Where the district court understood that the controversy
involved its jurisdiction, and dismissed the case because the
publication under the Materialmen's Act was insufficient to bring
in some of the necessary parties, and so certified, the issue of
jurisdiction is involved and this Court has jurisdiction of a
direct appeal under § 238, Judicial Code.
Even if the district court is in error in holding that failure
to perform a prerequisite condition to commencing an action raises
a question of jurisdiction of the court, and dismisses the action
on that ground instead of on the merits, this Court can and must
review the decision and correct the error, if any, under § 238,
Judicial Code.
Although a statute may be ambiguous and repel accommodation, the
court must try to give coherence to its conflicting provisions and
accomplish the intent of the legislature.
The Materialmen's Act of 1894, as amended in 1905, is highly
remedial; its purpose, simple and beneficial, is to give a remedy
to materialmen and laborers on the bond of the original contractor
and a reasonable time to enforce it and to unite all claimants in a
single proceeding.
Although the provisions of the act present an apparently
insolvable puzzle owing to ambiguity and conflict with each other,
they must be adapted to fulfill the purpose of the act, and the
court must consider which of such provisions must give way and
which are the fittest to accomplish that result.
The provision in the third proviso of the amended Materialmen's
Act requiring notice to be given to other creditors by the creditor
availing of the right to commence suit within the year in case the
government has not instituted a suit within six months after
completion, is not of the essence of jurisdiction of the court over
such a case nor a condition of the liability of the surety on the
bond.
The facts, which involve the construction of the Materialmen's
Acts of 1894 and 1905, are stated in the opinion.
Page 235 U. S. 330
MR. JUSTICE McKENNA delivered the opinion of the Court.
The United States, suing for the use of the Alexander Bryant
Company, plaintiff in error, was plaintiff in the court below, and
the defendants in error defendants.
The complaint alleged the following facts: the New York Steam
Fitting Company entered into a contract with the United States for
the mechanical equipment of the New York Custom House at New York.
It gave bond for the faithful performance of its contract with
defendant in error, the Title Guaranty & Surety Company, as
surety. One of the conditions of the bond was that the Steam
Fitting Company would, among other things, promptly make a payment
to all persons supplying it labor and material in the prosecution
of the work contemplated by the contract of the Steam Fitting
Company with the United States.
The bond was accepted and the work undertaken and duly completed
on or about February 19, 1908, the Alexander Bryant Company having,
in pursuance of a contract with the Steam Fitting Company,
furnished all the materials and performed all of the work, upon
which there is a balance due to the Bryant Company of $5,431.18.
Under the terms of the agreement between it and the Steam Fitting
Company, it should have been paid as the government paid the
former, and, as final payment was made by the government February
15, 1908, interest is demanded.
No action, it is alleged, had been brought by the United States
against defendant within six months after, nor had one year elapsed
since, the performance and final settlement
Page 235 U. S. 331
of the contract by the New York Steam Fitting Company prior to
the commencement of this action.
It is alleged that, in pursuance of the requirements of the Act
of Congress of August 13, 1894, 28 Stat. 278, c. 280, as amended
February 24, 1905, 33 Stat. 811, c. 778, under and by virtue of
which this action is brought, complainant served personal notice of
the pendency of this action upon all known creditors, informing
them of their right to intervene as the court might order, and in
addition thereto published the notice in a newspaper of general
circulation in the City, County, and State of New York for three
successive weeks, the last publication of which was three months
before the time limited therefor as in the acts of Congress
provided.
A bill of particulars was furnished defendants, of which the
following is a copy:
"The plaintiff as and for a bill of particulars, demanded by the
Title Guaranty & Surety Company herein avers:"
"That, pursuant to the requirements of the acts of Congress
under which this action is brought, the plaintiff herein made
personal service of notice of the pendency of this action upon all
known creditors of the New York Steam Fitting Company as
follows:"
"On Messrs. Peet and Powers, November 21st, 1908; on Hermann
& Grace, November 21st, 1908; on Henry R. Worthington, November
19th, 1908; on John Simmons Company, November 20th, 1908; on Cutler
Hammer Company, November 19th, 1908; on Rob't A. Keasby Company,
November 20th, 1908."
