Fleischmann Constr. Co. v. United States ex rel. Forsberg, 270 U.S. 349 (1926)

FLEISCHMANN CONSTRUCTION COMPANY et al . v. UNITED STATES TO THE USE OF FORSBERG ET AL.

ERROR TO THE CIRCUIT COURT OF APPEALS FOR THE FOURTH CIRCUIT.

No. 50. Argued October 15, 1925.—Decided March 1, 1926.

• Statement of the Case. 270 U. S.

3. But preliminary rulings on the pleadings made by the District Court under its general authority, before the issues are submitted under the statutory stipulation, are reviewable as in ordinary cases, independently of the statute. P. 357.

4. Under the Materialmen’s Act, if suit on a contractor’^ bond be not brought by the United States “ within six months from the completion and final settlement ” of the contract, suit by any person who supplied labor or materials, etc., may be brought in the name of the United States, “ within one year after the performance and final settlement of the contract,” but not later. Held that allegations in the use plaintiff’s declaration and in intervening petitions, that the contract was “ completed and final settlement had ” on a date specified, more than six months, but within a year, before institution of the suit, were not mere conclusions of law but allegations of fact. P. 358.

5. Amendments, in such a suit, which do not set up a new cause of action, but merely supplement the defective statement of previously existing rights, relate back, and may be filed after expiration of the year following final settlement. So held where the amendments brought in a supplementary contract amending, but not otherwise affecting, the original construction contract. P. 359.

6. The strict letter of an Act must yield to its evident spirit and purpose, when this is necessary to effectuate the intent; and unjust or absurd consequences are to be avoided if possible. P. 359.

7. The Materialmen’s Act provides that where suit is instituted by a creditor or creditors, only one action shall be brought, which must be within one year from “ performance and final settlement ” of the contract, and any creditor may file his claim and be made a party within one year from the completion of the “ work ” under the contract, and not later. Held, in view of the remedial purpose of the Act and the liberal construction called for, that intervening claimants, like original plaintiffs, have one year from final settlement. P. 360.

8. Amendments held germane to causes of action originally alleged. P. 362.

9. A judgment of the District Court may validly be entered at a term following that in which the case was heard and taken under advisement. P. 363.

298 Fed. 330, affirmed.

Mr. Levi H. David, with whom Mr. William F. Kimber was on the brief, for plaintiffs in error.

Mr. Bynum E. Hinton, with whom Messrs. David W. Kahn, Milton M. Leichter, and Isidor Weissberger were on the briefs, for defendants in error.

Mr . Justi ce Sanford delivered the opinion of the Court.

This is a suit under the Materialmen’s Act of 1894, 28 Stat. 278, c. 280, as amended by the Act of 1905, c. 778? It was brought in the name of the United States by Forsberg, a materialman, as use plaintiff, in the federal district court for Eastern Virginia, to recover on a bond given by the Fleischmann Construction Company, as contractor, and the National Surety Company, as surety, for the construction, under a contract with the United States, of a torpedo assembly plant in Alexandria. Various materialmen and subcontractors filed intervening petitions in the suit. The plaintiff and the intervenors recovered judgment, 298 Fed. 320, which was affirmed by the Circuit Court of Appeals, 298 Fed. 330. This writ of error was allowed in March, 1924. A motion was interposed to dismiss the writ of error upon the ground that the record presents no question properly reviewable by this Court, or to affirm the judgment; the consideration of which was postponed to the hearing on the merits.

