author: DAWKINS, District Judge.

text:
    UNITED STATES ex rel. and for Use of GENERAL IRON WORKS CO. et al. v. MAPLES et al. (CRANE CO. et al., Interveners).
    No. 2406.
    District Court, W. D. Louisiana, Shreveport Division.
    Feb. 13, 1934.
    E. W. & P. N. Browne, of Shreveport, La., for plaintiffs.
    Jasper K. Smith, Jr., John H. Tucker, Foster, Hall, Barret & Smith, M. C. Trichel, Jr., M. W. Feist, C. F. Currier, and Pugh, Grimmet & Boatner, all of Shreveport, La., and Chas. H. Jackson, Jr., of San Antonio, Tex., for defendants.
   DAWKINS, District Judge.

This suit was filed in the name of the United States, on the relation of and for the use and benefit of General Iron Works & Supply Company, and its receiver, Charles Eisen, in which it was alleged that the “defendant, L. C. Maples, was at the time of the transactions hereinafter mentioned, doing business in the name of L. C. Maples Construction Company.” It was further alleged that the Hartford Accident & Indemnity Company had become the surety upon the bond of “L. C. Maples, doing business as aforesaid,” for the faithful performance of the contract with the government for the construction of “thirty-four sets of double non-commissioned officers quarters” at Barks-dale Flying Field, in Bossier parish, for the price of $383,303. It was alleged that the bond was in the sum of $191,651.50. The petition then proceeded to allege that the defendant L. C. Maples, contractor and principal in the original contract and bond with the government, later entered into a subcontract with the O’Pry Heating & Plumbing Corporation, whose name was subsequently changed to Smith-Jones Company, “one of the defendants herein,” for the furnishing and installing of the plumbing and heating fixtures in said quarters; that relators “have no copy of said contract,” but its terms were recited in substance; further, that the relators, “at the instance and request of said O’Pry Heating & Plumbing Corporation, entered into a contract in writing, wherein and whereby the said General Iron Works Company agreed to furnish said O’Pry Heating & Plumbing Corporation” certain materials for installing in the said buildings, originally contracted for by Maples, and in which the O’Pry Heating & Plumbing Corporation was to install the plumbing and heating fixtures; that the prices charged for said materials by relators were reasonable and proper, and the said O’Pry Heating & Plumbing Corporation promised and agreed to pay the same within thirty days after the dates of the respective invoices; that the materials were furnished and partly paid for, but there remained due and unpaid $11,356, as shown by “statement annexed and made a part hereof.”

Petitioner further alleged as “an additional cause of action” that O’Pry Heating & Plumbing Corporation had made a contract with one “Marcus E. Warden, doing business as Warden Sheet Metal Works,” for the furnishing of certain materials and labor, “and which entered into the construction both of the non-commissioned officers’ quarters under said contract of said Maples with the United States government, and of-forty-two commissioned officers’ quarters under the contract of the Ashton-Glassell Company, Inc. with the United States.” Further, that the said Warden had contracted with Charles Johnson Company, Inc., of Peoria, Ill., to furnish certain materials for use in the said noncommissioned officers’ quarters under the contract of Warden with the Smith-Jones Company (formerly O’Pry Heating & Plumbing Corporation), which materials were furnished to the extent of $2,992.87, “the reasonable prices thereof,” and which Warden furnished to Smith-Jones Company, and the latter in turn furnished to the said Maples, and to’ said Ashton-Glassell Company, Inc., and which “entered into the construction of said non-commissioned officers’ quarters,” as respectively contracted for by said Maples, and the said Ashton-Glassell Company, Inc.; that there was a balance due to said Charles Johnson Company, Inc., by Warden of $1,192.95, and “that the said General Iron Works Co., Inc., prior to the appointment of the said Charles Eisen as receiver, had guaranteed in writing to said Charles Johnson Company, Inc. the payment by the said Marcus E. Warden; that Warden had failed to pay said indebtedness and on August 2, 1932, the claim against him had been acquired by relators “for valid and sufficient consideration”; that the balance due for materials to Maples for use in the noncommissioned officers’ quarters amounts to the sum of $549.95.

Petitioners further alleged the completion by Maples of the contract with the government, the lapsing of the time required by the statute without the government having sued and prayed for service upon “L. C. Maples, the said Smith-Jones Company and the Hartford Accident & Indemnity Company,” and for judgment “against said defendants, individually and in solido,” in said sums of $11,356 and $549.95, with interest, “and such further amounts, under the penalty of said bond, in the sum of $191,651.50, as may on the trial hereof be shown to be due, either to relators or to any or all others who may intervene herein,” and for reasonable attorney’s fees.

This suit was filed on May 10, 1933, and on May 27th following Crane Company, alleging itself to be an Illinois corporation, domiciled at Chicago, intervened and alleged the same facts as to the name of Maples and O’Pry Heating & Plumbing Company, as in the original petition, and that the said “Smith-Jones Company, formerly O’Pry Heating & Plumbing Corporation, L. C. Maples, doing business as L. C. Maples Construction Company, and Hartford Accident & Indemnity Company, are justly and truly indebted unto your petitioner in solido” in the sum of $3,693.5^, with interest. The Crane Company further alleged the same facts as to the making of the contracts “by L. C. Maples, doing business as L. C. Maples Construction Company,” with the government, for the erection of thirty-four noncommissioned officers’ quarters and the furnishing by Maples of “a standard government performance bond with the Hartford Accident & Indemnity Company as surety thereon”; that the O’Pry Heating & Plumbing Corporation had entered'into a. contract with Maples to furnish the labor and materials for the installation of the plumbing and heating fixtures; that at various times shown on an itemized statement the Crane Company had furnished O’Pry Heating & Plumbing Corporation plumbing and heating materials to the amount of $22,019, upon which payments had been made reducing the balance to the sum claimed in the intervention; that payments were to, be made on the 15th of each month following the month in which the materials were furnished; that all of the materials furnished “were used” under the subcontract in said noncommissioned officers’ quarters; and that demand had been made upon Smith-Jones Company, L. C. Maples, and the Hartford Accident & Indemnity Company, without avail.

On June 2d Peden Iron & Steel Company, a Texas corporation, also intervened. It likewise alleged the contract by Maples with the government, describing this defendant in the same manner as the other petitioners, as well as the giving of the bond with the Hartford Accident & Insurance Company, as surety; the subcontract between Maples and O’Pry Heating & Plumbing Corporation which had “changed its name to Smith-Jones Company”; that O’Pry Heating & Plumbing Corporation had given a performance bond in the sum of $61,300, “ * * * signed by the United States Fidelity Company, a corporation organized under the laws of the state of Maryland,” as surety for the faithful performance of the subcontract with Maples, and which had been duly recorded; that O’Ply Heating & Plumbing Corporation had sublet a portion of the work to be done for Maples to Marcus E. Warden of San Antonio, Tex.; that Warden’s contract included the obligation to furnish and install warm air furnaces on the said job, “with the exception of electrical work and gas piping,” in accordance with the contract-awarded by the United States; that Warden gave a performance bond signed by the New York Casualty Company as surety, in the sum of $7,000, “covering this and other work undertaken by Warden at Barksdale Field, Louisiana”; that all of said contracts, subcontracts, and bonds are governed by the Heard Law; that interveners, at the instance and request of the above-named contractors and subcontractors, agreed to furnish, and did furnish, said Marcus E. Warden materials and supplies necessary for the construction and completion of the said public buildings and for which $1,688.13 remained due and unpaid. Petitioner prayed for services on “L. C. Maples, O’Pry Heating & Plumbing Corporation, Marcus E. Warden and their respective sureties, the Hartford Accident & Insurance Company, the United States Fidelity & Guaranty Company, and the New York Casualty Company,” and for judgment in solido against all of them.

On June 14, 1933, the original relators, General Iron Works Company, and its receiver, appeared and moved to dismiss the cause “with prejudice.”

On the same day Marcus E. Warden filed an intervention. He also alleged the same facts and the contract between Maples with the government for the construction of the noncommissioned officers’ quarters and the giving of the bond with the Hartford Accident & Insurance Company as surety; the subletting by Maples of the work of installing the heating and plumbing fixtures to O’Pry Heating & Plumbing Corporation; the giving by the latter of a performance bond to Maples in the sum of $61,300, with the United States Fidelity & Guaranty Company as surety; that under the terms of said contract and bond O’Pry Heating & Plumbing Corporation and United States Fidelity & Guaranty Company “became liable and bound unto the United States and to L. C. Maples, to prosecute said work and improvements to completion according to the terms of the sub-eontraet,” “ * * * and to make prompt payments to all persons supplying the contractor with labor and materials in the prosecution of said work provided for in said contract”; the subletting by O’Pry Heating & Plumbing Corporation of a portion of the work to petitioner in “a formal sub-eontraet” for the installation of the warm air heating furnaces in the forty-two commissioned officers’ quarters at Barksdale Field, as well as in the thirty-four noncommissioned officers’ quarters, for which O’Pry Heating & Plumbing Corporation would pay to petitioner $14,940, “total for the two jobs of which the sum of $9,015.00 is for the work under this construction job”; that additional work was done and materials furnished under the terms of the contract “on this construction job” to the amount of $2,548, making a total of $11,563, which was earned by the furnishing of the materials and doing the work “on this construction job,” and that there remains due to petitioner $4,661.76, “for the portion of the sub-contract covering this construction job * * * interven oFs damage Ten Thousand ($10,000.00) Dollars”; that in performing said contract petitioner obtained materials and supplies from other concerns as follows:

Further, that O’Pry Heating & Plumbing Corporation “had not filled its part of its contract with petitioner,” or its subcontract with L. C. Maples Construction Company, in that petitioner “has not been paid in compliance with the terms of its sub-eontraet”; that Maples had not filled his contract with the government because of the failure to pay petitioner, and the said “United States Fidelity & Guaranty Company and the Hartford Accident & Indemnity Company, as surety, thereby became liable” to petitioner for the sum of $4,661.76 “on this construction job.” Petitioner also prayed for service upon “L. C. Maples, L. C. Maples Construction Company, Hartford Accident & Indemnity Company, O’Pry Heating & Plumbing Corporation, and United States Fidelity & Guaranty Company”; that petitioners’ creditors above named be notified of their right to intervene herein; that further notice be given by publication; and “that its demand be allowed and established and that it have judgment against all of the defendants, in accordance with law and the Heard law for its debt, interest and attorneys fees,” etc.

