Sec. Trust Co. of Pottstown v. Anderson

DAVIS, J.

Contractor paying claims as required by the bond and contract for the construction of the court house annex could deduct amount thereof from balance due subcontractor and its assignee, as against contention that the claimants of the insolvent subcontractor had not complied with provisions of P. L. 1918, p. 203, as amended (Comp. St. Supp. § 107— 1496(1) et seq.) and therefore the contractor had no right to pay claims out of money due subcontractor, since the tiling of the statement required by the statutes was for benefit of sureties and there was no statutory requirement that notice be given to the contractor, and since, in view of insolvency of subcontractor, no good purpose could be served by forcing contractor to submit to suit on being satisfied of correctness of claims.

Action by the Security Trust Company of Pottstown against W. M. Anderson. On petition for rule to show cause why default judgment should not be opened.

Rule to show cause made absolute.

Wilfred B. Wolcott, of Camden, for plaintiff.

Bleakly, Stockwell & Burling, of Camden, for defendant.

DAVIS, J.

In the case above stated I allowed a rule to show cause why the judgment by default against the defendant should not be opened and he be permitted to file an answer. Depositions were taken under this rule.

The suit was commenced by the plaintiff against the defendant, in attachment, and judgment was entered on June 16, 1931. At the time the attachment was issued the defendant was a resident of the commonwealth of Pennsylvania, and the plaintiff was a corporation of the same commonwealth. This suit could have been instituted in Pennsylvania, but the plaintiff, due to the fact that there were certain moneys held by the county of Camden representing the balance due the defendant on his contract, commenced its suit by attachment in this court. The defendant had no actual notice of the issuance of the writ of attachment, his notice being entirely a constructive one under the statute. 1 Comp. St. 1910, p. 142, § 20. It would seem, therefore, that, if he appears to have a meritorious defense to the action, the judgment should be opened and he be permitted to file an answer.

The defendant entered into agreements with the city of Camden and the county of Camden, municipal corporations of the state of New Jersey, for the furnishing of labor and material to construct and install a heating and ventilating system in the Camden county courthouse annex, and contracted with Softer Bros. Company for a portion of the work for which he was obligated under his agreements with the city and county of Camden.

The defendant gave bonds, as required by the provisions of chapter 75, P. L. 1918, p. 203, as amended (Comp. St. Supp. § 107— 1496(1) et seq.). Under the provisions of this act these bonds obligated the defendant for the payment for all labor performed or materials furnished in connection with his agreements with the city and county of Camden.

Softer Bros. Company, the subcontractor, became insolvent before completing its portion of the contract, and the defendant was required to complete the same. Softer Bros. Company, by assignment, assigned its interest, in moneys due to it by the defendant, to the plaintiff in this case. The defendant hadpaid to Sotter Bros. Company, or the plaintiffs, its assignee, on account of moneys due, the sum of $9,200. leaving a balance in the hands of the defendant of $5,785, representing the balance due Sotter Bros. Company under its contract before its insolvency.

The defendant under his contract with the city and county of Camden was required to complete the work after Sotter Bros. Company became insolvent, and the cost of completing it amounted to $1,490.25. The right of the defendant to deduct this amount from the balance of $5,785 is not seriously disputed by the plaintiff.

The defendant, in addition to completing the work of Sotter Bros. Company, paid certain claims for labor performed and materials furnished on the job to Sotter Bros. Company prior to its insolvency. It appears, by the contracts entered into by the defendant with the city and county of Camden and by his bond given in connection with these contracts, that he was obligated to pay these claims. The plaintiff contends that there was not a compliance with the provisions of the statute by the claimants of Sotter Bros. Company, and therefore the defendant had no right to pay, out of the moneys in his hands due Sotter Bros. Company and assigned to the plaintiff, these claims.

Under the statute requiring bond to be given, obligating the contractor to pay for all labor performed or materials furnished, it is provided that any person, firm, or corporation to whom any money shall be due shall furnish the sureties on said bond with a statement of the amount due within eighty days after the acceptance of the contract, and that no suit shall be brought against said sureties on said bonds until the expiration of sixty days after the furnishing of said statements. The statute does not require any notice to be given to the contractor who is the principal on the bond.

It appears that the defendant had knowledge of these claims and knew of his obligation under his contract and bonds to pay the same. The filing of the statement required by the statute seems to have been required for the benefit of the sureties. Nothing in the statute requires any notice to be given to the principal or contractor. The defendant being obligated to pay these claims of Sotter Bros. Company upon its default assumed that no further proceedings were necessary on the part of the claimants to permit him to make the payments.

In view of the insolvency of Sotter Bros. Company and its inability to pay these claims, no good purpose could be served by the defendant submitting to a suit against him upon being satisfied of the correctness of the claims.

While Sotter Bros. Company had assigned its interest to the plaintiff in moneys due to it by the defendant, such an assignment could only have the effect of entitling the plaintiff to the balance of these moneys after the deduction by the defendant of the amounts of money which the defendant was obligated to pay and expend by reason of the default and insolvency of Sotter Bros. Company.

The defendant has, I feel, shown such a meritorious defense as to entitle him to its benefit. The rule to show cause will be made absolute.