Curtin & Johnson projects to which Silver Hill delivered materials during the relevant period were bonded government projects. The rationale behind the defense of misapplication -- "that it would be unfair to the principal and the surety on the Miller Act bond to permit a supplier to collect old debts out of monies paid on a current government project, secure in the knowledge that he will be able to collect for the materials furnished on the government project by filing a claim against the bond," Wiring, supra, at 1040 -- does not apply when a supplier would be "misapplying" payments from one bonded account to another bonded account. Silver Hill could not hope to realize any advantage from its accounting practice of crediting undirected payments toward the most delinquent bonded accounts.
Third, Silver Hill's practice of applying payments to the oldest accounts was not an innovation designed to exploit the bond requirements of the Miller Act. Rather, that policy had been in effect for at least several years before Curtin & Johnson embarked on the Pershing Park project. There was testimony at trial that this accounting practice was a standard one in the industry. See United States for the Use of Jinks Lumber Co. v. Federal Insurance Co., 483 F.2d 153, 156 (5th Cir. 1973). In any event, the policy appears to have been applied neutrally and consistently to all the Curtin & Johnson accounts over the relevant time period.
Fourth, Silver Hill applied payments to the oldest unpaid account only when creditors did not designate the account to which payments should be allocated. Indeed, Silver Hill gave Curtin & Johnson every opportunity to allocate payments to various accounts; the payment form itself included a space where creditors could designate the exact job toward which payment was being made. Curtin & Johnson refused to use this opportunity. It was at Curtin & Johnson's election, and not Silver Hill's, that Curtin & Johnson's accounts were credited in the fashion disclosed by the record.
In light of these considerations the defendants clearly failed to carry their burden of demonstrating that Silver Hill misapplied payments knowing or having reason to know they were derived from the Pershing Park account. "The purpose of the Miller Act is to protect those who furnish labor and materials for public construction and to ensure that they will be paid for the same." Graybar Electric Co. v. John A. Volpe Construction Co., 387 F.2d 55, 58 (5th Cir. 1967), quoting St. Paul Mercury Indemnity Company v. United States for the Use of H.C. Jones Construction Company, 238 F.2d 917, 921 (10th Cir. 1957). "The Miller Act . . . is highly remedial in nature. It is entitled to a liberal construction and application in order properly to effectuate the Congressional intent to protect those whose labor and materials go into public projects." United States for the Use of Sherman v. Carter, 353 U.S. 210, 216, 1 L. Ed. 2d 776, 77 S. Ct. 793 (1957).
Thomason may understandably complain that it was not delinquent in paying Curtin & Johnson for the cement. However, it should be noted that Thomason and Peerless were not without means of protecting themselves against loss resulting from Curtin & Johnson's failure to pay Silver Hill for deliveries to the Pershing Park project. The prime contractor could have issued joint checks payable to both Curtin & Johnson and Silver Hill; required Curtin & Johnson to post a bond; made regular inquiries into the state of Curtin & Johnson's accounts at Silver Hill; or simply required Curtin & Johnson to fill out that section of the Silver Hill invoice form allocating payments to the appropriate accounts. Thomason neglected to adopt any of these procedures.
Judgment shall be entered for plaintiff Silver Hill Concrete Corp. against defendants in the amount of $70,890.51, with interest from date of judgment at a rate of 14 percent per annum pursuant to Section 2 of D.C. Act 4-117 (D.C. law 4-70, effective March 10, 1982).