On June 14, 1933, Taylor-Seidenbaeh Company, Inc., a Louisiana corporation, domiciled at Shreveport, intervened and alleged substantially the same facts with respect to the original contract between Maples and the government, the former’s subcontract with the O’Pry Heating & Plumbing Corporation, the making of the bonds with the Hartford Insurance Company, United States Fidelity & Guaranty Company, and the New York Casualty Company, as sureties; that petitioner had sold to said Marcus E. Warden certain materials to the amount of $238.11, which were used in the construction of the noncommissioned officers’ quarters. This intervener also prayed for judgment against Maples, O’Pry Heating & Plumbing Corporation, Warden, and the three bond companies, in solido.

June 26, 1933, the Peden Company filed an amended petition, in which it was alleged that the Ashton-Glassell Company and L. C. Maples were the principal contractors and the Union Indemnity Company and Hartford Accident & Indemnity Company were sureties, respectively, of the two contractors and the performance bonds by the subcontractors, O’Pry Heating & Plumbing Corporation and Marcus E. Warden, were signed by the United States Fidelity & Guaranty Company and the New York Casualty Company, respectively; that $1,125.48 remained due by Warden and O’Pry Heating & Plumbing Corporation on the Ashton-Glassell Company contract and $1,688.13 upon the Maples contract. Other details as to the time the materials were furnished and interest claimed are set forth; and that all of the materials were furnished to Warden “at the express request of all the defendants herein.” The prayer was for judgment in solido in the sum of $3,043.61, attorneys’ fees, etc.

On June 30, 1933, exceptions were filed by the same counsel, as follows:

(1) By United States Fidelity & Casualty Company to the intervention of Peden Iron & Steel Company of no right or cause of action “and that your petitioner is improperly impleaded in this suit”;

(2) By L. C. Maples, an exception of vagueness to the intervention of Peden Iron & Steel Company, in that (a) it does not state whether the contract between O’Pry Heating & Plumbing Corporation and Marcus E. Warden “was verbal or in writing”; nor is it set out. in substance, (b) that, although copies of the subcontracts and bonds are alleged to have been annexed to the said intervention, they were not so annexed; (e) that it is not alleged whether the agreement between the said intervener and Warden was oral or in writing; (d) that, although the petition alleges an account of the work and materials furnished is annexed, it was not so annexed; (e) and that the intervention does not allege whether the materials were furnished for the work at Barksdale Field or somewhere else, or that they went into the buildings covered by the original contract;

(3) By the Smith-Jones Company to the intervention of Peden Iron & Steel Company, on the same grounds as urged by Maples;

(4) By the Hartford Accident & Indemnity Company to the intervention of Crane Company, that (a) it is not alleged whether the contract between O’Pry Heating & Plumbing Corporation and Maples was in writing or verbal; (b) intervener does not state whether its agreement with O’Pry Heating & Plumbing Corporation was written or verbal; (e) nor does it state whether the work and materials were furnished at Barks-dale Field or elsewhere;

(5) By Hartford Accident & Indemnity Company to the intervention of Peden Iron & Steel Company upon the same grounds as urged to the intervention of Crane Company, as Tyell as the further ground that, although an account was alleged to have been annexed, none was so annexed;

(6) By the United States Fidelity & Guaranty Company, to the intervention of Peden Iron & Steel Company, because (a) it is not stated whether the contract between O’Pry Heating & Plumbing Company and Warden was verbal or in writing; (b) that copies of the subcontract and bond were alleged to be annexed, but were not so annexed; (c) that it does not say whether its contract with Warden was verbal or in writing; (d) that the petition of intervention alleges that an account was annexed, which was not done; and (e) does not show whether the work and materials furnished were used at Barksdale Field or some other place;

(7) By L. C. Maples to the intervention of the Crane Company, upon the same grounds as set forth in (a), (b), and (e) of the exception of the United States Fidelity & Guaranty Company, last mentioned; and

(8) By the O’Pry Heating & Plumbing Corporation to the intervention of Peden Iron & Steel Company, on the same grounds as set forth in (a), (b), (e), (d), and (e) of the exception of United States Fidelity & Guaranty Company to the intervention of this same intervener.

On September 26,1933, additional exceptions were filed by the same counsel, as follows:

(1) By L. C. Maples to dismiss the intervention of Marcus E. Warden as to “L. C. Maples Construction Company,” for the reason that the latter “is merely a trade name under which your appearer operates,” and any judgment against it “may be construed to constitute a judgment herein.”

(2) By Smith-Jones Company, to dismiss the intervention of Marcus E. Warden, in so far as it attempts to make O’Pry Heating & Plumbing Corporation a party to the suit, for the reason that the petition “shows on its face that there is no longer any such corporation,” its name having been changed to that of this mover.

(3) By L. C. Maples, Hartford Accident & Indemnity Company, Smith-Jones Company and United States Fidelity & Guaranty Company, to the intervention of Warden, operating as Warden Sheet Metal Works, because it “has no right or capacity to sue or stand in judgment herein.”

(4) By Maples to dismiss the intervention of Taylor-Seidenbaeh Company, Inc., because it “attempts to make your appearer a party to said proceedings,” under the title of L. C. Maples, doing business as L. C. Maples Construction Company, whereas no such legal entity exists. * * * ”

(5) By Smith-Jones Company to the intervention of Taylor-Seidenbaeh Company, Ine., because it states no cause or right of action against mover.

(6) By Hartford Accident & Insurance Company to the intervention of the said Taylor-Seidenbaeh Company, Ine., because there is a misjoinder of parties defendant in said petition.”

(7) By New York Casualty Company, represented through counsel other than those appearing in the foregoing exceptions, to the intervention of Peden Company, Ine., because it discloses no eause of action against mover.

On October 5, 1933, counsel for intervener Peden Company, filed a plea suggesting that it had previously filed an amendment to its intervention “which should satisfy the exceptions of vagueness of L. C. Maples, Hartford Accident & Insurance Company, O’Pry Heating & Plumbing Corporation, Ine. (Smith-Jones Co.).”

The motion of the General Iron Works and its receiver, who originally filed this proceedings, to dismiss the intervention of Crane & Co. and all other proceedings herein, was on September 20, 1933, overruled by the court, for reasons stated in a memorandum handed down at that time.

These numerous exceptions will be disposed of in the order above stated.

Exceptions filed June 30, 1933.

(1) Taking up first the exception of no eause of action by the United States Fidelity & Guaranty Company to the intervention of Peden Iron & Steel Company, I am of the view that, while a subcontractor or those having claims for labor or materials furnished either to him or to the original contractor may have a right of action in this proceeding upon the bond by the principal contractors with the government (Bartlett & Kling v. Dings [C. C. A.] 249 F. 322; Chicago Bonding & Surety Co. v. U. S. [C. C. A.] 261 F. 266; Taylor v. Connett [C. C. A.] 277 F. 945; Mankin v. U. S. to Use of Ludowici-Celadon Co., 215 U. S. 533, 30 S. Ct. 174, 54 L. Ed. 315, affirming [C. C. A.] 158 F. 1021), they cannot implead the surety upon the bond of a subcontractor given for the protection of the principal contractor. This is a statutory proceeding (title 40, § 270, U. S. C. [40 USCA § 270]) upon the bond required to be given to take the place of the lien which the furnishers of labor and material would have against the work in the ease of a private individual. There can be no lien upon government property, and it cannot be sued without its consent. Any one having a claim against the contractor with the government, after certain delays and after its failure to sue, may proceed in the name of the United States upon the bond which the law requires the government to exact in letting public works. It provides that there shall be but one suit, and “any person, company, or corporation who has furnished labor or materials used in the construction or repair of any public building or public work” may sue or intervene in the proceeding after it has been instituted, regardless of the amount of the claim. It cannot be commenced until after the completion of the work and final settlement by the government, and then not later than one year thereafter. “If the recovery on the bond should be inadequate to pay the amounts found due to all of said creditors, judgment shall be given to each creditor pro rata of the amount of the recovery.” The fact that it is required to be brought in the name of the government carries the idea that the claimants authorized to sue on the bond shall, in effect, occupy the position of the United States, if it were compelled to pay the furnisher of labor and materials to discharge a lien. In other words, it substitutes them in place of the government, and reasonably contemplates that the proceedings shall be limited to and determined by the rights of all parties in and under the bond or obligation given to the United States. To this extent it is in the nature of a proceeding in rem on the bond. To engraft either a contractual or legal claim or controversy between these claimants and a third person, such as the surety on a subcontractor’s bond, who has voluntarily appeared or under process been brought into the matter, and as to whom the government has no interest and is not privy, would, I think, go beyond the purpose of the law and bring in persons and parties who could not otherwise, because of citizenship, etc., be sued in this court, under the limited jurisdiction conferred by this statute. I see no reason why any one having claims which, but for the fact that those were public buildings, would have had a lien thereon, may not avail himself of the benefits of the statutory bond, but, as to those bonds given by subcontractors to persons other than the government (which are not required by law), claimants are relegated to the normal remedies and proceedings which exist in suits to which the government is not a party. My view, therefore, is that the motion of the United States Fidelity & Guaranty Company to dismiss the demand as to it, by the Peden Iron & Steel Company, should be sustained.

