' bond, promised pertinent bond. 16 hold properly used set off independent below reversed. Reversed. 18 BURTON dissents. 19 DOUGLAS took consideration ecision case. These assignments course invalid R.S. 3477, 203; Martin National 300 588, 57 531, 81 822, enable contest Such proceedings purpose taking possession property prevent loss dissipation. Insolvency allegation, Houston Ormes, 252 469, 369, 64 667, insolvent. whole exceeded, and, four, than, particular contract. compel accepted. falls, obviously, paying,

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