Mr. Glunt failed to pay his subcontractors. It appears that he did not even return to Bangor after making the contract, and that he did nothing toward performance of the contract. The construction was supervised by an engineer from the office of the Civilian Aeronautics Administration. No bond appears tó have been required of the contractor. Prior to payment being made to Mr. Glunt by the Government, the subcontractors have notified the Civil Aeronautics Administration in writing that Mr. Glunt was obligated to them. This is admitted in the report submitted by the Department of Commerce. Despite such notice the Civilian Aeronautics Administration proceeded to pay Mr. Glunt, and notified Messrs. O'Connell and Stewart that they could not recognize any claim by them, since the Government had contracted with Mr. Glunt. The Department of Commerce denies the Government's liability on the ground that there was no privity of contract between the Government and the subcontractors, and hence the Government is not responsible for the acts of its contractor in failing to meet his obligation to his subcontractors, any dispute as to settlement being one for adjustment between the contractor and his subcontractors. Your committee, however, feel that because of the peculiar circumstances of this case the general rule should not be applied, and that the Government is at least morally and equitably obligated to the subcontractors. Mr. Glunt, the contractor, was "a soldier of fortune and a bird of flight," a fact that came to the early attention of the Government when it developed that he did not even return to Bangor, where the construction took place, after entering into the contract, and apparently had been there merely for the formalties of executing the contract. From the beginning of the work until completion thereof, it was supervised by an engineer from the office of the Civilian Aeronautics Administration who was notified by the subcontractors, and who well knew, that Mr. Glunt was performing no services whatever and that all of the work was being done and all of the materials were being furnished by Messrs. O'Connell and Stewart. Furthermore, long before payment by the Government was made to Mr. Glunt, the Government was notified in writing that Messrs. O'Connell and Stewart had performed the contract and were entitled to the money, and that Mr. Glunt had done nothing more than execute the contract with the Government, subcontract with Messrs. O'Connell and Stewart, and that he then left the scene and never returned thereto; yet the Government did not withhold or even question payment to Mr. Glunt, despite its being put on notice that he was in the very act of defrauding his subcontractors. It is further submitted that the Government did not require a bond of Mr. Glunt, as is usual in such cases. It is believed that if, under the circumstances, Mr. Glunt's contract had been with a person or persons other than the Government, and payment to Mr. Glunt had been made, such person or person s could be required to pay the subcontractors despite the fact that they had already paid Mr. Glunt, and that a lien would also attach to the building which had bee n onstructed. Your committee feel that the predicament results from fault or negligence on the part of the Government in proceeding to pay Mr. Glunt, despite the exceptional circumstances, and that the subcontractors are entitled to the reliefs ought. In this connection, your committee further feel that the Government should take such steps against Mr. Glunt as to bring him to account for his fraudulent and deceitful acts, and is so advising the Attorney General. Your committee further find that the subcontractors have little, if any, possibility of obtaining relief other than that which Congress may afford. Immediately after entering into the contract with the Government and the subcontract with the claimants, Mr. Glunt left the jurisdiction for parts unknown. Since it appears that he is irresponsible and a fly-by-night, it is doubted if any judgment which the claimants might be able to obtain against him would be of any value. The claimants filed suit in the Superior Court at Penobscot, Maine, to enforce a lien against the building constructed by their materials and labor, but the United States filed a "suggestion of interest" in the litigation praying that the bill be dismissed, insofar as it sought to assert, impress, or foreclose a lien on the land and the building or to disturb in any way the possession or rights of the Government, Government property being not subject to lien. This motion, or "suggestion of interest," was sustained. It is apparent that unless Congress grants the relief sought by the proposed legislation, the claimants (subcontractors) will lose the value of their materials and services. Your committee