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Socony-Vacuum Oil Co. v. Continental Casualty Co.

219 F.2d 645 (1955)

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Socony-Vacuum Oil Co. v. Continental Casualty Co.

United States Court of Appeals for the Second Circuit
219 F.2d 645 (1955)

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Facts

A federal contractor took out the performance and payment bonds required by the Miller Act. The contractor subcontracted a second company to do the project’s roadwork. To protect itself against liability on the Miller Act bonds, the contractor required the subcontractor to obtain a bond from Continental Casualty Company (Continental) (defendant). The bond obliged Continental to pay damages if the subcontractor breached its obligations to the contractor, including the obligation to pay all sub-subcontractors and materialmen. The subcontractor ordered construction material from Socony-Vacuum Oil Company (plaintiff) but failed to pay for it. Socony-Vacuum missed the Miller Act’s deadline for claiming payment from the contractor’s surety, so it turned for relief to the subcontractor’s bond and sued Continental. The federal district court dismissed the case, reasoning that the subcontractor’s bond was meant to protect only the contractor, not third-party material suppliers. Socony-Vacuum appealed to the Second Circuit Court of Appeals.

Rule of Law

Issue

Holding and Reasoning (Hincks, J.)

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