United States v. Carter, 353 U.S. 210 (1957)

United States v. Carter

No. 48

Argued December 5, 1956
Decided April 29, 1957
353 U.S. 210

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

Syllabus

As required by the Miller Act, a contractor who had a contract with the United States for the construction of federal buildings furnished a payment bond with a surety. The collective bargaining contract under which employees of the contractor were hired obligated the contractor to pay them wages at specified rates and, in addition, to pay 7 1/2 cents per hour of their labor to the trustees of a health and welfare fund established for their benefit and that of other construction workers. When the contractor failed to pay in full the required contributions to the health and welfare fund, the trustees of the fund sued (in the name of the United States) the surety to recover the balance due the fund, plus liquidated damages, attorneys’ fees, court costs and expenses.

Held: the surety was liable under § 2(a) of the Miller Act, 40 U.S.C. § 270a. Pp. 211-221.

(a) The surety’s liability on a Miller Act bond must be at least coextensive with the obligations imposed by the Act if the bond is to have its intended effect. Pp. 215-216.

(b) In this case, the trustees’ rights against the surety depend upon, and are to be measured by, the applicable provisions of § 2(a) of the Act. P. 216.

(c) The Miller Act is to be given a liberal construction to effectuate its protective purposes. P. 216.

(d) The essence of the policy of the Miller Act is to provide a surety who, by force of the Act, must make good the obligations of a defaulting contractor to his suppliers of labor and material. Pp. 216-217.

(e) The Miller Act does not limit recovery on the statutory bond to "wages." P. 217.

(f) The contractor’s employees will not have been "paid in full" for their labor in accordance with the collective bargaining agreements until the required contributions to the health and welfare fund have been made. Pp. 217-218.

(g) The contractor’s obligation to contribute to the fund was covered by the statutory bond, even though that obligation was not set forth in the construction contract with the United States, but appeared only in the master labor agreements. P. 218.

(h) In the circumstances here, the trustees stand in the shoes of the employees, and are entitled to enforce their rights. Pp. 218-220.

(i) The trustees of the fund have an even better right to sue on the bond than does the usual assignee, since they are claiming recovery for the sole benefit of beneficiaries of the fund, and those beneficiaries are the very ones who have performed the labor. P. 220.

(j) For purposes of the Miller Act, contributions to the fund are, in substance, as much "justly due" to the employees who have earned them as are the wages paid to them directly in cash. P. 220.

(k) The trustees are also entitled, under the Act, to recover liquidated damages, attorneys’ fees, court costs, and other related expenses of this litigation, since these items must be included if the employees are to be "paid in full" the "sums justly due" them. P. 220.

229 F.2d 645 reversed and remanded.