American Air Filter Co. v. Innamorati Bros., Inc.

• Decision Date: 06 July 1970
• Citation: 260 N.E.2d 718,358 Mass. 146
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: AMERICAN AIR FILTER COMPANY, Inc. v. INNAMORATI BROTHERS, INC. et al.

Page 718

260 N.E.2d 718

358 Mass. 146

AMERICAN AIR FILTER COMPANY, Inc. v. INNAMORATI BROTHERS, INC. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued March 4, 1970.

Decided July 6, 1970.

Jacob J. Locke, Boston, for plaintiff.

Jon C. Mazuy, Boston (Sally A. Corwin, Boston, with him) for defendant.

Before WILKINS, C.J., and SPALDING, KIRK, REARDON, and QUIRICO, JJ.

QUIRICO, Justice.

American Air Filter Company, Inc. (American), brought this bill under G.L. c. 149, § 29, against Innamorati Brothers, Inc. (Innamorati), and the Hartford Accident and Indemnity Company (Hartford) to recover for materials furnished by American to one of Innamorati's subcontractors in the construction of a public building. The case is before us on American's appeal from the final decree dismissing the bill on the basis of facts found and reported by a master, and an interlocutory decree confirming the master's report.

On September 30, 1963, Innamorati entered into a contract with the town of Hopedale, in this Commonwealth, to construct an addition to a public high school. On the same day Innamorati as principal and Hartford as surety executed a bond to the town as obligee as required by G.L. c. 149, § 29. The bond provided in part 'for payment by the contractor and subcontractors for labor performed or furnished and materials used or employed' in the construction of the school addition. Innamorati as the general contractor then entered into a written contract with Kahn Heating Corporation (Kahn) under which the latter as a subcontractor would furnish all of the labor and materials necessary for the heating and ventilating work in the construction of the building.

Kahn issued a written purchase order to American for $8,658 worth of equipment required for Kahn's performance of its subcontract. American delivered all of the equipment covered by the purchase order to the school site on February 26 and March 16, 1964. Title to the equipment passed from American to Kahn prior to its delivery at the school site. All of the equipment was as specified in Innamorati's contract with the town. American was not required to perform or furnish any labor at the school site since it was not a subcontractor, but a supplier of materials to Kahn.

On April 14, 1964, American seasonably filed a sworn statement of its claim in proper form for $8,658 with the town clerk of Hopedale. G.L. c. 149, § 29. It then filed its bill in equity in this case on July 22, 1964. This was the last step required of American to obtain the benefit of the security of the bond. It is entitled to the benefit of that security and to the payment of its claim unless barred by events which occurred after it completed its delivery of the equipment of Kahn at the school site on February 26 and March 16.

On April 9, 1964, Kahn filed a written consent to be adjudicated a bankrupt, and it was so adjudicated on April 13, 1964. It furnished no labor or materials at the school site after April 9, 1964, and it did not install any of the equipment furnished to it by American. On April 21, 1964, Innamorati wrote Kahn terminating the latter's subcontract. Innamorati then negotiated with Robert A. LaCentra Co., Inc. (LaCentra), for the completion of the heating and ventilating work and they signed an agreement therefor on August 6, 1964. Both American and Kahn's trustee in bankruptcy (trustee) claimed the equipment American had delivered to the job site, and LaCentra was informed of such claims. Six console heaters delivered by American and having a fair value of $1,264.35 were removed from the job site by the trustee prior to May 20, 1964, on which date he sold them at public auction to Hampden Supply Co., Inc. (Hampden). LaCentra purchased these same heaters from Hampden on August 16, 1964, for $800, brought them to the job site, and installed them in the school addition. Sometime after July 30, 1964, the rest of the equipment furnished by American to Kahn was removed from the job site by the trustee. The trustee negotiated a sale of this and certain other equipment to LaCentra for $2,450, ¹ and the sale was approved by the referee in bankruptcy (referee) on August 18, 1964. LaCentra then brought all of this equipment to the job site and installed it in the school addition, except for eleven spare filters having a fair value of $33.

The action of the trustee in removing the American equipment from the job site and selling it in part to Hampden and in part to LaCentra was taken after petitions to the referee for approval thereof and notice of each such petition to all of Kahn's creditors, including Innamorati and American. All such petitions were duly approved by the referee.

