Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Massachusetts Bonding and Insurance Co.

June 7, 1962


Author: Medina

Before MEDINA, SMITH and HAYS, Circuit Judges.

MEDINA, Circuit Judge.

There are two appeals before us. The first involves the merits in an action in effect for goods sold and delivered, with a counterclaim for damages for alleged delay, delivery of defective material and a congeries of miscellaneous subsidiary and related claims. The trial judge granted judgment for the amount agreed to be paid for the goods, less an allowance of $388.50 expended in the replacement of a small amount of damaged lumber; and he dismissed the counterclaim in its entirety. The second appeal is from an order granting a motion by an alleged co-appellant to strike its name from the notice of appeal because it had not authorized the appeal to be taken. The opinion below is reported at 195 F.Supp. 26.

The proliferation of issues, the numerous briefs, appendices, letters and memoranda, and the fact that some eight motions have been made by appellant in this Court during the pendency of the appeals, make it desirable, we think, to state in simple, chronological sequence the development of the controversy and its progress after the commencement of the action. We shall insert a few parenthetical comments for the purpose of disclosing the sequence of events as an integral whole. The action is by a materialman under the Miller Act, 40 U.S.C.A. ยงยง 270a, 270b, against the surety for the principal contractor. The same attorney represented both the surety and the principal contractor throughout, and, some time after joinder of issue the principal contractor was permitted to intervene and assert its counterclaim or set-off against the subcontractor-plaintiff.

On December 12, 1958 appellant Ove Gustavsson Contracting Co. Inc. contracted with the United States to furnish all labor, equipment and materials for the repair of the sea wall and replacement of fenders on Pier G in the Brooklyn Navy Yard. A performance bond of $158,768 and a payment bond of $79,384 conditioned for the prompt payment of all persons supplying labor and materials in connection with the contract were required and were executed and delivered by Massachusetts Bonding and Insurance Company and accepted by the Government.

The contract with the subcontractor, as found by the trial judge, is an exhibit written on the letterhead of the materialman-plaintiff, Browne & Bryan Lumber Co., Inc., under date of January 29, 1959 and signed by Gustavsson on February 2, 1959. The lumber to be delivered and the necessary details relative to sizes and fabrication are set forth, delivery to start "in five or six weeks and complete within 90 days, weather conditions permitting with a proposed delivery schedule of approximate [sic] one third of schedule per month." Hereafter we shall refer to the parties as Gustavsson, the Lumber Company and the surety.

There was a subsequent order for additional lumber on September 16, 1959, covered by an invoice of October 6, 1959. The pertinence of this relates only to one of the many peripheral issues, as to whether a payment of $2,000 by Gustavsson to the Lumber Company on December 11, 1959 was of the amount or part of the amount due for the additional order or on account of the large balance due for deliveries of lumber pursuant to the terms of the contract of January 29, 1959.

The substance of the state of affairs before the commencement of the action by the Lumber Company against the surety was that the Lumber Company had a claim for $25,848.25 for goods sold and delivered, against which it had received only three payments of $2,000 each, on August 5, 1959, September 4, 1959, and December 11, 1959. The last delivery of lumber on the job was August 13, 1959; and it was conceded at the trial that the lumber was used on the job by Gustavsson. The Government paid Gustavsson the full amount specified in its contract, $158,768, plus $37,025 for extras, or a total of $195,793, without any penalty for delay. And yet the claim of the Lumber Company remained unpaid. Other materialmen were also clamoring for the money due them.

After getting little or no satisfaction out of Gustavsson, the Lumber Company wrote the surety on January 5, 1960 complaining of the delay, and the reply of the surety on January 12, 1960 was to the effect that Gustavsson was "in no financial difficulty and that this indebtedness will be cleared up in due course." It was not cleared up, however, and the Lumber Company commenced this action on April 6, 1960.

Despite the fact that the Miller Act was designed to provide a prompt means of satisfying the claims of those furnishing labor and materials for use on construction or repair work for the Government, this litigation is still in progress and the record before us discloses a pattern of dilatory tactics, including the series of delaying moves in this Court, that is much to the discredit of the administration of justice. Moreover, in retrospect it is difficult to see how much of this could have been avoided, as it was not until the lapse of twelve full days of trial before an exceptionally patient and considerate judge that the testimony of both Ove Gustavsson, President of Gustavsson, and its other principal witness was found to be false, and Gustavsson's documentary evidence branded as dubious and unreliable.

The answer of the surety was not filed until August 30, 1960. The attorney was the same attorney who later represented Gustavsson on the motion to intervene, and who acted as counsel at the trial for both the surety and Gustavsson. No jury trial was demanded at the time of filing the answer of the surety. In this answer it was alleged as a defense that the lumber was not delivered in time, that when it was delivered it was damaged and in a raw and unfabricated condition and that Gustavsson had rejected it. It was also alleged by way of defense that the District Court had no jurisdiction of the case, that the Lumber Company had no capacity to sue and that Gustavsson was an indispensable party.

As early as September 6, 1960, as disclosed by the papers on file in the case, Ove Gustavsson, President of Gustavsson, signed and swore to the affidavit annexed to the notice of motion later made for an order permitting Gustavsson to intervene. This notice of motion was originally dated September 6, 1960 but was partially erased and November 26, 1960 substituted. The reason for waiting to serve the motion papers on the motion to intervene is all too plain. The attorney thought he had an ace in the hole, a possible means of obtaining substantial further delay, in the form of a demand for a jury trial to be stated in the "Intervenor's Plea," the pleading attached to the notice of motion and proposed to be served if Gustavsson's motion for leave to intervene should be granted; and it was thought expedient to delay the making of the motion until other dilatory maneuvers had failed.

The Lumber Company noticed the case for trial and filed a statement of readiness. The attorney for the surety filed an affidavit of non-readiness in which no mention is made of any forthcoming motion to intervene or of any demand for a jury trial. Judge Rayfiel held a hearing on November 22, 1960 and declared the case ready.

The motion to intervene, while returnable on December 7, 1960, was not argued before Judge Mishler until December 21, 1960. In the meantime, the customary pre-trial conference was held before Judge Bartels on December 16, 1960, and the case was set down on the non-jury calendar for the week of January 19, 1961, "the case to be tried when reached." True it is that Judge Bartels was informed that Gustavsson "is moving to intervene," but nothing was said of the fact that the motion ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.