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UNITED STATES EX REL. FOSTER WHEELER CORP. v. AMER

July 22, 1940

UNITED STATES, to Use and for Benefit of FOSTER WHEELER CORPORATION,
v.
AMERICAN SURETY CO. OF NEW YORK; ATLANTIC BASIN IRON WORKS v. UNITED STATES



The opinion of the court was delivered by: GALSTON

GALSTON, District Judge.

This is an action brought pursuant to the Miller Act, U.S.C. Title 40, Sec. 270b, 40 U.S.C.A. § 270b (formerly known as the Hurd Act) by a sub-contractor to recover an alleged balance due it from the general contractor.

The suit was begun by the Foster Wheeler Corporation against the American Surety Company. From the complaint it appears that on November 27, 1936, the Atlantic Basin Iron Works entered into a contract with the United States for furnishing and installing new boilers, renewal of tank tops, and general above water repairs for the United States Army Transport Republic. Pursuant to that contract the Atlantic Basin Iron Works furnished a payment bond with a surety for the protection of a person supplying labor and material in the prosecution of the contract. The bond was executed by the defendant, American Surety Company of New York, in the usual form in such cases made and provided. The general contractor thereupon contracted with the plaintiff for boilers, materials and labor which it is alleged were duly supplied by the plaintiff. The agreed price for the boilers and services was $96,128.49; the contractor paid on account thereof the sum of $90,513.20, leaving unpaid $5,616.29.

 By its answer, making denial of material allegations, the defendant Surety Company raised the general issues. Thereafter the Atlantic Basin Iron Works intervened as a defendant, and by an amended answer set up a counterclaim alleging that the boilers and appurtenances supplied by the plaintiff were not in accordance with the specifications; and that the Atlantic Basin Iron Works was compelled to make repairs after notice to the plaintiff at a cost of $11,365.48, and accordingly seeks judgment in that amount against the Foster Wheeler Corporation.

 The United States of America, as third party defendant, alleges that all the work and labor performed on or about October 12, 1937, in repairing the boilers on board the United States Army Transport Republic, was by virtue of the contract between the parties required to be done without any additional cost or expense; and as a counterclaim owing to the failure of the defendant, Atlantic Basin Iron Works, to repair or replace the defects in the brick work which developed within the year's guarantee, seeks a recovery against the defendant and the third party plaintiff in the sum of $8,135.77.

 The issue can be narrowly stated. On the one hand the plaintiff contends that it complied fully with the terms of the contract; on the other, the United States contends that within one year from the date of completion of the contract the furnaces failed; that in consequence the general contractor, having guaranteed the equipment furnished against defective materials and workmanship, was under obligation to replace by supply of new part or otherwise remedy the defect without cost to the United States Government; and the Atlantic Basin Iron Works in turn looks to the Foster Wheeler Corporation, under the terms of the contract between those two corporations, for failure to comply with the terms of the contract between them.

 Moreover, the position of the Foster Wheeler Corporation is that the collapse of the furnaces was owing not to any fault on its part, but on the contrary to improper operation of the boilers by the crew of the United States Army Transport Republic.

 In the stipulation signed by the parties it appears that the only items in the Government's specifications claimed by the defendants not to have been performed duly by the Foster Wheeler Corporation relate to

 (a) The type, trade name and specifications of the fire brick and refractory furnished and installed;

 (b) The means employed for tying in place the furnace walls;

 (c) The type, tradename, etc., of tie brick used for tying in place the furnace walls;

 (d) The design and specifications of the tie bolts used for tying in place the furnace walls; and

 (e) The number of tie bolts used for tying in place the furnace walls.

 The stipulation recites that the foregoing items are covered by the following extracts ...


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