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Universal Supply Co. v. Martell Construction Co.

Decided: February 17, 1978.

UNIVERSAL SUPPLY COMPANY, PLAINTIFF-RESPONDENT,
v.
MARTELL CONSTRUCTION COMPANY, INC., DEFENDANT-APPELLANT



Halpern, Larner and King. The opinion of the court was delivered by Larner, J.A.D.

Larner

[156 NJSuper Page 329] Plaintiff Universal Supply Company (Universal) furnished materials to Monroe Bonded Roofers (Monroe), a subcontractor in connection with a construction project of the State of New Jersey. When Monroe defaulted

in payment, Universal instituted an action against Monroe and Martell Construction Company, Inc. (Martell), the prime contractor. The complaint was voluntarily dismissed as against Monroe and the litigation continued against Martell only.

Plaintiff's action against Martell was founded upon a two-pronged basis: (1) on the payment bond filed pursuant to the Public Works Bond Act (N.J.S.A. 2A:44-143 to 147), and (2) liability arising out of the Trust Fund Act (N.J.S.A. 2A:44-148).*fn1

Concededly, plaintiff failed to comply with the notice and suit limitations of the Bond Act and is therefore barred from recovery thereunder. The appellate issue is thus limited to the construction and scope of the Trust Fund Act and the right of plaintiff to recover against the prime contractor thereunder.

On cross-motions for summary judgment the trial judge concluded that the Trust Fund Act (N.J.S.A. 2A:44-148) was controlling and dispositive in that it imposed an obligation upon Martell to hold moneys received from the State in trust for the benefit of Universal by virtue of a duty to "insure that all claims in connection with the performance of the public works contract be paid." Summary judgment was therefore entered in favor of Universal against Martell for the full amount of the claim. Martell appeals therefrom.

The operative facts are undisputed and uncomplicated. Martell as the prime contractor of the State of New Jersey completed the construction project and received payment from the State pursuant to its contract. It in turn paid its subcontractors in full, including Monroe. Monroe, however, failed to pay its indebtedness to Universal for roofing materials which were utilized in performance of Monroe's subcontract on the project. Officers of Universal contacted Martell

on several occasions complaining that Monroe had not paid its indebtedness, and Martell responded that it "would take care of things and that (Universal) would be paid." This was followed up by Martell notifying Monroe and requesting that it pay the Universal obligation. Nevertheless, Monroe failed to do so.

The prime thrust of appellant's argument to the trial judge and on appeal is that the admitted noncompliance with the rigid requirements of the Bond Act precludes recovery under the Trust Fund Act. It is asserted that the two statutes should be read as one and that notice within 80 days and institution of suit within one year, as mandated by N.J.S.A. 2A:44-146, is a sine qua non for recovery under the Trust Fund Act. N.J.S.A. 2A:44-148.

This suggestion is clearly without merit. Although the Band Act and the Trust Fund Act are related pieces of legislation designed to grant protection to contractors, laborers and materialmen engaged in the performance of public works projects, they are totally dissimilar in scope and effect. There is no rational basis for superimposing the procedural underpinnings for recovery on a payment bond to the other act which simply provides that the moneys paid by the State to its prime contractor shall constitute a trust fund in the hands of such contractor.

Nothing either express or implied in the Trust Fund Act leads to the conclusion urged by appellant. And conversely, N.J.S.A. 2A:44-146 clearly states that its notice and limitations provisions are confined to an action on the bond required by Article 12, which is entitled "Bonds of Contractors on Public Works and Improvements" N.J.S.A. 2A:44-143 to 147. The Trust Fund Act, N.J.S.A. 2A:44-148, was enacted in 1932, many years after the adoption of the Bond Act, and is designated as Article 13 of Chapter 44, which chapter encompasses all ...


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