Boyd v. Benkelman Public Housing Authority

• Court: Nebraska Supreme Court
• Writing for the Court: Heard before WHITE; NEWTON; BOSLAUGH and SPENCER; McCOWN
• Citation: Boyd v. Benkelman Public Housing Authority, 195 N.W.2d 230, 188 Neb. 69 (Neb. 1972)
• Decision Date: 03 March 1972
• Docket Number: No. 38029,38029
• Parties: Leonard R. BOYD, d/b/a Southwest Plumbing and Heating Company, Appellant, v. BENKELMAN PUBLIC HOUSING AUTHORITY et al., Appellees.

Page 230

195 N.W.2d 230

188 Neb. 69

Leonard R. BOYD, d/b/a Southwest Plumbing and Heating Company, Appellant, v. BENKELMAN PUBLIC HOUSING AUTHORITY et al., Appellees.

No. 38029.

Supreme Court of Nebraska.

March 3, 1972.

Syllabus by the Court

1. In the absence of an otherwise binding agreement, express or implied, there is no privity of contract between a subcontractor and the owner.

2. Mutual manifestations of assent that are in themselves sufficient to make a contract will not be prevented from so operating by the mere fact that the parties also manifest an intention to prepare and adopt a written memorial thereof.

3. Final settlement is not synonymous with final payment. It precedes payment and denotes the proper administrative determination with respect to the amount due.

4. Final settlement occurred when an administrative determination was made with respect to the amount due, following completion of the project, which was accepted by the owner.

Sarah Jane Cunningham, McCook, for appellant.

Leon C. Hines, Benkelman, Thomas F. Colfer, McCook, Herbert E. Story, Omaha, for appellees.

Heard before WHITE, C.J., and SPENCER, BOSLAUGH, SMITH, McCOWN, NEWTON, and CLINTON, JJ.

NEWTON, Justice.

This is an action brought by a subcontractor to recover, for work and materials furnished on a construction project, from the surety on the performance bond of the defaulting principal contractor and from the owner of the project. The district court found for the defendants and we affirm the judgment so entered.

The Benkelman Public Housing Authority entered into a contract with the Joe Dougherty Construction Company for the construction of a housing project. United Bonding Insurance Company became surety on Dougherty's bond as required by section 52--118, R.R.S.1943. Plaintiff subcontracted the plumbing, heating, air conditioning, and outside utilities portion of the project from Dougherty. On default by Dougherty, United, as surety, undertook to complete the project. It was completed and accepted by the Housing Authority on July 26, 1966. There appears to have been some dispute between United and the Housing Authority as to the sums remaining due from the Housing Authority. A meeting was held between them on September 22, 1966, at which time United offered a compromise settlement calling for a further payment of $4,000 by the Housing Authority in final settlement of all its obligations. On October 4, 1966, the board of commissioners of the Housing Authority approved the settlement in the following language: '* * * BE IT RESOLVED * * * that the compromise settlement presented to this meeting between this Housing Authority and the United Bonding Insurance Company be, and the same hereby is, accepted, and the Executive Director, * * * is herewith authorized and directed to execute the compromise settlement and return it with the payment of the amount set forth therein to the offeror.' The settlement agreement was reduced to writing and executed on November 4, 1966, and the $4,000 payment made on November 9, 1966. The settlement agreement provides that it shall not be construed as releasing 'United from its obligation to secure payment to persons furnishing material or labor on said project in accordance with the terms of the performance and payment bond executed by United with reference thereto.' Plaintiff seeks to recover for work and materials furnished.

Two questions are presented. First, does plaintiff have a cause of action against the Housing Authority? Second, is the statute of limitation, section 52--118.02, R.R.S.1943, a bar to plaintiff's action against United?

It seems clear that plaintiff has no right of recovery from the Housing Authority. His contract was with the principal contractor, Dougherty, and not with the Housing Authority. 'In the absence of an otherwise binding agreement, express or implied, there is no privity of contract between a subcontractor and the owner.' Gatchell v. Henderson, 156 Neb. 1, 54 N.W.2d 227. See, also, Rosebud Lumber & Coal Co. v. Holms, 155 Neb. 459, 52 N.W.2d 313.

At the September 22, 1966, meeting, United offered to the Housing Authority certain terms for a final settlement of their respective liabilities under the housing project contract. This offer, as embodied in exhibit 24, was accepted by the Housing Authority on October 4, 1966, and the action recorded in the minutes of the meeting of the officers of the Housing Authority. There was at this time a final settlement entered into notwithstanding the agreement was later reduced to writing. 'Mutual manifestations of assent that are in themselves sufficient to make a contract will not be prevented from so operating by the mere fact that the parties also manifest an intention to prepare and adopt a written memorial thereof; * * *.' Restatement, Contracts, s. 26, p. 33. See, also, Annotation, 122 A.L.R. 1217; Reynolds & Maginn v. Omaha General Iron Works, 105 Neb. 361, 180 N.W. 584.

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