A. J. Chromy Const. Co. v. Commercial Mechanical Services, Inc.

Decision Date09 December 1977
Docket NumberNo. 47218,47218
Citation260 N.W.2d 579
PartiesA. J. CHROMY CONSTRUCTION COMPANY, Appellant, v. COMMERCIAL MECHANICAL SERVICES, INC., Defendant, Integrity Mutual Insurance Company, Respondent.
CourtMinnesota Supreme Court

Syllabus by the Court

1. Summary judgment is an appropriate procedural device where the function of the trial court is to apply a statute to uncontested facts.

2. When considering the timeliness of the filing of a claim against a contractor's

performance bond, the date of acceptance of a construction project by a municipality is to be determined from the facts of the case and not solely from contractual agreements to which the claimant was not a party.

The judgment in favor of Integrity is vacated and the matter remanded to the trial court for further proceedings consistent with this opinion.

Hoversten, Strom, Ryan, Johnson & Rysavy and Donald E. Rysavy, Austin, for appellant.

Lang & Pauly and R. Thomas Greene, Jr., Minneapolis, for respondent.

Heard before SHERAN, C. J., and TODD and SCOTT, JJ., and considered and decided by the court en banc.

TODD, Justice.

Commercial Mechanical Services, Inc., contracted to perform construction services for the city of Montgomery. A. J. Chromy Construction Company entered into a subcontract agreement with Commercial. Integrity Mutual Insurance Company provided a surety bond to the city of Montgomery covering the contract with Commercial. Commercial became bankrupt and defaulted on the contract. Integrity completed the construction contract and entered into a settlement agreement with the city which was signed on October 6, 1975, and ratified by the Montgomery City Council on October 27, 1975. Chromy filed a claim against the bond on January 12, 1976, which was within the 90-day statutory period for the October 27 date, but outside the 90-day period as to the October 6 date. The trial court granted Integrity's motion for summary judgment. We reverse.

Although the exact amount of the claim is in controversy, the facts essential to this case are not in dispute. Commercial, the general contractor, became insolvent and Integrity was compelled under its surety bond to complete the contract with the city. At that time, Chromy had an unpaid claim against Commercial for services rendered under the subcontract between them. Integrity, as surety, was advised of this fact by letter in January of 1975.

Although the city had occupied the new building in the fall of 1974, a dispute arose between Integrity and the city as to whether the construction was in fact completed according to the terms of the construction contract. This dispute continued unresolved until August 1975, when an agreement of settlement was negotiated by Integrity and the city. The agreement provided among other things that May 15, 1975, would be deemed the date of the project's completion and formal acceptance by the city. At a September 2, 1975, council meeting, a resolution was adopted approving a settlement payment of $1,100 from Integrity and additional sums from others in lieu of certain remedial construction work. There was no additional reference made to the proposed settlement agreement at this meeting other than to instruct the city attorney to get signed agreements from the parties.

Thereafter, the proposed settlement agreement was revised by the parties' attorneys to change the May 15 purported completion and acceptance date to July 15, 1975. The revised agreement was forwarded to the city on September 25 and executed by the mayor and clerk on October 6, 1975. Paragraph 3 of the October 6 agreement provides:

"3. Montgomery agrees forthwith, upon the execution hereof, to deliver to Integrity the retainages and contract balance due on the Agreement in the amount of $21,233.80 together with a certified copy of the resolution of the Montgomery Council approving, ratifying and confirming this document." (Italics supplied.)

On October 27, 1975, the city council adopted the following resolution:

"BE IT RESOLVED:

"That the proposed agreement made and entered into by and between the City of Montgomery and Integrity Mutual Insurance Company is hereby approved and the appropriate officers of the City of Montgomery are authorized and instructed to execute the same by and in behalf of the City of Montgomery. A copy of said agreement is attached hereto and made a part hereof." (Italics supplied.)

On January 12, 1976, Chromy filed its written claim on the bond with the county auditor pursuant to the provisions of Minn.St. 574.31. 1 January 12 is 98 days after October 6, but 77 days after October 27. Based on these facts, the trial court held the statutory date of acceptance to be October 6, 1975, and granted Integrity's motion for summary judgment on the ground that Chromy's claim against the bond had not been timely filed under the statute and was therefore barred. A motion to vacate the judgment was denied and Chromy appealed.

The issues on appeal are:

(1) Were there factual disputes which made the entry of summary judgment improper?

(2) Was Chromy's notice of January 12, 1976, timely as a matter of law?

1. Chromy argues that because a ruling on the timeliness of its notice of claim involved the resolution of factual issues, the trial court should not have considered Integrity's motion for summary judgment. We disagree. As we noted above, the operative facts of this litigation are not disputed. In its ruling, the trial court had only to apply the pertinent language of Minn.St. 574.31 to the undisputed facts. Summary judgment was a fully appropriate procedural vehicle for the consideration of that question.

2. Considering the second issue raised on this appeal, we commence with the basic proposition that the purpose of the statute requiring performance bonds on public projects is

" * * * to protect laborers and materialmen who perform labor or furnish material for the execution of a public work to which the mechanic's lien statute does not apply." Ceco Steel Products Corp. v. Tapager, 208 Minn. 367, 370, 294 N.W. 210, 212 (1940).

See, Weyerhaeuser Co. v. Twin City Millwork Co., 291 Minn. 293, 301, 191 N.W.2d 401, 405 (1971); Wheeler Lumber B. & S. Co. v. Seaboard Surety Co., 218 Minn. 443, 449, 16 N.W.2d 519, 522 (1944).

Mindful of the purpose underlying § 574.31, we must examine the four dates which could, under the facts of this case, be deemed the date of acceptance which began the running of the statutory period for filing claims. The possible dates are July 15, 1975, September 2, 1975, October 6, 1975, and October 27, 1975.

The settlement agreement ultimately entered into between Integrity and the city purported to backdate the official completion and acceptance of the...

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