Peters v. Hartford Acc. and Indem. Co.

Decision Date19 April 1979
Citation389 N.E.2d 63,377 Mass. 863
PartiesRobert PETERS et al., Trustees, v. The HARTFORD ACCIDENT AND INDEMNITY COMPANY.
CourtUnited States State Supreme Judicial Court of Massachusetts Supreme Court

Ira Sills, Boston, for plaintiffs.

Robert J. Sherer, Boston, for defendant.

Before QUIRICO, BRAUCHER, KAPLAN, WILKINS and LIACOS, JJ.

LIACOS, Justice.

This case, which arises under G.L. c. 149, § 29, involves the scope of the payment bond which prime contractors are required to provide as surety for work done on public projects. Specifically, we are asked to determine whether the trustees of employee fringe benefit funds may maintain an action 1 against the general contractor's surety when the employer primarily liable for contributions to these funds is a "sub-subcontractor." 2 The Superior Court judge granted the defendant surety company's motion to dismiss the complaint for failure to state a claim on which relief may be granted, Mass.R.Civ.P. 12(b)(6), 365 Mass. 754 (1974), "it appearing upon the allegations of the complaint that the plaintiffs have no contractual relationship with either the contractor principal on the bond or a subcontractor and thus are not within the protection of G.L. c. 149, § 29." The plaintiff trustees (trustees) 3 appealed, and we transferred the case here on our own motion. We reverse.

For the purpose of ruling on a motion to dismiss, the allegations of the complaint are to be taken as true. Lowell Gas Co. v. Attorney Gen., --- Mass. ---, --- A, 385 N.E.2d 240 (1979). They are essentially as follows. Harvey Construction Co., Inc. (Harvey), was the general contractor on a public works construction project at the Essex Water Pollution Control Plant in Salem, Massachusetts. In accordance with G.L. c. 149, § 29, Harvey as principal and The Hartford Accident and Indemnity Company (Hartford) as surety executed a bond to guarantee the payment of labor, materials, health, welfare, pension and other obligations incurred by Harvey, and its affiliates and subcontractors, on the construction project in question. Harvey, as general contractor, subcontracted with William M. Collins Co., Inc. (Collins), for a portion of the construction work, and Collins, in turn, subcontracted with HEMCO Corporation (HEMCO). 4

From March, 1975, through October, 1975, HEMCO employed sheet metal workers at the Essex jobsite. Under a collective bargaining agreement between the Sheet Metal Workers Local Union No. 17 and an employer association, HEMCO was obligated to pay over amounts withheld from employees' wages for the union's vacation fund, and to contribute to the union's insurance and pension funds. HEMCO failed to turn over to the union any of these sums. 5 The trustees thereafter sought payment from both Collins and Harvey, sending demand letters which met all the requirements of G.L. c. 149, § 29. When payment was refused, this suit against Hartford was brought in the Superior Court.

[2,3] We stated in American Air Filter Co. v. Innamorati Bros.,358 Mass. 146, 150, 260 N.E.2d 718, 721 (1970), that "(a)n 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." Hartford contends that through an amendment inserted by St.1972, c. 774, § 5, 6 the Legislature clearly limited the scope of protection offered by the statute. Specifically, Hartford argues that, by virtue of the amendment, the statute now precludes claims against the surety bond by employees of a sub-subcontractor engaged in work on the project. We disagree with this contention for reasons which follow.

A view of G.L. c. 149, § 29, in its historical perspective is essential to our analysis. As we made clear in Massachusetts Gas & Elec. Supply Co. v. Rugo Constr. Co., 321 Mass. 20, 22-23, 71 N.E.2d 408 (1947), the statute 7 is an outgrowth of the mechanics' lien statutes. See Friedman v. County of Hampden, 204 Mass. 494, 503-508, 90 N.E. 851 (1910). Recognizing that a lien in favor of those furnishing labor or materials with respect to public buildings or other public works was unavailable, Lessard v. Revere, 171 Mass. 294, 50 N.E. 533 (1898), we stated that § 29 8 affords these parties the benefit of the security taken by bond or otherwise by the public contracting party. "The object of these statutes is to give those furnishing labor and materials 'security equivalent to the lien which the law creates upon the property of other owners in like cases.' Burr v. Massachusetts School for Feeble-Minded, 197 Mass. 357, 360, 83 N.E. 883 (1908)." Massachusetts Gas & Elec. Supply Co., supra, 321 Mass. at 23, 71 N.E.2d at 410.

