Montana Attorney General Opinion 15-429

Opinion No. 429. State Highway Commission-Con- t1'llds, a~feptance by "Affirmative Ac· tion" of the Commission-Contracts, Acceptance by Engineers-Claims -Subcontractors-Material· men-Labol'el·s. HELD: Acceptance of the contract hy the State Highway ]~llgineer in charge of particular work is acceptance by the commission. Claims of subcon- tractors, materialmen and laborers may be filed as soon as the service or sup- plies are furnished by Wem; therefore, the action or non-action of the Com- mission becomes immaterial for the purpose of computing the statutory period within which suhcontractors, materialmen and laborers must file no- tice of claim against bondsmen. OPIXIOXS OF THE ATTORXEY GEXERAL 21J5 January 20, 1934. 'Ve acknowledge receipt of yours of December 27 to which is attached a copy of your usual highway contract and a letter from Messrs. Grubb & l{ockwood, attorneys-at-law of Kalis- pell, Mon1ana. You request an opinion from this office on the following mat- ter: "1. Is it, or i,s it not, necessary for the Highway Commission at a regular or special meeting to take affirmative action with respect to the acceptance of our contracts. said action to he mIHie of record in the minutes of said meet- ing? "2. In case the first question is answered in the affirmative, shall the action taken by the Highway Com- mission be as of the date that accep- tance was made by the engineer acting under the delegated authority of the Highway Commission when the ac- ceptance was considered?" Letter of Messrs. Grubb & Rockwood is as follows: "We are enclosing herewith a for- mal demand requesting the State Highway Commission to affirmatively accept both of the Douglas contracts on which Kirkpatrick Brothers are unpaid, and are asking that this be done in open meeting with due minute entry of th.e same. Chapter 20 of the 1931 Session . Laws provides that the subcontractor, etc., ha's 15 days 'from and after the completion of the con- tract with an acceptance of the work by the affirmative action of the board, counCil, commission, • • *.' within which to file his notice. "Our position is that the law con- templates affirmative action by the Board itself so that the minutes will show the acceptance and thus there will be public record showing that the Board has accepted the work. As you know, I read the minutes and find no affirmative action of any kind on the part of the board in reference to this work and Mr. Whipps also advises that the Board itself does not accept the contracts and that there is no rec- ord in the minutes pertaining to such an acceptance and that it is not a cus- tom of the hoard in any instance, to so accept the work. "If the Highway Commission will take action on this, we shall then file our fifteen day notice whereupon we will have laid a foundation to com- mence a suit on the bond. We cannot see that such action would be detri- mental in any way to the Highway Commission and it would be extreme- ly helpful to us in suing for this money. We belie\'e that the courts will construe this law in favor of the subcontractors and materialmen as strictly as they can possibly do so, in- asmuch as this is a very stringent law in limitation of the rights of subcon- tractors and materialmen against the bonds. "Under our theory of the case, we have no suit on the bond at all until we have filed our statutory notice within fifteen days after Board af- firmatively accepts the work. As the matter now stands, there is no af- firmative acceptance by the Board that is a matter of record or other- wise, and consequently, we ha\'e not as yet the right to file the notice and it would be impossible for us to al- lege a compliance with the statute in order to sue on the bond. In case the Highway Commission will not volun- tarily take this affirmative action as requested, we do not know how we can sue on the bond until we first in- stitute an action in mandamus to com- pel the Board to take this affirmative action, and as stated above, we do not see how the Board could be injured in any way by voluntarily doing this and this voluntary action could not change the rights of the parties from what they now are, but it would elim- inate an e.'i:tra suit for us. * * *." That part of Chapter 20, Laws of 1931, pertinent to the question in- volved is as follows: "Provided, that such persons shall not have any right of action on such bond for any sum whatever, unless within fifteen (15) days from and after the completion of the contract with an acceptance of the work, by the affirmative action of the boanl, council, commission, trustees, 'officer or body acting for the state, county 