to do so. These allegations, however, do not seem to be material to any question now involved.

On November 8, 1904, an order was made by agreement of parties directing the payment to R. P. Prowell of $1,607.68, then described as the amount of the then last estimate made by the United States on the work, and he was directed or permitted to use the amount or so much of it as was necessary for the completion of the lock and dam, and to pay any surplus into court. On March 15, 1905, he reported that he had not only paid out all of the $1,607.68, but in addition had expended a further sum of $865.28-a total of $2,472.96. I find no order authorizing the expenditure of the excess, but most probably the excess expenditure had reference to the contract last above copied.

The bill in this case was filed after the situation in October, 1904, had been discovered by the complainant, and under the operation of the orders made herein a further balance due on the work by the United States amounting to $8,176.75 was on May 31, 1905, paid into court, where it now remains. The United States has no further concern with the case, and all questions involved are those which grew out of claims for labor and materials supplied either to Willard & Cornwell or to Joseph Coyne or by or to Hardaway & Prowell.

Without any formal pleadings by any of those who claim to have supplied labor and materials, the court, pursuant to the request and stipulation of the parties, entered an agreed order on November 8, 1904, referring the case to the special master to audit the claims, etc. When this order was entered, no idea was conveyed of the various and somewhat intricate questions that might come up when the claims were presented, and when the last two contracts above copied should be filed. Hence, it was not anticipated that a state of case would arise which would call for the laying down of exact rules for the guidance of the special master. Indeed, the court was in no way advised of the status until called upon to hear argument on the pending exceptions to the special master's report. The investigation of certain important legal questions which might more appropriately have been made at the reference was for that reason delayed until the present. As already intimated, some parts of the claims for labor and materials supplied, which were filed before the special master, arose before the contract of February 5, 1901, between James E. Willard and Charles L. Cornwell on the one side and Joseph Coyne on the other. Some parts of them arose between that date and the 2d day of June, 1903, when the contract was made between Joseph Coyne on the one side and Hardaway & Prowell on the other, and still more of them arose after the making of that contract. Each of these three sets of claims demand separate treatment.

Class 1: It appears that only part of one of the claims was created before February 5, 1901, namely, part of the claim of the Tidewater Coal Company. This claimant had supplied to the original firm material used in the prosecution of the work to the extent of $361.85, which had not been paid, and that sum with interest is reported to be $516.23. I cannot agree that any part of the claim of Allen-Jamison Company comes into this class. While several thousand dollars of this claim were for supplies purchased before February 5. 1901, the proper application of the payments made before June 2, 1903, extinguished that part of the indebtedness. This, however, is not very material. Class 2: The balance of the claim just mentioned, namely, $557.68 thereof, is for materials and labor claimed to have been supplied after February 5, 1901, and interest thereon. In addition to these two, eleven other persons, corporations, and firms claim to have supplied labor and materials or to be the assignees of those who did, and these materials and all the labor are asserted to have been used in the prosecution of the work on the lock and dam between February 5, 1901, and June 2, 1903.

Class 3: Only one claim of this class was presented to the special master, to wit, that of Hardaway & Prowell, and this claim to the extent of $32,757 54 was allowed by him. In the main the special master allowed most of the claims, one of the second class, though he reduced some of them on account of items not properly to be regarded as labor or materials, and many exceptions have been filed directed to this part of his report. The complainant has also filed many exceptions which have relation to the claim of Hardaway

& Prowell, and the latter have excepted to the action of the special master in disallowing some items of their claims.

1. It is conceded upon all hands that $516.23 of the claim of the Tidewater Coal Company, which covers items for labor and materials supplied to the firm of Willard & Cornwell previous to February 5, 1901, is a just and proper claim against the fund in court if not against the complainant. The court is of the opinion that that part of that claim is a proper charge, both against the fund and against the complainant as well.