"That, under date of November 21st, 1908, Messrs. Hardy &
Shellabarger, attorneys for New York Steam Fitting Company and the
Title Guaranty & Trust Company of Scranton, Pennsylvania (now
the Title Guaranty & Surety Company), stipulated with the
attorney for the plaintiff as follows:"
" It is hereby consented on the part of the defendants
Page 235 U. S. 332
that defendants waive any failure on the part of the plaintiff
to notify creditors under the third proviso of the statute,
provided no more such notices are sent."
"That on the 5th day of November, 1908, and on each day
thereafter to and including November 25th, 1908, there was
published in the New York Press of New York City, New York, a
notice of the pendency of this action, addressed to all known
creditors of the defendant, the New York Steam Fitting Company.
Attached hereto and forming a part of this bill of particulars is a
copy of the form in which personal notice of the pendency of this
action was served upon all known creditors of the New York Steam
Fitting Company, and a copy of the notice which was given by
publication in the New York Press to aforesaid creditors. Dated,
New York, December 7th, 1909."
Copies of the notices are inserted in the margin.
* It
Page 235 U. S. 333
was stipulated that certain of the creditors who were served
with personal notice appeared in the action and filed pleas of
intervention. The action was subsequently discontinued as to them,
they having been settled with by the Surety Company.
The answer of the Surety Company is unimportant except so far as
it raises the issue, which is the crux of the case, whether the
action was brought in time, or whether proper notice of it was
given to other creditors.
The answer of the Steam Fitting Company is also unimportant.
The case, by consent of the parties, was referred to a referee,
upon whose report judgment was to be entered "as if said cause had
been heard before the court."
The referee found and reported the basic facts of liability of
the Surety Company, but found besides that the action was not
commenced in time, as provided by the acts of Congress, nor was
notice given to creditors as required, and therefore directed a
judgment dismissing the complaint. A judgment was subsequently
entered by the court after motion for a new trial was denied by the
referee.
The following facts appear from the report of the referee: the
date of final settlement between the United States and the Steam
Fitting Company was February 19, 1908, and to show compliance with
the provisions of the act of Congress set out below, the Bryant
Company
Page 235 U. S. 334
offered evidence of the publication of notice to creditors in
the New York Press, beginning November 5, 1908, and also introduced
in evidence a stipulation between it and the defendants made
November 21, 1908, by which defendants' time to move of plead was
extended, and by which it was stipulated as follows:
"It is hereby consented on the part of the defendants that
defendants waive any failure on the part of the plaintiff to notify
creditors under the third proviso of the statute, provided no more
such notices are sent."
Prior to the execution of the stipulation, the Bryant Company
had personally served all known creditors with notice in the form
hereinbefore given. Notwithstanding the stipulation, notice by
publication continued for the full twenty-one days, to and
including November 25, 1908.
The Surety Company moved to strike out the evidence of
publication as incompetent, irrelevant, and immaterial on the
grounds: (1) that there was no order of the court obtained for the
giving of the notice; (2) that, under the act of Congress, the last
publication of such a notice must expire three months before the
end of the year after the final completion of the contract -- that
is, on November 18th, 1908 -- whereas the last publication of the
notice offered in evidence was on November 25, 1908, seven days
beyond the time.
The motion was based on certain provisos of the act of Congress
already referred to. The act is entitled, "An Act for the
Protection of Persons Furnishing Materials and Labor for the
Construction of Public Works." It provides for the execution of a
bond by any person entering into any formal contract with the
United States for any public work, and that, in any action
instituted by the United States, any person who has furnished
materials or labor to the contractor may intervene and become a
party to the action. If no action be brought by the United States
within six months from the completion and final settlement
Page 235 U. S. 335
of the contract, then any person furnishing materials or labor
may bring suit in the name of the United States in the circuit
court of the United States (now district court) in the district in
which the contract was to be performed and executed, irrespective
of the amount in controversy, and not elsewhere, for his or their
use and benefit, against the contractor and his sureties.
