The opinion of the court was delivered by: MODARELLI
This is an action by a sub-contractor (Glickfeld) against the prime contractor (Krendel), the latter having contracted with the United States Government for the rehabilitation of building No. 24, Naval Industrial Shipyard, located at Port Newark, New Jersey. Seaboard Surety Company is a party defendant as surety under the bond executed and delivered by Krendel, the bond being conditioned upon the prompt payment of persons supplying labor and materials pursuant to the prime contract.
Jurisdiction is based solely on 40 U.S.C.A. 270b,
which provides, in substance, that any person who has furnished labor or material in the prosecution of the work provided for in a contract for the construction or repair of any public building, in respect of which a payment bond is furnished and who has not been paid in full, shall have the right to sue on the bond for the unpaid amount.
In the latter part of May, 1950, Krendel contracted with the Government and Glickfeld entered into the contract with Krendel, which, in substance, provided that Glickfeld was to furnish the labor and material necessary to perform 'All Heating and Plumbing work necessary to complete the work in accordance with U.S. Navy plans and Specifications No. 24152 Contract NOy-20798 and Addendum No. 1. Patching to be done by others.', for which Glickfeld was to be paid $ 6,500 by Krendel. At the trial, held without a jury, Glickfeld testified that he received by mail the contract from Krendel, whereupon he signed it at his home in Newark and returned it by mail to Krendel in New York. Krendel, however, testified that Glickfeld, who at the time was engaged in work at a location near Krendel's New York office, signed the contract in Krendel's New York office. This is but one of a mass of contradictory testimony in this case.
The complaint alleges that (a) during the performance of the work, Glickfeld was orally directed by Krendel to perform certain work pursuant to four so-called change orders (authorized modifications under the prime contract) at agreed additional amounts totaling $ 902.35; (b) Glickfeld was orally directed by Krendel to perform certain so-called extra work (work not included in the Glickfeld-Krendel contract although included in the Krendel-Government contract) at agreed additional amounts totaling $ 881.86. Thus, for all of the work allegedly performed, Glickfeld claims that the total amount due him as the alleged agreed and reasonable value of the work performed and material furnished is $ 8,284.21. However, Glickfeld sues for only $ 1,916.21, Krendel having paid over $ 6,368. Furthermore, Krendel concedes that $ 572 now is due Glickfeld, to whom he mailed a check for that amount dated March 17, 1951. Glickfeld received the check and a letter of transmittal, and although he has retained possession of the check he has not yet deposited it.
The defendants' answer, in substance, admits entering into the contract with Glickfeld, 'terms of which are self-explanatory' and denies all of Glickfeld's allegations relating to the change orders and extra work and the amounts due thereupon. Defendants also set forth four separate and complete defenses, one of which -- accord and satisfaction -- counsel now urges as ground for this court to grant the motion to dismiss the complaint, which was interposed at the close of defendants' case.
As for the counterclaim based on conversion, Glickfeld set up the separate defense that he entered into an agreement with Krendel for the storage of the salvage material and he is willing to allow Krendel to remove the salvage upon payment of the agreed $ 10 a month storage charges. As for the counterclaim based on plaintiff's failure to perform, Glickfeld set up the separate defenses that he fully performed all work required to be performed under the contract; that Krendel accepted as full performance the work performed by Glickfeld, Krendel having represented to the Government that Glickfeld did fully perform and the Government having accepted the work as fully complying with the contract, so that now Krendel is estopped from denying full performance by Glickfeld.
Krendel amended his answer to set up a fifth defense based on a New York statute, Personal Property Law, 33-c, as amended L.1952, which, in effect, provides that a written contract containing a provision that it cannot be changed orally, cannot be changed by an executory agreement unless such agreement is in writing and signed by the party against whom enforcement of the change is sought. The contention is that the alleged oral directions by Krendel to Glickfeld to perform the work under the change orders and the extra work were ineffective under the New York statute as modifications of the written contract between the parties inasmuch as that contract contained a provision prohibiting oral changes. Regardless of the question of whether or not there has been any 'modification' of the sub-contract within the meaning of the statute, and aside from the conflict of laws problem as to the governing law in the case (and where was the contract entered into?), the statute is inapplicable in this action brought under 40 U.S.C.A. 270b, which provides:
'(a) Every person who has furnished labor or material in the prosecution of the work provided for in such contract, (the prime contract) in respect of which a payment bond is furnished * * * and who has not been paid in full therefor * * * shall have the right to sue on such payment bond * * *.'
