
    G. M. McWILLIAMS, TRUSTEE IN BANKRUPTCY FOR F. T. NEWTON FOR HIS OWN USE AND FOR THE USE OF NATIONAL SURETY CORPORATION v. THE UNITED STATES
    [No. 49439.
    Decided March 6, 1956]
    
      Mr. Emanuel Harris for plaintiff. Messrs. Bernard J. Gallagher and Max E. Greenberg were on the briefs.
    
      Mr. LeRoy Bouthmayd, Jr., with whom was Mr. Acting Assistant Attorney General George S. Leonard, for defendant.
   LittletoN, Judge,

delivered the opinion of the court:

In this case the defendant admits that there is due the plaintiff, G. M. McWilliams, Trustee in Bankruptcy, the sum of $6,288, representing the balance — unused balance — on the contract made September 6,1943, with one F. T. Newton for the construction of a building at Tallahassee, Florida. The facts relative to the contract, the work thereon and the default of contractor Newton on November 5,1943, are shown in findings 4 and 5. The only defense is the statute of limitations.

The commissioner of this court has made detailed findings on the stipulation of the parties, supplemented by evidence offered by the parties. These findings are fully supported by the record and we approve and adopt them.

The petition herein was filed on January 13, 1950. The defendant says that inasmuch as defendant completed the contract work on or before January 1, 1944, at a cost of $1,334.88, and thereafter made a determination of such costs, the cause of action accrued on January 1,1944.

The uncontroverted facts show the defendant did not advise the contractor or his representative or the use plaintiff, National Surety Corporation, which had paid $3,811.43 to various creditors of the contractor under a payment bond, of the cost of completion and the balance due from the Government on the contract price until after January 14, 1944. See findings 15-24. The National Surety Corporation was diligent in its efforts to ascertain from the proper Government officials the cost of completion and the balance due xmder the contract, if any, but was unable to get this information prior to January 14, 1944. It appears from the evidence that neither the Trustee in Bankruptcy nor the National Surety Corporation was able to ascertain from defendant the cost of completion and the balance due until a date which was within a period of six years prior to the filing of the petition herein. The Trustee was appointed in December 1945.

The National Surety Corporation was not in a position to bring suit on January 1,1944, or prior to January 14,1944, as-claimed by defendant. Nor was the defaulting contractor Newton in a position to do so.

The contract and the circumstances obviously required the Government officials to determine the cost of completion and the balance due under the contract to the original contractor, or the National Surety Corporation, or the Trustee, and to notify the proper party or parties to that effect. They did not do so. The claim was not, therefore, barred by the statute when the petition was filed in this court.

The plaintiff, G. M. McWilliams, Trustee in Bankruptcy, is therefore entitled to recover $6,288, of which sum the amount of $3,811 is for the “use plaintiff,” the National Surety Corporation, as hereinbefore stated and as shown in the findings. See findings 8 and 25.

Judgment will be entered in favor of the plaintiff for $6,288.

It is so ordered.

Laramore, Judge; Madden, Judge; Whitaker, Judge; and JONES, Chief Judge, concur.

FINDINGS OF FACT

The court, having considered the evidence, the briefs and argument of counsel, and the report of Commissioner Paul EL McMurray, makes the following findings of fact:

1. Plaintiff, G. M. McWilliams, was appointed Trustee in Bankruptcy for F. T. Newton, general contractor, Hatties-burg, Mississippi, by order of the United States District Court, Hattiesburg Division, Southern District of Mississippi, in December 1945.

2. On September 6, 1943, F. T. Newton and the United States, acting through the contracting officer, War Department, entered into Contract No. W-1452-E (S. C. IV)-4, whereby F. T. Newton was to furnish the materials, and perform the work for the construction on or before October 15, 1943, of an addition to Headquarters Building, Dale Mabry Field, Tallahassee, Florida, for the sum of $7,622.88.

3. The use plaintiff, National Surety Corporation, executed a payment bond on the contract for F. T. Newton in the sum of $3,811.43.

4. F. T. Newton entered upon the performance of the com tract but failed to complete the performance of the contract on or before October 15,1943. Accordingly, the defendant, under date of November 5, 1943, terminated the contract pursuant to the provisions of Article 9 thereof and undertook completion of the construction contemplated by the contract.

5. On or prior to January 1,1944, the defendant completed all work required for the satisfactory final accomplishment of the contract at a cost to the defendant of $1,334.88.

6. The amount earned on the contract by F. T. Newton at the time of his default and the unpaid balance due on the contract after deducting the cost of completion by the dm fendant is the sum of $6,288.00.

