Hon. J. W. Calhoun 

Comptroller 

University of Texas 

Austin, Texas 

Dear Sir: 

Opinion No. O-1268 

Re: Method of final payment of 

contract price to Wood and Scurlock, Contractors under contract 

dated September 24, 1938--P.W.A. 

Docket 9107-F (Texas). 

Your letter of August 10, requesting an opinion from 

this department and accompanied by correspondence contained in 

your file, along with an executed copy of the contract between 

the Board of Regents of the University of Texas and Wood and 

Scurlock, Contractors, a copy of the Contractor’s Bond with 

Standard Accident Insurance Company as surety, and complete 

folder designated as ‘Specifications for the Mechanical Contract, Men’s Dormitory Building, Unit 3, University of Texas”, 

with the latter containing the contract documents which compose 

the contract above mentioned, has received our attention. 

The following are substantially the facts as we understand them, taken from the above documents: 

Under the above contract, dated September 29, 1938, 

the project specified therein of constructing and completing in every detail a men’s dormitory 

h 

Unit No. 3 

for the University of Texas, was complete by Wood ani 

Scurlock, Contractors, with final payment under the contract yet to be paid said contractors. Under date of 

May 29, 1939, the following notice was received by you: 

~~Comptroller 

University of Texas 

Austin, .Texas Attention: Mr. C. D. Simmons 

Gentlemen, 

“We wish to advise that we have a balance due us 

for the tile and marble work installed by us in the 

Men's Dormitory, Docket Te xas-9107F-1. 

“We request that when making settlement w.ith the 

general contractor, have him present you with a statement paid in full from our office. 

“Thanking you very kindly, we are 
Hon. J. W. Calhoun, page 2 (O-1268) 

Yours very truly, 

TRAFION TILE & MARBLE CO. 

(Signed) Forrest Trafton Mgr.‘! 

Supplementing this letter you were presented with a copy of an 

l,nvolde showing the amount due by the contr.actors to the Trafton Tile & Marble Co. in the sum of $l,OOO.CO. The situation 

stands at present with the contractors demanding the balance 

due under the contract less the $1 

1, 

000.00 

ton Tile & Marble Co. or an offer 

claimed by the Trafy the contractors to put up 

a release bond as provided in Article %72b-1, Vernon’s Annotated Civil Statutes, cumulative supplement, and receive the 

entire retainage fund due by the University. At this stage, 

you request our advice as to the proper legal procedure to follow. 

provides: 

Article 5l60, Revised Civil Statutes, 1925, as amended, 

“Any person or persons, firm or corporation, entering into a formai contract with this State or its counties 

or school districts or other subdivisions thereof or any 

municipality therein for the construction of any public 

building or the prosecution and completion of any,public 

work sh ai 1 be required before commencing such work 

ai i 

to 

execute the usual~ Pen Bond, with the additional o ligatlon that such contractor shall promptly make payments to 

all persons supplying him or them with labor and materials 

in the prosecution of the work provided for in such contract. Any person, company, or corporation who has furnished labor or materials used in the construction or repair of any public building or public work, and payment 

for which has not been made, shall have the right to intervene and be made a party to any action instituted by 

the State or any munlclpallty on the bond of the contractor, and to have their rights and claims adjudicated in 

such action and judgment rendered thereon, subject 

h 

however, to the priority of the claims and judgment o the 

State or municipality. If the full amount of the liabllity of the surety on said bond is insuffficient to pay the 

full amount of said claims and demands then, after paying 

the full amount due the State or municipality the remainder shall be distributed pro rata among said lntervenors. 

Provided further, that all claims for labor and material 

furnished to said contractor, and all claims for labor 

and material furnished to any contractor shall be itemized 

and sworn to as required by statutes as to mechanic’s 

lien claims, and such claims shall be filed with the County 

Clerk of the County, in which said work is being prosecuted, 
Hon. J. W. Calhoun, page 3 (O-1268) 

within ninety days from the date of the delivery 

of said material and the performance of said work. 

