Source: https://caselaw.findlaw.com/us-supreme-court/204/349.html
Timestamp: 2019-04-21 01:29:37+00:00

Document:
On the same day-August 13th, 1894-Congress passed an act providing that whenever any recognizance, stipulation, bond, or undertaking conditioned for the faithful performance of any duty, or for doing or refraining from doing anything in such recognizance, stipulation, bond, or undertaking specified, is, by the laws of the United States, required or permitted to be given with one or more sureties, it should be lawful to accept such instrument from a corporation having power to guarantee the fidelity of persons holding positions of public or private trust, and to execute and guarantee bonds and undertakings in judicial proceedings. The act provided that [204 U.S. 349, 351] any surety company doing business under the provisions of that act '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. at L. 279, 5, chap. 282. U. S. Comp. Stat. 1901, p. 2316.
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 Fed. 82.
George S. Cooper, and James E. Smith for plaintiff in error. [204 U.S. 349, 352] Mr. Edward D. Bassett for defendant in error.
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, arrising under the laws of the United States, if the value of the matter in dispute exceeds $2,000, exclusive of interest and costs. [24 Stat. at L. 552, chap. 373] 25 Stat. at L. 433, chap. 866, U. S. Comp. Stat. 1901, p. 508. 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 , 40 L. ed. 508, 16 Sup. Ct. Rep. 371; United States v. Shaw, 3 L.R.A. 232, 39 Fed. 433; United States v. Kentucky River Mills, 45 Fed. 273; United States v. Reid, 90 Fed. 522.
The contention of the Fidelity Company is that the government, in this case, is to be beemed a nominal party only, its name being used as plaintiff simply under the authority of the above act of 1894, chap. 280. In support of this position our attention is called to the following, among other cases: Browne v. Strode, 5 Cranch, 303, 3 L. ed. 108; McNutt v. Bland, 2 How. 9, 14, 11 L. ed. 159, 161; Maryland use of Markley v. Baldwin, 112 U.S. 490 , 28 L. ed. 822, 5 Sup. Ct. Rep. 278; Stewart v. Baltimore & O. R. Co. 168 U.S. 455 , 42 L. ed. 537, 18 Sup. Ct. Rep. 105.
Browne v. Strode was a suit in the circuit court for the district of Virginia in which the persons named in the declara- [204 U.S. 349, 355] tion 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.
This case differs from those just cited, and stands, we think, on exceptional grounds. The United States is not here a merely nominal or formal party. It has the legal right, was a principal party to the contract, and, in view of the words of the statute, may be said to have an interest in the performance of all its provisions. It may be that the interests of the government, as involved in the construction of public works, will be subserved if contractors for such works are able to obtain materials and supplies with certainty and promptly. To that end Congress may have deemed it important to assure those who furnish such materials and supplies that the government would exert its power directly for their protection. It [204 U.S. 349, 357] may well have thought that the government was under some obligation to guard the interests of those whose labor and materials would go into a public building. Hence, the statute required that, in addition to a penal bond in the usual form, one should be taken that would contain the specific, special obligation directly to the United States that the contractor or contractors 'shall promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work.' The government is a real party here because the declaration opens, 'The United States, suing herein for the benefit of and on behalf of James Kenyon . . . comes and complains,' and alleges that the 'defendants became and are indebted to the United States for the benefit of the said James S. Kenyon.' In a large sense the suit has for its main object to enforce that provision in the bond that requires prompt payments by the contractor to material men and laborers. The bond is not simply one to secure the faithful performance by the contractor of the duties he owes directly to the government in relation to the specific work undertaken by him. It contains, as just stated, a special stipulation with the United States that the contractor shall promptly make payments to all persons supplying labor and materials in the prosecution of the work specified in his contract. This part of the bond, as did its main provisions, ran to the United States, and was therefore enforceable by suit in its name. We repeat, the present action may fairly be regarded as one by the United States itself to enforce the specific obligation of the contractor to make prompt payment for labor and materials furnished to him in his work. There is, therefore, a controversy here between the United States and the contractor in respect of that matter. The action is none the less by the government as a litigant party, because only one of the persons who supplied labor or materials will get the benefit of the judgment. We are of opinion, in view of the peculiar language of the act of 1894 for the protection as well of the United States as of all persons furnishing materials and labor [204 U.S. 349, 358] 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.
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, chap. 280, for the protection of material men 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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