7. After the default of F. T. Newton as aforesaid, various persons, firms and corporations, who furnished labor or material to the said Newton under the contract, made claim for settlement of their accounts under the payment bond of National Surety Corporation.

8. On February 18,1944, the National Surety Corporation deposited the sum of $3,811.43 under the payment bond in the United States District Court for the Northern District of Florida, in an action instituted in that court by various creditors upon the payment bond. A final decree in that action, dated August 7, 1944, released and discharged the National Surety Corporation from any and all liability to the various creditors by virtue of the payment bond and a pro rata distribution was directed in favor of the creditors.

9. On November 9, 1943, the National Surety Corporation filed a Complaint for Injunction and Receiver in the United States District Court for the District of Columbia seeking to enjoin the Treasurer of the United States, the Secretary of the Treasury, the Secretary of War, and others, from making any payments due under contracts entered into by F. T. Newton with defendant, including Contract No. W-1452-E (S. C. IV)-4, and requesting that a receiver be appointed to obtain and receive any balances due from defendant under the contracts. The aforesaid case, Civil Action No. 21947, was dismissed on January 15, 1945, for lack of prosecution pursuant to Civil Rule number 13, Federal Rules of Civil Procedure.

10. Counsel for National Surety Corporation advised the Law and Claim Department of said corporation, under date of January 19,1944, that a call was made on.the Post Engineer at Dale Mabry Field regarding the instant contract and that “The cost to the government for completing the contract was $1,334.88.” National Surety Corporation has been unable to ascertain the specific date on which the call was made on the Post Engineer to obtain the cost information.

11. On December 22,1943, Major G. R. McCauley, Corps of Engineers, Headquarters Fourth Service Command, Office of the Commanding General, Atlanta, Georgia, wrote to the Commanding Officer, Dale Mabry Field, Tallahassee, Florida, forwarding a copy of memorandum from the Office of the Judge Advocate General, Washington, D. C., requesting the preparation of a report on the said contract.

12. On January 1, 1944, Major Lacey F. Johnson, Post Engineer, at Dale Mabry Field, wrote to the Commanding General, Fourth Service Command, Atlanta, Georgia, transmitting undated report signed by him, which letter of transmittal bears notation “SOUTH ATLANTIC DIVISION JAN 6 ’44 — 10 AM.”

The report stated in part as follows:

1. On 6 September 1943, this office issued Letter Contract (Contract No. W-1452-E (S. C. IV) 4), to F. T. Newton, General Contractor, 12214 Front Street, Hattiesburg, Mississippi, for the construction of an addition to Headquarters Building, Dale Mabry Field, Tallahassee, Florida. This letter contract was based upon proposal dated 6 September 1943. Copies of proposal and letter contract are attached herewith.
2. Subsequently, W. D. Contract Form #2 was prepared and forwarded to the Contractor for signature under date 24 September 1943, construction having been commenced in the meantime. On 5 October 1943, no signed contract having been returned, teletype was sent to contractor requesting immediate return of contract and payment bond. No response being made, a second teletype was dispatched requiring immediate return under threat of closing down job. Both then received, and on 14 October 1943, contract was forwarded to Headquarters, Fourth Service Command for approval and distribution. Copies of above mentioned teletypes and contract attached.
3. Subject contract was returned to this office under date of 21 October 1943, for correction, as indicated by copy of 1st Ind. attached hereto.
4. On 30 October 1943, revised contracts were forwarded to Contractor for initialing. To date, such contracts have not been returned, and there does not exist in this office any signed contract, with required initials. Therefore, no official approval and distribution of the contracts have ever been made by the Government.
5. The Contractor, in the meantime, defaulted in payrolls due for the weeks ending 9 October and 16 October 1943. _ On notification of this by Contractor’s local representative, a telephone call was made to home office of National Surety Company in Albany, New York, and at their request a teletype,‘copy attached, was dispatched to their Atlanta, Georgia, representative. The local representative kept work going until 1 November, and then work having ceased, a teletype was sent to Contractor requesting conference on situation. Copy is attached. No reply forthcoming, this office, on 5 November 1943, terminated contract under provisions of Article 9 thereof, and took over completion of same. Copy of letter of termination attached.
6. This office has completed all work required for the satisfactory final accomplishment of contract at a cost to the Government of $1334.88, as evidenced by work orders and cost accounting reports. Therefore, the amount due on the contract will not be the sum alleged in Paragraph 6 of the complaint, but $6288.05, the balance after deducting such costs.
* * * * *

13. On January 19, 1944, Keen & Allen, counsel for National Surety Corporation at that time, advised said corporation, among other things, that Keen & Allen called on Captain Metzger in the Post Engineer’s Office in reference to having the Government pay out the monies to claimants on the Newton contract, that Captain Metzger advised that the matter had passed out of his hands and was being handled from the Chief Engineer’s Office in Washington, and that the Washington Authorities moved the matter upon the filing of the National Surety Corporation suit in the U. S. District Court for the District of Columbia.