(2) As to the exception of L. C. Maples to the intervention of Peden Iron & Steel Company, (a) I think the intervener should set forth, if it has that information, whether the contract between O’Pry Heating & Plumbing Corporation and Marcus E. Warden (the latter being the person to whom the said intervener claims to have furnished the labor and materials) was oral or in writing; (b) and, if it has copies of the contract and bonds alleged to have been annexed to the intervention, but which appear to have been omitted, they should be produced and filed; (e) it should also state whether the agreement between it and Warden was oral or in writing, and annex it to its reply. With reference to (d) and (e), an amendment subsequently filed by this intervener has copies of the accounts against Warden annexed, and otherwise gives the information called for under these headings.

(3) A compliance with the ruling just made will suffice to meet the objections contained in the exception against Smith-Jones Company resting upon the same grounds.

(4) As to the exception of Hartford Accident & Insurance Company and the intervention of Crane Company, (a) it is sufficient to say that the intervention of Marcus E. Warden discloses that the contract between L. C. Maples and O’Pry Heating & Plumbing Corporation was in writing and recorded in Mortgage Book YY, page 494, of Bossier parish, La., and I think affords all the information on that score necessary in this proceeding; (b) this intervener should state whether its agreement with O’Pry Heating & Plumbing Corporation was oral or in writing; (e) and it should state affirmatively whether all the work and materials sued for were done and furnished at Barksdale Field and covered by contract and bond with the government on this job.

(5) As to the exception of Hartford Accident & Indemnity Company to the intervention of Peden Iron & Steel Company, the same will be disposed of by a compliance with the ruling made upon a similar exception to this intervener’s claim by L. C. Maples.

(6) What has just been said is equally applicable to the exception of the United States Fidelity & Guaranty Company’s exception to the claim of Peden Iron & Steel Works, and, besides, an exception of no cause-of action by this exceptor to this intervention has been sustained.

(7) A compliance by the Crane Company with the ruling under No. 4 above upon the exception of Hartford Accident & Indemnity Company will dispose of the same exception filed by L. C. Maples under this number.

(8) This exception of O’Pry Heating & Plumbing Corporation to the intervention of Peden Iron & Steel Company will be met by a compliance by the latter with the rulings made above upon similar exceptions of other parties.

Exceptions Filed September 26, 1933, by Same Counsel.

(1) I think this exception of L. C. Maples is without substance, and should be overruled.

(2) This exception of Smith-Jones Company is also without merit and will be overruled.

(3) The joint exception of L. C. Maples, Hartford Accident & Indemnity Company, Smith-Jones Company, and United States Fidelity & Guaranty Company to the intervention of Warden is also without merit and will be overruled.

(4) This exception of Maples to the intervention of Taylor-Seidenbaeh Company, Inc., is without merit and will be overruled.

(5) This is an exception of no cause of action by Smith-Jones Company, formerly operating under the name of O’Pry Heating & Plumbing Corporation, to the claim of Taylor-Seidenbaeh Co., Inc. The intervener alleges the contract between the United States and L. C. Maples, the subcontract between the latter and O’Pry Heating & Plumbing Corporation (now Smith-Jones Company), the subcontract of the latter with Marcus E. Warden, and that the present intervener, Taylor-Seidenbaeh Company, Inc., had delivered to Warden materials for use in the construction of the thirty-four noncommissioned officers’ quarters contracted for by Maples with the government. In so far as this claimant asserts the right against the bond given by Maples to the government, I think it does state a cause of action. U. S., for Use of Hill, v. American Surety Company of New York, 200 U. S. 197, 26 S. Ct. 168, 50 L. Ed. 437.

(6) What has just been said applies to the exception of Hartford Accident & Insurance Company to the intervention of Taylor-Seidenbach Company, Inc.

(7) This is an exception by the New York Casualty Company, represented by counsel other than those appearing in all of the foregoing exceptions, to the point that the intervention of Peden Iron & Steel Company discloses no cause of action against the present exceptor. Marcus E. Warden gave the performance bond to O’Pry Heating & Plumbing Corporation for the faithful performance of his contract with them, upon which the New York Casualty Company was surety, and the Peden intervention seeks to recover against this surety in the present proceeding. For the reasons given above in No. 1 of the first list of exceptions, involving an identical question raised by the United States Fidelity & Guaranty Company to the intervention of Peden Iron & Steel Company, seeking to recover upon the bond of O’Pry Heating & Plumbing Corporation, given to L. C. Maples, the present exception of no cause of action will be sustained.

The amendment of Peden Iron & Steel Company, filed October 5, 1933, referred to hereinabove, will be allowed, subject to the rulings made on the exceptions disposed of in this opinion, in so far as they affect this claim.


source: Caselaw Access Project

license: Public Domain

text:
    UNITED STATES for Use and Benefit of BUCKELEW HARDWARE CO. v. UNION INDEMNITY CO. et al. (PITTSBURGH PLATE GLASS CO. et al., Interveners).
    No. 2394.
    District Court, W. D. Louisiana, Shreveport Division.
    Feb. 16, 1934.

      Joe B. Hamiter, of Shreveport, La., for plaintiff.
    Rosen, Kammer, Wolff & Parrar and J. C. Henriques, all of New Orleans, La., for defendant.
    John B. Piles, Robt. L. Garrett, Blanchard, Goldstein, Walker & O’Quin, Irion & Switzer, J. H. Tucker, Jr., Wilkinson, Lewis & Wilkinson, Poster, Hall, Barret & Smith, Hardin & Coleman, Pugh, Grimmet & Boatner, J. N. Mareantel, and E. W. & P. N. Browne, all of Shreveport, La., R. L. Carloek, of Port Worth, Tex., Chas. H. Jackson, Jr., of San Antonio, Tex., and Porteous, Johnson & Humphrey, of New Orleans, La., for interveners.
   DAWKINS, District Judge.

This is a suit under the provisions of section 270, title 40, of the U. S. C. (40 USCA § 270). Plaintiff alleges that on April 17, 1931, the government entered into a contract with Ashton-Glassell Company, Inc., a Louisiana corporation, to construct forty-two company officers’ quarters at Barksdale Plying Field, Bossier parish, La., for the priee of $462,457, and that the contractor furnished a performance bond in the sum of $231,228.-50, with the Union Indemnity Company, also created under the laws of Louisiana, as surety; that the said company, on or about the 11th day of May, 1931, “entered into a reinsurance agreement with the * * International Reinsurance Corporation,” a Colorado corporation, “in favor of the United States, reinsuring and counter-securing the said Umon Indemnity Company on said contract and bond to the extent of $27,823.23”; that between the dates of March 8, 1932, and June 14, 1932, petitioner had sold and delivered to the said contractor building materials to the value of $12.23, which had not been paid, and wMch materials were purchased for and used in the construction of said officers’ quarters; that the UMon Indemnity Company was in the hands of a receiver appointed by the state court for the parish of Orleans; that the Ashton-Glassell Company, Inc., the contractor, had been adjudged a bankrupt and a trustee appointed. These companies were cited through their receivers and trustee, respectively. The prayer was for a judgment in solido against all of said defendants, including the International Reinsurance Corporation.

On April 10, 1933, the Pittsburgh Plate Glass Company filed an intervention, reciting the same facts and circumstances, including the making of the contract and bond with the government; that it had, at the request of the said Ashton-Glassell Company, Inc., sold and delivered to it $53.54 worth of material, which had gone into the said job. It prayed for judgment against the same parties and in the same manner as the original petitioner.

On the same day Victoria Lumber Company, through its receivers, intervened, alleging upon the original contract and bond, as well as the reinsurance bond, and further, that it had entered into a contract -with the Ashton-Glassell Company, Inc., to furmsh the millwork for twenty-nine type A and thirteen type B quarters at Barksdale Field, for the consideration of $28,200, as per copy of contract attached; that, in addition, it had furnished extra materials to the extent of $3,156.72, as per itemized statement annexed, all of wMch materials so furnished were used in the construction of said buildings; and that there was a balance due of $8,092.53, for which it prayed judgment against the three defendants in solido.

Likewise on the 19th day of April, 1933, C. V. Brandt of San Antonio, Tex., “operating and doing business as Brandt Floor Company,” intervened, claiming the sum of $179.72 for finishing the floors “in the forty-two officers’ quarters” and repeating all of the allegations of the preceding claimants with regard to contracts, bonds, etc. and praying for judgment against the contractor, surety company, and the reinsurer. He alleged that Ms dealings were direet with- the contractor, Ashton-Glassell Company, Inc.

On the same day similar intervention was-filed by C. W. Milford, “operating and doing business as Acme Weather Strip & Caulking Company, of Dallas, Texas,” in. which he alleged his agreement was also direct with the contractor, setting forth the contract, bond, etc., and praying for judgment against the same parties in solido for a balance of $121.80.

On May 3, 1933, the Robinson-Slagle Lumber Company, Inc., a Louisiana corporation, through its receivers, intervened, alleging it had furnished labor and materials “to the Ashton-Glassell Company, Inc.,” upon which a balance of $1,356.46 remained due. It adopted “the allegations of the plaintiff herein,” except as to the amount of its claim, •and prayed judgment against the same parties in solido.

May 20, 1933, Decatur Cornice & Roofing Company, an Alabama corporation, “operating, doing business and trading as Decatur Iron & Steel Company,” intervened, repeating substantially the allegations of the original plaintiff; that, by agreement with the contractor, it had “furnished at different times from and including June 13, 1931, to and including May 25, 1932, certain materials and supplies” for the construction of the said officers’ quarters, upon which there was a balance due of $5,256.79, for which it prayed judgment against the same defendants in solido.

May 23, 1933, Albert Karelius intervened, repeating in substanee the allegations of the original petition; that petitioner had “entered into a contract in writing, as sub-eon-tractor, with the defendant Ashton-Glassell Company, Inc.,” to do the “lathing, plastering and stucco work for twenty-nine Type A and thirteen Type B, company officers’ quarters, for the sum of $57,750.00,” payable as provided in said contract; that extra labor and material was performed and furnished, resulting in a total of $59,951, upon which there was a balance due of $714, and for which he prayed judgment in solido against all three of the original defendants. On the 27th of May he obtained an order to the defendants Ashton-Glassell Company, Inc., through its trustee, the Union Indemnity Company, through its receivers, and the International Reinsurance Corporation, to show cause why “the relief prayed for in his petition * * * should not be granted.”