feel that this should not result, and that the Government owes them at least a moral and equitable obligation, and, therefore, your committee recommend favorable consideration of the proposed legislation. Appended hereto is the report of the Department of Commerce, together with other pertinent evidence, all of which is made a part of this report. DEPARTMENT OF COMMERCE, Hon. DAN R. McGEHEE, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: Reference is made to your letter of February 25, 1943, addressed to the Honorable Charles I. Stanton, Administrator, Civil Aeronautics Administration, in which you enclosed copies of H. R. 1962, a bill for the relief of Daniel D. O'Connell and Almon B. Stewart, and requested a report of the facts in the case as disclosed by the files, together with opinion as to the merits of the bill and copies of all papers on file that are material to the facts and a decision on the bill. This bill directs the Secretary of the Treasury to pay to Daniel D. O'Connell and Almon B. Stewart the sums of $544.16 and $1,732.22, respectively, payment of such sums to be in full satisfaction of all claims against the United States for damages sustained by them by the failure of George E. Glunt to pay Daniel D. O'Connell and Almon B. Stewart for labor and materials furnished as subcontractors. The facts surrounding this case may briefly be summarized as follows: The first regional office of the Civil Aeronautics Administration, located at LaGuardia Field, Long Island, N. Y., contracted with George E. Glunt, successful bidder, under Invitation No. 1-41-357 for the erection of a 16- by 24-foot prefabricated steel-frame watch-house building furnished by the Government at Bangor, Maine. The established cost of the work was $1,688. After Government acceptance of the lease, Mr. Glunt, the contractor, was issued the usual notice to proceed with the work commencing September 22, 1941, and was required to complete the job under the terms of the contract within 60 days, or by November 21, 1941. Upon the completion of the project on January 14, 1942, it was found that the estimated contract price of $1,688 was in excess of the actual contract price determined under the specifications as $1,520.40. Accordingly, Mr. Glunt was paid this amount, less $282.60, representing cash discount of one-half of 1 percent-$7.60 and liquidated damages, 55 days at $5 per day $275, or a net payment of $1,237.80. It subsequently developed, after the contract was awarded to him, that Mr. Glunt sublet to two subcontractors; namely Almon B. Stewart, for furnishing labor and materials in erecting the watch-house building, and Daniel D. O'Connell, for installing the foundation and piers for the building. Mr. Stewart's bill to Mr. Glunt for the erection amounts to $1,732.22 while Mr. O'Connell's bill for labor and materials for the foundation amounts to $544.60. Mr. Glunt failed to pay his subcontractors. The subcontractors had notified the regional office of the Civil Aeronautics Administration that Mr. Glunt was obligated to them, prior to payment being made by the Government to Mr. Glunt. There being no privity of contract between the Government and the subcontractors, the Government is not responsible for the acts of its contractor in failing to meet his obligation to his subcontractors. Consequently, any dispute as to settlement is one for ajdustment between the contractor and his subcontractors. In view of the above facts the Department is opposed to the enactment of H. R. 1962. Copies of all reports relating to this claim are enclosed. The Bureau of the Budget has advised that there is no objection to the submission of this letter to the committee. Sincerely yours, WAYNE C. TAYLOR, Acting Secretary of Commerce. AFFIDAVIT OF DANIEL D. O'CONNELL To Whomsoever This May Concern: I, Daniel D. O'Connell, of Bangor, county of Penobscot, State of Maine, do upon oath depose and say, that I am a general contractor and have been engaged in the business for constructing foundations and buildings in said Bangor for more than 35 years. That on the 29th day of November 1941, George E. Glunt, then of Altoona, Pa., contacted me at my office in said Bangor and represented to me that he had a contract for the construction of a watch house at the Bangor Airport with Civil Aeronautics Administration and desired that I perform the necessary work and furnish the materials required under the contract that he had with Civil Aeronautics Administration for the construction of the foundation walls and piers for said building. I entered into a contract with George E. Glunt to construct the foundation walls and piers for a type S building at the Bangor Airport for the sum of $406. The back filling, installing frame, and subfloor were to be done on a day-work basis and the amount of my bill for this work