U.S. Supreme Court
Martin v. National Surety Co., 300 U.S. 588 (1937)
Martin v. National Surety Co.
Argued March 2, 3, 1937
Decided March 29, 1937
300 U.S. 588
1. A payment by the Government of money due on a construction contract, made to one who collected it under a power of attorney and letter from the contractor intended to operate as an assignment (contrary to R.S., § 3477), is to be regarded as payment to the contractor through his representative. P. 300 U. S. 594.
2. The provisions of R.S., § 3477; 31 U.S.C. 203, declaring all assignments of any claim upon the United States "absolutely null and void" unless made after the allowance of such claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof, are provisions for the protection of the Government, and not for the regulation of the equities of claimants growing out of irregular assignments when collection is complete and the Government's liability ended. P. 300 U. S. 594 chanroblesvirtualawlibrary
3. Moneys due by the Government as deferred payments under a building contract were paid over by the Government to the contractor, although the contractor had failed to perform the obligation imposed on him by the Materialmen's Act, 40 U.S.C. 270, and by his bond, to pay persons who supplied labor and materials in the progress of the work. The contractor, in obtaining his bond, had promised the surety in writing that he would not assign any such payments to any third person, and had, on the contrary, undertaken to assign them to the surety to the end that, in the event of any breach or default in the government contract, such money might be credited upon any loss or damage sustained by the surety under the bond. Held that an equitable lien arose from the assignment in favor of the surety to have the moneys received by the contractor from the Government applied to the satisfaction of the claims of laborers and materialmen, and that this equity was superior to the claim of one who, with notice, had lent money to the contractor and, under power of attorney from the contractor, had collected the deferred payments from the Government and applied them to his loan. P. 300 U. S. 595.
4. Failure to pay materialmen, as required by 40 U.S.C. 270, and by the contractor's bond, is a default in the performance of the construction contract, since the statute commands that the bond, conditioned on such payments, shall be executed by the contractor before the commencement of the work, and the terms of the bond are read into the contract. P. 300 U. S. 597.
85 F.2d 135 affirmed.
Certiorari, 299 U.S. 536, to review the affirmance of a final decree of the District Court in a suit by the surety on a bond securing a public building contract. At the prayer of the surety, money paid the contractor by the Government was impounded and applied to the claims of materialmen and laborers. The petitioner in this case, who had lent money to the contractor, had, by the contractor's authority, received the payment from the Government and applied it to his debt. chanroblesvirtualawlibrary