Source: https://www.legalcrystal.com/case/90468/united-states-fid-guar-co-vs-struthers-wells
Timestamp: 2019-04-19 04:51:48+00:00

Document:
Appellant United States Fid. and Guar. Co.
United States Fidelity and Guaranty Company v.
There is always a strong presumption that a statute was not meant to act retrospectively, and it should never receive such a construction if susceptible of any other, nor unless the words are so clear, strong and imperative as to have no other meaning.
The Act of February 24, 1905, c. 778, 33 Stat. 811, amending the Act of August 13, 1894, c. 280, 28 Stat. 278, is prospective, and does not relate to or affect actions based on rights of materialmen which had accrued prior to its passage, and such actions are properly brought under the act of 1894.
The absolute taking away of a present right to sue and suspending it until after certain events have happened and the giving of preferences between creditors are not mere matters of procedure, but affect substantial rights, and, as the Act of February 24, 1905, consists of but a single section, and deals with such subjects, and only incidentally applies to procedure, the entire statute must be construed under the general rule that it is not retrospective in any respect.
below) against the plaintiff in error for the sum of $2,054.23. The action was brought in the circuit court above mentioned in the name of the United States for the use and benefit of Struthers Wells Company against the plaintiff in error, and against the individual defendant Flaherty, as well as one Lande, upon a bond dated December 10, 1903, executed by Flaherty as well as one the above-mentioned plaintiff in error as surety, by which they were held bound in the sum of $40,000, to be paid the United States as liquidated damages, the condition of the obligation being that, if Flaherty, his successors, heirs, etc., should well and truly execute the contract annexed to the bond, which he had entered into with Colonel W. A. Jones, U.S.A. Engineer of the Fifth Lighthouse District, for and in behalf of the United States, by which Flaherty covenanted and agreed to completely construct and deliver the metal work for the Baltimore Lighthouse, Maryland, according to all the conditions of the said contract, and should promptly make payments to all persons supplying said Flaherty labor and materials in the prosecution of the work provided for in such contract, then the obligation was to be void; otherwise to remain in full force and virtue.
The Struthers Wells Company, under an agreement with the defendants Flaherty and Lande and in or about the month of March, 1904, supplied to them certain materials, described in the complaint, for use by them in the prosecution of the work which they had contracted with the United States to do in constructing the metal work for the Baltimore Lighthouse, as mentioned in the bond. The material furnished by the company was of the value of $1,890.25. The company duly performed all the conditions of its contract with the defendants which it had agreed to perform, and made delivery as provided for in its agreement, and by reason of the premises, there became due and payable to the company from the defendants, including the plaintiff in error, the sum of $1,890.25, with interest from June 7, 1904, no part of which has been paid. Judgment was demanded for that sum, with interest, as stated.
The action was commenced on the twelfth of April, 1905. The plaintiff in error demurred to the complaint on the ground first that the court had no jurisdiction of the person of the defendant the United States Fidelity & Guaranty Company, second that the court had not jurisdiction of the subject of the action, and third that the complaint does not state facts sufficient to constitute a cause of action against the defendant the United States Fidelity & Guaranty Company. This demurrer was overruled, with leave to the defendant to answer, which the defendant refused to do, and thereupon judgment was entered for the plaintiff against it, which was affirmed by the circuit court of appeals.
been completed, or that six months had expired since its completion, or that the United States had not itself sued on the bond.
The act which is amended consists of but one material section, the second section providing only for the comparatively unimportant matter of security for costs. The act amending the section also consists of but one section. The question is whether the amended act applies to this case.
There are certain principles which have been adhered to with great strictness by the courts in relation to the construction of statutes, as to whether they are or are not retroactive in their effect. The presumption is very strong that a statute was not meant to act retrospectively, and it ought never to receive such a construction if it is susceptible of any other. It ought not to receive such a construction unless the words used are so clear, strong, and imperative that no other meaning can be annexed to them, or unless the intention of the legislature cannot be otherwise satisfied. Dash v. Van Kleeck, 7 Johns. 499; Jackson v. Van Zandt, 12 Johns. 169; United States v. Heth, 3 Cranch 399, 7 U. S. 414 ; Southwestern Coal Co. v. McBride, 185 U. S. 499 , 185 U. S. 503 ; United States v. American Sugar Co., 202 U. S. 563 , 202 U. S. 577 .
The language of the amended act is prospective, as it provides "that hereafter any person or persons entering into a formal contract with the United States," etc. That language, standing alone, would leave little doubt as to the intention of Congress in the matter of the taking effect of the amendment.