2. But it is most earnestly insisted that the complainant is not personally liable for any part of the claims of class 2. It is pointed out that all of these claims were created with the full knowledge upon the part of the respective claimants that Joseph Coyne alone was conducting the work on the lock and dam after February 5, 1901, and that all of the accounts representing those claims were for that reason charged to Coyne alone, and none of them were charged to Willard & Cornwell. It is also pointed out that the bond given to the United States, and upon which alone this class of claimants can rely in this proceeding, after binding the obligors therein to certain stipulations respecting the contract with the United States, also stipulates that said obligors, including the complainant, "shall promptly make full payments to all persons. supplying them labor or materials in the prosecution of the work provided for in said contract." The complainant contends that it is a mere surety and is bound precisely as it contracted and no further; that the stipulation just copied binds it to promptly pay all claims for labor and materials supplied to Willard & Cornwell as a firm, and that that firm is alone included in the pronoun "them" as used in the provision just copied; that it necessarily increased and certainly changed the risk and liability of the surety for the complainant to furnish the supplies to and upon the credit of one person instead of the credit and ability to pay of three persons, and that as all of the claimants of class 2 knew of the contract of February 5, 1901, and supplied labor and materials of Joseph Coyne alone and not to "them" (that is to say, not to the firm of Willard & Cornwell), the complainant upon general principles of law is not bound for any of this class of claims. There are, indeed, certain general principles of law relating to principal and surety which have been long established. Among them are, first, that the surety's contract is to be strictly construed; second, that any change in the contract without the consent of the surety releases him; and, third, that any increase of his risk without his consent also releases him. These principles are strongly pressed as bearing upon claims in classes 2 and 3. Here the contract between the United States on the one side and Willard & Cornwell and the surety company on the other was not itself changed by the parties to it, but with the knowledge of the claimants, who credited Joseph Coyne alone, the partners composing the firm of Willard & Cornwell, as between themselves, changed their relations and contract, and, as far as they could do so, transferred their rights and liabilities to one only of the partners. Evidently this change was without the knowledge or consent of a not very vigilant surety; but upon all the grounds indicated, and perhaps others, it is strenuously insisted that the surety was released, and it might be hard to resist this conclusion but for one authority. In the very recent case of United States et al. v. American Surety Co. (decided January 2, 1906) 26 Sup. Ct. 168. 50 L. Ed. 437, the Supreme Court had occasion to look into the object of the legislation to which we have referred, and the purpose and scope of the penal bond required thereunder, and as labor and materials were supplied by this class of claimants to Joseph Coyne, who was a member of the firm of Willard & Cornwell, the original and principal contractors, and as that labor and those materials under Coyne's express orders and supervision actually went into the work done under the contract with the United States, I have concluded that the stress of the opinion in that case requires me to hold that the labor and materials supplied to Coyne and used by him in the work done under the contract come within the obligation of the complainant. I do this with some hesitation because no question growing out of the change of the contract relation of the principal obligors was presented in the case referred to, and the condition now confronting us might not have been within the view of the Supreme Court when it remarked that it did not see how the surety in that case could be injured by

what had actually occurred. There had been a subcontractor in that case and not a dissolution of a partnership. A subcontractor is a very familiar character. One contracts to build a house and then subcontracts with A. for the foundation, with B. for the brick work, with C. for the plumbing, with D. for the carpentering, etc. But here I think there is no such simple thing as that, but something more and something entirely different.

I, therefore, put my judgment upon this class of claims upon the ground that Coyne was a principal in the bond, and that the labor and materials were supplied to him as such, and not upon the ground that he was a subcontractor within the purview of the opinion in United States v. American Surety Co. This general proposition being settled, we are brought to inquire as to the exact amounts due each of this class of claimants. In this connection at least there can be no latitudinous construction of the contract of the surety. It is entitled here to a strict adjudication of its rights. It contracted for the prompt payment of all just claims for labor and materials supplied to "them" (meaning Willard & Cornwell), and used in the prosecution of the work provided for in the contract with the United States. Nothing but labor and materials, in the proper sense of these terms, which were used in the prosecution of the work "provided for in the contract" with the United States, can be taken into account in passing upon these claims. Courts have probably been more or less astute to find the exact principles governing such cases, but I may say once for all that I do not think that labor and materials used in the construction of houses for laboring men and kindred objects come within the liability of the surety, because I do not find that any of these things were provided for in the contract with the United States, filed in the record, and hence persons who supplied labor and materials for these outside objects are not protected and were never intended to be protected by the penal bond exacted by the government under the statute, which bond only stipulated for the prompt payment of claims for labor and materials supplied for the work the United States had contracted for when the bond was exacted. For other claims, even if closely connected with the interest of the contractors, their creditors must look to them alone. The obligation of the surety is one of strict law.