The Materialmen’s Act, as amended,1 provides that the usual penal bond required of anyone entering into a contract with the United States for the construction of any

x33 Stat. 811. This is set forth in full in the margin of Texas Cement Co. v. McCord, 233 U. S. 157, 160, note 1.

public work, shall contain an additional obligation for the payment by the contractor of all persons supplying labor and materials in the prosecution of the work. Any such person not thus paid may intervene in any action instituted by the United States on the bond and obtain judgment pro rata with other intervenors, subject to the priority of the claim of the United States. If no suit is brought by the United States “within six months from the completion and final settlement ” of the contract, any such person shall have a right of action upon the bond, and may, “within one year after the performance and final settlement ” of the contract, but not later, commence suit against the contractor and his sureties, in the name of the United States, for his use and benefit, in the federal court of the district in which the contract was performed, and prosecute the same to final judgment and execution. Where suit “ is so instituted by a creditor or by creditors, only one action shall be brought; and any creditor may file his claim in such action and be made party thereto within one year from the completion of the work under said contract, and not later.” If the recovery on the bond is inadequate to pay the amounts due to all of the creditors, judgment shall be given to each pro rata.

The first question to be determined is whether any of the matters presented by the assignment of errors—which relate chiefly to the times at which the suit was brought and the intervening petitions filed—are now open to review upon the record.

The defendants filed demurrers to the original and amended declaration and petitions. All of these were overruled. And the amended declaration and petitions were then put at issue under pleas filed by the defendants.

By agreement of all the parties the case was referred to a special master to hear the evidence and find the facts. In his report, he found that the work was completed February 5, 1920, and that the date of final settlement was October 1, 1920.

Thereafter, in April, 1923, before action had been taken on this report, the parties filed a written stipulation, under § 649 of the Revised Statutes, waiving a jury and agreeing that all the issues might be tried and determined by the court.

In August, the District Judge handed down an extended written opinion in which he considered the entire case as to the facts and law, and concluded, inter alia, that the master had found correctly that the date of the final settlement was October 1, 1920; that it was unnecessary to determine the date on which the work had been com-

pleted, since the intervenors had filed their petitions within one year after the final settlement; that the actions were not barred because the amendments setting up the supplemental contract were made more than a year after the final settlement, the original and supplemental contracts being one and the same, and the amendments relating back to the bringing of the original suit and the filing of the original petition; and that the claims of the plaintiff and the intervenors were severally established. No special findings of fact had been requested; and none were made.

On the same day a judgment was entered, which “ for reasons stated ” in the opinion, awarded the plaintiff and the intervenors recoveries upon their several claims, the aggregate of which was less than the amount of either bond.

The defendants, without having excepted to any of the rulings or conclusions of the court or requested any special findings of fact, sued out, in September, a writ of error from the Circuit Court of Appeals. After this writ had issued, however, the District Judge, in October, granted them a “ bill of exceptions,” which recited that the court had filed its opinion and entered its final judgment on the same day, without notice to the parties; set forth various exceptions then, for the first time, noted by the defendants “ to the rulings, findings of fact and conclusions of law by the court” in the opinion and judgment; and stated that, by reason of the circumstances, these exceptions were “ to be taken as severally made at the time thereof and before the entry of judgment thereon.” And later the District Judge granted them another “ bill of exceptions,” embodying the evidence and the proceedings before the master, and setting forth in the same manner other exceptions to be taken, for like reason, as made before the entry of the judgment.

1. The assignment of errors challenges the affirmance of the judgment because of the action of the District Court in overruling the demurrers to the original and amended declaration and petitions; in allowing the amendments to the original declaration and petitions; and in making various other “ holdings ” and “ findings ” in reference to matters of law and fact. It is clear that none of these questions are open to review except those which arise upon the pleadings.

Section 700 of the Revised Statutes—re-enacting a like provision in the Act of March 3, 1865, c. 862—provides that when an issue of fact in a civil cause is tried and determined by the court without the intervention of a jury, according to § 649, “ the rulings of the court in the progress of the trial of the cause, if excepted to at the time, and duly presented by a bill of exceptions, may be reviewed” upon writ of error; “and when the finding is special the review may extend to the determination of the sufficiency of the facts found to support the judgment.”

