Court Opinion

ID: 9569338
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:13:01.29742+00
Date Added: 2024-06-11T11:50:22.124702
License: Public Domain

On Rehearing
SMITH, Justice.
We have again examined I.C. § 45-502, which requires indemnification of public and quasi-public bodies on contracted work which exceeds $200.00, by bond equaling the full amount of the contract price, the bond to contain the additional obligation that the contractor shall promptly make payment to all persons supplying material and labor in the prosecution of the contracted work. The bond is furnished for the benefit of the public body, to guarantee performance by the contractor of the work contracted. The statute does not provide for any amount to be retained by the public body from amounts earned by the contractor as the work progresses; but, if an amount is retained by contract, as in the case at bar, such likewise is intended as an additional guarantee for the performance of the contracted work.
*419Simply stated the statute contemplates that if the contractor fails to perform the work contracted, for the performance of which the statute requires a bond to be given in a sum equaling the full amount of the contract price, then the surety, under the obligations of the required bond, must provide performance of the contracted work. The surety in such a case is required to step into the shoes of the contractor; the surety to perform as the contractor originally agreed to do.
Appellant American Surety Company on rehearing of this cause again presented the issue whether respondent Minidoka County must respond to the surety by reason of the County having paid to Krieger, the prime contractor, retainage funds amounting to $69,243.86 which, the surety states, were by the County “contracted to be retained upon the contract”.
The prime contractor, Krieger, contracted to construct the County’s hospital building for the sum of $629,246.00. The architect’s performance estimate of December 8, 1960, submitted to the County showed $69,122.60 additional work authorized under the contract. The total work contracted amounted to $698,386.60. All of the work contracted under the original contract had been completed, and all of the additional work had been completed except only $5,948.03 thereof, and the architect so certified. On December 8, 1960, the architect additionally certified that $69,-243.86 as retained percentage was currently due to Krieger, who had presented a showing to the County to the effect that his subcontractors had been paid. The only work subsequently authorized as an addition to the contract amounted to $722.-25.
The work required by the original contract and by the authorized addition to the contract had been substantially completed as of December 18, 1960. Nothing in the record indicates that the County’s payment of the retainage involved any bad faith on the part of the architect, the County or its board of county commissioners.
Graybar Electric Co. v. Manufacturers Cas. Co., 37 N.J.Super. 284, 117 A.2d 196 (1955) and 21 N.J. 517, 122 A.2d 624 (1956), involved a performance bond executed by the Manufacturers Casualty and Insurance Company in favor of the Board of Education of Plainfield, New Jersey, for the performance by N. R. Epstein Electric Company of contracted work on the electrical system of a certain school. The contract provided that the Board should make monthly payments to the contractor based upon 90% of the estimated completed work at the end of each month, as certified by the Engineer, and that payment of the retained percentage should be made 60 days after final date of acceptance. The Board omitted to retain the 10% retainage but made full payment to Epstein, the contractor, before the date of final acceptance of *420the work by the Engineer. Epstein became bankrupt. Graybar Electric Co., which had not been paid for material furnished to the contractor, brought an action on its claim, against the Board and the insurance company.
The insurance company asserted that the retained percentage was for the benefit of the Board, as well as the lien claimants and the surety. It pointed out if the Board had not made the final payment, the retainage would have been available for the indemnification' of the surety.
Both the superior court and the Supreme Court of New Jersey pointed out that the performance bond contained the provision, required by the New Jersey statute, that “no modifications, omissions or additions in or to the terms of the said contract or in or to the plans or specifications therefor shall in anywise affect the obligation of said surety on its bond”. The superior court, 117 A.2d 196, at 201, stated:
“That form [of bond] evidences a legislative intent to make the bonding company absolutely liable for the penal sum of the bond no matter what alteration, omission or addition the board and the contractor may make in or to the terms of the contract.”
The Supreme Court upheld such construction.
In the case at bar the performance bond furnished by the contractor in favor of the public body is required by I.C. § 45-502. Although specific phraseology of the performance bond is not set forth by statute, such bond, as in the Graybar Electric Co. case, covered all of the undertakings, covenants, terms, conditions and agreements of the prima contract as well as any and all authorized modifications of said contract. (See Footnote 2, Original Opinion.) Although Minidoka County paid Krieger the retainage as of a time prior to formal acceptance of all of the contracted work, nevertheless under such broad phraseology, the surety must “be held liable without recourse against the public agency”; Graybar Electric Co. v. Manufacturers Cas. Co., supra, 122 A.2d 624, at 626.
American surety again stresses its lack of notice before the County made payment of the retained percentage to Krieger.
In the original opinion this Court pointed out that the surety was not entitled to notice because the bonds do not so require. Peachtree Roxboro Corp. v. United States Cas. Co., 101 Ga.App. 340, 114 S.E.2d 49 (1960). See also Bekins Moving & Storage Co. v. Maryland Cas. Co., 72 Idaho 493, 244 P.2d 1100 (1952), which quoted with approval from the syllabus of Corporation of President of Church of Jesus Christ of Latter-Day Saints v. Hartford Acc. Etc. Co., 98 Utah 297, 95 P.2d 736 (1939), which reads:
“A surety on a building contractor’s bond is not entitled to notice of con*421tractor’s default, unless bond specifically provides therefor.
This Court ruled that such holding, among others, was pertinent and controlling in the Bekins case, stating: “It will be noted that the contract and bond herein [Bekins case] did not require notice of the contractor’s default.”
The surety asserts that a duty rested upon the County to see that the money retained was applied by Krieger, the prime contractor, in payment of Krieger’s subcontractors. We are unable to entertain such view simply because the privity of contract existed between the County and Krieger, the prime contractor, and not between the County and the subcontractors. Moreover Krieger had furnished the County with requisite security required by law to insure the County in case of Krieger’s default, in whjch event the surety was obligated to provide performance in his place and stead.
We again point to I.R.C.P. Rule 56(e) which provides:
“ * * * When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon mere allegations or denials of his pleading, but must answer in detail as specific as that of the moving papers, setting forth the material facts as he believes and intends to prove them to be. If he does not so answer under oath, summary judgment shall be entered against him.”
The record shows that the County’s motion for summary judgment was based upon the pleadings, interrogatories and answers thereto, depositions, records and files in the cause. None of the matters which counsel for the surety have submitted on the petition for rehearing, as alleged facts in affidavit form, were presented at the hearing on motion for summary judgment, at which time the trial court inquired of the surety’s counsel if the surety had anything to offer in addition to the records and exhibits. Counsel replied in the negative, excepting in case of an' appeal, that the record be clarified by identification of exhibits, to which opposing counsel registered no objection.
The motions for summary judgment were not refuted by the surety as contemplated by I.R.C.P. Rule 56(e). The motions were heard nearly six weeks after the County filed its motion for summary judgment, which afforded the surety ample time to file counter affidavits or any other showing in contest of the motion, had it desired so to do.
While the surety generally alleges prejudice in its pleadings, it attempted to’support such allegation in the form of’ affidavits supporting its petition' for rehearing herein, some 18 months after the lower *422court entered judgment. It thus attempted to raise questions of fact by a method not within the purview of I.R.C.P. Rule 56(e).
We adhere to the original opinion filed in this cause' July 16, 1964.
McQUADE, and McFADDEN, TAYLOR and KNUDSON, JJ., concur.