the payment bond other than a desire to benefit those in the position of plaintiff. Accordingly the plaintiff was permitted to recover from the subcontractor's surety.
The McGrath case was criticized by the Court of Appeals for the Second Circuit in Socony-Vacuum Oil Co. v. Continental Casualty Co., 2 Cir., 1955, 219 F.2d 645. There the court was nominally applying Vermont law. But since the courts of that state had not yet spoken on this problem, the Second Circuit said that its task was
'not to surmise which line of judicial precedent a Vermont court would follow if presented with the case, but rather, by looking to the same sources which a Vermont court would presumably consult and by weighing the comparative reasoning of learned authors and conflicting judicial decisions for their intrinsic soundness, to define the pertinent law which when thus ascertained is presumably the law of Vermont even though as yet unannounced by the Vermont Court.' 219 F.2d at page 647.
The court then went on to quote approvingly from Professor Corbin's treatise and to hold, in a situation legally indistinguishable from the McGrath case, that an unpaid materialman of a subcontractor could sue the subcontractor's surety on a bond expressly conditioned upon the payment of laborers and materialmen by the principal despite the presence of Miller Act rights which the plaintiff once could have asserted.
Thus, among New Jersey and the three jurisdictions surrounding her can be found the gamut of judicial views concerning the interpretation of this type of contractor's surety bond. They are (1) the New Jersey view of strict construction of a surety's undertaking -- a construction so strict that it ignores language which the majority of courts would find to be words of express promise by the surety to pay the plaintiff; (2) the New York search for an 'intention to benefit' to be gleaned from the words of the bond and the circumstances surrounding its origin; and (3) the rule followed in Pennsylvania and Delaware which simply looks for a promise to pay third parties within the four corners of the bond and any instruments incorporated in or guaranteed by it, which was also the rule adopted by the Second Circuit in dealing with a bond controlled by Vermont law.
Obviously, this plaintiff cannot sue American under the strict construction rule followed by the cited New Jersey cases. Nor could it maintain this suit under the New York rule because here, as in the McGrath case, the presence of rights under the Miller Act would foreclose a finding that the parties to the bond at the time of its execution intended to benefit unpaid laborers and materialmen. And it is equally clear that plaintiff cannot sue under the Pennsylvania cases, which it presses, because of the absence in American's bond or in the underlying contract of a promise to pay plaintiff for the default of L. & R. The motion to dismiss the complaint as to the American Surety Company must be granted.
A procedural point remains. Defendants Wortmann and Seaboard Surety have cross-claimed against American on the bond. American protests that these cross-claims were prematurely filed and asks that they be dismissed with leave to Wortmann and Seaboard to reinstate these same claims by way of third-party complaints. Wortmann and Seaboard assert that if forced to withdraw their cross-claims an attempt to reinstate them in another form might well be precluded because the time within which the bond specifies Wortmann may sue has expired. However, this question need not be decided. The point American makes is perhaps novel, but not difficult. The aim of procedural rules is facilitation not frustration of decisions on the merits.
Rules 13(g) of the Fed.Rules Civ.Proc. 28 U.S.C., provides that:
'A pleading may state as a cross-claim any claim by one party against a co-party arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim therein or relating to any property that is the subject matter of the original action. Such cross-claim any include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant.'
There can be no doubt that had American not been a co-party at the time the cross-claims were made it could have been made a third-party defendant under Rule 14. But because it was a co-party of Wortmann and Seaboard at the time, the cross-claims were proper. Once proper, they did not cease to be so because the party to whom they were addressed subsequently ceased to be a co-party. This result is clearly contemplated by the language of Rule 13(g). The cross-claims against American may stand as such.
Orders should be submitted in conformity herewith by counsel for American and for Wortmann and Seaboard.