The opinion of the trial judge, dealing generally with the issues of law and fact and giving the reasons for his conclusion, is not a special finding of facts within the meaning of the statute. Insurance Co. v. Tweed, 7 Wall. 44, 51; Dickinson v. Planters’ Bank, 16 Wall. 250, 257; Raimond v. Terrebonne Parish, 132 U. S. 192, 194; British Mining Co. v. Baker Mining Co., 139 U. S. 222; York v. Washbum (C. C. A.), 129 Fed. 564, 566; United States v. Stock Yards Co. (C. C. A.), 167 Fed. 126, 127. And it is settled by repeated decisions, that in the absence of special findings, the general finding of the court is conclusive upon all matters of fact, and prevents any inquiry

213 Stat. 500, 501.

into the conclusions of law embodied therein, except in so far as the rulings during the progress of the trial were excepted to and duly preserved by bill of exceptions, as required by the statute. Norris v. Jackson, 9 Wall. 125, 128; Miller v. Insurance Co., 12 Wall. 285, 300; Dickinson v. Planters’ Bank, supra, 257; Insurance Co. v. Folsom, 18 Wall. 237, 248; Cooper v. Omohundro, 19 Wall. 65, 69; Insurance Co. v. Sea, 21 Wall. 158, 161; Martinton v. Fairbanks, 112 U. S. 670, 673; Boardman v. Toffey, 117 U. S. 271, 272; British Mining Co. v. Baker Mining Co., supra, 222; Lehnen v. Dickson, 148 U. S. 71, 73; St. Louis v. Telegraph Co., 166 U. S. 388, 390; Vicksburg Ry. v. Anderson-Tully Co., 256 U. S. 408, 415; Law v. United States, 266 U. S. 494, 496; Humphreys n . Third National Bank (C. C. A.), 75 Fed. 852, 855; United States v. Stock Yards Co., supra, 127. To obtain a review by an appellate court of the conclusions of law a party must either obtain from the trial court special findings which raise the legal propositions, or present the propositions of law to the court and obtain a ruling on them. Norris v. Jackson, supra, 129; Martinton v. Fairbanks, supra, 673. That is, as was said in Humphreys v. Third National Bank, supra, 855, “he should request special findings of fact by the court, framed like a special verdict of a jury, and then reserve his exceptions to those special findings, if he deems them not to be sustained by any evidence; and if he wishes to except to the conclusions of law drawn by the court from the facts found he should have them separately stated and excepted to. In this way, and in this way only, is it possible for him to review completely the action of the court below upon the merits.”

The statute, however, relates only to those rulings of law which are made in the course of the trial, and by its terms has no application to the preliminary rulings of the District Judge made, in the exercise of his general authority, before the issues are submitted to him for hearing under the statutory stipulation. Such rulings on the pleadings and the sufficiency of the complaint are therefore subject to review as in any other case, independently of the statute. Norris v. Jackson, supra, 128; Martinton v. Fairbanks, supra, 673; Lehnen v. Dickson, supra, 72; St. Louis v. Telegraph Co., supra, 390; Vicksburg Railway v. Anderson-Tully Co., supra, 415. And see Campbell v. Boyreau, 21 How. 223, 226, Bond v. Dustin, 112 U. S. 604, 606, Erkel v. United States (C. C. A.), 169 Fed. 623, 624, and Ladd Bank v. Hicks Co. (C. C. A.), 218 Fed. 310, 311, as to the questions which are open to review where the case is heard by the judge by consent, but without the jurisdictional stipulation.

Since, therefore, the questions arising on the pleadings in this case are now open to review, the motion to dismiss the writ of error must be denied.

Opinion of the Court. 270 U. 8.

