Dolben v. Duncan Const. Co.

• Decision Date: 01 July 1931
• Parties: DOLBEN v. DUNCAN CONST. CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

276 Mass. 242

177 N.E. 105

DOLBEN

v.DUNCAN CONST. CO. et al.

Supreme Judicial Court of Massachusetts, Suffolk.

July 1, 1931.

Appeal from Superior Court, Suffolk County; Weed, J.

Suit by J. Alfred Dolben against the Duncan Construction Company and others, wherein many interested parties intervened, and the defendant New Amsterdam Casualty Company filed a cross-bill against the defendant, the City of Medford. From the decree rendered, the City of Medford, the New Amsterdam Casualty Company, and the intervener Manufacturers' National Bank of Lynn appeal.

Decree amended, and, as amended, affirmed.C. B. Cross and J. S. McCann, both of Boston, for defendant City of medford.

E. W. Crawford, of Boston, for defendant New Amsterdam Casualty Company and another.

G. W. Cox, of Boston, for W. W. Hall & Sons and others.

H. F. Wood, of Boston, for Richmond Fireproof Door Company.

D. T. Montague, of Boston, for Robert A. Burns, Adm'r.R. T. Parke, of Boston, for R. McMillen Company.

J. A. Locke, of Boston, for New England Slate Blackboard Company.

F. I. Rose, of Boston (F. M. Cohen, of Boston, on the brief), for Venezia and another.

A. J. Zimmerman, of Boston, for Hub Steel & Iron Works, Inc.

H. Loewenberg and G. L. Harden, both of Boston, for Building Finishing Corporation and another.

SANDERSON, J.

The plaintiff brought this bill against the Duncan Construction Company, the city of Medford, and the New Amsterdam Casualty Company, hereinafter referred to, respectively, as the contrator, the city, and the surety, alleging that the contractor entered into a contract with the city for the construction of a school building and defaulted in the contract. The plaintiffis a subcontractor and the bill is brought both in his own behalf and in behalf of all subcontractors who may join therein to obtain satisfaction for their claims from the money retained by the city under the contract and from the bond of the surety, the money and bond being alleged to be the security obtained under G. L. c. 149, § 29. Twenty-nine subcontractors and the Manufacturers' National Bank of Lynn intervened, the latter alleging that it held an assignment from the contractor dated August 21, 1926, of the moneys due and to become due from the city. The surety filed a cross bill against the city, alleging that it held an assignment from the contractor dated June 15, 1926, of all moneys due and to become due from the city. The case was referred to a master and the interlocutory and final decrees were based upon his report, certain exhibits and an agreement concerning one of them. The court entered a decree disallowing the claims of certain intervenors and allowing the claims of the petitioner and other subcontractors in the total amount of $40,588.57 with interest; holding that the bond furnished by the contractor and the surety was the sole security obtained by the city for the payment of the subcontractors' claims and that the building was completed by the city in accordance with the terms of the contract; and adjudging that at the time the surety filed its cross bill the city owned the surety, as assignee of the contractor in respect to the contract, the sum of $33,335.34. The decree ordered that the city apply this money in satisfaction of the subcontractors' claims, the additional funds necessary for the purpose to be furnished by the surety. The intervening petition of the Manufacturers' National Bank was dismissed. From this decree the city, the surety and the bank appealed.

G. L. c. 149, § 29, required the officers contracting in behalf of the city to obtain security by bond or otherwise for the payment by the contractor and subcontractors for labor performed or furnished and materials used in the construction of the building. One of the contract documents referred to in the contract contained a provision that the contractor should furnish a satisfactory surety bond in an amount equal to fifty per cent. of the contract price for the payment of all labor performed or furnished and all materials used in the fulfillment of the contract, and for the faithful performance of all the terms and conditions of the contract, and a form of bond accompanied the contract substantially like that later given. The bond furnished was upon condition that the contractor would faithfully perform the contract on its part and satisfy all claims and demands incurred for the same and would fully indemnify and save harmless the city from all costs and damages which it might suffer by reason of the contractors failure so to do, and would fully reimburse and pay the city all outlays and expense which the city might incur in making good any default and would pay all persons who had contracts directly with the contractor for labor and materials. This bond given in compliance with the contract was in terms broad enough to meet the statutory requirements, and the master found that it was intended by all parties to be security taken by the city under the statute. The trial judge was right in his conclusion that the bond while conditioned on the performance of the contract was also obtained as security for payment by the contractor and subcontractors for labor performed or furnished and for materials used in the construction of the building, as provided by statute. See J. H. McNamara, Inc., v. McGuire, 254 Mass. 589, 150 N. E. 862;A. L. Smith Iron Works v. Maryland Casualty Co. (Mass.) 175 N. E. 82. Neither the provision in the bond limiting the term within which an action may be brought on it nor its other provisions required the conclusion that it was not a bond under the statute. See now St. 1920, c. 110.

