Source: https://www.legalcrystal.com/case/90330/united-states-fidelity-vs-kenyon
Timestamp: 2019-04-25 14:49:57+00:00

Document:
Under the Act of August 13, 1894, 28 Stat. 278, as construed in the light of the act passed the same day, 28 Stat. 282, and of the act amending the latter passed January 24, 1905, 33 Stat. 811, in suits brought in the name of the United States for the benefit of materialmen and laborers on bonds given in pursuance of the act, the United States is a real litigant, and not a mere nominal party, and the Circuit Court of the United States has jurisdiction of such suits without regard to the value of the matter in dispute.
a formal contract with the United States for the construction of any public building, or the prosecution and completion of any public work, or for repairs upon any public building or public work, shall be required, before commencing such work, to execute the usual penal bond, with good and sufficient sureties, with the additional obligations that such contractor or contractors shall promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in such contract, and any person or persons making application therefor, and furnishing affidavit to the department under the direction of which said work is being, or has been, prosecuted, that labor or materials for the prosecution of such work has been supplied by him or them, and payment for which has not been made, shall be furnished with a certified copy of said contract and bond, upon which said person or persons supplying such labor and materials shall have a right of action, and shall be authorized to bring suit in the name of the United States for his or their use and benefit against said contractor and sureties, and to prosecute the same to final judgment and execution: Provided, That such action and its prosecutions shall involve the United States in no expense. Sec. 2. Provided, that in such case the court in which such action is brought is authorized to require proper security for costs in case judgment is for the defendant.
28 Stat. 278, c. 280.
"may be sued in respect thereof in any court of the United States which has now or hereafter may have jurisdiction of actions or suits upon such recognizance, stipulation, bond, or undertaking, in the district in which such recognizance, stipulation, bond, or undertaking was made or guaranteed, or in the district in which the principal office of such company is located."
28 Stat. 279, § 5, c. 282.
Proceeding under the above acts the United States, in 1899, made a written contract with one Churchyard to furnish labor, materials, tools, and appliances for the construction of a public building, taking from him the required bond with the United States Fidelity & Guaranty Company, a corporation, as surety.
The present action, brought in the circuit court on that bond, was by the United States, "suing herein for the benefit and on behalf of James S. Kenyon," who furnished a contractor, for use in the construction of the proposed government building, materials of the value of $66.05 for which the latter neglected and refused to pay. Damages to the amount of $500 were claimed in the declaration.
The defendant, the United States Fidelity & Guaranty Company, pleaded that it did not owe the sum demanded. The plaintiff introduced testimony, but the defendant introduced none, and it appearing upon the face of the declaration that the value of the matter in dispute was less than $2,000, it moved that the action be dismissed for want of jurisdiction in the circuit court. That motion was denied, and judgment for $206.47 was entered against the Fidelity & Guaranty Company for the use and benefit of Kenyon. United States v. Churchyard, 132 F. 82.
This case is here upon a certificate as to the original jurisdiction of the circuit court of the United States of this action.
A circuit court of the United States, as provided in the Judiciary Acts of 1887, 1888, may take original cognizance of any suit at common law or in equity arising under the laws of the United States if the value of the matter in dispute exceeds $2,000, exclusive of interest and costs. 25 Stat. 433, c. 866. But if, within the meaning of that act, the United States is the plaintiff in the action, then jurisdiction exists in a circuit court without regard to such value. United States v. Sayward, 160 U. S. 493 ; United States v. Shaw, 39 F. 433; United States v. Kentucky River Mills, 45 F. 273; United States v. Reid, 90 F. 522.
The contention of the Fidelity Company is that the government in this case is to be deemed a nominal party only, its name being used as plaintiff simply under the authority of the above act of 1894, c. 280. In support of this position, our attention is called to the following, among other cases: Browne v. Strode, 5 Cranch 303 [omitted]; McNutt v. Bland, 2 How. 9, 43 U. S. 14 ; Maryland v. Baldwin, 112 U. S. 490 ; Stewart v. Baltimore & O. R. Co., 168 U. S. 455 .
as plaintiffs were justices of the peace, all citizens of Virginia. The suit was on a bond given by an executor in conformity with a Virginia statute, and was for the recovery of a debt due from the testator in his lifetime to an alien, a British subject. The defendant was a citizen of Virginia. This Court held that the circuit court had jurisdiction, notwithstanding the justices and the defendant were all citizens of the same state. This was, we assume, upon the ground that the justices were nominal parties only, while the beneficial party was an alien, and the defendant a citizen of the state in which the suit was brought.
"for denying the right of prosecuting the same cause of action against the sheriff and his sureties in the bond, by and in the name of the governor, who is a purely naked trustee for any party injured. He is a mere conduit through whom the law affords a remedy to the person injured by the acts or omissions of the sheriff; the governor cannot prevent the institution or prosecution of the suit, nor has he any control over it. The real and only plaintiffs are the plaintiffs in the execution, who have a legal right to make the bond available for their indemnity, which right could not be contested in a suit in a state court of Mississippi, nor in a circuit court of the United States, in any other mode of proceeding than on the sheriff's bond."
"The justices of the peace in the one case and the governor in the other were mere conduits through whom the law afforded a remedy to persons aggrieved, who alone constituted the complaining parties. So, in the present case, the state is a mere nominal party; she could not prevent the institution of the action, nor control the proceedings or the judgment therein. The case must be treated, so far as the jurisdiction of the circuit court of the United States is concerned, as though Markley was alone named as plaintiff, and the action was properly removed to that court."
Stewart v. Balt. & O. R. Co. was an action against a railroad company by an administrator to recover damages for the benefit of a widow whose husband's death was alleged to have been caused by the negligence of the defendant company. In the course of the discussion of the controlling questions in that case, the court observed, in passing, that, "for purposes of jurisdiction in the federal courts, regard is had to the real, rather than to the nominal party," and that, even in an action of tort, "the real party in interest is not the nominal plaintiff, but the party for whose benefit the recovery is sought."
for the construction of public works, that it is not an unreasonable construction of the words in the Judiciary Act of 1887, 1888, "or in which controversy the United States are plaintiffs or petitioners," to hold that the United States is a real, and not a mere nominal, plaintiff in the present action, and therefore that the circuit court had jurisdiction.
and to prosecute the same to final judgment and execution."
It is true that this statute can have no direct application here, because the present action was instituted long prior to its passage and after the trial court had decided the question of the jurisdiction of the circuit court. As the act of 1905 does not refer to cases pending at this passage, the question of jurisdiction depends upon the law as it was when the jurisdiction of the circuit court was invoked in this action. Nevertheless, that act throws some light on the meaning of the act of 1894, c. 280, for the protection of materialmen and laborers, and tends to sustain the view based on the latter act -- namely that, in suits brought in the name of the government for their benefit, the United States is a real litigant, not a mere nominal party, and that, of such suits, the government being plaintiff therein, and having the legal right, the circuit court may take original cognizance without regard to the value of the matter in dispute. There are cases which take the opposite view, but the better view, we think, is the one expressed herein.

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