2L This brings us to the consideration of the questions arising on the pleadings as to which errors are assigned. We may assume for present purposes, without deciding, that the defendants did not waive their demurrers by pleading over to the merits after they had been overruled. Compare, however, Young v. Martin, 8 Wall. 354, 357; Stanton v. Embrey, 93 IT. S. 548, 553; Teal v. Walker, 111 U. S. 242, 246; Bans erman v. Blunt, 147 U. S. 647, 652; Nolle v. Oyster, 230 U. S. 165, 174; Denver v. Home Savings Bank, 236 U. S. 101,104; Harper v. Cunningham, 8 App. D. C. 430, 434.

The demurrers to the original declaration and petitions were based upon the grounds that they were insufficient in law, since the averment in the declaration that the contract was completed and final settlement had on September 25, 1920, was a mere conclusion of law, and the facts averred did not show that a right of action had accrued or that the court had jurisdiction of the cause when the suit was instituted. And the demurrers to the amended declaration and petitions were based on like grounds, and on the further ground that they set up new causes of action and were not filed within the times required by the Materialmen’s Act.

And although the amended declaration and petitions showing the supplemental contract between the Construction Company and the United States, were filed more than one year after the date of the final settlement, they did not set up new causes of action at a time beyond that permitted by the Act. The original declaration set forth a provision in the original bond that it was given to secure the performance of the contract “ as it now exists or may be modified according to its terms.” And the supplemental contract—a copy of which was attached to and made a part of the amended declaration—specifically provided that it should be regarded as amendatory of the original contract; that all provisions and requirements of the original contract should remain in full force, except as specifically changed; and that the original bond should not be released or otherwise affected, but should remain in full force as though the changes provided for had been included in the original contract; and it expressly recited that the Surety Company, which also signed the supplemental contract, was made a party thereto “ for the purpose of extending the obligation of said bond to cover the changes herein provided.” It is clear that the amended declaration and petitions did not set up new causes of action, but merely supplemented by appropriate allegations the defective statements of the rights which had existed when the original declaration and petitions were filed; and that the amendments when made related back, by operation of law, to the dates on which the original suit was brought and the original petitions filed. Texas Cement Co. v. McCord, 233’U. S. 157, 164; Illinois Surety Co. v. Peeler, 240 U. S. 214, 222.

The strict letter of an act must, however, yield to its evident spirit and purpose, when this is necessary to give effect to the intent of Congress. Holy Trinity Church v. United States, 143 U. S. 457, 459; Ozawa v. United States, 260 U. S. 178, 194. And unjust or absurd consequences are, if possible, to be avoided. Lau Ow Bew v. United States, 144 U. S. 47, 59; Hawaii v. Mankichi, 190 U. S. 197, 213.

It is clear, considering the entire provisions of the Act, that such an anomalous and unreasonable result was not intended, frustrating the plain purpose that the bond should inure to the benefit of all creditors and that all should share pro rata in the recovery. And to give effect to the manifest intention of Congress it must be held that the phrase “within one year from the completion of the work ” was used in reference to the filing of intervening claims in the same sense as the phrase “ within one year after the performance and final settlement of the contract” in reference to the commencement of the original suit; that is to say, not only that the original suit may be commenced within one year after the performance and final settlement of the contract but that other creditors may file their claims in such suit within the same period of time. In other words, as was said in the Bryant Co. Case, there is the same limit of time for the commencement of the suit and for the filing of intervening claims, “ beginning to run from the same event,” namely, the performance and final settlement of the contract; thereby avoiding a race of diligence between creditors and bringing about the equality in the distribution of the avails, of the bond among all creditors which Congress obviously intended.

The judgment of the Circuit Court of Appeals is

SEABOARD RICE MILLING COMPANY v. CHICAGO, ROCK ISLAND & PACIFIC RAILWAY COMPANY.

ERROR TO THE DISTRICT COURT OF THE UNITED STATES FOR THE EASTERN DISTRICT OF MISSOURI.

No. 311. Motion to affirm submitted January 25, 1926.—Decided March 1, 1926.