is $138.16, making a total due me for the labor and materials furnished in connection with this work of $544.16. I proceeded with my work in the erection of the foundation walls and piers, in accordance with the plans and specifications furnished me by George E. Glunt. The construction was supervised by an engineer from the office of Civil Aeronautics Administration, who knew that all labor and materials required for the work that I was engaged to do was furnished by me. I have never seen Mr. Glunt since the day he was in my office when I was engaged by him to do this work. After my work was completed I sent my bill to George E. Glunt addressed to 1811 Eighth Avenue, Altoona, Pa., this being the address that he left with me. I received no response to my bills or letters and my last letter to him written in February 1942, was returned by the Post Office Department with the notation that the addressee had left Altoona, Pa., leaving no forwarding address. On March 2, 1942, my attorney, A. M. Rudman of this city, wrote to Civil Aeronautics Administration, informing them that my claim for the erection of the foundation walls and piers had not been paid by Mr. Glunt, and on March 10, 1942, A. J. Massari, Chief Clerk of Civil Aeronautics Administration at La Guardia Field, Jackson Heights, Long Island, N. Y., wrote acknowledging the letter of March 2, 1942, and stated: "We exceedingly regret that this office is without authority to adjust claims of subcontractors arising out of default of the Government contractor in meeting his contractual obligations. Our records indicate that Mr. Glunt was recently paid for this job and it is possible that he may have since liquidated his obligations." I have never received payment for the labor and materials furnished by me in connection with the construction of this watch house building at the Bangor Airport for Civil Aeronautics Administration, neither have I been able to locate Mr. Glunt, nor do I believe that there is any likelihood of my being able to collect from him. There is due me the sum of $544.16 for the labor and materials so furnished and used by me in the erection of said building or watch house, and the charges made for such labor and materials which were actually used in the erection of said building or watch house were fair and reasonable. Dated at Bangor, Maine, this twenty-fifth day of May 1943. STATE OF MAINE, Penobscot, ss: DANIEL D. O'CONNELL. MAY 25, 1943. Personally appeared the above-named Daniel D. O'Connell and made oath that the foregoing statements by him made and subscribed are true. Before me, [SEAL] ABRAHAM M. RUDMAN, Notary Public. AFFIDAVIT OF ALMON B. STEWART To Whomsoever This May Concern: I, Almon B. Stewart, of Bangor, County of Penobscot, State of Maine, do upon oath depose and say, that I am a contractor and builder and have been engaged in the contracting and construction business in said Bangor for more than 25 years. That on the 29th day of November 1941, George E. Glunt, then of Altoona, Pa., contacted me at my office in said Bangor and represented to me that he had a contract for the erection of a watch house at the Bangor Airport with Civil Aeronautics Administration and desired that I perform the necessary work and furnish the materials required under the contract that he had with Civil Aeronautics Administration for the construction of this watch house. As a result of this conversation I entered into a contract with George E. Glunt, under the terms of which I agreed to furnish the necessary labor and materials at actual cost plus 15 percent. This contract was in writing, signed by George E. Glunt and A. B. Stewart. After Daniel D. O'Connell, of this city, completed the construction of the foundations, I proceeded with my work in the erection of the superstructure, in accordance with the plans and specifications furnished me by George E. Glunt. The construction was supervised by an engineer from the office of Civil Aeronautics Administration, who knew that all labor and materials required under the original contract was furnished by me, as Mr. Glunt did not return to Bangor after making the contract above referred to. On January 6, 1942, as the building was nearing completion, at the suggestion of the engineer in charge, I wrote to Mr. J. E. Somers, regional manager of Civil Aeronautics Administration, LaGuardia Field, New York, informing him that I had erected the watch-house building under the contract made between Civil Aeronautics Administration and George E. Glunt as per their contract No. 1-41-357. In response to this letter I was advised by Civil Aeronautics Administration by its letter under date of January 8, 1942, that it was unable to exercise any control over the payment for the labor and materials furnished by me in connection with this contract. I informed Civil