The County Clerk shall note on the mechanic’s lien 

record the name of the claimant, the amount claimed, 

the name of the contractor and the name of the county, 

school district, other subdivisions, or municipality 

with which the contract was made; and the County 

Clerk shall index the claim under the name of the 

contractor and under the name of the county, school 

district, other subdivisions or municipality; with 

which the contract was made. 

tlProvlde’d further that after completion and acceptance of completed prolject all moneys due contractor under said contract shall be held by the State or 

Its counties or school districts or other subdivision 

thereof or any municipality until such a time that 

satisfactory evidence is submitted and affidavits made 

by the contractor that all just bills for labor and 

material under this contract has been paid In full by 

the contractor .‘I 

Article %72a and Article 5472b, Revised Civil Statutes, 

1925, provide : 

“That. any person,, firmor Corporation9 or: trust,B 

estate, furnishing any material, apparatus, fixtures, 

machinery or labor to any contractor for any public improvements In this state, shall have a lien on the moneys, 

or bonds, or warrants, due or to become due to such contractors for such improvements; provided, such person, 

firm, corporation 

any payment is maie 

or stock association, 

to such contractor, 

shall, before 

notify in writing 

the officials of the State, county, town or municipality 

whose duty it is to pay such contractor of his claim.” 

“That no public official, when so notified in writing, 

shall pay all of said moneys, bonds; or warrants, due said 

contractor, but shall retain enough of said moneys bonds, 

or warrants to pay said claim, in case It Is estab i lshed 

by judgment in a court of proper jurisdiction.” 

Article 5472b--1, Revised Civil Statutes, 1925, as amended, provides: 

“Section 1. That whenever any claim or claims shall 

be filed attempting to fix a lien, secured or claimed by 

any instrument filed under the provisions of Chapter 17, 

of the General Laws of, the.State of Texas, passed by the 
Hon. J. W. Calhoun, page 4 (O-1268) 

Thirty-ninth Legislature In Regular Session, that the 

contractor or contractors against vhom,such claim or 

claims are made may file a bond with the officials of 

the State, coo&y, town or municipality whose duty it 1s 

to pay the moneys, bonds or’ warrants to such contractor 

or contractors. Said bond shall be double the amount of 

the claims filed, and shall be payable to the claimant or 

cl almant 9. It shaI.1 be executed by the party filing same 

as principal 

!t 

and by a corporate surety authorized under 

the laws of exas to execute such bond as surety, and 

shall be conditioned substantially that the principal and 

surety will pay to the obligees named, or their assigns, 

the amount of the claim or claims, ore such portion or 

portions thereof as may be proved to have been liens, under the terms of Chapter 17, General Laws of the State of 

Texas, passed by the Regular Session of the Thirty-ninth 

Legislature. The filing of said bond and Its approval 

by the proper official. of the State, county town or munlclpallty shall release and discharge all liens fixed or 

attempted to be fixed by the piling of said claim or claims, 

and the official or officials whose duty it is to pay the 

moneys, bonds or warrants shall pay or deliver the same 

to the contractor or contractors or their assigns. Said 

official shall send by registered mail an exact copy of 

said bond to .a11 claimants. 

ttSec. 2. At any time within six months from the date. 

of filing of said surety bond, the party making or holding 

such claim or claims may sue upon such bond but no action 

shall be brought on such bond after the exp 1 ration of such 

period. One action upon said -bond shall not exhaust the 

remedy thereon, but each obligee or assignee of an obligee 

named therein may malnta1n.a separate suit thereon In any 

court end in any jurisdiction. If any claimant or claimants 

in an action establish the fact that they vere entitled to 

a lien under the provisions of Chapter 17 of the General 

Laws of the State of Texas, passed at the Regular Session 

of the Thirty-ninth Legislature, and shall recover judgment 

for not less than the full amount for which claim was made 

the court shall fix a reasonable attorney’s fee in favor o 1 

the claimant or claimants, which shall be taxed as part of 

the costs In the case. The bond provided In Section One of 

this Act shall also be conditioned that the principal and 

surety will pay all court costs adjudged against the prlncipal In actions brought by claimant or clalmants thereon.” 

