§ 137 — Bond to secure payment of certain claims arising from a public improvement; enforcement

New York § 137

• Jurisdiction: New York
• Law STF: State Finance
• Art. 9: Contracts

Text

§ 137. Bond to secure payment of certain claims arising from a public\nimprovement; enforcement. 1. In addition to other bond or bonds, if any,\nrequired by law for the completion of a work specified in a contract for\nthe prosecution of a public improvement for the state of New York a\nmunicipal corporation, a public benefit corporation or a commission\nappointed pursuant to law, or in the absence of any such requirement,\nthe comptroller may or the other appropriate official, respectively,\nshall nevertheless require prior to the approval of any such contract a\nbond guaranteeing prompt payment of moneys due to all persons furnishing\nlabor or materials to the contractor or any subcontractors in the\nprosecution of the work provided for in such contract. Whenever a\nmunicipal corporation issues a permit subject to compliance with section\ntwo hundred twenty of the labor law, such permittee or its contractor or\nsubcontractors furnishing workers shall post a payment bond subject to\nthis section. Provided, however, that all performance bonds and payment\nbonds may, at the discretion of the head of the state agency, public\nbenefit corporation or commission, or his or her designee, be dispensed\nwith for the completion of a work specified in a contract for the\nprosecution of a public improvement for the state of New York for which\nbids are solicited where the aggregate amount of the contract is under\none hundred thousand dollars and provided further, that in a case where\nthe contract is not subject to the multiple contract award requirements\nof section one hundred thirty-five of this article, such requirements\nmay be dispensed with where the head of the state agency, public benefit\ncorporation or commission finds it to be in the public interest and\nwhere the aggregate amount of the contract awarded or to be awarded is\nless than two hundred thousand dollars. Provided further, that in a case\nwhere a performance or payment bond is dispensed with, twenty per centum\nmay be retained from each progress payment or estimate until the entire\ncontract work has been completed and accepted, at which time the head of\nthe state agency, public benefit corporation or commission shall,\npending the payment of the final estimate, pay not to exceed\nseventy-five per centum of the amount of the retained percentage.\n 2. A copy of such payment bond shall be kept in the office of the head\nof the department or bureau having charge of the public improvement in\nconnection with which the bond was given and a copy shall also be kept\nin the office of the comptroller or other appropriate official; such\ncopies shall be open to public inspection.\n 3. Every person who has furnished labor or material, to the contractor\nor to a subcontractor of the contractor, in the prosecution of the work\nprovided for in the contract and who has not been paid in full therefor\nbefore the expiration of a period of ninety days after the day on which\nthe last of the labor was performed or material was furnished by him for\nwhich the claim is made, shall have the right to sue on such payment\nbond in his own name for the amount, or the balance thereof, unpaid at\nthe time of commencement of the action; provided, however, that a person\nhaving a direct contractual relationship with a subcontractor of the\ncontractor furnishing the payment bond but no contractual relationship\nexpress or implied with such contractor shall not have a right of action\nupon the bond unless he shall have given written notice to such\ncontractor within one hundred twenty days from the date on which the\nlast of the labor was performed or the last of the material was\nfurnished, for which his claim is made, stating with substantial\naccuracy the amount claimed and the name of the party to whom the\nmaterial was furnished or for whom the labor was performed. The notice\nshall be served by delivering the same personally to the contractor or\nby mailing the same by registered mail, postage prepaid, in an envelope\naddressed to the contractor at any place where he maintains an office or\nconducts his business or at his residence; provided, however, that where\nsuch notice is actually received by the contractor by other means, such\nnotice shall be deemed sufficient.\n 4. (a) A payment bond required pursuant to this section may provide\nthat the place of trial of an action on the bond shall be in the county\nin which the contract of the contractor who furnished the bond was to be\nperformed or if such contract was to be performed in more than one\ncounty, then in any such county, and not elsewhere.\n (b) Except as provided in section two hundred twenty-g of the labor\nlaw, no action on a payment bond furnished pursuant to this section\nshall be commenced after the expiration of one year from the date on\nwhich the public improvement has been completed and accepted by the\npublic owner.\n (c) In any action on a payment bond furnished pursuant to this\nsection, any judgment in favor of a subcontractor or material supplier\nmay include provision for the payment of interest upon the amount\nrecovered from the date when demand for payment was made pursuant to the\nlabor and material payment bond and provided further that the court may\ndetermine and award reasonable attorney's fee to either party to such\naction when, upon reviewing the entire record, it appears that either\nthe original claim or the defense interposed to such claim is without\nsubstantial basis in fact or law.\n 5. (a) The expression "furnishes material" or other similar expression\nwherever used in this section shall be deemed to include the reasonable\nrental value for the period of actual use of machinery, tools or\nequipment, and the value of compressed gases furnished for welding or\ncutting, and the value of fuel and lubricants consumed by machinery\noperating on the improvement, or by motor vehicles owned, operated or\ncontrolled by the contractor or his subcontractors while engaged\nexclusively in the transportation of materials to or from the\nimprovement for the purposes thereof.\n (b) The expression "moneys due to persons furnishing labor to the\ncontractor or his subcontractors" includes all sums payable to or on\nbehalf of persons furnishing labor to the contractor or his\nsubcontractors, for wages, health, welfare, non-occupational disability,\nretirement, vacation benefits, holiday pay, life insurance or other\nbenefits, payment of which is required pursuant to the labor law or by\nthe contract in connection with which the bond is furnished or by a\ncollective bargaining agreement between organized labor and the\ncontractor or subcontractor, and which are computed upon labor performed\nin the prosecution of the contract. A trustee or other person authorized\nto collect such payments shall have the right to sue on the payment bond\nin his own name and subject to the same conditions as if he were the\nperson performing the labor upon which such sums are computed.\n