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Statement of the Case.
same necessitated a material change in the grading of the land which had been previously performed by the contractor, at a considerable expenditure not contemplated in the original contract, and prejudicial to the defendant.
On motion under the 73rd Rule of the Supreme Court of the District of Columbia the court entered judgment for the plaintiff for the amount of the demand; and defendant has appealed therefrom.
By stipulation two other cases involving the same question here presented are to abide the result of this case.
The act of Congress, in compliance with the requirements of which the aforesaid bond was executed, (c. 218, 30 Stat. 906), reads as follows:
"An Act Relative to the payment of claims for material and labor furnished for District of Columbia Buildings.
"Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That hereafter any person or persons entering into a formal contract with the District of Columbia 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
Argument for the Equitable Surety Co.
bring suit in the name of the District of Columbia or 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 not involve the District of Columbia or the United States in any expense: Provided, That in such case the court in which such action is brought is authorized to require proper security for costs in case judgment is for the defendant.
"Approved, February 28, 1899."
The Court of Appeals further certifies that the following question of law arises upon the record; that its decision is necessary to the proper disposition of the cause; and to the end that a correct result may be reached desires the instruction of the Supreme Court of the United States upon that question, to wit:
Did the alteration of the terms of the contract by the District of Columbia and the contractor, without the knowledge or consent of the surety, have the effect to release the surety from the obligation of the bond?
Mr. J. J. Darlington, with whom Mr. Joseph A. Burkart and Mr. William E. Ambrose were on the brief, for the Equitable Surety Company:
The surety obligation is not to be extended because the surety is a corporation, or because a premium was paid.
The change of site created a new contract, not binding on the surety, either as to owner or sub-contractors.
The bond was security for labor and materials for work provided for in the contract guaranteed by the surety.
The argument ab inconvenienti will not apply.
In support of these contentions, see Atlantic Trust Co. v. Laurinburg, 163 Fed. Rep. 690; American Bonding Co. v. Pueblo Inv. Co., 150 Fed. Rep. 17; Abbott v. Morissette, 46 Minnesota, 10; Bridge Co. v. Bogenshot, 48 S. W. Rep.
Argument for McMillan.
97, 102; Baglin v. Title Guaranty Co., 166 Fed. Rep. 356; Brunthaver v. Talty, 31 App. D. C. 134; Buchanan v. Macfarland, 31 App. D. C. 619, 620; Bauschard Co. v. Fidelity Co., 21 Pa. Sup. Ct. 375; Baglin v. Southern Surety Co., 42 Wash. Law Rep. 162, 164; Brown Co. v. Ligon, 92 Fed. Rep. 851; Chester v. Leonard, 68 Connecticut, 495, 570; Carroll v. Lessee of Carroll, 16 How. 275, 286; Conn v. State, 125 Indiana, 514; Chaffee. v. U. S. Fidelity Co., 128 Fed. Rep. 918; Dewey v. State, 91 Indiana, 173; Graham v. United States, 188 Fed. Rep. 651, 657; Guaranty Co. v. Pressed Brick Co., 191 U. S. 416; Harriman v. Northern Securities Co., 197 U. S. 244, 291; Henricus v. Englert, 137 N. Y. 484, 494; Miller v. Stewart, 9 Wheat. 680; McConnell v. Poor, 113 Iowa, 133, 139; O'Neal v. Kelley, 65 Arkansas, 550; Paolucci v. United States, 30 App. D. C. 217, 222; Pollock v. Farmers' L. & T. Co., 157 U. S. 429, 574; School District v. Greene, 135 Mo. App. 421, 426; Steffes v. Lemke, 40 Minnesota, 29; Thompson v. Chaffee, 89 S. W. Rep. 285; United States v. American Bonding Co., 89 Fed. Rep. 925; United States v. Bagly, 39 App. D. C. 105; United States v. Boecker, 21 Wall. 652; United States v. California Bridge Co., 152 Fed. Rep. 559; United States v. Freel, 186 U. S. 309, 318; Hill v. American Surety Co., 200 U. S. 197; United States v. U. S. Fidelity Co., 178. Fed. Rep. 721; United States v. Lynch, 192 Fed. Rep. 364, 368; United States v. National Surety Co., 92 Fed. Rep. 549; Wetmore v. Karrick, 205 U. S. 141, 155; Young v. American Bonding Co., 228 Pa. St. 273, 280; Zimmerman v. Judah, 17 Indiana, 286.