May 27,1933, the Crane Company of Chicago, Ill., repeating substantially the allegations of the original petition, intervened, and in addition thereto alleged that the International Reinsurance Company had been placed in the hands of receivers, who were named; that on the 7th day of May, 1931, Ashton-

Glassell Company, Inc., entered into a subcontract with O’Pry Heating & Plumbing Corporation, now Smith-J-ones Company, for the furnishing and installing of the plumbing, heating, and gas fitting materials, and that petitioner sold and delivered to said Smith-Jones Company materials for said work which went into the construction of the buildings, amounting to $29,320.81, upon which there remains a balance due of $13,059.90, and for which petitioner prayed judgment in solido against the original three defendants, as well as the Smith-Jones Company, in solido.

June 6, 1933, Interstate Electric Company, a Louisiana corporation, of Shreveport, La., intervened. It adopted the general allegations of the original plaintiff, and alleged that between the dates of June 6 and 15, 1932, it sold and delivered to the contractor materials to the value of $57.77, as per itemized statement annexed, which were used on said job. It likewise prayed judgment against the contractor, its surety, and the Reinsurance Corporation, in solido.

June 9th Peden Iron & Steel Company intervened, making the same general allegations, and further that the general contractor, Ashton-Glassell Company, Inc., had “sub-let a part of the work to O’Pry Heating & Plumbing Corporation, * * * which later changed its name* to the Smith-Jones Company”; that the latter company gave a performance bond with the United States Fidelity & Guaranty Company as surety; that the “O’Pry Heating & Plumbing Corporation sub-let a portion of the work” to Marcus E. Warden of San Antonio, Tex., “doing business as the Warden Sheet Metal Works,” which included the labor and materials to install the warm air furnaces “on the above job, with the exception of the electrical work and gas piping”; that Warden gave a performance bond in the sum of $7,500, with the New York Casualty Corporation as surety; that the said bonds are controlled by section 270, title 40, U. S. C. (40 USCA § 270) or, in the alternative, by the law of Louisiana; that petitioner furnished the materials which were used on said job and for which there was a balance due of $1,125.48. It also prayed for judgment against the contractor, its surety, the Reinsurance Corporation, United States Fidelity & Guaranty Company, O’Pry Heating & Plumbing Corporation, New York Casualty Company, and Marcus E. Warden, in solido.

June 26th, an amended petition was filed by “Peden Company,” alleging that its name had been changed from Peden Iron & Steel Company, and further elaborating its claim.

June 1, 1933, North Texas Iron & Steel Company intervened, alleging that it had furnished materials upon the orders of the Ash-ton-Glassell Company, Inc., to the extent of $227.42, as per itemized statement annexed, which were used in the same job. It adopted all the pertinent allegations of the original petition and prayed for judgment against the contractor, its surety, and the Reinsurance Corporation, in solido.

June 8, 1933, Sproul Company, Inc., intervened, alleging that the general contractor, Ashton-Glassell Company, Inc., had made a subcontract with Brasted Lacquer & Spray Equipment Company, Inc., a Kansas corporation, for the “painting and decorating of the company officers’ quarters,” for the price of $13,000, as per copy of said contract annexed and made a part of intervener’s petition; that intervener entered in-to an “agreement with said Brasted Lacquer & Spray Equipment Co., Inc., whereby it undertook to sell and furnish to said Brasted Company” upon open account certain materials for use on said job, which were so furnished and used, amounting to $695.53, upon which there was a balance due of $621.-25, as per itemized statement annexed. It also made the general allegations as to the original contract with the government by the Glassell Company, its giving bond, etc.; that the Brasted Company gave a performance bond with the Constitution Indemnity Company, a Pennsylvania corporation, of Philadelphia, as surety; that, after intervener had furnished materials to the extent of $326.76, the Brasted Company became involved financially, and the Constitution Indemnity "Company “took over said subcontract,” and proceeded to carry out its said principal’s contract, and “the remainder of the materials herein referred to being furnished upon the order” of said Indemnity-Company, all of which went into the construction of said job; that, “since the execution of the bond and the performance hereinabove referred to, the said Constitution Indemnity Company has merged and consolidated with Lloyd’s Casualty Company and Detroit Fidelity & Surety Company, forming a corporation styled The Lloyd’s Insurance Company of America, which has been authorized to do business in Louisiana, with the Secretary of State as its agent for service of legal process.” Intervener prayed for judgment “jointly and severally against Union Indemnity Company, International Insurance Corporation, Brasted Lacquer & Spray Equipment Co., Inc., The Constitution Indemnity Company and Lloyd’s Insurance Company of America.”

On June 8th C. C. Hardeman Company, Inc., a Louisiana corporation, of Shreveport, intervened, making the usual general allegations with respect to the general contract, bond, etc.; that, in connection with the contract between the general contractor and Brasted Lacquer Spray & Equipment Company, Inc., the latter gave a performance bond with the Constitution Indemnity Company as surety; that petitioner furnished materials for the work covered by the general contract on the orders of the Brasted Company, to the extent of $89.07, when it became involved and the work was taken over and completed by its said surety, to whom the remainder of the supplies were furnished and used on the job, and it asked judgment against the general contractor, its surety, Brasted Company and its surety, jointly and severally for the sum of $392.28.

On June 8th United States Fidelity & Guaranty Company intervened, repeating the general allegations similar to those of the intervener’s preceding, and alleging the subcontract between O’Pry Heating & Plumbing Corporation with the general contractor, amounting to $72,000; that there was still due to O’Pry Heating & Plumbing Corporation the sum of $8,321.32, which had been assigned to this intervener on the 21st day of February, 1933, as per copy of assignment annexed; that the said Ashton-Glassell Company, Inc., had been required to furnish, and did furnish, a bond with the Union Indemnity Company as surety; that the latter had made a reinsurance agreement with the International Reinsurance Corporation to the extent of $27,823.23, copy of which was annexed; and that supplies and materials furnished by intervener’s assignor were actually used on the job. Intervener prayed judgment against the general contractor, its said surety, and the Reinsurance Corporation in solido.

June 12th Alamo Paint & Wallpaper Company, a Texas corporation of San Antonio, intervened, alleged the general conditions embraced in other interventions, and that it had furnished materials which were used on the job to Brandt Floor Company, “owned and operated by C. V. Brandt” under his agreement with the original contractor referred to above; that there remained due to intervener the sum of $647.69, for which it asks judgment- “generally and severally” against the general contractor, its surety, and the Reinsurance Corporation.

June 12th N. P. O’Neal, “owner and operating under the trade name of Hope Brick Works,” intervened, adopted the general allegations of the original petitioner, and alleged that between the dates of July 14 and October 1, 1931, he had sold, furnished, and delivered, and there had been used in said job, materials and supplies to the extent of $7,178.82, upon which there was a balance due of $181.19, for which he prayed judgment against the contractor, its surety, and the Reinsurance Corporation “jointly and in solido.”

On June 12th the Globe Indemnity Company, a New York corporation, intervened and adopted the general allegations of the original petition; that on the 15th of June, 1931, H. P. Ross of R. & H. Electric Company, made a contract with Ashton-Glassell Company, Ine., to furnish the labor and materials in accordance with the contract with the government for the electrical work in the sum of $12,500, which said work had been performed according to the agreement; that a performance -bond was exacted of Ross, copy of which is annexed; that extras were added, and there remained due upon said account $2,762.29; that the claim of said Ross had been assigned to intervener and upon which it prayed judgment against the original contractor, its surety, and the Reinsurance Corporation in solido.

On June 12th the Constitution Indemnity Company, a Pennsylvania corporation of Philadelphia, intervened and also adopted the general allegations of the original petition; that it had signed the bond of the Brasted Lacquer & Spray Equipment Company as surety; that said Brasted Company continued the performance contract until about March, 1932, “when said Brasted Lacquer & Spray Equipment Company defaulted on said contract”; that “it took over the performance thereafter of said subcontract, and the Brasted Company assigned and sold to your intervener all of its rights and money due .under said contract,” as per copy of the assignment attached and made part of the intervention; that intervener "completed said contract, and there remains due a balance thereon plus extras of $8,246.20, for which intervener prayed judgment against the general contractor, its surety, and the Reinsurance Corporation, in solido.

June 14th Marcus E. Warden of San Antonio, Tex., “operating as Warden Sheet Metal Works,” intervened, repeated the general allegations of the contract, bond, etc., the subletting of a part of the work to O’Pry Heating & Plumbing Corporation, the giving by the latter of a performance bond in the sum of $72,000 with the United States Fidelity & Guaranty Company as surety; that said O’Pry Heating & Plumbing Corporation sublet to this intervener, on August 20, 1931, a portion of its said contract for the furnishing of labor and materials for the installation of the warm air furnaces in thirty-four noncommissioned officers’ quarters and forty-two commissioned officers’ quarters, for the sum of $14,900; that the materials had 'been furnished and installed in the forty-two commissioned officers’ quarters, which amounted to $5,9-25, to which extras or additions were made to the extent of $3,-105.50; that said work was done and the materials furnished according to contract, and there remained due and unpaid “on this construction job” $3,969.74 “intervenor’s damage $10,000”; and that intervener obtained “materials and supplies” from the following concerns for this job, in the amounts shown, to wit:

1. Peden Iron & Steel Co. of Houston, Texas............... $1,125.48

2. Charles Johnson Company of Peoria, Ill.................... $ 298.98

3. Southwestern Ceiling Co., San Antonio, Texas............... $ 87.08

4. Taylor-Seidenbaeh Co., Ine., Shreveport, La............... $ 260.48

It prayed for citation upon the Ashton-Glassell Company, Inc., Union Indemnity Company, International Reinsurance Corporation, O’Pry Heating & Plumbing Corporation, Inc., Smith-Jones Company, and the United States Fidelity & Guaranty Company; that intervener’s creditors above named be given notice, and for “judgment a'gainst all of the defendants in accordance with law and the ‘Heard Law,’ for its debt, interest and attorneys fees,” etc.

