Illinois Surety Co. v. John Davis Co.

Citations

• 244 U.S. 376
• 37 S. Ct. 614
• 61 L. Ed. 1206
• 1917 U.S. LEXIS 1649

Syllabus

<p>The purpose of the' Act of February 24, 1905, 33 Stat. 811, is to provide security for the claims of all persons who furnish labor or mate.rial oh public works of the United States; the act, and bonds given under it, are to be construed liberally to effectuate this purpose; and the release of sureties through mere technicalities is not to be encouraged.</p> <p>S, while conducting his business under, supervision of a creditors’ committee, entered into a contract with the United States for the doing of certain work, and gave bond with surety to secure claims for labor and materials under the Act of February 24, 1905, supra. After part performance of the contract, he and the creditors formed a corporation to take over his affairs, which, without the consent of the United States or the surety, received a transfer of all his business and assets, and thereafter under the management of S, as president, and the control of the creditors through the board of directors, continued for a time to perform the contract. Held: (1) That in view of § 3737, Rev. Stats., the transfer could not effect an assignment of the contract but amounted at most to a subletting.</p> <p>(2) That as the responsibility of the contractor under the contract and the actual management of the business were hot changed, nor the surety prejudiced, the transfer, did not operate to discharge the surety from past or future liability.</p> <p>(3) That labor and materials furnished in the prosecution of the work under the contract, after the transfer of the contractor’s business to the corporation, were to be regarded as furnished to him, within the meaning of the Act of February 24, 1905, supra, as well as to the corporation, and that the latter, besides, might be deemed the successor of the contractor within the condition of the bond, binding him “his heirs, successors,” etc.</p> <p>Questions of liability to pay interest under a bond given to secure pay- . ment for labor and materials, furnished under a const