This is so, despite the fact the work was progressing and Terminal continued to receive payments from the owner in accordance with the terms of the prime contract. The record contains no agreement as to, or explanation for, the abandonment of the terms of the subcontract pertaining to payments
Defendants argue plaintiff bank is estopped from asserting the wage claims covered by assignments for the reasons (1) plaintiff represented it would continue to loan money to subcontractor for payroll payments on and after September 9, 1960; (2) subcontractor, with plaintiff's knowledge, continued the practice of furnishing defendants certifications of weekly payroll payments; and (3) defendant Terminal, having been led to believe the subcontractor had itself met the payrolls, allowed the joint venture to continue with its performance and paid out large sums of money in relation thereto that Terminal would not otherwise have paid.
The proofs do not establish that plaintiff represented to defendants it would continue to make loans to subcontractor for the September 9, 1960, and subsequent payrolls; nor was plaintiff bank duty bound to continue to loan money to the joint venture throughout September and subsequent months. The evidence does not establish that plaintiff bank had knowledge that subcontractor continued its practice of furnishing defendant Terminal certifications of weekly payroll payments.
As to the latter, the office manager of T & M Plumbing Company's field office has testified that he, throughout the months, followed the instructions of Terminal's office manager in signing an affidavit each week to the effect 'all persons employed on the project have been paid in full the weekly wage' and that so far as he was concerned, this affidavit was as valid subsequent to September 9, 1960, as it had been prior thereto.
Estoppel is defined:
'To create an equitable estoppel, a false representation or concealment of material facts must be made, by a person with knowledge, actual or constructive, of the real facts, to a person without such knowledge, with the intention that it shall be acted on by the latter person, and he must so rely and act thereon that he will suffer injury or prejudice by the repudiation or contradiction thereof or the assertion of a claim inconsistent therewith.' 31 C.J.S. Estoppel § 67, p. 254 (1942).
The general principles of estoppel apply to suits upon a Miller bond. Moyer v. United States for Use of Trane Co., 206 F.2d 57, 39 A.L.R.2d 1098 (4th Cir., 1953); United States, to Use of Noland Co. v. Maryland Casualty Co., 38 F.Supp. 479 (D.Md.1941). However, the plaintiff in any event would be estopped only to the extent that the defendant relied and only as to the amount of damages actually sustained through the reliance. See United States, to Use of Noland Co. v. Maryland Casualty Co., supra.
We conclude defendant Terminal's argument that plaintiff bank made false representations or concealed material facts with the intention Terminal should act thereon is not supported by the evidence. Nor do we find that defendant Terminal has suffered injury or prejudice by the fact of plaintiff's purchase of wage claims.
Indeed, defendant Terminal during the several months following August 17, 1960, received the benefit of the labor furnished by the joint venture in carrying on the work to completion. Terminal, both as general contractor and as obligor on the performance bond, was duty bound to see that the necessary material was furnished and labor performed. It recognized its contingent obligation under the bond to pay for materials furnished; it cannot now refuse to recognize an obligation for labor on the basis that had it known of the assignments it would have cancelled the subcontract. Had cancellation been effected, Terminal would then have had to furnish the labor which was in fact furnished by plaintiff's assignors.
VI. PERSONS PROTECTED UNDER THE BONDS
Section 1 of the bond provides:
'A claimant is defined as one having a direct contract with the Principal or with a subcontractor of the Principal who has furnished labor, material, or both, in the prosecution of the work provided for in the Contract and who has not been paid in full therefor. Labor and material are construed to include, but are not limited to, that part of water, gas, power, light, heat, oil, gasoline, telephone service or rental of equipment directly applicable to the contract.'
As a general rule, the courts tend to give a very broad construction to the class of people entitled to protection under these bonds. See Standard Accident Insurance Co. v. United States for Use and Benefit of Powell, 302 U.S. 442, 58 S. Ct. 314, 82 L. Ed. 350 (1938); Brogan v. National Surety Bank, 246 U.S. 257, 38 S. Ct. 250, 62 L. Ed. 703 (1918); American Surety Co. of N.Y. v. United States ex rel. Barrow Agee Laboratories, Inc., 76 F.2d 67 (5th Cir., 1935); United States for Use and Benefit of Farwell, Ozum, Kirk & Co. v. Shea-Adamson Co., 21 F.Supp. 831 (D.Minn.1937) (all decided under the Heard Act.)