June 14th Industrial Tile Company, an Oklahoma corporation, intervened, adopted the general allegations of the original petition; that intervener made a contract with the Ashton-Glassell Company, Inc., to furnish and install all tile for the forty-two “company officers’ quarters at Barksdale Field, for the price of $12,174.00”; that it had complied with its contract-, and there remained due $1,821, for which it prayed judgment against the contractor, its surety, and the Eeinsurance Corporation, in solido.

June 14th Tiling Service Company, Inc., a Texas corporation, of the city of Fort Worth, intervened, repeated the allegations of a general character of the original petition; that the general contractor had made a written contract with Industrial Tile Company to furnish and install all tile for twenty-nine type A and thirteen type B houses at Barksdale Field, for which the general contractor was to pay $12,174; that the said Industrial Tile Company fulfilled its contract; that this intervener’s business is furnishing of tile to builders and contractors, and that “at the request of the Industrial Tile Company, Inc. it supplied to the said sub-contractor practically all of the tile material used by” it “on said government job, which was actually used thereon”; that on November 19, 1931, the said Industrial Tile Company assigned to intervener “as security for the payment of its account * * * all moneys due or to become due, to-wit, from Ashton-Glassell Company, Inc.,” copy of which assignment was annexed, and upon which there was a balance due of $1,821.09, for which it prayed judgment against the contractor, its surety, and the Eeinsurance Corporation.

June 15,1933, Shapleigh Hardware Company, a Missouri corporation, intervened. It made the same general allegations as other petitioners; that under an agreement with the principal contractor, between the dates of October 14, 1931, and May 17, 1932, it furnished materials and supplies which were used in said job to the amount of $12,733.45, upon which there was a balance due of $3,-681.22. It prayed for judgment against the principal contractor, its surety, and the Eeinsuranee Corporation, “jointly and severally.”

The following exceptions and motions have been filed:

(1) April 13,1933, Clay W. Beckner and S. Sanford Levy appeared as receivers of the Union Indemnity Company and moved to dismiss the original petition as to it, on the ground (a) that they were domiciled in the city of New Orleans, Eastern District of Louisiana; (b) that in a proceeding brought by the secretary of state against the Union Indemnity Company it had been declared insolvent and its dissolution had been decreed by the civil district court for the parish of Orleans, and for this reason this court was •without jurisdiction rationae materias; and (e) that they could not be sued without leave of the court which had appointed them.

(2) June 8th exceptions were filed by these same receivers to the intervention of Crane & Co., in whieh they (a) reiterate all matters pleaded in exceptions previously filed, (b) and (e), and moved to dismiss on the same grounds as urged to the original petition mentioned last above.

(3) June 8th by the said receivers upon the same grounds to the intervention of Albert Karelius.

(4) June 20th 'by the International Eeinsuranee Corporation, through counsel, who averred that it had been, since the institution of this suit, placed in receivership by the Chancery Court of Wilmington, Del., “and for this reason it was not qualified to stand in judgment and the receivers should be made parties.” It prayed that it be “relieved from answering until said receivers are made parties.”

(5) June 12th counsel for the trustee of Ashton-Glassell Company, Inc., excepted to the rule of Albert Karelius to show cause why his claim should not be allowed, “for the reason that this is not a proceeding to be tried on a summary process.”

(6) On June 28, 1933, the receivers of Union Indemnity Company excepted to the intervention of United States Fidelity & Guaranty Company, upon the same grounds as urged to the original petition of plaintiffs.

(7) June 30th United States Fidelity & Guaranty Company excepted to the intervention of Peden Iron & Steel Company on the ground that it disclosed no right or cause of action against the exceptor.

(8) July 3d the receivers of the Union Indemnity Company filed exceptions to the intervention of Mareus E. Warden, as urged to the original petition and other interventions.

(9) October 2d United States Fidelity & Guaranty Company excepted to the intervention of Marcus E. Warden, on the ground that the same did not disclose a right or cause of action against it.

(10) On the same day New York Casualty Company filed a similar exception of no cause of action to the intervention of Peden Companjr, Inc.

(11) On October 2d the receivers of International Eeinsurance Corporation appeared and excepted to plaintiff’s petition on the ground that it did not disclose a right or cause of action in that (a) the “reinsurance' bond sued on herein was not” the character of bond required by the Heard Act; “and (b) while the bond sued on was executed on a form purporting to contain a direct obligation to the United States of America, the provisions of said acts do not contemplate the execution of a reinsurance bond.

(12) October 2d Smith-Jones Company (formerly O’Pry Heating & Plumbing Corporation) to the intervention of Marcus E. Warden, on the ground that it did not disclose a cause or right of action as to it.

(13) On October 2d by International Rer insurance Corporation, through its receivers, exceptions to the claims of all interveners who had sued it on the reinsurance bond given in favor of the United States as the re-insurer of Union Indemnity Company, on the ground that said claims disclosed no cause or right of action for the same reasons urged to the petition of plaintiff, No. 11 above.

I shall take up these exceptions in the order stated above.

1. In ordinary eases and circumstances, the position taken by the receivers of the Union Indemnity Company in their exception to the jurisdiction and want of authority from the court of their appointment to sue them would be correct, but we have an extraordinary situation here. This is the only court in which a suit by any furnisher of materials can sue upon the bond given the United States, and the rights of every claimant to the benefits of that bond must be asserted in this one action alone. The reasons, no doubt, for the provision of the statute that every one asserting such a claim shall be drawn into the same suit are: (1) That the liability of the surety is a fixed and definite amount stated in the bond, and it might be, as frequently happens, that the claims would exceed that sum, in which event the recovery can be prorated in order to insure equality and just treatment to creditors of the same classes; and (2) the situs of the proceeding, i. e., where the work is performed, presumably will be more convenient to the greatest number of claimants. Then, too, to permit suits upon the bond at the domicile of the surety, as well as the place where the work was done, could easily result in judgments of different character and in excess of the amount of the bond, ultimately forcing something akin to a coneursus or inter-pleader action in some jurisdiction, if the recovery against the surety is to be held down to the amount of its bond. The rule relied on by the receivers was founded originally in comity, which gradually developed into a principle of law, but, when the reason for the rule disappears, or a statute by its express terms makes inapplicable such a rule, it must, necessarily to that extent, be held to have been superseded or repealed. I see no other conclusion. See the well-considered ease of United States v. Illinois Surety Co. et al. (D. C.) 238 F. 840, affirmed (as James S. Hopkins, Receiver, etc., Plaintiff in Error, v. U. S. of America, for Use and Benefit of Ellington & Guy, Inc.) 246 U. S. 655, 38 S. Ct. 423, 62 L. Ed. 924, on authority of U. S. v. Congress Construction ,Co., 222 U. S. 199, 32 S. Ct. 44, 56 L. Ed. 163; also Macdonald v. Aetna Indemnity Co., 93 Conn. 165, 105 A. 470; People v. Metropolitan Surety Co., 211 N. Y. 107, 105 N. E. 99; In re Emmet, 216 N. Y. 273,110 N. E. 610.

2, 3, 6, and 8. What has just been said is equally applicable to similar exceptions to the interventions of the Crane Company, Albert Karelius, United States Fidelity & Guaranty Company, and Marcus E. Warden.

4. The same rule is likewise applicable to the exception of International Reinsurance Corporation to the point, that, since the institution of this suit, it had been placed in the hands of receivers, and for that reason could not be made a party to this suit. Its receivers can and should be made parties hereto by appropriate proceedings.

5. The exception of the trustee in bankruptcy of the contractor, Ashton-Glassell Company, Inc., to the rule of Albert Karelius, to show cause why his claim should not be allowed, should be sustained, and the matter permitted to proceed in the usual manner upon the merits and a trial along with other claims.

7, 9, and 10. For the reasons given in the ease of U. S. ex rel. General Iron Works et al. v. Maples et al. (D. C.) 6 F. Supp. 354, decided at this time, I think the exception of no cause of action of United States Fidelity & Guaranty Company to the interventions of Peden Iron & Steel Company and Marcus E. Warden, as well as of the New York Casualty Company to the intervention of Peden Company, Inc., should be sustained. The United States Fidelity & Guaranty Company has also intervened in this proceeding as the assignee of its principal in the bond upon which it became surety of the O’Pry Heating & Plumbing Corporation, and, while this intervener’s claim to the funds due its principal out of the bond of the original contractor ranks no higher than that of said O’Pry Heating & Plumbing Corporation, Inc., and the creditors of the latter, it would seem, would come ahead of said United States Fidelity & Guaranty Company, I do not believe that their rights against it as surety upon the said subcontractor’s bond can be determined in this ease, but they will be relegated to independent suits either in the state or federal court, according to circumstances, for any balance that may remain due after exhausting the bond of the principal contractor with the government.

11 and 13. As to the contention that the furnishers of labor and material cannot sue upon the reinsurance bond in favor of the United States, upon which the International Reinsurance Corporation is surety, I am of the opinion that this is an obligation in favor of the United States upon which it could have sued the same as the one signed by the Union Indemnity Company, and for that reason it was taken to protect both the government and said claimants. I see no reason why the government might not accept two or more bonds with separate sureties for this protection, or any additional bond or security given for the same purpose cannot be availed of by either the government or the furnisher of labor and materials. The statute does not describe the number or amounts of “usual penal bonds” which may be given, and any such bonds given for the declared purposes of the law I believe fall within that category. This reinsurance bond was furnished by the government to the original plaintiffs, along with that of the Union Indemnity Company, as a part of the papers upon which to institute suit according to the statute.