234 U. S.
Mr. Wharton E. Lester, with whom Mr. Lucas P. Loving and Mr. Daniel W. Baker were on the brief, for the United States to the use of McMillan & Son:
Change of contract does not release the surety from liability to materialmen and laborers. There is a dual nature of bond required by act of 1899.
Opinion of the Court.
The agency of the District of Columbia ends with obtaining the bond.
The materials were furnished under contract for which bond was given.
In support of these contentions, see Mining Co. v. Cullins, 104 U. S. 176; United States &c. v. American Surety Co., 200 U. S. 199; Fidelity & Deposit Co. v. Smoot, 20 App. D. C. 376; United States v. National Surety Co., 92 Fed. Rep. 549; Guaranty Co. v. United States, 191 U. S. 416; United States v. California Bridge Co., 152 Fed. Rep. 559; United States v. Lynch, 192 Fed. Rep. 364; United States v. Freel, 186 Ú. S. 309.
MR. JUSTICE PITNEY, after making the foregoing statement, delivered the opinion of the court.
The act of February 28, 1899 (c. 218, 30 Stat. 906), under which the bond in question was given, was modeled after an act of August 13, 1894, entitled, "An Act for the protection of persons furnishing material and labor for the construction of public works," (c. 280, 28 Stat. 278). In an action founded upon a bond given under the latter act, it was held by the Circuit Court of Appeals for the Eighth Circuit, in United States v. National Surety Co., 92 Fed. Rep. 549, 551, that the obligation has a dual aspect, it being given, in the first place, to secure to the Government the faithful performance of all obligations which a contractor may assume towards it; and, in the second place, to protect third persons from whom the contractor may obtain materials or labor; and that these two agreements are as distinct as if contained in separate instruments. It was consequently held that the sureties in such a bond could not claim exemption from liability to persons who had supplied labor or materials to their principal, to enable him to execute his contract with the United States, simply because the Government and the
Opinion of the Court.
contractor, without the surety's knowledge, had made changes in the contract subsequent to the execution of the bond, the changes being such as did not alter the general character of the work contemplated by the contract or the general character of the materials necessary for its execution.
234 U. S.
In support of this decision several cases from the state courts were cited, among them Dewey v. State, 91 Indiana, 173, 185; Conn v. State, 125 Indiana, 514, 518; Steffes v. Lemke, 40 Minnesota, 27, 29; and Doll v. Crume, 41 Nebraska, 655, 660. They fairly sustain the conclusion reached. The cases cited from the Indiana and Minnesota reports antedated the passage of the act of 1894, and may have furnished the suggestion for that enactment.
The decision of the Circuit Court of Appeals in United States v. National Surety Co., supra, although never until now brought under the review of this court, has been many times cited and followed in the other Federal courts. Brown & Haywood Co. v. Ligon, 92 Fed. Rep. 851, 857; United States v. Rundle, 100 Fed. Rep. 400, 402; United States Fid. & Guar. Co. v. Omaha Bldg. & Constr. Co., 116 Fed. Rep. 145, 147; Chaffee v. United States Fid. & Guar. Co., 128 Fed. Rep. 918; United States v. Barrett, 135 Fed. Rep. 189, 190; Henningsen v. United States Fid. & Guar. Co., 143 Fed. Rep. 810, 813; City Trust &c. Co. v. United States, 147 Fed. Rep. 155, 156; United States v. California Bridge & Constr. Co., 152 Fed. Rep. 559, 562; Title G. & T. Co. v. Puget Sound Engine Works, 163 Fed. Rep. 168, 174.
In Guaranty Co. v. Pressed Brick Co., 191 U. S. 416, and Hill v. American Surety Co., 200 U. S. 197, 203, this court adopted a reasonably liberal construction of the act of 1894, in view of the fact that it was evidently designed to furnish the obligation of a bond as a substitute for the security which might otherwise be obtained by attaching a lien to the property; such lien not being permissible in the case of a Government work.