Baker Cont. Co. v. United States ex rel. Pennock, 204 F. 390 (4th Cir. 1913)

“ * * 4 If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contracto]' with labor and materials 'shall, upon application therefor, and furnishing affidavit to the department under the direction of which said work has been prosecuted that labor or materials for the prosecution of such work has been supplied by him or them, and payment for which has not been made, bo furnished with a certified. p. 394copy of said contract and.bond, upon wliich be or tbey shall have a right of action, and shall be, and are hereby, authorized to bring suit in the name of the United States in the Circuit Court of the United States in the district in which said contract was to be performed and executed, irrespective of the amount in controversy in such suit, and not elsewhere, for his or their use and benefit, against said contractor and his sureties, and to prosecute the same to final judgment and execution. * * * ”

p. 395“Whether or not, under the act of 1891, as amended in 1905, power to entertain the action was vested exclusively in tlm Circuit Court of the district wherein the contract was to be performed, is the question which was presented to the court below and answered in the affirmative; and the correctness of that answer turns upon the nature of the action and the provisions of the statute. According to the declaration, the contract for the construction of tlie building had been satisfactorily performed, full payment therefor had been made to the contractor, the conditions of the bond liad been breached only by his failure to pay designated subcontractors for labor and materials used in the construction of the building, and the object sought to be attained was the adjudication and enforcement of those demands, unaccompanied by any pecuniary demand of the United States. Manifestly, therefore, the action, although brought by the United States, was essentially one in behalf of the subcontractors, and the respective interests of the United States and the subcontractors therein were in no wise different from what they would have been, had the action been brought in the name of the United States by the subcontractors for the use and benefit of the latter. The statute, whilst authorizing persons holding unpaid demands for labor or materials to bring such an action in the name of the United States, expressly requires that it be brought ‘in the Circuit Court of the United States in the district in which said contract is to be performed and executed, irrespective of the amount in controversy, and not clsctrltcro,’ and also provides that only one such action shall be brought, and that it shall he so instituted and conducted, in point of notice and otherwise, that all demands of that class may be adjudicated therein and included in a single recovery. Considering the purpose of the statute, as manifested in these provisions, we think the restriction respecting the place of suit was intended to apply, and does apply, to all actions brought in the name of the United States for the purpose only of securing an adjudication and enforcement of demands for labor and materials, whether instituted by the United States or the creditors themselves. The reasons for the restriction are as applicable in the one instance as in the other, and it is difficult to believe that it was intended that it should be less potent when the United States acts for the creditors than when they act. for themselves. The contention to the contrary is rested largely upon the supposition that, in instances like the present, where the defendants, or some of them, are inhabitants of another district, there is an insuperable barrier to the maintenance of the action in the district wherein the contract was to be performed. But this supposition is a mistaken one, for the provision restricting the place of suit operates pro tanto to displace the provision upon that subject in the General Jurisdictional Act (25 Stat. 433. c. 806, § 1 fTT. S. Comp. St. 1901, p. 508J), and amply authorizes the Circuit Court in the district wherein the action is required to be brought to obtain jurisdiction of the persons of the defendants through the service upon them of its process in whatever district they may be found.”

“The learned judge below, in Ms opinion in denying tbe motion for judgment non obstante veredicto, said: ‘And for tlie purpose of this case it may also be assumed — but without deciding the point — that an independent action by the subcontractor should have been deferred until six months had elapsed from July 20th, the date of final settlement. But it still remains to inquire whether the defendants are in a position to take advantage of this p. 397defect in procedure, and in my opinion their objection should not be allowed to prevail. The defendants are setting up what is essentially a statute of limitation. It differs only from the ordinary statutes in the unessential particular that by it a time is fixed before which suit may not be brought, while by their provisions a time is fixed after which such action may not be entertained. But it is well settled that the defendant cannot take advantage of a statute of limitations unless in some way it is formally set up as a defense.’ In this we think he erred. He treated the statute in question as a statute of limitation, and concluded that because it had not been pleaded it had been waived. He cites authorities to show, what is undoubtedly the law, that a failure to plead such a statute constitutes a waiver thereof, but none to show that a statute, like the one in question, is in any sense a statute of limitation, or one which like that statute must be pleaded. To call the statute in question a limitation is not only a misnomer, but an absolute misconception of the purpose of the act, which was to give any person or persons, supplying labor and materials to a contractor with the government, a right of action where before none existed. The act was not intended to. and does not, bar any cause of action, but rather creates one. The lapse of six months was a condition precedent to the plaintiff’s right to sue. In other words, a conditional cause of action only was conferred. Such cause of action was created by the statute, and must be instituted pursuant to the terms and conditions of the statute, and not otherwise. No party prior to the expiration of six months from the completion and final settlement of a contract, except the United States, was thereby authorized to sue upon the bond. Whether during that period the United States does or does not institute a suit is a matter of entire indifference, in so far as the proper construction of the statute is concerned. It is sufficient for our purpose to say that during that, period, and all of it, the only right of action on a bond given under that statute is vested exclusively in the United States. Tlw statute has received substantially the same construction that we have given it, in the following eases: United States v. Winkler (C. C.) 162 Fed. 397; Title Guaranty & Trust Co. v. Puget Sound Engine Works, 163 Fed. 169, 89 C. C. A. 618; United States v. McGee et al. (C. C.) 171 Fed. 209.”