The language of G.L. c. 149, § 29, clearly indicates that the surety bonds required thereby in connection with the construction of public buildings or public works are intended to provide security for payment by contractors and subcontractors for both 'labor performed or furnished and materials used or employed' (emphasis supplied) in such construction. It is well established that suppliers of materials to contractors and subcontractors were entitled to the benefit of such security. Nash v. Commonwealth, 174 Mass. 335, 336--337, 54 N.E. 865; Nash v. Commonwealth, 182 Mass. 12, 16--17, 64 N.E. 690; Friedman v. County of Hampden, 204 Mass. 494, 506--507, 90 N.E. 851. ²

The issue before us is whether American, on the facts of this case, is such a supplier entitled to the benefit of the security; or whether, as contended by Innamorati and Hartford, American is only a remote supplier and therefore not entitled to the benefit of the security. See Claycraft Co. v. John Bowen Co., 287 Mass. 255, 257, 191 N.E. 403. When American delivered the equipment in question to Kahn at the job site, and when it filed its notice of claim with the town clerk, it was in the position of a direct supplier to a subcontractor and thus entitled to the benefit of the security. Its equipment, with a minor exception, was ultimately incorporated into the school addition. Did Kahn's bankruptcy after American's complete delivery of all the equipment it contracted to deliver, and the trustee's sale of that equipment as above described abrogate the right which American otherwise had to the security? For the several reasons which follow, we believe it did not.

1. The fact that Kahn was adjudicated a bankrupt and the probability that it received a discharge in bankruptcy would not operate to discharge the liability of either Innamorati or Hartford on the bond in question. The Federal Bankruptcy Act itself makes clear that a discharge in bankruptcy does not relieve a surety of the discharged debtor from liability. 11 U.S.C. § 34 (1964). In such case the creditor may prove his claim against the bankrupt and recover the balance remaining from the surety. McClintic-Marshall Co. v. New Bedford, 239 Mass. 216, 222--223, 131 N.E. 444; Dominion Culvert & Metal Corp. v. United States Fid. & Guar. Co., 238 S.C. 452, 457, 120 S.E.2d 518; United States to Use of Gen. Elec. Co. v. Schofield Co., C.C., 182 F. 240, 246; affd. sub nom. Title Guar. & Surety Co. v. United States, to Use of Gen. Elec. Co., 187 F. 98 (3d Cir.); Standard Acc. Ins. Co. v. Simpson, 64 F.2d 583, 589 (4th Cir.). See Fidelity & Cas. Co. of New York v. Lackland, 175 Va. 178, 8 S.E.2d 306. In any event, Kahn's bankruptcy did not terminate American's status as its creditor, but merely interposed a bar to American's enforcement of its rights as creditor against Kahn.

2. Kahn's failure to perform the subcontract it made with Innamorati does not affect American's right, as a supplier of equipment to Kahn, to the benefit of the bond as security. Under G.L. c. 149, § 29, the liability of Innamorati and Hartford to American is not contingent upon Innamorati's liability to Kahn which purchased from American. Philip Carey Mfg. Co. v. Joseph Rugo, Inc., 346 Mass. 206, 208, 190 N.E.2d 890; Milano Bros., Inc. v. Joseph Rugo, Inc., 353 Mass. 767, 233 N.E.2d 919.

3. An examination of the many decisions construing and applying G.L. c. 149, § 29, and the several predecessor statutes now merged therein reveals repeated statements that the statutes were intended to protect laborers and materialmen from nonpayment by contractors and subcontractors engaged in the construction of public buildings or public works. Nash v. Commonwealth, 182 Mass. 12, 16--17, 64 N.E. 690; Otis Elevator Co. v. Long, 238 Mass. 257, 264, 130 N.E. 265; Massachusetts Gas & Elec. Light Supply Co. v. Rugo Constr. Co., 321 Mass. 20, 22--23, 71 N.E.2d 408; Lock Joint Pipe Co. v. Commonwealth, 331 Mass. 346, 353, 118 N.E.2d 869; C. C. Smith Co. Inc. v. Frankini Constr. Co., 334 Mass. 379, 385, 135 N.E.2d 924; Mosaic Tile Co. v. Rusco Prod. of Mass. Inc., 350 Mass. 433, 439, 215 N.E.2d 171. The examination also reveals repeated statements that the statute should be given a broad or liberal construction to accomplish its intended purpose. C. C. Smith Co. Inc. v. Frankini Constr. Co., supra; Mosaic Tile Co. v. Rusco Prod. of Mass. Inc., supra; Lawrence Plate & Window Glass Co. v. Varraso Bros. Inc., 353 Mass. 631, 633, 233 N.E.2d 897; Warren Bros. Rds. Co. v. Joseph Rugo, Inc., 355 Mass. 382, 386, 245 N.E.2d 243.

Construing G.L. c. 149, § 29, broadly and liberally to the end that it will accomplish its intended purpose we conclude that the...