The above statutes pertlnent to the matters herein lnvolved, being in existence w h en the contract In question was entered into 

t 

same would be held’s part of such contract--Metropolltan Casual y Insurance Company vs. Cheaney, 55 S.W.(2d) 5%. 
Hon. J. W. Calhoun, page 5 (O-1268) 

In the case of 0. A. Durham Company vs. McKee, et al, 

(C.C.App.) 57 S.W.(2d) 1132, writ refused the court referring 

In its opinion to Articles 5160, $72a, &72b, %72b--1, above 

quoted, held that such statutes enacted to protect furnishers 

of labor end material on public works must be considered together as In par1 materla In construing any one of them, 

While the contract documents contain numerous provisions affording ample protection to the parties and the language 

of same is clear and unambiguous, yet where such clauses conflict 

with the above statutes as to rights and duties, such statutes 

should be followed. It appears that all of the above quoted 

statutes have been construed by our courts, thereby furnishing 

ample legal authority for proceeding in the matter of making final payment of the contract price. 

It is evident that the surety bond of Wood and Scurlock, 

Contractors, meeting the requirements of Article 960, supra 

snures to the benefit of such person, firms or corporations Chat 

have claims for labor and material furnished to said contractors 

and who comply with Its provisions. It will be noted that this 

Article requires that all such claims shall be filed with the 

County Clerk of the county in which the work is being prosecuted, 

within ninety (90) days from the date such material and labor are 

furnished to said contractors. It also provides that after completion and acceptance of completed projects, all moneys due contractor under said contract shall be held bv the State or its 

m or school districts or other subdivisionthereof or u 

l?&PlC~D~ltY ‘a&d such a me that satlsfactorv evidence Is &- 

mitted and affidavits made bv the contractor that all lust bll& 

for labor and material under this contract has been uald in RQ& 

by the contract=. 

Prom the instruments submitted by you we presume that 

the contractors have not complied with the prov I slons of the aforementioned statutes which clearly makes it the statutory duty of a 

public official to require satisfactory evidence to be submitted 

and affidavit made by the aontractor that ell just bills for labor 

and material under the contract have been paid In full by the contractor before releasing any retalnage funds payable under the contract. Correlating this statutory provision, we find the following 

paragraph, a part of the general conditions of the contract: 

“Art. 26. Payments Withheld.--The Architect may withhold or, on account of subsequently discovered evidence, 

nullify the whole or a part of any certificate to such extent 

as may be necessary to protect the Owner from loss on account 

of: 
Hon. J. W. Calhoun, page 6 (O-1268) 

“(a) Defective work not remedied. 

“(b) Claims filed or reasonable evidence indlcatlng probable filing of claims. 

l’(c) Failure of the Contractor to make payments 

properly to subcontractors or for material 

or labor. 

“(d) A reasonable doubt that the contract can be 

completed for the balance then unpaid. 

“(e) Damage to another Contractor. 

“When the above grounds are removed payment shall be 

made for amounts withheld because of them.” 

In the matter of final payment to the contractors by 

the University, with particular reference to the notice received 

and claim of the Trafton Tile & Marble Co., it appears that under the authorities reviewed no prior or greater rights are 

given one claimant who has g I ven statutory notice over other 

claimants who have not, yet may be entitled to some portion of 

the retalnage fund on hand. 

In the case of Smith VS. Texas Company (Comm.App.) 53 

S.W.(2d) 774 it was held that the notice provided In Articles 

!$+72a and 54$2b need ‘not be filed with the proper official before 

payment of any money to the contractor in order to fix lien on 

fund due him. To the same effect, certified question was answered by the Commission of Appeals, in Huddleston and Work, et al, 

vs. .Kennedy, et al, 53 S.W.(2d) 1009. 

The statutes do not provide for any specific time in 

which written notice of labor and material claims shall be given 

the officials whose duty it is to pay a public works contractor. 

