Court Opinion

ID: 6923664
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:10:45.424471+00
Date Added: 2024-06-11T16:06:52.430440
License: Public Domain

RIVES, Circuit Judge
(dissenting).
I agree with the district court’s appraisal of the intention of Congress with respect to the two Acts here involved. The Arbitration Act enacted in 1925 is limited in its application to issues “referable to arbitration under an agreement * * * ” 9 U.S.C.A. § 3. Ten years later the Miller Act was enacted in 1935 with the provision that suits of the type here involved shall be brought “in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere” (emphasis supplied), 40 U.S.C.A. § 270b (b), and with its even more explicit provision that every person who has furnished labor or material and has not been paid therefor within ninety days “shall have the right to sue on such payment bond for the amount * * * unpaid at the time of institution of such suit and to prosecute said action to final execution and judgment for the sum or sums justly due him. * * * ” (Emphasis supplied.) Government contractors were restricted in the kinds of agreements into which they might validly enter to those conforming to the public policy declared in the Miller Act.
The Heard Act, which was the predecessor of the Miller Act, had also been intended to protect those whose labor or material had contributed to the prosecution of the work on Government contracts. Under the Heard Act the Government was given the sole right to sue on the bond for six months after completion of the work and final settlement. Thereafter other claimants could sue but had to join in a single action. As we commented in Texas Construction Company v. United States, 5 Cir., 1956, 236 F.2d 138, 143, “it thus became essential that the place of such action be considered as a strict condition of the bringing of the suit since the right of all creditors might be completely cut off unless those conditions were strictly complied with.” If the Heard Act were still in force no *559one could seriously urge the validity of the present agreement which provides: “Any controversy or claim arising out of or relating to this agreement or the breach thereof. * * * shall be settled by arbitration in the Borough of Manhattan, City and State of New York in accordance with the Civil Practice Act of the State of New York.”
The majority quotes from Texas Construction Company v. United States, supra, the following passage: “ * * * the requirement as to the district in which suit may be filed, contained in the Miller Act, is only one for the benefit of the defendants and may thus be waived by them, as may any other question of venue.”
In the Texas Construction Company case that language was employed in connection with the holding that a prime contractor and his bonding company when sued in a district other than that in which the contract was to be performed and executed may waive objection to the place of suit. In that context, the language employed does not mean that the requirement of the Miller Act that suit be brought “in the United States District Court for any district in which the contract was to be performed and executed and not elsewhere” was intended for the benefit of the defendants to the exclusion of the plaintiffs; it means no more than that the requirement relates to venue rather than jurisdiction and may be waived by both parties.
There is nothing in the language of the Act, or in its legislative history, which would restrict to the defendants the benefit of that requirement. The propriety of extending its protection to the plaintiffs is shown by the observation of the district court:
“The instant case strikingly demonstrates the purpose of Congress in thus providing an exclusive venue, and, it is believed, an exclusive forum for the resolution of Miller Act disputes. The inherent inconvenience and injustice of Moseley’s being forced to transport himself, his records, and his witnesses from the scene of the activities under investigation to a point so distant as New York City is from Macon, Georgia, is readily apparent.”
The prime contractor is in peculiarly favorable position to impose upon those who would enter into subcontracts with him burdensome agreements as to arbitration. The number of subcontractors from which the prime contractor may choose is limited only by the scope of the industry, while would-be subcontractors must seek the nod of a single prime contractor, who is in that respect a complete monopolist.
If, as must be conceded, the Heard Act protected those persons supplying the contractor with labor and materials against the imposition of such burdensome agreements, then, a fortiori, the Miller Act does no less. In MacEvoy Co. v. United States, 1944, 322 U.S. 102, 105, 106, 64 S.Ct. 890, 892, 893, 88 L.Ed. 1163, the Supreme Court said:
“The Miller Act, while it repealed the Heard Act, reinstated its basic provisions and was designed primarily to eliminate certain procedural limitations on its beneficiaries. There was no expressed purpose in the legislative history to restrict in any way the coverage of the Heard Act; the intent rather was to remove the procedural difficulties found to exist under the earlier measure and thereby make it easier for unpaid creditors to realize the benefits of the bond.”
. United States for Use and Benefit of Bryant Elec. Co. v. Aetna Casualty & Surety Co., 2d Cir., 1962, 297 F.2d 665, at page 667 points out:
“Every subcontractor and mate-rialman not reimbursed for work done under a contract is given an unqualified right to sue on the payment bond.” (Emphasis supplied.)
*560In discussing the changes made between the Heard Act. and the Miller Act, the court said, pages 668-669:
“The primary aim of the Miller Act was to secure greater protection for the subcontractor. The major changes were designed to streamline the cumbersome Heard Act machinery and to facilitate suit by those supplying labor or materials to the general contractor. * * * “ * * * The purpose of the Miller Act was clearly to provide a forum for all unpaid subcontractors.” (Emphasis supplied.)
The court found such a strong public policy in favor of the protection of subcontractors and the furnishing of a forum in which they may proceed in court to enforce their right to prompt payment that it rightly concluded that, although the work was done outside the United States and therefore was not within any judicial district, an unpaid subcontractor was nevertheless entitled to maintain his suit.
In this connection, the language which the court used on page 669 is most appropriate to the situation the plaintiff in this case would face if he were not permitted to prosecute his suit, when the court said:
“ * * * with no forum for enforcement, the bond becomes an empty gesture, a stately farce carried out by contractors and sureties, at the public expense, and to the detriment of the very class the Miller Act was designed to protect. We cannot accept a construction which would lead to such a result.”
The Miller Act provides to every person who has furnished labor or material not only the right to sue in the district in which the contract was to be performed and executed but also the “right * * * to prosecute said action to final execution and judgment.” (Emphasis supplied.) That is diametrically opposite to being required to stay the action to await the result of an arbitration.
The holding of the majority in the present case places it within the power of prime contractors to insist on agreements for arbitration which might well nigh nullify the beneficent provisions of the Miller Act. That is not conducive to the efficient, economical and just performance of Government contracts. So thinking, I respectfully dissent.