In the Shea-Adamson case the scope of the bond included work done by a superintendent or foreman.
'It may be true that the term 'labor' in this statute, as generally in statutes relating to mechanics' liens, refers to physical labor rather than technical and professional skill and judgment, but an architect or other skilled man who actually superintends the work as it is done is by the weight of authority furnishing labor. * * * It was so held under the federal statute where the superintendent did some manual labor * * *.' American Surety Co. v. United States ex rel. Barrow Agee Laboratories Inc., supra, 76 F.2d at 68.
The liberal construction given to the Heard Act is also to be given in cases arising under the Miller Act. See MacEvoy v. United States for Use and Benefit of Calvin Tomkins Co., 322 U.S. 102, 107, 64 S. Ct. 890, 88 L. Ed. 1163 (1944) (dictum). 'The courts have refrained from attempting an all-inclusive definition of (labor and) material furnished in the prosecution of the work.' United States for Use and Benefit of J. P. Byrne & Co., v. Fire Association of Philadelphia, 260 F.2d 541, 543-544 (2d Cir., 1958). The test developed by the courts is that the labor and materials must be furnished in the prosecution of the work. The Miller Act 'does not require that the labor or material furnished be actually used or incorporated into the contract work.' Fourt v. United States for Use and Benefit of Westinghouse Electric Supply Co., 235 F.2d 433, 435 (10th Cir., 1956).
But however broad the rule is, the coverage of the bond will not be extended to one who is one of the partners or joint venturers constituting the subcontractor. This was the rule under the Heard Act, Theobald-Jansen Electric Co. v. P. H. Meyer Co., 77 F.2d 27 (10th Cir., 1935); United States for Use and Benefit of Walker v. United States Fidelity & Guaranty Co., 4 F.Supp. 854 (D.Wyo.1933), and the rule has been followed under the Miller Act. St. Paul-Mercury Indemnity Co. v. United States for Use of Jones, 238 F.2d 917 (10th Cir., 1956).
Nor can the correctness of the rule be questioned. The purpose of the bond is to protect the laborers in the event the subcontractor should fail or otherwise become unable to pay the wages. To extend the protection of the bond to the subcontractor or one of its principals would mean that the surety would, in effect, be a guarantor of the profits or success of the subcontractor.
It necessarily follows that E. J. Morin, one of the joint venturers, is not entitled to protection and that the wage assignments executed by him in the aggregate sum of $ 8,441.96 do not constitute valid bases for recovery against the defendants Terminal and American Surety Company.
This court reaches a like conclusion in respect to the wage assignments ($ 1,739.76) executed by John Rothenberg, a certified public accountant, hired on a two-day a week basis, for internal auditing, accounting, and preparing payroll tax returns. The services he performed cannot be held to constitute labor furnished in the prosecution of the work. However, site office manager Stiles and the few employees who worked under him in daily active support of all phases of performance including the satisfying of daily complaints and demands of defendant Terminal, would seem to fall within the class of persons covered, and we deem their assigned claims valid bases for recovery here.
Therefore, on the first count of the complaint, plaintiff will be awarded the amount demanded, less the amounts constituting the assignments of E. J. Morin and John Rothenberg, or the principal sum of $ 178,738.33.
VII. TRUST FUNDS
Trustees of welfare and pension funds may be claimants under the bonds. See United States for Benefit and on Behalf of Sherman v. Carter, 353 U.S. 210, 77 S. Ct. 793, 1 L. Ed. 2d 776 (1957). However, defendants contend the welfare fund claims presented here do not come within the scope of the notices received.
Not so. The proofs disclose that the defendants received a letter dated December 29, 1960, signed by a trustee of each of the two welfare funds involved, notifying defendants of an aggregate claim of $ 20,242.20. The proofs also disclose that the trustees received a check drawn by defendant Terminal dated January 9, 1961, in the amount of $ 13,000.00, leaving an unpaid claim of $ 7,242.20, which is the amount demanded by plaintiff in its second count.
Plaintiff has introduced assignments executed by the trustees of the funds, dated December 15, 1960, covering the amount in question, and we conclude plaintiff is entitled to recover the $ 7,242.20 demanded.
We find that plaintiff bank is entitled to judgment in the principal amount of $ 185,980.53. Interest and other items to be settled by motion on notice.
Submit an order.