The provisos are as follows:
"
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 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. . . ."
"
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."
It was admitted that no court order was obtained specifying the
kind of notice to be given creditors, or giving directions as to
publication.
The referee decided that an order of the court was necessary,
and that "the publication proved did not come within the time limit
of the statute."
The argument of the referee was that the conditions
Page 235 U. S. 336
of suit by the creditors of a contractor were (1) the omission
of the United States to sue within six months from the completion
and final settlement; (2) an action by a creditor must be commenced
within one year after such performance and final settlement; (3)
only one action can be brought, in which any creditor may file his
claim and be made a party thereto within one year from the
completion of the work under said contract, and not later; (4)
personal notice must be given to known creditors, and in addition
notice by publication, the last publication to be at least three
months before the time limited therefor. In other words, and
succinctly, the referee held that the time for a suit by creditors
must be within one year from the complete performance of the
contract and its final settlement, and as there could be only one
action, this time was the limit within which other creditors could
file their claims, and that notice to them, whether personal or by
publication, must be in such time as to enable this to be done. He
held further that this was a jurisdictional requirement. In this
ruling the district court concurred, and certified "that the
jurisdiction of the court over the persons and subject matter in
this action is in issue," and that this was done in accordance with
the provisions of § 238 of the Judicial Code.
Defendants in error, however, move to dismiss the writ of error
on the ground "that no question as to the jurisdiction of the court
below to hear and determine the cause is in issue."
Under § 238 of the Judicial Code, a case may be brought here
directly from a district court if the jurisdiction of the court was
in issue, that question alone to be certified.
The present case satisfies this requirement. The controversy
between the parties must have been understood by the referee and
the district court to involve the jurisdiction of the court.
Indeed, such was the explicit contention of the Surety Company, and
both referee and
Page 235 U. S. 337
court in the decision of the issue thus presented dismissed the
action. The Bryant Company combated the conclusion, and still
combats it. The issue of jurisdiction was and is therefore plainly
marked. It may be that the referee and the court were in error in
their decision, but this could not be asserted or demonstrated
except by proceedings in error, to be taken as prescribed by law,
and to this Court. We cannot make the possible error of the court a
ground for refusing to review it. The right of review is given to
correct the error, if error there be, and the decision of the
question involved is given to this Court by § 238 of the Judicial
Code. We are brought, therefore, to the consideration of the
correctness of the ruling.
The act of Congress is undoubtedly ambiguous. Indeed,
considering the letter only of the three provisos with which we are
concerned, they absolutely repel accommodation. We must try,
however, to give coherence to them, and accomplish the intention of
Congress. The act is intended to be highly remedial. Its purpose is
simple and beneficial. It is to give a remedy to materialmen and
laborers on the bond of the original contractor, and a reasonable
time to enforce it, and in a single proceeding to unite all
claimants. It, however, imposes a limitation of time on all
claimants, the time beginning to run from the same event. From this
the complexity in the construction of the act arises.
By the first proviso of the act, a creditor cannot institute
suit until after the complete performance of the contract and its
final settlement; but after such events, he may do so (the United
States not having sued) within one year from their fulfillment.
This is clear enough. The next proviso introduces ambiguity. "Only
one action shall be brought," is its provision, in which "any
creditor may file his claim . . . and be made a party thereto
within one year from the completion of the work, and not
later." The words in italics are disturbing. "This
Page 235 U. S. 338
right to intervene and file a claim, conferred by the statute,
presupposes an action duly brought under its terms."
Texas
Cement Company v. McCord, 233 U. S. 157,
233 U. S. 163.
But, by its terms, the instituting creditor has one year from the
designated events to commence his action. If he file it on the last
day of the designated time, what then becomes of the rights of
other creditors who must file their claim within the same limit of
time, and not later? The question is not easy to answer, and any
answer may be disputed. It presents a puzzle for judicial
resolution apparently insolvable.