12. The intervention of Marcus E. Warden alleges that the Smith-Jones Company (formerly O’Pry Heating & Plumbing Corporation) was the subcontractor of Ash-ton-Glassell Company, Inc., the principal contractor with the government, and that the said subcontractor sublet a part of the work to Warden for the price named in the intervention. In this situation, I think it does allege a cause of action against the said Smith-Jones Company for the purposes of this suit and recovery upon the original bond.

There should be judgment on the several exceptions and pleas in accordance with the views herein expressed.


author: VAUGHT, District Judge.

text:
    ELECTRICAL RESEARCH PRODUCTS, Inc., v. HOME AMUSEMENT CO., Inc.
    Nos. 4527, 4613.
    District Court, W. D. Oklahoma.
    Feb. 15, 1934.

      M. M. Thomas, of Oklahoma City, Okl., for plaintiff.
    Stanard & Carey, of Shawnee, Okl., and Blakeney & Ambrister, of Oklahoma City, Okl., for defendant.
   VAUGHT, District Judge.

In No. 4527 the plaintiff, a New York corporation, brings this action as a replevin action against the defendant, an Oklahoma corporation, alleging that it is the owner of, and entitled to the immediate possession of, certain goods, chattels, and mechanical devices, to wit, a certain electrical sound projector and reproducing equipment known as type 2—S equipment of the value of $6,600; that the plaintiff is the owner of said property, is entitled to immediate possession thereof, and that the defendant, although due demand has been made, refuses to deliver said property to plaintiff.

In No. 4613 the plaintiff alleges that it is a New York corporation, that the defendant is an Oklahoma corporation, that the amount in controversy exceeds $3,000, and for its first cause of action alleges that on the 30th day of November, 1928, the plaintiff and defendant entered into a written contract wherein it was agreed that the plaintiff was to install in the Savoy Theatre at Shawnee, Okl., a certain sound reproducing device which was the property of the plaintiff, said device being described as: “Type 2 — S equipment designed for use with two (2) simplex, powers or motiograph projectors for disc and film reproduction.”

The contract referred to is set out as an exhibit to said petition, and among other things provides, first, a grant of license and installation of equipment; second, for the use of equipment, for the removal to another theater, and instruction and inspection service. Under paragraph 5, it provides for installation charge as follows: “The Exhibit- or agrees to pay to Products in New York Exchange an initial charge of Twenty-Six Hundred Twenty-Five ($2,625.00) Dollars less 10% quantity discount ($262.50) payable as follows: The sum of Ten Hundred Fifty ($1,050.00) Dollars less 10% quantity discount ($105.00) on or before the execution of this instrument, receipt of which is hereby acknowledged, and the balance, namely, Fifteen Hundred Seventy-Five ($1,575.00) Dollars less 10% quantity discount ($157.50') by a demand promissory note satisfactory to Products in the amount last mentioned, made by the Exhibitor and delivered to Products oil or before the execution of this agreement and bearing no interest prior to presentation, which demand note Products agrees not to present for payment prior to the date on which the installation of the Equipment is completed and the Equipment made available to the Exhibitor as ready for public exhibition.”

Paragraph 6 provides for a weekly payment during the life of the contract, as follows: “In addition to any other payments required to be made by the Exhibitor hereunder, the Exhibitor agrees to pay to Products throughout the term of the license hereby granted, a weekly payment which, for the first two weeks of said term, shall be payable on the Saturday next succeeding the day upon which the installation shall have been completed and the Equipment made available to the Exhibitor as ready for use, and thereafter throughout the balance of said term on each and every Saturday in advance. The amount of such payment shall be One Hundred Sixteen and 05/100 Dollars ($116.05) less 10'% quantity discount ($11.60) per week for the first two years (104 weeks), and thereafter for the balance of the term of said license such weekly payment shall be in accordance with Products’ then current schedule of weekly payments for similar licenses, but not exceeding one-fourth of the weekly payment hereinabove agreed upon to be paid for the first two years.”

The contract also provides for transportation charges, payment for parts, etc., and changes in theater. Paragraph 10 provides as follows: “Title to and ownership of all equipment at any time furnished hereunder and also all tools of all kinds, drawings, prints and written descriptions and instructions, remains vested in Products” (the plaintiff herein).

The contract further provides that the defendant shall pay all taxes, provides for access to equipment, liability for interruptions, injuries, etc., and paragraph 14 provides for events of default, which paragraph is here set out as follows:

“This agreement and the license hereby granted shall, at the option of Products, terminate and come to an end upon the happening of any of the following events, hereby designated to be events of default, to wit:

“(a) Upon the bankruptcy or insolvency of the Exhibitor or the assignment of any of its assets for the benefit of creditors.

“(b) Upon the failure or refusal of the Exhibitor for any reason to pay any of the items or sums herein agreed to be paid by it, including the payment of the note provided for in Section 5 hereof, within five days after sueh item or sum is or may become due, and as to this provision time shaH’be of the essence.

“(c) Upon the Exhibitor’s ceasing to own or operate the Theatre, unless the Exhibitor shall previous to its ceasing to own or operate the Theatre have notified Products in writing of the date it will cease to own or operate the Theatre and shall have made provision, satisfactory to Products, for the care and custody of the Equipment or for the assumption of this agreement by the successor operator of the Theatre.

“(d) Upon a breach by the Exhibitor of any of the covenants herein contained relative to the use or maintenance of the Equipment, continued for more than fourteen (14) days after notice thereof by registered mail from Products.

“(e) Upon the removal of the Equipment or any part thereof without the consent of Products from the location and position in which it was installed by Products.

“(f) Upon the failure of the Exhibitor to accept delivery of the Equipment from the transportation company or common earner, or to facilitate the work of Products in installing the Equipment. In the event of a default under any of the provisions of this section at any time during the first two years of the term of this license, the entire balance of weekly payments for the first two years shall be due and payable forthwith at the option of Products and whether or not it terminates this license or removes the Equipment as hereinafter provided. The license hereby granted and all obligations imposed upon Produets by virtue of this agreement shall be suspended during the continuance of any event of default.”

Paragraph 15 provides for the repossession of equipment, and is set out as follows: “Upon termination or expiration of this license by lapse of time or otherwise, the Exhibitor will surrender up and deliver possession of the Equipment to Products in good order and condition, reasonable wear and tear and obsolescence due to proper use thereof in the manner and place and for the purpose set forth in this agreement only excepted, and Products may repossess the Equipment and may, for the purpose of reducing the same to possession, enter the Theatre or any other premises where said Equipment may be and without any legal proceedings whatever possess and remove said Equipment, and the Exhibitor agrees to cooperate in sueh removal. If this license shall be terminated by default, or if the Exhibitor permits any of the events of default, hereinbefore enumerated, to oecur, whether or not Products shall exercise the option to terminate this agreement, Products shall thereupon have the right without notice to take immediate possession of said Equipment, or any part thereof, and for that purpose may pursue the same wherever it or any part thereof may be found and may enter, with the aid and assistance of any person or persons, the Theatre or other premises of the Exhibitor and such place or places whatsoever, whether belonging to the Exhibitor or not in which the Equipment or any part thereof may be placed, and may take and seize the same to its own proper use forever, free from any right of the Exhibitor under this agreement. Products shall also have the right in like manner to enter the said premises and remove the Equipment in the event of the said premises being destroyed or damaged by fire or otherwise, to an extent which, in the opinion of Products, endangers the Equipment. The Exhibitor expressly covenants that in any sueh event no claim will be made for damage on account of sueh removal or otherwise, and the Exhibitor further agrees that it will hold and save harmless Prodnets from and against any and all claims for damages by any parties whatsoever on aeeount of such removal.”

The petition further alleges that, after said contract had been entered into, the equipment completely installed, and the payment of the installation charge, the defendant continued to use said equipment up to and including the 9th day of May, 1931; that after the 17th day of May, 1930, the weekly installments due to the plaintiff from the defendant were reduced to the sum of $94.70 per week, which weekly installment was due and payable on Saturday of each week thereafter.

The petition further alleges that the defendant has violated the terms of said written agreement, in that on the 14th day of October, 1930, there became due and owing to the plaintiff from the defendant on said written contract the sum of $94.70; that no part of said sum has been paid to the plaintiff, although due demand has been made for the payment thereof; that thereafter, and upon Saturday of each successive week from the 4th day of October, 1930, up to and including the 9th day of May, 1931, there became due and owing to the plaintiff from the defendant an installment of $94.70 for each week, and that none of said weekly installments and payments due from the defendant has been paid, although demand has been made for the payment of same, and that there was due on said payments and installments in the sum of $94.70 for 32 weeks, all in the total sum of $3,030.40. The petition further alleges that on the 16th day of May, 1931, the plaintiff reduced said weekly installments to the sum of .$20 per week; that the defendant has failed and refused to pay any of said weekly installments becoming due and payable on Saturday of each week from May 16,1931, to June 13, 1931, or a total of $100, which the defendant has failed and refused to pay, although due demand has been made therefor.

The petition further alleges that during the month of October, 1930, the plaintiff furnished at the request of the defendant merchandise in the total sum of $6.70, and that defendant has failed and refused to pay said sum, and that there now remains due and owing to the plaintiff from the defendant the sum of $3,137.10 as above set out, together with interest on $3,030.40 at 6 per cent, from the 9th day of May, 1931, interest on $100 at 6 per cent, from the 13th day of June, 1931, until paid, and interest on the sum of $6.70 at 6 per cent, from the 6th day of October, 1930, until paid.

The second cause of action alleges that, as a part payment of accounts and installments due prior to September 4,1930, the defendant executed a promissory note in favor of the plaintiff in the sum of $243.95, which the defendant has failed and refused to pay, although due demand has been made therefor, and that the defendant, therefore, is indebted to the plaintiff the sum of $243.95, together with interest at 6 per cent, from September 4, 1930, until paid, and plaintiff asks judgment against the defendant on the several counts for a total sum of $3,381.05, together with interest thereon at 6 per cent, as hereinbefore set out.

