Mankin v. United States Ex Rel. Ludowici-Celadon Co.

Background

A general contractor hired to build a post office in Natchez, Mississippi entered a federal construction contract and gave a bond guaranteeing payment to those who supplied labor or materials. The contractor hired a subcontractor to do plumbing, roofing, and metalwork. Three companies sold materials to that subcontractor and were not fully paid. Because the United States did not sue on the bond within six months, one supplier filed the required affidavit, obtained a certified copy of the contract and bond, and sued in the name of the United States with the other suppliers joining. The trial court and the Court of Appeals entered judgment for the suppliers against the contractor and its surety.

Reasoning

The main question was whether the statute and bond protect people who furnished materials to a subcontractor, not only those who dealt directly with the main contractor, and whether recovery is limited when the contractor paid the subcontractor before notice. The Court applied an earlier decision holding that the phrase “persons supplying the contractor” includes those who supplied a subcontractor. The Court found the amended statute’s bond language imposed the same payment obligation and did not limit recovery because the contractor had earlier paid the subcontractor. The Court therefore affirmed judgment for the suppliers on the contractor’s bond.

Real world impact

Vendors who sell materials to subcontractors on federal public buildings can recover under the contractor’s statutory bond if the United States does not sue first. General contractors cannot avoid bond liability merely by paying a subcontractor before suppliers give notice; contractors should require releases or protective arrangements from subcontractors and sureties.