Jurisdiction is based on a federal statute and since counsel for Krendel has pleaded the New York statute as a complete defense, the initial question for decision is whether or not the 'person who has furnished labor or material' must have done so pursuant to the terms of a written contract. Such a question is one of statutory construction, so that this court must look not to any state laws, but to federal law, Lembcke v. United States, 2 Cir., 1950, 181 F.2d 703. In that case the court was confronted with the question of whether or not the appellant was a 'widow' of a deceased veteran within the meaning of 38 U.S.C.A. 802(g), which specifies the permissible beneficiaries of National Service Life Insurance. While that case is not directly in point, the reasoning of the court applies to this case. The court decided that 'Interpretation of words used in a federal statute is a federal question not to be determined by local law unless statute is construed to intend the meaning to depend upon applicable state law.' The court reasoned that Congress intended policies of National Service Life Insurance, which are contracts of the United States, 'to have a uniform interpretation throughout the nation' insofar as certain words used in the contracts had an 'ordinary and popular meaning independent of local statutes.' So too while in the case at bar there is no direct contractual relationship between Glickfeld and the United States, nevertheless, 40 U.S.C.A. 270(b) grants a right to every person who has performed work provided for in a contract with the United States; and to restrict that right by holding that the performance is gratuitous unless in strict compliance with local contract law would not further the purpose of the statute which was intended to assure all workers and sub-contractors that they would receive compensation for their efforts. As was said by the court in United States, for Use of Harrington v. Trione, D.C.Colo.1951, 97 F.Supp. 522, 526, the statute was '* * * designed to afford laborers and materialmen relief against the contractor and the surety on the payment bond for labor and material furnished on public works.' Moreover, it is common knowledge that many laborers do not enter into written agreements prior to furnishing their labor, although, of course, if the laborer is a member of a labor union, it will have contracted with the employer for the benefit of the employee. If written contracts were required in order to ground an action under the statute, then many laborers would be denied relief. The omission by Congress of any qualifying words was intended to permit a suit by anyone who furnished labor or material.
As for the four change orders, two issues have been raised by counsel for Krendel. Since I hold that there has been an accord and satisfaction of Glickfeld's claim, I need not decide whether or not the parties entered into an oral agreement that the compensation would be $ 440.
The evidence discloses that (a) Glickfeld received from Krendel a check dated September 27, 1950, in the amount of $ 957; (b) the accompanying letter of transmittal contained a breakdown of the total amount, including the entry 'Change Orders * * * $ 440.00 * * * 75% completed * * * $ 330.00.'; (c) Glickfeld testified that upon receipt of the check and letter, he telephoned Krendel and contended that a price of $ 440 for the work on the change orders had never been agreed to by him (Glickfeld); (d) Glickfeld deposited the check; (e) Glickfeld received from Krendel a check dated October 21, 1950, in the amount of $ 2,044.50; (f) the accompanying letter of transmittal contained a breakdown of the total amount, including the entry 'Change Orders 100% completed * * * $ 440.00.'; (g) once again, according to Glickfeld, he protested by telephone to Krendel; and (h) but again Glickfeld deposited the check.
Counsel for Glickfeld contends that there was no accord and satisfaction because the $ 440 was merely a 'payment on account in an amount which the defendant admits that he owes'; that when payment is made of what is admitted by the debtor to be owed by him there is no consideration to support any 'waiver' by the creditor of his right to a greater amount. In support of such a contention, counsel quotes language from Decker v. George W. Smith & Co., E. & A.1916, 88 N.J.L. 630, 96 A. 915, which does not support the contention. The situation where the amount due is liquidated, or both parties admit that a certain amount is due and the debtor pays over that amount, must be distinguished from the situation where there is a dispute prior to the payment, as in the case at bar Glickfeld disputed the amount due him prior to depositing the $ 2,044.50 check which included $ 440 for 'Change Orders 100% completed'; in the former type of case, there is no accord and satisfaction because there is no dispute as to which the parties have ...