01' municipality or other pub- lic 'body, City, town or district, the la- borer, mechanic or sub-contractor, or materialman or person claiming to have supplied provender, materials, provi- sions of goods for the prosecution of such work, or the making of such im- provement, shall present to and file with such board, council, commiSSion, trustees or body acting for the state, 296 OPINIONS OF THE AT'l'ORXEY GE~ERAL county or municipality or other public body, city, town or district, a notice in writing in substance as follows: * .... " Our Supreme Court has not inter- preted this section of our statute, but the State of 'Vashington has a similar statute which provides: "That such persons (materialmen and laborers) shall not have any right of action on such bond .. .. .. unless within thirty days from and after the completion of the contract with an acceptance of the work by the board ...... the * * * per- son claiming to have supplied materi- a1s * .. * shall present and file with such board" .... a notice in writing * .... " An amendment to this section in 1915 requires acceptance by "af- firmative action" of the board or com- mission. In Wheeler-Osgood Co. v. Fidelity & Deposit Co., 139 Pac. 53, the "Board of Public Control" of the state entered into a contract with a construction company to erect a building for the in- sane of the state. The defendant was surety on the contractor's bond. The State Board of Control selected an architect to supervise the construction of the building, who was authorized to accept the building on completion. On December 6, the architect issued his final certificate certif~'ing to the COIll- pletion of the work. The Board made no minute entry on its record accepting and approving the report of the archi- tect, but on December 23, the Board authorized a warrant to be issued in final paYillent of the contract price. On .January 13 follOWing, the plaintiff filed his claim with the Board for ma- terial furnished contractors. The claiIll being disallowed and the contractor be- ing insolvent, the suit followed. In this action the question arose as to when the contract was accepted- whether on December 6 when the arch- itect issued his certificate, or on De- cember 23 when the Board made final payment on the contract. The Court held that the architect was the agent of the Board and his action bound the Board as to the completion of the work and the thirty days provided by statute in which claims might be filed began to run from that date. In the course of the opinion the Court said: "We think it must be held, conSidering all the terms of the contract, that the final certificate of the architect constituted an acceptance on the part of the Board, in the absence of any showing of fraud, collnsion, bad faith or mistake." The above decision was followed in Denny-Renton Clay & Coal Co. v. Na- tional Suret~' Co., 160 Pac. 1, and again in Union High School District, etc., v. Pac. Northwest Const. Co., 269 Pac. 809. In the latter case the Court held the architect's final certificate was conclusive as between the parties. Both our statute and the statute of the State of Washington contain prac- tically the same phraseology in regard to "affirmatb'e" action by the Board in the acceptance of contracts, and the saille phraseology in regard to tiIlle that claims may be filed with the Board or Comillission, except that our statute provides for only fifteen days, while the State of 'Vashington statute provides for thirty days. In regard to the "affirillative" action by the Board or ComIlli-ssion, the Supreille Court of the State of Washington in the case of Denny-Renton C. & C. Co. v. Nat'\. Surety Co., 160 Pac. 1, used the fol- lowing language: "The action of the Council in ordering the complete esti- mate of ninety per cent paid as certi- fied by the engineer was the only ac- tion of the council ever taken directly upon this certificate of completion. Tha t action necessarily implied an ac- ceptance of the work as then complet- ed and certified. If affiI'mative action be held now necessary, we think that this was such an affirmative recogni- tion of the wOl'k as completed as to con- stitute an acceptance. .. .. .. Even aside from any affirmative action on the part of the City Council this case is con- trolled by our decision in the case of Wheeler-Osgood Co. v. Fidelity & De- posit Co., 139 Pac. 53. In that case we held that, bpcause the contract gave the architect control of the work and provided for the payment on the archi- tect's certificate, an acceptance by the architect was an acceptance by the Board of Control, in that the contract itself, by reason of the broad powers which it gave to the architect, made him the Board's agent to accept the ,york :0: :0 *." 