It is urged, however, that as the amendment in this respect but reiterates the language of the original act, the use of the word "hereafter" in the commencement of the amendment ought not to have the significance which would otherwise attach to it, because it is simply in this particular reenacting the law as it already stood.
as to the intention of Congress, and when we come to look at the provisions of the statute, as amended, we are convinced that Congress did not intend that the amendment should apply to cases where the bond had already been executed, the work done, the respective rights of the parties settled, and the cause of action already in existence. If Congress had intended otherwise, we think it would have still further amended the original act by providing in plain language that the amendment should apply to all cases, and not be confined to the future.
The plaintiff in error contends that, where an amendment to an act relates only to procedure, it takes effect upon causes of action existing when the amendment was passed, and hence that part of the amendment in question applies and prevents the taking of jurisdiction by the circuit court for the Eastern District of New York. It is admitted by the plaintiff in error that the act is not confined to procedure, but deals with substantive rights in some instances, one of which is the provision granting a preference to the United States over all other creditors. In such case, counsel admits that the provision must be construed and held to apply to bonds executed subsequent to the enactment of the statute, and to such bonds alone. Under the statute of 1894, no such preference could be obtained. American Surety Co. of New York v.Lawrenceville Cement Co., 96 F. 25; United States v. Heaton, 128 F. 414.
to its pro rata share, while, if executed subsequently, the full amount of its claim, regardless of the claims of the other creditors, would be the amount due. In other words, these provisions, contained in the single section of the act, are to be considered as prospective only, and as applicable to bonds executed subsequently to the passage of the amendment.
There is another most important amendment, by which the materialman's right to sue is suspended until after the completion of the work and final settlement and for six months thereafter, during which the United States can alone sue upon the bond. Instead of a right to sue at once upon the nonpayment of his claim, he is precluded from doing so, perhaps for years.
Although the time in which to commence action may be shortened and made applicable to causes of action already accrued, provided a reasonable time is left in which such actions may be commenced ( Terry v. Anderson, 95 U. S. 628 ; Wilson v. Iseminger, 185 U. S. 55 ), yet that is a different principle from taking away absolutely a present right to sue until a period of time, measured possibly by years, shall have elapsed.
of it made applicable to cases already existing and other portions applicable only to the future. We are convinced Congress did not intend such separation. Viewing the whole section, we think Congress meant that only in future cases should the provisions of the amendment apply, although some trifling portion of those provisions might be regarded, technically, as in the nature of procedure. It is therefore wiser to hold the entire section governed by the usual rule, and as applying only to the future.
" Be it enacted, etc., That hereafter any person or persons entering into 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 prosecution shall involve the United States in no expense."
" Be it enacted, etc., That the act entitled 'An Act for the Protection of Persons Furnishing Materials and Labor for the Construction of Public Works,' approved August thirteenth, eighteen hundred and ninety-four, is hereby amended so as to read as follows:"
" That hereafter any person or persons entering into 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 obligation that such contractor or contractors shall 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. If the full amount of the liability of the surety on said bond is insufficient to pay the full amount of said claims and demands, then, after paying the full amount due the United States, the remainder shall be distributed pro rata among said interveners. If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials shall, upon application therefor, and furnishing affidavit to the Department under the direction of which said work 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, be furnished with a certified copy of said contract and bond, upon which he or they shall have a right of action, and shall be and are hereby authorized to bring suit in the name of the United States in the circuit court of the United States in the district in which said contract was to be performed and executed, irrespective of the amount in controversy in such suit, and not elsewhere, for his or their use and benefit, against said contractor and his sureties, and to prosecute the same to final judgment and execution: Provided, That where suit is instituted by any of such creditors on the bond of the contractor, it shall not be commenced until after the complete performance of said contract and final settlement thereof, and shall be commenced within one year after the performance and final settlement of said contract, and not later: And provided further, That where suit is so instituted by a creditor or by creditors, only one action shall be brought, and any creditor may file his claim in such action and be made party thereto within one year from the completion of the work under said contract, and not later. If the recovery on the bond should be inadequate to pay the amounts found due to all of said creditors, judgment shall be given to each creditor pro rata of the amount of the recovery. The surety on said bond may pay into court, for distribution among said claimants and creditors, the full amount of the sureties' liability, to-wit, the penalty named in the bond, less any amount which said surety may have had to pay to the United States by reason of the execution of said bond, and, upon so doing, the surety will be relieved from further liability: Provided further, That in all suits instituted under the provisions of this act, such personal notice of the pendency of such suits, informing them of their right to intervene, as the court may order shall be given to all known creditors, and, in addition thereto, notice of publication in some newspaper of general circulation, published in the state or town where the contract is being performed, for at least three successive weeks, the last publication to be at least three months before the time limited therefor."

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