From the case of Franklin Brothers vs. Standard Manufacturing 

Company, 78 S.W.(2d) 294, by the Austin Court of Civil Appeals, 

we quote: 

II*** In this circumstance a reasonable time after 

the completion and acceptance of the public’ works project will be implied and allowed for giving such notice. 

That this should be the rule Is apparent when these statutes are considered with article 5160, supra, which requires the state to hold all money due the contractor 

wafter completion and acceptance of completed project 

*** until such a time that satisfactory evidence is 

submitted and affidavits made by the contractor that all 

just bills for labor and material *** have been paid in 

full. ’ This statute does not make notice prerequisite 

to the duty of the state t,o withhold money due the contractor after the completion and acceptance of the work, 
Hon. J. W. Calhoun, page 7 (O-1268) 

and to require satisfactory proof and affidavit that 

all labor and material claims have been paid. It 

further provides ‘that all claims for labor and material *** shall be itemized and sworn to as required by 

Statutes as to mechanic’s lien claims, and such claims 

shall be filed vith the County Clerk of the County, in 

which said work is being prosecuted, within ninety days 

from the date of the delivery of said material and the 

performance of said work.’ The mechanic’s lien statutes referred to (article 5452 and art. 5453, as amended by Acts 1929 c. 478, sec. 1 (Vernon’s Ann.Civ.St. 

art; 54533) provide that the sworn Itemized account of 

materiel furnished shall be filed with the county clerk 

within ninety days after the indebtedne~ss accrues. Appellee fully complied with the requirements of the registration statutes. 

I’*** It was agreed that neither the state nor any 

of Its agents, after the completion and acceptance of 

the construction work, and before payment of the retainage fund to the contractor, secured from the contractor satisfactory proof and affidavits that all claims 

for labor and material had been paid In full as required 

by article 5160, and In consequence of this &each of 

duty the state Is liable to appellee for the amount of 

the retainage fund. And since the contract Imposed the 

same duty with regard to retaining the fund until satlsfactory proof was made that all labor and material claims 

had been paid, no necessity exists for a determination of 

such contract liability of the state; nor for a determination of the question of whether any notice of appellee’s 

claim was necessary to fix the contract liability.” 

In answer to your request you are respectfully advised 

that you should require the contractor to furnish satisfactory evidence and affidavits made by him that all just bills for labor and 

material under the oontract has i een paid in full by the contractor. 

Article 5472a provides that when a claim Is filed under such artlcle no public official shall pay all of said moneys due said contractor’but shall retain enough of said moneys to pay said claim. 

Therefore, if the contractors comply with the requirements of the 

statute as to furnishing satisfactory evidence and affidavits that 

all just claims have been paid except that of the Tile Company, 

the University should retain enough to pay that claim that IS, 

the amount of the claim with a small sum In addition for contingencies and pay to Wood & Scurlock, Contractors, the remainder. 

It is further our opinion that where a portion of the retainage fund or balance of the contract price withheld, Is charged 
. . , 

Hon. J. W. Calhoun, page 8 (O-1268) 

by statutory notice with the claim by a subcontractor, the general 

contractors have a right to furnish a release bond under the 

visions of Article $t72b--1 Revised Civil statutes, 1925, as 

proamended, and be paid said claimed portion along vith the balance 

of the retainage fund, provided the evidence is satisfactory that 

there are.no other claimants to the retainage fund. 

In connection with the foregoing, we further respectfully advise that this department Is unable to sanction or speclfically answer any one or all of the propositions Number 2, 3 and 

4 outlined in the third paragraph on page 2 of your letter same 

being questions controlled by facts directly bearing upon Che 

proof to be submitted by the contractors under the contract and 

statutes quoted herein, upon which we are unable to pass. 

Trusting the above answers your request, we remain 

Yours very truly 

ATTORNEY GENERAL OF TEXAS 

By /s/ Wm. J. R. King 

Wm. J. R. Klng,~ Assistant 

APPROVED AUG 25, 1939 

/s/ Gerald C. Mann 

ATTORNEY GENERAL OF TEXAS 

APPROVED: ;X’&NIg;A;zT” 

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