'Ve think the cases cited above clear- ly establish the fact that the engineer in the instant case was the agent of the Commission and that his accep- tall(~e was binding on the Commission and the State and that the fifteen days allcwed for the filing of claims would OPIXIOXS OF THE ATTOR;,\EY GEXERAL 297 expire at tbe end of fifteen days after the acceptance by the engineer in charge. It is contended by Messrs. Grubb & Rockwood that unless there is some af- firmative action by tbe Commission shown on its records, tbat it is incon- venient if not practically impossible to tell wben tbe fifteen days begin to run, hut it does not seem to us that tbis is a material question bere. Sub-contractors or materialmen may file their notice of claim when tbeir sub-contracts are completed, or the material furnished, witbout waiting for the completion of the contract between the State and the general contractor. (Cascade Lumber Co. v. Aetna Indem- nity Co., 106 Pac. 158; Washington Monumental & Cut Stone Co. v. Mur- phy et ai, 142 Pac. 065; Denny-Renton C. & C. Co. Y. Nat'\. Surety Co., sUllra.) In referring to the clause in the stat- ute wbere it is provided that "unless within thirty days from and after the completion of tbe contract and accep- tance of tbe work," which is contained in tbe statute of tbe State of Wash- ington and is also in ours, tbe Supreme Court of tbat state, in the case of Cas- 'cade Lumber Co. v. Aetna Indemnity Co., supra, having under consideration tbe contention of tbe defendant in tbat case that tbe notice of claim was filed prematurely, used tbe following lan- guage: "'Ve are of the opinion that the sta tute only fixes the time after which tbe notices may not be file{l. '.rhe words 'from and after' as bere used, indicate wben tbe time begins to run and wben it ends, for the purposes of computation only; tbat is, the time began to run, and included the day the work was completed. These words do not indicate that the notice must be filed after completion of the work. and before tbe expiration of tbirty days. as contended by appellant. The object of the statute is notice to tbe surety tbat the claimant intends to hold the surety. Notice given before the completion of the work woulll be as effective for tbat purpose as notice l,riven after the completion tbereof. The statute was not intended as a trap, and, unless tbe words used clearly show an intention that the notice shall be filed at a certain time, it sbould be con- strued so as to effect its object with fairness. In tbis case we are of the opinion that tbe statute does not pre- vent the filing of a notice prior to the time of the completion of the work. and that the fil'st notice was therefore not prema ture." Under tbe ruling in these cases of the State of Wasbington, based on a law practically the same as ours, and containing the reference to affirmath'e action by tbe Board, a sub-contractor or materialman or laborer may file bis claim as soon as his work is completed and need not wait until fifteen days after tbe general contractor has com- pleted his work. Such being the rule established in those cases, which we tbink would be followed by our Su- preme Court, there is no reason wby the SUb-contractor, materialman or la- horer could not file bis claim as soon as his work is completed. ]j~ollowing the rule laid down in the cases cited our conclusions are: 1. That the acceptance of your en- gineer in charge of particular work is acceptance hy the Commission; 2. That claims of subcontractors, materialmen and laborers may be filed as soon as the services or supplies are furnished by them and sucb filing need not be deferred until the general con- tmct is completed but mnst be filed hefore the expiration of fifteen days after the engineer in charge issues his final certificate of acceptance. 'Ve think this covers your two ques- tions. An entry in your minute record would be advisable if it were practical, but the commission is required to meet but once eacb month and the fifteen days provided by statute might come allli go before the commission held a meeting. Under tbe rule laid down in the cases cited, those who bave claims they desire to file need not wait for affirmative action of the commission to do so. Tbe action or non-action of the cOIllmission thus becomes immaterial in the matter that gave rise to your questions. This opinion is for your guidanc-e. Tbe controversy between the clients of Messrs, Grubb & Bockwood and tbe contractor and his surety is a matter in which the state is not directly con- cerned and their contro"ersy will have to be determined by the {'ourts.