There is more ambiguity when we bring forward the next, and
third, proviso. Notice of the suit must be given to creditors
personally if they be known, and by publication besides, informing
them "of their right to intervene as the court may order." Passing
what the quoted words may mean, and coming to the requirement of
notice, it is provided that it must be "for at least three
successive weeks, the last publication to be at least three months
before the time limited therefor."
This seemingly brings us to an impasse. How can the instituting
creditor (so called for convenience) have a year to commence his
suit and yet give the notice required? -- and it is to be
remembered that the intervening creditor must file his claim also
within a year.
The Surety Company sees the difficulty and seizes it to press
its contention that the year's time for bringing suit is not an
authorization of such time, but a permission, and must be availed
of so as to permit of the notice to creditors provided for; in
other words, that the time in which to bring suit or file a claim,
which is explicitly given, is cut down by the provision for notice
-- that is, the instituting creditor is given not one year from the
indicated events to institute a suit, but one year to institute
suit and serve notice of it, which notice must precede the
expiration of the year by at least three months and three weeks.
This
Page 235 U. S. 339
limitation of time is brought about, it is contended, with all
of its embarrassment to the creditor who institutes the suit and to
the creditors who may want to intervene in it, by the third
proviso, which is made all-dominating, bending the other provisions
to it, and made even a jurisdictional condition of suit against the
sureties of the contractor.
There are grounds for the contention, but there are opposing
grounds, which, we think, are supported by the better reason, all
things considered. As we have said, the act of Congress is highly
remedial, and its provisions must be adapted to fulfill its whole
purpose.
In
Vermont Marble Company v. National Surety Company,
213 F. 429, the Circuit Court of Appeals for the Third Circuit had
occasion to pass upon the act of Congress under consideration. The
court, Circuit Judge Gray speaking for it, decided against the
contention now made by the Surety Company. The careful review and
exposition of the statute there made leave little else to be
said.
That case illustrates the consequences of the contention of
defendants in error. Here, the contention is urged to defeat a suit
by the instituting creditor against the surety of the contractor;
there, it was urged to defeat a claim of an intervening
creditor.
The suit was on a contractor's bond by one who furnished
materials to the contractor. The work was completed and final
settlement made June 14, 1912. The suit was brought February 28,
1913, within one year from the completion of the work. Notice to
creditors was given by publication, the last publication being on
April 9, 1913, twenty-three days prior to the expiration of the
time within which the suit could have been brought. The Vermont
Marble Company intervened and filed its statement of claim within
the time prescribed by the statute. The claim was resisted on the
ground that publication of notice
Page 235 U. S. 340
to creditors should have been so made that the last publication
would have been at least three months before the time limited for
bringing the suit, and therefore should have been started not later
than February 21, 1913 (it was started February 28th, as we have
seen), so that the last publication should have been on or before
March 14, 1913, three months before June 14, 1913, the time when
the right to bring suit expired. It was contended that the suit not
having been brought nor publication made within the time required
by the act, it could not be maintained either by the original
plaintiff or the Vermont Marble Company or other intervening
creditors. The contention found favor with the district court; it
was rejected by the court of appeals. The latter court concluded
that the third proviso was directory, and not a limitation upon the
right of action given by the other provisos.
Texas Cement Company v. McCord, 233 U.
S. 157, does not militate against that conclusion. In
the latter case, it was decided that no right of action accrued to
a materialman until the time reserved to the United States to sue
had expired, and that this condition was expressed too clearly to
be mistaken.
It is urged that it is a consequence of our construction that an
action may be commenced on the last day of the year, and that all
opportunity for intervention may be precluded; for, counsel say,
"intervention cannot be conducted in a day," and it would seem as
if the act intended "to afford creditors an interval of three
months within which to secure an intervention." Even if this be the
consequence, some of the provisions of the act, as we have
intimated, must give way. We can only select those which we
consider the fittest to prevail to accomplish the purposes of the
statute, and at the very start comes the suggestion that, even if
it be granted that the diligent creditor is under obligation to
give notice to a waiting or tardy, or, it may be, unwilling one,
how is the surety of
Page 235 U. S. 341
the contractor concerned with the discharge of the obligation?