14. On July 22, 1954, Keen, O’Kelley & Spitz, attorneys, successors to Keen & Allen, advised Max E. Greenberg, attorney for National Surety Corporation, that they could not locate any record which would enable them to answer inquiry as to the date when their representative called on Captain Metzger as stated in the letter of January 19, 1944, or any other record which would add to the information contained in such letter.

15. F. T. Newton, the contractor, received no notice from the United States or anyone else prior to January 14, 1944, of the cost of the completion of the contract by the Government or of the determination of the final amount due on the said contract for the unpaid balance thereof, or of any final settlement of said contract.

16. National Surety Corporation received no notice prior to January 14, 1944, from the United States, the War Department, any other agency of the United States or anyone else, of the cost of completion of the said contract by the Government or of the determination of the final amount due or the unpaid balance thereof or of any final settlement of the contract.

17. On September 26,1947, Colonel Homer B. Pettit, Corps of Engineers, Chief Legal Division, wrote National Surety Corporation, in response to an inquiry as to the amount due under the said contract, that the contract was under the jurisdiction of the Commanding General, Third Army, Atlanta, Georgia, that the inquiry had been transmitted to that officer and, as to payments under the contract, he suggested that the National Surety Corporation contact the General Accounting Office in St. Louis, Missouri.

18. On December 16, 1947, the National Surety Corporation, by F. I. Tennyson, wrote to the Comptroller General stating that it had made numerous efforts to obtain information concerning the status of the contract and had been advised by the General Accounting Office that part of the file had been located, but that he could not give any information as to the financial status of the contract without the consent and approval of the General Counsel, E. L. Fisher, and that Mr. Fisher suggested writing to him outlining the facts of the case and that he would then give the matter further consideration.

19. On January 23,1948, the Acting Comptroller General wrote National Surety Corporation that its letter of December 16,1947, was being transmitted to the Claims Division of the Office of the Comptroller General for consideration as a claim.

20. On May 12,1948, National Surety Corporation, by F. I. Tennyson, wrote the Comptroller General requesting advice as to the status of the matter.

On June 11, 1948, the Claims Division of the General Accounting Office, Washington, D. C., wrote National Surety Corporation that the Department of the Army had been called upon for an administrative examination and report concerning the default of the contractor, as well as the facts recording the completion of the work, etc. that the Department had encountered difficulties in locating the permanent records and to date had failed to furnish the required report upon the basis of which, the General Accounting Office could take settlement action; that the latest request for a specific report in connection with the case was made to the Department on May 13, 1948; that no response thereto had been received and that until such time as the necessary development was completed, the General Accounting Office would not be in a position to take final settlement action on the Surety’s claim.

21. On August 19,1948, the Claims Division of the General Accounting Office wrote National Surety Corporation that action on the claim was being held in abeyance pending receipt of a report from the Department of the Army, that the Department was making every effort to locate the records upon which to base the report and there was nothing that National Surety Corporation could do to expedite the matter.

22. No administrative determination or the balance due on the contract was communicated to the contractor of the Surety prior to January 14,1944.

No final settlement was made on the contract prior to January 14, 1944.

No final settlement on the contract was ever filed in the General Accounting Office and no final settlement was made by that agency.

■ 23. Neither the contractor nor the Surety was in a position to make demand for the balance due on the contract prior to January 14,1944, and were without information as to the unpaid balance on the contract for which claim could be made by them.

24. It has been agreed by the parties that the amount earned by Newton and the unpaid balance due under the contract, after deducting the cost of completion by the defendant, is $6,288.00. The National Surety Corporation has paid out the sum of $3,811.00 under the payment bond.

.. 25. No part of the unpaid balance on the contract in the sum of $6,288.00 has been paid by the defendant to Newton or to the plaintiff, G. M. McWilliams, Trustee in Bankruptcy for Newton, or to the use plaintiff, National Surety .Corporation.

26. This action was instituted on January 13, 1950.

No part of the claim herein has been assigned.

CONCLUSION OF LAW

Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiff is entitled to recover, and it is therefore adjudged and ordered that Gr. M. McWilliams, the Trustee in Bankruptcy, recover of and from the United States the sum of six thousand two hundred eighty-eight dollars ($6,288), of which sum three thousand eight hundred eleven dollars ($3,811) shall be for the use of the National Surety Corporation.  