In the main, the original exceptions, filed April 9, 1906, by the complainant to the allowance of the claims in class 2, are based upon the general ground that it is not bound for any of them because of the contract of February 5, 1901. But all exceptions based upon that contention must be overruled upon the grounds we have heretofore indicated.

Additional exceptions were filed by the complainant on April 17, 1906, and while they, including the so-called "exhibits" referred to therein, and also including a reference back to the original exceptions, are rather too vague, or at least in some particulars, to demand the court's attention, we have nevertheless gone into them all with some care, and will in detail take up each of the claims of class 2.

J. M. Wentzell, Assignee: The special master allowed this claim, including interest, and the exceptions thereto are either upon the general ground that the surety is not bound therefor because the labor and materials were supplied to Coyne alone, or else the exceptions are too vague to require further All exceptions to the allowance of this claim are overruled. Strickland Bros. Machine Company: The exception to the allowance of this claim is that the whole account is for repairs on machinery, but I think the evidence and the stipulation in regard to it sustains the action of the special master, and all exceptions thereto are overruled.

J. Snow Hardware Company: I think the evidence sustains the action of the commissioner on this claim, and the surety's exceptions to its allowance are all overruled. The claimant's own exceptions to the report of the special master on account of his refusal to allow certain items of the account filed are likewise overruled.

J. E. Baker: This claim appears to be sustained by the evidence, and complainant's exceptions thereto are overruled.

F. G. Blair: The same may be said of this claim, and the exceptions to its allowance are overruled.

Weatherford Printing Company: This claim is too insignificant to consume time for much inquiry as to whether the special master was right or wrong in allowing it. We shall presume that he was right, and overrule the exceptions filed to this part of the report.

Tidewater Coal Company: The allowance of this claim was clearly right, both as to the part which we have placed in class 1 and as to the part which we have placed in class 2. The exceptions to it are therefore overruled.

Harder Planing Mill & Lumber Company: The stipulation as to this claim shows it to be a proper one unless I am wrong in the general view I have taken as to its being within the terms of the penal bond. All exceptions to its allowance are consequently overruled.

Carolina Portland Cement Company: If I am correct in the general views I have expressed, the exceptions to this claim must be and they are overruled. For reasons which have been stated I think it clearly comes within the penal bond.

R. P. Prowell: The original exceptions to the allowance of this claim are too vague to require further notice, even when we include the so-called "exhibit." The amended exceptions fall within the general views expressed as to the liability of the surety for labor and materials supplied to Coyne, and all exceptions to the allowance of this claim are overruled.

"Allen-Jamison Company: The exceptions of the complainant to the allowance of this claim are overruled upon two grounds, namely, first, that it makes no difference that the labor and materials referred to therein were supplied to Joseph Coyne; and second, because I do not think the finding of the special master thereon was flagrantly against the evidence, if, indeed, it was against the evidence at all. The exceptions filed by this claimant itself to the action of the special master in disallowing some items of the account filed by it must also be overruled. I think the items disallowed are not such as the surety in the penal bond undertook to pay.

Perry & Walter: This claim is based upon time checks which divers laborers on the works previous to June 2, 1903, assigned to the claimants. I am inclined to hold and do hold that these claimants may fairly stand in the place of the laborers who assigned the checks. But for the liberty of doing this the laborers would have been subjected to even greater hardship than being compelled to submit to a discount. I think that that discount in no way inured to the benefit of the surety nor discharged its liabilities for the laborers' claims. As these claims appear to have been for labor supplied to Coyne, the exceptions to the allowance of this claim are overruled.

A. S. Cleere: The special master finds that such parts of this claim as were allowed were based upon time checks "given to laborers for labor performed by them for Joseph Coyne upon said work." While the accuracy of this particular finding might possibly have been doubted upon the evidence and exhibits found in the record, no exception based upon that ground has been filed, and we assume the finding to be correct. Indeed, the exceptions themselves assume the finding to be correct, and are based (1) upon the ground that there was some arrangement with Coyne about a discount; and (2) that the discounting was for his benefit. I see no ground for these assertions, and for the reasons indicated in what has been said relative to the claim of Perry & Walter these exceptions are also overruled.