The defendant in its answer denies generally the allegations of the plaintiff's petition, except the installation of the equipment and its use by the defendant, and by way of cross-petition alleges that the equipment described in plaintiff's petition was leased by the defendant for a period of 10 years; that the total payments to be made by the defendant to the plaintiff over the 10-year period was $10,131.30, and that said sum was to be paid during the first 2 years of the contract; that as a matter of right and equity said sum should be equally distributed over the 10-year period, and, if that were done, that the defendant has already paid more than the sum due at the time the replevin action, No. 4527 law, was instituted; that the plaintiff, having brought an action for the recovery of the equipment, could not in law collect the rentals due for the period subsequent to the demand for the equipment, and that therefore the defendant has overpaid the plaintiff in the sum of $5,529.17, for which sum it asks judgment.

The case was submitted to the court upon stipulation of facts and the written contract. The stipulation admits the jurisdictional facts, admits that the contract was duly executed and subscribed by both parties; that said contract was prepared by the plaintiff and was the standard form of contract used by the plaintiff at the said time throughout the United States; that said equipment was installed in the Savoy Theatre at Shawnee, Okl., on or about the 13th day of May, 1929, pursuant to the terms of said contract; that, in connection with the installation of said equipment, the defendant complied with the terms and provisions of the contract of paragraphs 7 and 9, and has complied with section 8 in all respects, except as to the payment for merchandise; that the amount due for merchandise is correctly listed as $6.70; that said merchandise was received by the defendant, and no portion thereof has been paid for by said defendant; that the plaintiff has complied with all the provisions and terms of the written contract from the time of its execution to the cancellation of said contract hereinafter mentioned; that the defendant paid the plaintiff the sum of $2,362.-50 provided for in paragraph 5 of the contract; that paragraph 6 of the contract provides for 104 weekly payments or installments of $104.45 each, and that each of said weekly payments or installments originally included an item of $29.75, service and inspection charges, which charges were voluntarily reduced by the plaintiff to $25 per week, effective with the week ending October 12, 1929; that said service and inspection charge was again voluntarily reduced to $20 per week, effective with the week ending April 12,1930; that the defendant has paid the plaintiff 72 of said weekly installments or payments provided for in paragraph 6 of the contract, including the service and inspection charges as modified by voluntary reductions thereof, and the defendant admits the execution of the promissory note in the amount of $243.95, it being agreed that the amount of said note is included in the 72 installments or payments referred to as having been made, and that said note has not been paid; that no service was' rendered by the plaintiff, or inspections of said equipment made in said theater after January 12, 1931.

The stipulation further admits that defendant failed to pay the installment or payment which fell due on the 4th day of October, 1930, and has paid no installments or payments thereafter; that, after repeated demand for payment, which demands were refused by the defendant, the plaintiff on or about the 24th day of April, 1931, made written demand on the defendant for possession of the equipment described in the contract; that on or about the 28th day of April, 1931, the plaintiff filed a replevin action in the United States District Court for the Western District of Oklahoma, being cause No. 4527 law, for the possession thereof which action is still pending; that the defendant gave a redelivery bond pursuant to which it held the possession of said equipment until about the 16th day of October, 1931, when it was surrendered to the plaintiff, and that the plaintiff has retained possession of said equipment since said date; that thereafter, on the 20th day of June, 1931, the plaintiff formally canceled the written contract involved in this action by a written notice; and that the action, No. 4613 law, is brought by the plaintiff for all weekly payments or installments falling due up to and including the week ending June 13,1931.

The defendant contends that since the action, No. 4527, law, was instituted, the plaintiff has exercised its right of election of remedies; in other words, that the plaintiff is not entitled to possession of the equipment and also to collect the rentals due up to the time the equipment was removed, and sets up its contention that the replevin action constitutes an election of remedies. Its second defense is that the contract as written is unconscionable. The defendant also urges as a third defense (which really is a part of the second) that the contract contravenes the statute against penalties and forfeitures (St. Okl. 1931, §§ 9488-9490).

The material facts in this ease having been stipulated, there is nothing left for the court but the construction of the contract. Paragraph 5 of the said contract provides for the payment of the installation charge. Paragraph 6 provides for a weekly rental of a certain sum for a period of 104 weeks, and further provides: “ * * * And thereafter for the balance of the term of said license such weekly payment shall be in accordance with Product’s then current schedule of weekly payments for similar licenses, but not exceeding one-fourth of the weekly payment hereinabove agreed upon to be paid for the first two years.”

This language is clear, unambiguous, and constitutes a part of the written contract duly entered into by the parties hereto. The first charge is designated as an installation charge and that it should be paid in cash and by note on or before the completion of the installation. The second charge provided for in the contract is for certain weekly payments to be made during the first 2 years of the contract. The third charge provided for in the contract is that, after the 2-year payments shall have been completed, thereafter the weekly charge of a certain sum, not to exceed one-fourth of the weekly payment exacted during the first 2 years of the contract, shall be made.

The defendant contends that the contract should be so construed as to provide that the installation charge plus the sums paid over the period of the first 2 years should be divided into 520 payments, and that the contract in substance provides for paying the total sum over a period of 10 years, and therefore it should be divided equally. Doubtless this would have been a more satisfactory contract for the defendant, but that is not the contract that was entered into. There is no evidence here of any fraud or deception that was prae tieed by the defendant. On the other hand, the inference to be drawn is that they were both practical picture show institutions with experience in those matters and that both parties to the contract knew what they were entering into at the time of the execution of the contract. The mere fact that conditions have changed since the execution of the contract, making defendant’s business less lucrative, is no justification for an effort to revise or rewrite the contract. A contract once having been duly and legally entered into is expected to be carried out as written.

The defendant has rather exhaustively briefed the proposition that, notwithstanding the fact that the defendant had breached the contract by failing and refusing to pay the weekly rental from October, 1930, to June, 1931, and that therefore the plaintiff was entitled under the terms of the contract to the possession of the equipment, and that since the plaintiff had seen fit to bring an action in replevin for the possession of said equipment, the bringing of that action constituted an election of remedies to the extent that the plaintiff was not entitled to recover for the weekly rentals accruing during the default from October, 1930, to June, 1931, and is therefore barred, in bringing said action to recover the rentals due by the previous action in replevin. The contention of the defendant is not supported by the authorities cited in its brief. Many of the eases cited referred to the sale of property. It is true that, if one sells property, one may not maintain one action to recover the property and another for the purchase price thereof. The second action would be inconsistent with the first, and the rule in the election of remedies is applicable only where the two actions are inconsistent. If one purchases property and then is made to pay for the property, the property may not be recovered because upon the payment of the purchase price the title passes to the purchaser. In the case at bar, however, the plaintiff retained expressly in the contract the title to the property, and the contract in no uncertain terms provides for the payment of, first, an installation charge, and, second, weekly rentals during the life of the lease. To say defendant is entitled to retain the property without paying the rental thereof is in violation of the terms of the contract. Furthermore, the contract explicitly provides that upon the breach of the contract and the happening of other events the plaintiff should be entitled to possession of the property.

In Peters v. Bain, 133 U. S. 670, 10 S. Ct. 354, 362, 33 L. Ed. 696, the Supreme Court of the United States says: “The doctrine of election rests upon the principle that he who seeks equity must do it, and means, as the term is ordinarily used, that where two inconsistent or alternative rights or claims are presented to the choice of a party, by a person who manifests the clear intention that he should not enjoy both, then he must accept or reject one or the other. * * * ”

The Supreme Court of Oklahoma in Invader Oil Corporation v. Commerce Trust Company, 111 Okl. 85, 238 P. 441, said: “No irrevocable 'election of remedy’ exists, unless there is knowledge of material facts, and there are two inconsistent remedies, pursuit of either of which would accomplish same legal result.”

The District Court of Appeal of California, in Crittenden v. St. Hill, 34 Cal. App. 107, 166 P. 1016, 1017, says:

“The defendant contends as a matter of law that, when she became in default, respondent had an election of two remedies: He could either commence an action for rent, or he could institute unlawful detainer proceedings; but, having elected to pursue the former, he thereby affirmed the lease and waived his right to the latter remedy. * * *

“In our opinion the mere institution of the rent action did not have the legal effect claimed for it, nor did it indicate a waiver of the right to maintain an action for the possession of the premises. By the original action plaintiff was seeking to recover the rent due him, and, being resisted in that action, he has resorted to a more expeditiojis proceeding to accomplish this result. * * * The rights litigated in the two actions are therefore entirely different; and where the law affords distinct, but not inconsistent, remedies, the election to follow one does not operate as a waiver of the other.”

The court, therefore, is not impressed with the defendant’s contention that the replevin action is a bar to an action to recover the rentals due.

The next proposition relied upon by the defendant is that the contract sued upon is unconscionable. Similar contracts have been construed many times by our courts, and a rule of construction of written contracts has been definitely determined and laid down for our guidance.

“It is not the province of a court, however to change the terms of a contract which has been entered into, even though it may be a harsh and an unreasonable one. Nor will the dictates of equity be followed if by so doing the terms of a contract are ignored, for the folly or wisdom of a contract is not for the court to pass upon. Its terms, however onerous they may be, must be enforced if such is the clear meaning of the language used, and the intention of the parties using that language.” 13 C. J. 541.

“A contract must be so interpreted as to give effect to the mutual intention of the parties, as it existed at the time of contracting, so far as the same is ascertainable and lawful.” Okla. Stats. § 9460 (1931).

“When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible, subject, however, to the other provisions of this article.” Okla. Stats. § 9463 (1931).

“A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable and capable of being carried into effect, if it can be done without violating the intention of the parties.” Okla. Stats. § 9467 (1931).

The foregoing section of our statutes was construed in King et al. v. Turner, 109 Okl. 77, 234 P. 564, and Anderson v. Reed et al., 133 Okl. 23, 270 P. 854.

