Court Opinion

ID: 9443517
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:23:57.872262+00
Date Added: 2024-06-11T17:29:31.546832
License: Public Domain

PICKETT, Circuit Judge
(dissenting).
It seems to me that my colleagues take too narrow a view of the coverage intended by the terms of the performance and payment bond in this case. Under the statute and the provisions of the bond, the surety has the primary obligation to pay the wages of the laborers upon default of the contractor. This obligation extends to the full amount of the wages earned and not just a percentage or portion of them. I can see no reason why. this obligation should be diminished because the law requires that a portion of the wages be diverted to the United States for the payment of income taxes and other benefits for the wage earners. By holding the surety responsible for the amounts withheld from the wages under the law, no more is required than what the surety agreed to do and for which it was paid a premium. To so hold does not injure or mislead the. surety or extend its liability in any manner.
Where a wage earner has assigned his wages or a portion of them to a third party, the surety is responsible to the assignee if the employer defaults. United States Fidelity & Guaranty Co. v. United States for the Benefit of Bartlett, 231 U.S. 237, 34 S.Ct. 88, 58 L.Ed. 200; Title Guaranty & Trust Co. v. Crane Co., 219 U.S. 24, 31 S.Ct. 140, 55 L.Ed. 72; Third National Bank of Miami v. Detroit Fidelity & Surety Co., 5 Cir., 65 F.2d 548, certiorari denied, 290 U.S. 667, 54 S.Ct. 88, 78 L.Ed. 577; United States, to Use of Fidelity National Bank v. Rundle, 9 Cir., 100 F. 400; National Market Co. v. Maryland Casualty Co., 100 Wash. 370, 170 P. 1009, 174 P. 479, 1 A.L.R. 450; Northwestern Nat. Bank v. Guardian Casualty & Guaranty Co., 93 Wash. 635, 161 P. 473; 43 Am.Jur., Public Works and Contracts, Sec. 152; Anno. 77 A.L.R. 149. I see no essential difference in this case and the assignment cases. The liability remains exactly the same as though the full amount of the wage earned was due to the wage earner. Under such conditions, the surety should bear any loss in the total amount of the wages earned even though a portion of the wages bears the label of a tax. This type of case is easily distinguishable from those where it was sought to hold the surety liable for ordinary taxes of the employer.
In determining whether the amounts withheld are part of wages earned or strictly a tax, the provisions of the Miller Act and the bond should be given a liberal construction to require full coverage of the bond. Fleisher Engineering & Construction Co. v. United States, for Use and Benefit of Hallenbeck, 311 U.S. 15, 61 S.Ct. 81, 85 L.Ed. 12; Massachusetts Bonding & Ins. Co. v. United States, for Use of Clarksdale Machinery Co., 5 Cir., 88 F.2d 388. I would affirm the judgment.