Some exceptions are made to the allowance of interest, but, as the penal bond binds the principal obligor and their surety to pay promptly and in full all claims for labor and materials supplied, I do not see, if that, was done, why interest should not be allowed. There is no exception upon the ground that the legal rate of interest in Alabama as applicable to such cases is not 8 per cent. per annum. Consequently all exceptions to the action of the special master in allowing interest upon the various claims of this class and of class 1 will be overruled.

It seems to me, therefore, that the claim in class 1, to wit, that of the Tidewater Coal Company, for $516.23, and the following claims in class 2, to wit: J. M. Wentzell, assignee, for $372.33; Strickland Bros. Machine Company, $176.78; Snow Hardware Company, $218.64; J. E. Baker, $162.55; F. G. Blair, $59.05; Weatherford Printing Company, $22.54; Tidewater Coal Company (in addition), $557.68; Harder Planing Mill & Lumber Company, $157;

Carolina Portland Cement Company, $1,490.68; R. P. Prowell, $2,025.72; AllenJamison Company, $6,146.86; Perry & Walter, $1,047.56; A. S. Cleere, $308.14; and all of which amount in the aggregate to $13,261.76-were properly allowed by the special master.

Hardaway & Prowell's Claim. 3. We come now to the claim of these parties, the only one in class 3. The general facts will be recalled that with the labor and materials supplied by these claimants neither one of the original contractors had anything to do. True, the United States made no objection, if, indeed, it had any knowledge of the transfer by Coyne to these claimants of the contract of June 2, 1903, and the surety company knew nothing of it until rather late in 1904. That contract, we think, went far beyond anything which we are accustomed to regard as meeting the idea of a subcontractor. The penal bond we may again recall bound the surety to make prompt payment to all persons supplying the labor or materials to the firm of Willard & Cornwell in the prosecution of the work provided for in the contract with the United States. We have construed this clause to mean any one of the firm of Willard & Cornwell, but it does not by any fair construction of the language used bind the surety to pay anything to any one else for supplies furnished to themselves by themselves. This particular claim, if the anomaly is possible, is one due to Hardaway & Prowell from themselves. If any one contracted with respect to the items thereof, it was those parties with themselves, and we think it certainly does not come within the stipulation of the bond. The materials and the labor thus supplied, even if used upon the work, were not in any fair sense supplied to Willard & Cornwell, or to either member of that firm, but were altogether supplied to entirely outside parties by those outside parties themselves. To the certain knowledge of Hardaway & Prowell every remnant of control over the matter had been thrown off by every member of the firm of Willard & Cornwell.

The contract of June 2, 1903, per se, conveyed to Hardaway & Prowell full information that all of the members of the firm of Willard & Cornwell, including Joseph Coyne, had successively abdicated their duties under their contract with the United States, and had turned them over to these claimants. this point, if Hardaway & Prowell did not know of the existence of the penal bond, of course, they did not contract with any reliance upon it. On the contrary, if they did know of the bond, good faith and every applicable equitable consideration demanded that full notice of the proposed change in the situation should be given the surety-a party most vitally and obviously interested -to the end that it might have the opportunity to agree or to object to this most important change, and take steps to protect itself. Failing to do this, the claimants put themselves in an attitude wholly inconsistent with a just right to claim against the surety, who had been ignored and disregarded at the outset. However, the rights of the surety in this case do not depend upon Hardaway & Prowell's knowledge or their lack of knowledge of the penal bond, and, whether they in fact knew of it or not, the surety, before it could be bound, was entitled to know of the new contract, and to have an opportunity to accept or reject the new arrangement, if it was thereby intended that the surety should come under any obligations respecting that new contract. This right of the surety necessarily resulted from the radically changed situation and the new contract on its face and ultimately under its practical workings showed how immensely and recklessly was increased the cost of the work and the risk of the surety. It cannot be that a right to make a new contract existed whereby the most licentious expenditures could be made and a commission thereon charged to the surety without giving it any opportunity or chance to participate in the making of such an agreement. In short, the surety was not a party to this contract.

Without going at much length into authorities upon general principles of law, which in the main are elementary, we may observe that in United States v. Freel, 186 U. S. 309, 22 Sup. Ct. 875, 46 L. Ed. 1177, it was held that the obligation of a surety does not extend beyond the terms of his undertaking, and when this undertaking is to secure the performance of an existing contract, if any change is made in the requirements of such contracts in matters of substance without his consent, his liability is extinguished. While in that case the contract was changed by the principal parties to it, it cannot fail to 150 F.-31