Commercial Cas. Ins. Co. of Newark, N.J. v. Murphy

• Decision Date: 16 February 1933
• Citation: 282 Mass. 100,184 N.E. 434
• Parties: COMMERCIAL CASUALTY INS. CO. OF NEWARK, N. J., v. MURPHY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

282 Mass. 100

184 N.E. 434

COMMERCIAL CASUALTY INS. CO. OF NEWARK, N. J.,

v.MURPHY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

Feb. 16, 1933.

Appeal from Superior Court, Suffolk County; Hammond, Judge.

Bill by the Commercial Casualty Insurance Company of Newark, New Jersey, against Thomas D. Murphy and others, wherein the Standard Oil Company of New York filed an intervening petition. From a decree for plaintiff, intervening petitioner appeals.

Amended and, as amended, affirmed.F. J. Carney and D. A. Lynch, both of Boston, for appellant.

S. MacMillan and P. J. Woodward, both of Boston, for plaintiff.

H. J. Barry, of Boston, for appellee Town of Winthrop.

PIERCE, Justice.

This is a bill in equity brought by the plaintiff surety company seeking reimbursement for the amount paid by it to a lien claimant upon a bond given by the plaintiff, as surety, and the defendant Thomas D. Murphy, as principal, as security under G. L. (Ter. Ed.) c. 149, § 29. The case was heard on agreed facts, a final decree was entered for the plaintiff, and the case is before this court on the appeal of the Standard Oil Company of New York, an intervening petitioner. The agreed facts are as follows: ‘On May 5, 1930 the defendant Thomas D. Murphy entered into a contract with the defendant Town of Winthrop to build and surface certain streets in the Town of Winthrop. The plaintiff Commercial Casualty Insurance Company was the surety on the bond in the penal sum of $10,000 given by the defendant Murphy in connection with this contract. The bond was conditioned upon the obligation to pay all claims for all labor performed or furnished and to indemnify and save harmless the Town of Winthrop from all such claims. This bond was the security obtained by the Town of Winthrop under the provisions of General Laws, chapter 149, § 29, and having obtained security by bond it was under no obligation to furnish other additional security for payment by the Defendant Murphy for labor performed and materials furnished by subcontractors. The contract between the Town of Winthrop and the defendant Murphy provided that the Town might withhold fifteen percent of the contract price for a period of sixty-one days after the final completion of the work, not only to protect the Town against all claims of subcontractors remaining unpaid, but also to protect the Town against any loss sustained by reason of any default on the part of the defendant Murphy. In connection with the execution of the bond the defendant Murphy gave the plaintiff an indemnity agreement dated May 2, 1930 which included, among other provisions, an assignment to the plaintiff of all deferred payments and retained percentages due at the time of any breach or default to be credited by the plaintiff upon any loss, charge or expense suffered by it by reason of its execution of the bond. On October 27, 1930 the Lynn Sand & Stone Company, a subcontractor which had furnished labor or materials to the defendant Murphy, filed a notice with the Town Clerk in accordance with the provisions of the statute that it had a claim in the sum of $3,311.02. The plaintiff then notified the defendant Town that it held an assignment of all retained percentages and other moneys due the defendant Murphy, and subsequently the plaintiff paid this claim of the Lynn Sand & Stone Company and accepted an assignment of its claim on April 28, 1931. The claim of the Lynn Sand & Stone Company was the only claim filed within the time and in the manner provided by the statute. The defendant Standard Oil Company of New York furnished material to the defendant Murphy in the performance of his contract with the Town of Winthrop, but it failed and neglected to file notice of its claim within the time provided by statute and it has no claim upon the bond which was the security furnished by the Town in compliance with the statute. Having failed to file a notice which would enable it to obtain the benefit of the security of the bond, the defendant Standard Oil Company of New York brought an action to law against the defendant Murphy by a writ dated March 18, 1931, and sought by trustee process served upon the Town of Winthrop on March 19, 1931 and March 21, 1931 to attach the funds constituting the retained percentage in the hands or possession of the Town of Winthrop. The work under the contract was completed on September 2, 1930, and at that date the defendant Town of Winthrop had in its hands or possession as a retained percentage a fund in the sum of $2,330.10. It still holds this retained percentage and it has accepted the work and has no claim against the defendant Murphy.’

The single issue presented by the record in this case is whether the plaintiff as surety upon the bond representing the statutory security, having paid the claim of the only subcontractor which filed a notice, is entitled to a priority in the retained percentage held by the town as against the Standard Oil Company of New York, an attaching creditor.

The plaintiff claims priority upon two distinct...