Aeronautics Administration that I was unable to get any response from Mr. Glunt and again requested that the payment to Glunt be withheld until he arranged to settle with me. Between January 8, 1942, and March 2, 1942, several letters were exchanged between the affiant and Civil Aeronautics Administration, I informing them of my inability to contact George E. Glunt or to obtain from him a reply to my letters and demands for payment of the amount then due me, and Civil Aeronautics Administration replied each time that they had no control over the situation and could not recognize my claim. On March 2, 1942, my attorney, A. M. Rudman, of this city, wrote to Civil Aeronautics Administration, informing them that my claim and the claim of Daniel D. O'Connell for the erection of the foundation walls and piers had not been paid by Mr. Glunt, and on March 10, 1942, A. J. Massari, Chief Clerk of Civil Aeronautics Administration at LaGuardia Field, Jackson Heights, Long Island, N. Y., wrote acknowledging the letter of March 2, 1942, and again stated: "We exceedingly regret that this office is without authority to adjust claims of subcontractors arising out of default of the Government contractor in meeting his contractual obligations. Our records indicate that Mr. Glunt was recently paid for this job and it is possible that he may have since liquidated his obligations." I have not been paid for the labor and materials furnished by me, neither have I been able to locate Mr. Glunt; although I have requested Civil Aeronautics Administration to furnish me with his address, they have not done so. There is little likelihood of my being able to collect from Glunt even if I could locate him. There is due me the sum of $1,732.22 for the labor and materials so furnished and used by me in the erection of said building or watch house, and the charges made for such labor and materials which were actually used in the erection of said building or watch house were fair and reasonable. Dated at Bangor, Maine, this 25th day of May 1943. STATE OF MAINE, Penobscot, 88: ALMON B. STEWART. MAY 25, 1943. Personally appeared the above-named Almon B. Stewart and made oath that the foregoing statements by him made and subscribed are true. Before me, [SEAL] PENOBSCOT COUNTY SUPERIOR COURT EQUITY DOCKET No. 154 Almon B. Stewart vs. George E. Glunt & City of Bangor Entry date, March 13, 1942 March 13, 1942: A. M. Rudman-E. Donald Finnegan for United States of March 13, 1942: Bill filed and subpena issued returnable April Rules 1942. March 19, 1942: Upon application for notice to George E. Glunt of Altoona, May 12, 1942: Answer of City of Bangor filed. August 11, 1942: Motion of E Donald Finnegan, assistant United States attorney for leave to file a "Suggestion of the interest of the United States in the matter of litigation" in above-entitled suit filed. Brief in support of motion filed. Suggestion of the interest of the United States in matter of litigation filed. June 14, 1943: Final decree dismissing bill, signed, entered, and filed (Murray, J.). A true copy of docket entries. Attest: GEORGE P. GOULD, Clerk. DEPARTMENT OF JUSTICE, Washington, D. C., May 14, 1943. Re Almon D. Stewart and Daniel D. O'Connell v. George E. Glunt and City of Bangor, Maine, Superior Court, Penobscot, Maine. Mr. WILLIAM A. M. BURDEN, Special Aviation Assistant to the Secretary of Commerce, Department of Commerce, Washington, D. C. SIR: Receipt is acknowledged of your letter of May 4, 1943, requesting the present status of the above-entitled case and for any pertinent data that we have in our files. As you probably know, the first regional office of the Civil Aeronautics Administration, LaGuardia Field, Long Island, N. Y., contracted with George E. Glunt for the erection of a watch-house building at Bangor, Maine, on land leased from the city of Bangor According to the allegations of the complaint, Glunt by contract with Stewart and O'Connell obtained labor and materials in the performance of the contract with the United States. The building was erected; Glunt was fully paid, but the plaintiff claims a lien on the building and land to secure the amount due by Glunt and prays that the property be sold and the proceeds applied to the discharge of the lien. The United States filed a "Suggestion of interest" in the litigation praying that the bill be dismissed, insofar as it sought to assert, impress, or foreclose a lien on the land and the building or to disturb in any way the possession or rights of the United States. We were advised today by letter of May 11, 1943, from the assistant United States attorney at Bangor, Maine, that the matter is still pending before the court and that the attorney for the plaintiff has not requested a hearing. Respectfully, FRANCIS M. SHEA, Assistant Attorney General (For the Attorney General.) |