In Friedman v. County of Hampden, supra, the court surveyed the general lien law of this Commonwealth with respect to the protection granted subcontractors, 9 laborers, and materialmen. "Suffice it to say that a lien is given whether the lienor be the original contractor, a subcontractor of any degree, or simply a laborer or materialman. . . . It is necessary only that the work be within the scope of the work called for by the parent contract." Id. 204 Mass. at 504-505, 90 N.E. at 855-856. The court continued, Id. at 506, 90 N.E. at 856: "It is to be borne in mind, also, that, whatever may be the distinction in the lien laws of other States between subcontractors on the one hand and laborers and mere material men on the other, in our general lien law, as is above stated, there are no such distinctions much less are there any between subcontractors of different degrees." 10

Having explored the contours of the general lien law, the Friedman court delineated the scope of St.1878, c. 209, one of the precursors of G.L. c. 149, § 29: "In a word, whoever is a creditor of either the original contractor or of a subcontractor of any degree, for labor performed or furnished, or for materials furnished and actually used in the public work is within the protection of the statute . . . ." Id. at 507, 90 N.E. at 856. 11

Faced with this pronouncement of the court, left undisturbed for almost seventy years, Hartford takes the position that the Legislature intended to curtail the scope of coverage set forth in Friedman through the enactment of the 1972 amendments to G.L. c. 149, § 29. Specifically, Hartford focuses on the following language inserted in the third paragraph of § 29 "Any claimant having a contractual relationship with a subcontractor performing labor or both performing labor and furnishing materials Pursuant to a contract with the general contractor but no contractual relationship with the contractor principal furnishing the bond shall have the right to enforce any such claim as provided in subparagraphs (a) and (b) of paragraph (2) only if such claimant gives written notice to the contractor principal within sixty-five days" (emphasis supplied) as demonstrative of the legislative intention that the protections of the statute extend only to employees of subcontractors in direct privity with the general contractor. 12

In declining to accept Hartford's interpretation of the statutory language, we adhere to our oft-repeated determination that G.L. c. 149, § 29, "be given a broad or liberal construction to accomplish its intended purpose." American Air Filter Co. v. Innamorati Bros., 358 Mass. 146, 150, 260 N.E.2d 718, 721 (1970). 13 Cf. M. Lasden, Inc. v. Decker Elec. Corp., 372 Mass. 179 B, 360 N.E.2d 1068 (1977). The amendment on which Hartford relies is essentially procedural in nature. As we noted in Manganaro Drywall, Inc. v. White Constr. Co., 372 Mass. 661, ---, 363 N.E.2d 669, 671 (1977), "The heading of (St.1972, c. 774, § 5) is instructive in identifying its legislative purpose: 'An Act expediting payments to general contractors and to subcontractors and improving the flow of funds in the construction industry.' " The Legislature is presumed to have been cognizant of the expansive definition of "subcontractor" set forth in such cases as Friedman and its progeny. It is unlikely that it intended to implement so substantial a curtailment of statutory protection for laborers and materialmen by virtue of an amendment which describes the notice prerequisites to the filing of a claim on the bond. 14

Significantly, the fundamental statutory language in the first paragraph of § 29, which requires that a bond be secured "for payment by the contractor And subcontractors for labor performed or furnished" was left unmodified 15 (emphasis supplied). Had the Legislature wished to abridge the broad definition of "subcontractors," as that term appears in the sections of the first paragraph of § 29 pertinent here, it could easily have done so. See St.1962, c. 696, which inserted in the first paragraph of G.L. c. 149, § 29, a provision "for payment of transportation charges for materials used or employed therein which are consigned to the contractor or to a Subcontractor who has a direct contractual relationship with the contractor " (emphasis supplied). Instead, it chose not to tamper with those sections.

We do not construe the words, "(a)ny claimant having a contractual relationship with a Subcontractor performing . . . pursuant to a contract with the general contractor " (emphasis supplied), as barring all claims against a subcontractor not in direct privity with the general contractor. Contrary to Hartford's assertions, performance "pursuant to a contract" need not imply a relationship of direct privity. Rather, it more generally signifies acts done in accordance with, by reason of, in agreement with, or in the prosecution of, the contract. See Old Colony Trust Co. v. Commissioner of Internal Revenue, 301 U.S. 379, 57 S.Ct. 813, 81 L.Ed. 1169 (1937); Suppiger v. Enking, 60 Idaho 292, 91 P.2d 362 (1939); Black's Law...

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