At the most, its concern is only to be protected against claims
delayed beyond the limit of time provided by the act. We may refer
again to
Vermont Marble Company v. National Surety
Company. The Court in that case, in careful distinction
between the purposes of the provisos, said that the first and
second confer a substantive right of action or intervention limited
only by a time for assertion -- that is, one year from the
completion of the work -- and that that time was "obviously for the
benefit of the sureties on the bond," while the last proviso (the
third) was "just as obviously for the benefit of the creditors
alone." It was pointed out that indeed it was to the interest of
the sureties not to bring in the other creditors, and yet they
contended that the provision for notice to the creditors was
mandatory and jurisdictional, and not simply directory. The same
contention is made in this case. In other words, it is in effect
contended that a provision which it is to the interest of the
Surety Company not to have observed the statute gave it a right to
have observed. Such a contradiction of interests and rights we
cannot assume the statute intended to create, nor that it was
intended to give to the Surety Company a right to have done that
which it is its interest not to have performed. The provision for
notice therefore is not of the essence of jurisdiction over the
case, nor a condition of the liability of the Surety Company. We
need not go farther in this case.
In the cited case, it was held that the third proviso was
directory only, and the conclusion has reason to sustain it. There
can be no sacrifice of rights in it, neither of surety companies
nor of creditors. Every creditor has the same rights, and may
institute the action provided for in the first proviso. If he does
not choose to do so, it is his own affair, and he may guard against
surprise or deception. He knows the time limit of suit and of
intervention. He knows
Page 235 U. S. 342
that the suit must be brought in the district court of the
United States in the distract where the contract was performed. It
would seem as if the law owed him no further care. If he chooses,
he may institute proceedings if another has not done so. If another
has, he knows in what court and within what time, and he may
intervene. He has therefore the means of suit or the means of
intervention. An attentive waiting is all that is necessary for
either, and indeed is his ultimate safeguard, as intervention must
depend on a suit previously instituted.
Judgment reversed and cause remanded for further proceedings
in accordance with this opinion.
*
"Please take notice that the above-named Alexander Bryant
Company has commenced an action in the name of the United States of
America under the provisions of the act of Congress of August 13th,
1894 (as amended by Act of Congress of February 24th, 1905), to
recover a judgment against the defendant New York Steam Fitting
Company and its surety, the Title Guaranty & Trust Company of
Scranton, Pennsylvania, for a sum of money alleged to be due and
owing to the aforesaid Alexander Bryant Company for work, labor,
materials, and services furnished as subcontractors under the
contract and bond entered into by the New York Steam Fitting
Company for the mechanical equipment of the new customhouse at New
York City, New York, in which bond the defendant, the Title
Guaranty & Trust Company of Scranton, Pennsylvania, is joined
as surety."
"As required by the express provisions of the aforementioned
acts of Congress, and as one of the creditors of the New York Steam
Fitting Company under aforesaid contract, you are hereby notified
of your right to intervene and be made an additional party
plaintiff in this action, as the court may order, so as to have the
rights and claims of any and all existing creditors under said
contract and bond adjudicated in one and the same action."
"Dated, New York, Nov.2d 1908."
"Pursuant to the requirements of an Act of Congress of August
13th, 1894, and of February 24th, 1905, amendatory thereof, notice
is hereby given to all creditors of the above named defendant New
York Steam Fitting Company under the contract between the plaintiff
and the said last-named defendant (and the codefendant as their
surety) for work incident to the construction of the customhouse,
that the above entitled action has been instituted upon the bond of
the defendant contractor, and against said surety, and that any
creditor may file his claim in this action and be made a party
herein as in said acts of Congress provided."
"New York, October 16th, 1908."
Both notices were signed by plaintiff's attorney.