Opinion ID: 1842491
Heading Depth: 1
Heading Rank: 2

Heading: The Bond Claim

Text: Having established that the underlying claim against Garland had merit, we now proceed to consider the issues relating directly to this appeal. The issues subsumed under the bond claim are: (a) Does a public owner have a duty under Code 1975, § 39-1-1, to require a bond from the general contractor inuring to the benefit of subcontractors? (b) If so, when does the statute of limitations begin to run against a party seeking to file suit based on this duty? (c) Would a holding in favor of Mr. Smelley in this case be retroactive so as to constitute an impairment of the obligation of a contract entered into in reliance on a prior interpretation of the law? (d) Does Mr. Smelley's failure to inquire whether Garland had filed a bond amount to contributory negligence? The duty question turns on the language of the statute and on the decisions in Robbins v. City of Sheffield, 237 Ala. 674, 188 So. 874 (1939), Jackson v. City of Florence, 294 Ala. 592, 320 So.2d 68 (1975), and Housing Authority of Prattville v. Headley, 360 So.2d 1025 (Ala.Civ.App.1978). In Robbins this Court held that the municipality was not liable to laborers or materialmen for failure to require a public contractor to give a bond as provided by the precursor of § 39-1-1. 237 Ala. at 677, 188 So. 874. This decision was based on the doctrine of sovereign immunity, which was overruled in Jackson v. City of Florence, supra . The Court of Civil Appeals in Housing Authority of Prattville, supra, held a municipal housing authority subject to suit by a subcontractor in spite of the holding in Robbins because the statute which authorizes the creation of housing authorities in this state expressly allows such authorities to sue and be sued. 360 So.2d at 1027. The court expressly noted that the proceedings in that case were initiated prior to the decision in Jackson, supra . Under the rationale of either Jackson or Housing Authority of Prattville the duty and liability imposed here should be allowed to stand. These events and proceedings took place subsequent to Jackson and so the removal of the rationale of Robbins made the duty and potential liability imposed by § 39-1-1 upon public agencies at best an open question; furthermore, § 11-58-5(2) gives medical clinic boards the power [t]o sue and be sued and prosecute and defend civil actions in any court having jurisdiction of the subject matter and of the parties. We find no error in the trial court's imposition of liability for failure to require a bond. Medical Clinic Board argues that Mr. Smelley's claim is barred by the one-year statute of limitations found in Code 1975, § 6-2-39, because its duty to require a bond arose when it entered into its contract with Garland in January of 1977, and that its duty to Mr. Smelley arose on June 27, 1978, when he contracted with Garland. It argues that the amendment which added Medical Clinic Board as a party on July 31, 1979, was beyond the period of the statute. Mr. Smelley counters that his cause of action arose when Medical Clinic Board authorized final payment to Garland on March 27, 1979. We agree. Not only does § 39-1-1 expressly state that an action on a bond shall be commenced not later than one year from the date of final settlement of said contract, but also, Mr. Smelley had no cause of action prior to this time because he had suffered no injury arising from Medical Clinic Board's breach of duty. The Court of Civil Appeals made a similar ruling in Headley v. Housing Authority of Prattville, 347 So.2d 532 (Ala.Civ.App.1977), an earlier appeal of Housing Authority of Prattville, supra . Medical Clinic Board's argument that an affirmance would constitute an impairment of an obligation of contract is premised upon a belief that affirmance would rest on Housing Authority of Prattville, supra, which was decided after the contracts here were executed. Because we hold that the trial court's judgment is equally supported by Jackson, supra, we find no merit in this contention. Furthermore, Medical Clinic Board does not argue here that it defended the suit on the basis that it failed to require a bond in reliance upon the denial of liability in Robbins, supra, and so it will not be heard to argue such reliance here. Dicta in Robbins, supra, indicates approval of a Florida holding to the effect that as this related to a matter of public record, the one furnishing the labor and material might readily ascertain whether or not the bond had been given, and if he furnished such labor and materials when bond has not been given, his negligence in doing so with knowledge of such fact or without informing himself as to the true situation, is the cause of his loss and no recovery may be had against the public body. Robbins v. City of Sheffield, supra, 237 Ala. at 677, 188 So. 874. Our statute, however, makes no mention of filing the bond as a public record. Although it does require that a subcontractor shall be furnished a certified copy of said additional bond and contract, Code 1975, § 39-1-1(b), this applies only after payment has been denied, not before the subcontractor enters into the contract. Id. Therefore no statutory duty to inquire is imposed, and the subcontractor is entitled to take the contractor's solicitation of his labor or materials as an assurance that the statutorily required bond has been executed. [1]