3. Section 28, Judicial Code, allowing removal of suits of which the District Courts “ are given original jurisdiction,” relates to the general jurisdiction of those courts and not to their local jurisdiction over the defendant’s person, dealt with in § 51; so that the fact that a suit between non-residents' might have been brought in the state court and removed to the District Court does not show that, if brought originally in the District Court, it could have been retained there over the defendant’s objection. P. 366. Affirmed on motion.

Error to a judgment of the District Court dismissing an action for want of jurisdiction over the defendant.

Messrs. Thomas P. Littlepage, Lon- 0. Hocker, Frank H. Sullivan, W. F. Dickinson, Luther Burns, and M. L. Bell, for the defendant in error, in support of the motion.

Mr. Aljred A. Hagerty for the plaintiff in error, in opposition thereto.

Mr . ’Justi ce Sanf ord delivered the opinion of the Court.

This is an action at law brought by the Milling Company against the Railway Company, in the District Court for the Eastern District of Missouri, to recover the sum of $3,035.73 for damages alleged to have been sustained through the negligence of the Railway Company, the initial carrier, and its connecting carriers, in the interstate transportation of rice shipped from Arkansas to New York. The Railway Company, appearing specially, filed a plea to the jurisdiction, on the ground that neither it nor the Milling Company was a resident or inhabitant of the district. This plea was sustained, without opinion, and the suit was dismissed for want of jurisdiction. This direct writ of error was allowed and the jurisdictional question certified, in February, 1925, under § 238 of the Judicial Code.

The declaration and the testimony heard upon the plea show that the Milling Company is a corporation organized under the laws of Texas; and that the Railway Company is a corporation organized under the laws of Illinois and Iowa, having its principal office in Chicago, but maintaining a branch office and operating a branch line within the eastern district of Missouri.

Section 51 of the Judicial Code, which deals with the venue of suits originally begun in the District Courts—re-enacting in part a similar provision in the Judiciary Act of 18881 provides, subject to certain exceptions not material here, that “ no civil suit shall be brought in any district court against any person by any original process or proceeding in any other district than that whereof he is an inhabitant; but where the jurisdiction is founded only on the fact that the action is between citizens of different States, suit shall be brought only in the district of the residence of either the plaintiff or the defendant.” That is to say, the suit must be brought within the district of which the defendant is an inhabitant, unless the general federal jurisdiction is founded upon diversity of citizenship alone, in which case it must be brought either in that district or in the district in which the plaintiff resides.

While this provision does not limit the general jurisdiction of the District Courts, it confers a personal privilege on the defendant, which he may assert, or may waive, at his election, if sued in some other district. Lee v. Chesapeake Railway, 260 U. S. 653, 655; and cases cited. If this privilege is seasonably asserted, the suit must be dismissed for want of jurisdiction over the person of the defendant. Macon Grocery Co. v. Atlantic Coast Line, 215 U. S. 501, 510; and cases cited.

125 Stat. 433, 434, c. 866.

It is immaterial whether the general federal jurisdiction in the present suit is founded upon diversity of citizenship alone, or whether the suit is also one arising under the laws of the United States, since neither the Milling Company nor the Railway Company is a resident of the Eastern District of Missouri; a corporation being, within the meaning of the jurisdictional statutes, a resident of the State in which it is incorporated, and not a resident or inhabitant of any other State, although it may be engaged in business within such other State. Re Keasbey & Mattison Co., 160 U. S. 221, 229; Macon Grocery Co. v. Atlantic Coast Line, supra, 509; and cases cited.

Whether the suit be originally brought in the District Court or removed from a state court, the general federal jurisdiction is the same; and the venue or local jurisdiction of the District Court over the person of the defendant is dependent in the one case as in the other upon the voluntary action of the non-resident defendant, being acquired in an original suit by his waiver of objection to the venue, and in a removed suit by his application for the removal to the District Court.

Since the question does not require further argument, the motion of the Railway Company is granted, and the judgment of the District Court is