In Hansbrough v. Peck, 72 U. S. (5 Wall.) 497, 18 L. Ed. 520, the court said, quoting from the syllabus: “The party who has advanced the money, or done an act in part performance of an agreement, and then stops short and refuses to proceed to its ultimate conclusion, the other party being ready and willing to proceed and fulfill all his stipulations according to the contract, will not be permitted to recover back what has thus been advanced or done.”

In Oklahoma Petroleum & Gasoline Co. v. Winship, 83 Okl. 146, 200 P. 844, 849, the court said: “The rule is well settled that, where there is an express contract of bailment, the terms thereof control, as the parties are entitled to impose upon each other any terms they may choose and may abridge, qualify or supersede the obligations which otherwise would arise from the bailment by implication of law.”

A ease cited by the plaintiff in its brief, which is applicable to both contentions of the defendant, is the Electrical Products Corporation v. Mosko et al., 88 Colo. 447, 297 P. 991. In that ease the Electrical Company rented a sign to Mosko, retaining title in the sign; the court held, upon the default in payment of the rents, the plaintiff was not only entitled to possession of the sign, but to the rents due up to that time.

“Eor it is a rule of interpretation that, where a contract is fairly -open to two constructions, by one of which it would be lawful and the other unlawful, the former must be adopted.” Hobbs v. McLean, 117 U. S. 576, 6 S. Ct. 870, 29 L. Ed. 940.

“Where contracts are open to two reasonable interpretations one defeating a claim for balance due, the other enforcing it, the court is at liberty to adopt the latter interpretation.” Cole Motor Car Co. v. Hurst (C. C. A.) 228 F. 280.

As to the defendant’s third contention that the contract contravenes the statute against penalties and forfeitures, the court is of the opinion that these statutes are nor. involved in this contract. Ho penalties or forfeitures are exacted. It is true that there was an agreement that a certain sum should be paid for the installation of the machine; the parties agreed to that, and the sum was paid. They also agreed that the rent for 2 years should be at a certain rate and the rent for the remaining 8 years should be a certain sum. These are most assuredly matters about which the parties were contracting, and, they having entered into such a contract, the contract is binding. The counsel for the defendant cites the case of Hargrove v. Bourne, 47 Okl. 484, 150 P. 121, an Oklahoma case, but the court can hardly see how that case helps the defendant. Quoting from syllabus 5: “If a tenant wrongfully abandons leased premises before the expiration of the lease, the landlord may, at his option, re-enter and terminate the contract, and recover the rent due up to the time of the abandonment.

This is exactly what the plaintiff seeks to do in this case. The recovery of its property and the collection of its rents, during the time the defendant had possession of the property as provided in the contract, constitutes neither a penalty nor a forfeiture.

The court is of the opinion that the rule is too well established for any doubt to exist. Under this contract upon the default, as admitted in the stipulation, the plaintiff was entitled to recover the possession of its equipment, and, in addition thereto, it was entitled to collect the weekly rentals, provided in the contract, falling due up to the time that the equipment was recovered.

In the replevin action, as admitted in the stipulation, the equipment has already been recovered, which should be so shown in the judgment.

In No. 4613 the plaintiff is clearly entitled to judgment as prayed for in its petition.

Exception allowed defendant in each ease. Forms of judgment may be submitted consistent with this opinion.


author: PATTERSON, District Judge.

text:
    MUNSON S. S. LINE v. ROSENTHAL. ROSENTHAL v. MUNSON S. S. LINE.
    District Court, S. D. New" York.
    Dec. 29, 1933.
    Irving L. Evans and Kirlin, Campbell, Hiekox, Keating & MeG-rann, all of New York City (L. De Grove Potter and William H. Postner, both of New York City, of counsel), for Munson S. S. Line.
    Ben Rosenthal, of Brooklyn, N. Y., and Harry S. Thirkield, of New York City (Gregory S. Rivkins, of New York City, of counsel), for Sam Rosenthal.
   PATTERSON, District Judge.

The Munson Line brought suit against Rosenthal to recover $1,028.85, representing freight and charges on a shipment of tomatoes carried on the steamship Pan America from Nassau to New York and delivered here to Rosenthal. The latter filed a cross-libel against the Munson Line for $8,500, alleged to be the damage to the tomatoes caused by the carrier’s negligence in transit.

The tomatoes, packed in 2,372 crates, were shipped by one Slater in Nassau and were carried on a straight bill of lading consigned to Rosenthal. Rosenthal is a commission merchant in New York who sells produce for the account of those who ^end it to him. He had made pre-harvesting advances to the growers of the tomatoes, the amount of such advances not being stated. There is undisputed proof that the tomatoes were not in uniformly good condition on receipt by the carrier on January 20, 1929. Some were over-ripe; others had green rot; the greater part, however, were merchantable. The carrier’s agents discussed their condition with the shipper, who conceded that the tomatoes were not up to standard. The bill of lading recited that they were “in apparent good order and condition.” It contained, however, the additional notation in typewriting in a conspicuous place on the face of the bill, “Not Responsible For Condition On Arrival.” The Pan America arrived in New York on January 24, 1929, the tomatoes being then in substantially the same state as at the time of shipment. The defectives ranged from 2 per cent, in some crates to 16 per eent. in others. There was no damage to them on the voyage. They were delivered to Rosenthal in lots commencing on the 24th and ending on the 28th. He received the bill of lading on the 24th and paid the customs duty, $474.40, before he received the tomatoes. He refused to pay the freight. On being sued for the freight, he filed a cross-libel for damages to the goods alleged to have come about because of the carrier’s negligence.

1. The right of the carrier to recover the freight cannot reasonably be questioned. It surrendered the goods and waived its lien in consideration of the implied promise of the consignee to pay the freight. A consignee who receives goods under a bill of lading which incorporates the charter provisions is personally responsible for the freight. Union Pacific R. Co. v. American Smelting & Refining Co. (C. C. A.) 202 F. 720; Vane v. A. M. Wood & Co., Inc. (D. C.) 231 F. 353; Yone Suzuki v. Central Argentine R. Co. (C. C. A.) 27 F.(2d) 795. It is no defense that the goods were damaged through the carrier’s fault, although any such damage may be offset against the claim for freight by recoupment or cross-libel. The Gwalia’s Cargo (D. C.) 26 F. 919; Relyea v. New Haven Rolling Mill Co. (D. C.) 75 F. 420.

2. The other question is whether the consignee is entitled to> damages from the carrier because of the damaged condition of the go'ods at destination. The consignee was a commission merchant. He had no title to the goods in question; he had, however, a lien or special property in them by reason of the advances he had already made to the owner. This is a sufficient interest to enable him to bring suit for damage alleged to have been sustained by the goods in transit. Grove v. Brien, 8 How. 429, 12 L. Ed. 1142; Grinnell-Collins Co. v. Illinois Central R. Co., 109 Minn. 513, 124 N. W. 377, 26 L. R. A. (N. S.) 437. The issue is whether liability on the part of the carrier was made out.

No attempt was made to prove that the damaged condition on arrival was actually the result of lack of care by the carrier or that it occurred in the course of the voyage. As already pointed out, the uneont.radicted proof is that the tomatoes were in poor shape when received by the carrier. The consignee insists, however, that because of the recital as to< good condition in the bill of lading the carrier is estopped to show that the tomatoes were in poor condition on shipment. The rule is that a carrier who has given a clean bill of lading, stating that cargo has been received in good order when it was at the time manifestly damaged, is estopped to deny the truth of the assertion against a purchaser of the bill of lading who has been misled by the representation and has altered his position on the faith of the representation. Sears v. Wingate, 3 Allen (Mass.) 103; Compania Naviera Vasconzada v. Churchill & Sim, [1906] 1 K. B. 237; Higgins v. Anglo-Algerian S. S. Co. (C. C. A.) 248 F. 386; The Carso (C. C. A.) 53 F.(2d) 374. The rule is applicable to straight bills of lading as well as to order bills of lading.

There are two reasons, I think, why the rule does not fit the facts of this ease. In the first place, the bill was not the usual clean bill of lading. True, it did carry the customary words, “in apparent good order and condition.” But it also bore the bold legend, “Not responsible for condition on arrival.” This was sufficient to put the consignee on notice as soon as he saw the bill of lading. In this feature the case is indistinguishable from Craig & Rose v. DeLargy, 16 Scottish Law Reports, 750, where the decision went in favor of the carrier.

In the second place, the consignee did not alter his position or act to his prejudice. He did not purchase or pay for the goods. He was simply the agent of the shipper, to whom he had made advances long prior to shipment. He asserts that he paid the duty on the tomatoes, $474.40, in reliance on the statement in the bill of lading that they were in good order and condition on shipment. But this payment was one made for the account of his principal, who was the eulpable party so far as the condition of the shipment was concerned and who certainly has no grievance against the carrier. Moreover, the consignee’s statement that he would not have paid this relatively small sum but for the statement in the bill of lading cannot be credited when the circumstances of the case are taken into consideration. For one thing, he had an interest in the tomatoes because of the money he had advanced on them before they were harvested, and he obviously wanted them in order to sell them and reimburse himself for his advance. It is plain that in their damaged condition they were worth far more than $474.40, for less than 16 per cent, was defective and the consignee claimed damages in this ease in the sum of $8,500. It is also to be noted that after he had learned of the actual condition of the tomatoes he accepted delivery and thereby took on an additional liability for freight to the extent of $1,028.85. The only rational conclusion is that he was not led to pay the duty by anything that he saw in the bill of lading. No act of prejudice beyond the payment of duty is claimed.

The carrier therefore was not estopped to prove that the goods were in a damaged state at the time of shipment. The proof being uneontradieted that the tomatoes were delivered at destination by the carrier in substantially the same condition as they had been on receipt by the carrier, the consignee is not entitled to damages from the carrier.

The carrier will have the relief demanded in its libel for freight. The consignee’s libel for damages to the cargo will be dismissed.