Court Opinion

ID: 9633803
Source: CourtListenerOpinion
Date Created: 2023-08-22 12:00:52.066344+00
Date Added: 2024-06-11T18:08:42.533690
License: Public Domain

LARAMORE, Judge (dissenting).
When this case was before the court on plaintiff’s motion for judgment on the pleadings dismissing intervenor’s petition, the United States was not a mere stakeholder, and it was not necessary to express an opinion on the correctness of Royal Indemnity Co. v. United States, 93 F.Supp. 891, 117 Ct.Cl. 736. But now the United States may be a stakeholder of about $66,000 and, if so, the Royal Indemnity case is indistinguishable. I *204believe that the Royal Indemnity ease should be overruled. I fail to see how the laborers and materialmen have any standing to .sue in this court. Their claim is against the contractor, not the United States.
It is true that the Supreme Court held in Henningsen v. United States Fidelity & Guaranty Co. of Baltimore, Maryland, 208 U.S. 404, 28 S.Ct. 389, 52 L.Ed. 547, that the surety on a payment bond had an equitable priority to the retained percentages where the bank and the surety were both asserting equitable claims. The United States was not a party to that suit and the District Court had jurisdiction as between the private parties under their general jurisdiction. It is also not clear from that decision what rights the surety was “subrogated” to. The cases relied upon by the majority, except Munsey Trust, infra, which I do not believe supports the majority, were all decided before the amendment to the Assignment of Claims Act in 1940, 31 U.S.C.A. § 203, 54 Stat. 1029, and the question of this court’s jurisdiction was not involved. Also, the United States was not involved in those suits because it had already paid the money to the party it believed entitled thereto, except in the case of Greenville Savings Bank v. Lawrence, supra, where the United States withheld money, pursuant to the contract, for no other purpose than the payment of laborers and materialmen.
It is also relevant to note that Prairie State Nat. Bank v. United States, 164 U.S. 227, 17 S.Ct. 142, 41 L.Ed. 412, was not before this court under our present jurisdictional act, but rather by reference under section 1063 of Revised Statutes, now 28 U.S.C.A. §§ 1493, 2510.
In this case the plaintiff, trustee for the financial institution, is not asserting a mere equitable priority, but rather is asserting a valid legal claim under the Assignment of Claims Act as amended in 1940, supra. This amendment was enacted to encourage the private financing of Government contracts and should be so construed. Central Bank v. United States, 345 U.S. 639, 646, 73 S.Ct. 917, 97 L.Ed. 1312. The United States could properly and safely pay the funds to the holder of the valid assignment without subjecting itself to double liability. See Martin v. National Surety Co., 300 U.S. 588, 57 S.Ct. 531, 81 L.Ed. 822, and the cases cited for the proposition that the Act was for the protection of the Government and was to prevent the Government from becoming- embroiled in disputes between the contractor and its creditors. The United States does not have to concern itself with the question of which person is ultimately entitled to money, it can pay the holder of a valid assignment under the Assignment of Claims Act, supra. But on the question of which party is ultimately entitled to the money see the Coconut Grove Exchange Bank v. New Amsterdam Casualty Co., 5 Cir., 149 F.2d 73, and General Casualty Co. of America v. Second National Bank of Houston, 5 Cir., 178 F.2d 679, in which cases it was held that the financial institution has' the superior claim over the surety on a payment bond by reason of the passage of the 1940 amendment to the Assignment of Claims Act, supra. Obviously, the majority opinion is in direct conflict with these cases.
The laborers and materialmen and their subrogees have no enforceable rights against the United States. United States v. Munsey Trust Co., 332 U.S. 234, 67 S.Ct. 1599, 91 L.Ed. 2022. Having no rights against the United States, the intervenors are in the position of asking this court to litigate the rights of private parties over which this court has no jurisdiction. United States v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058, and the cases there cited. If the laborers and materialmen have a superior right against the’ plaintiff inter sese they may prosecute that action in the proper forum.
I would overrule intervenors’ motion.