American Surety Co. v. Westinghouse Elec. Mfg. Co., 296 U.S. 133 (1935)

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American Surety Co. v. Westinghouse Electric Manufacturing Co.

No. 12

Argued October 17, 1935
Decided November 11, 1935
296 U.S. 133

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

1. A bond given to the United States, pursuant to 40 U.S.C. § 270, for the faithful performance of a construction contract and for the making of prompt payment to all persons supplying the principal with labor and materials in the prosecution of the work, inures to the laborers and materialmen as obligees, together with the United States, though the claims of the Government have priority. P. 135.

2. Where a bond securing payment of the claims of materialmen was required by statute, and its full amount has been paid by the surety and applied in part satisfaction of such claims, the surety, against such claimants, has no equity to reimbursement from funds of its insolvent principal until such claims have been settled in full; such an equity does not arise from the doctrine of subrogation, nor from an express contract of the principal, made before he became insolvent, to indemnify the surety out of those particular funds -- in this case the "retained percentage" due the principal under a construction contract. P. 137.

75 F.2d 377 affirmed.

Certiorari, 295 U.S. 723, to review the affirmance of a decree of the District Court, in bankruptcy, directing that a fund belonging to the bankrupt, which had been retained by the United States as security from moneys due him under a construction contract, should be devoted to payment of claims of creditors who furnished materials for the performance of the contract, to the exclusion of the claim for reimbursement of the surety on the contractor’s bond.