By the contract the right was reserved in the city to retain from the monthly payments to the contractor a percentage of the value of labor and materials incorporated in the work and of materials stored at the site during the preceding month. Final payment was to become due sixty-three days after substantial completion of the work provided it be completed and the contract fully performed. The city having obtained security by bond was not required to furnish other and additional security for payment by contractors and subcontractors for labor and materials. George H. Sampson Co. v. Commonwealth, 208 Mass. 372, 94 N. E. 473;Hunter v. Boston, 218 Mass. 535, 538, 106 N. E. 145;McClintic-Marshall Co. v. New Bedford, 239 Mass. 219, 131 N. E. 444. See J. H. McNamara, Inc., v. McGuire, supra.

The bond was given to afford protection to laborers and materialmen as well as to the owner. Equitable Surety Co. v. McMillan, 234 U. S. 448, 454, 34 S. Ct. 803, 58 L. Ed. 1394. In Hunter v. Boston, supra, the bond purported to be security only for the faithful furnishing of material and doing of the work required of the contractor by the contract, while the contract provided that the payments were to be retained to settle claims for materials or labor furnished where claims have been filed with the city by subcontractors.

In Otis Elevator Co. v. Long, 238 Mass. 257, 130 N. E. 265, there was a finding by the master that both the money retained by the city and the bond were security, but in the case at bar there is no such finding as to the money retained by the city. The provisions for the retention of money by the city to which reference has been made must be held upon this record to be for the city's own protection and not to provide security for labor and materials furnished, and the conclusion of the trial judge that the bond was the sole security under G. L. c. 149, § 29, for payment for labor furnished and materials used in the construction of the building was right.

It is contended by the surety that, because of two clause numbered nine and eighteen in the printed parts of several of the contracts between the contractor and subcontractors who have filed claims, these claimants have waived their equitable liens or, if not, that their claims were prematurely filed. Clause number nine in substance provided that these contractors waived and released all lien or right of lien then existing or that might thereafter arise for work or labor performed or material furnished under this contract, under any lien laws upon the building, the land upon which the same is situated, and upon any money or moneys due or to become due from any person or persons to the contractor, and agreed to furnish a good and sufficient waiver of lien on the premises from every person or corporation furnishing labor or material for the premises under the subcontractor.

The judge ruled that the waiver expressed in this clause applied only to such lien, if any, as the subcontractor might thereafter have upon any money or moneys due or to become due from the city to the principal contractor. If it be assumed that this clause has a proper place in a contract for the construction of a bublic building to which the lien laws do not apply, it cannot affect the rights of the subcontractors upon the facts in this case because the waiver by its terms is expressly confined to the money that is due or to become due to the contractor from the city.

Clause eighteen provided for the retention by the contractor from the monthly payments of twenty per cent. of the value of all work done and material furnished until the time for final payment, which is stated in that clause to be within sixth-one days after the acceptance of the building. The surety contends that because of this clause certain claims were prematurely filed and should be reduced twenty per cent. of their face value. Under the statute claims must be filed within sixty days after the claimant ceases to perform labor or to furnish labor or materials. If the contruction for which the surety contends were adopted it would be impossible for a claimant whose contract contains clause eighteen to obtain the benefit of the security, at least as to a part of his claim, notwithstanding the fact that the contractor had broken his part of the agreement by abandoning the work and...