Philadelphia v. McLinden ( 1903 )

Opinion by

Mb. Justice Fell,

This action is by the city of Philadelphia to the use of a number of persons who were employed as day laborers in grading streets. It is founded on two bonds (included in the same action by agreement of the parties), given to the city by the contractor and his surety to secure the prompt payment of all amounts due “ for labor and materials furnished and supplied or performed in and about the work.” The work was done in accordance with the contract, and the contractor was paid in full by the city. The surety notified the city, at a time when the amount due the contractor exceeded the amount of the claims for labor, not to pay the balance due him until he had paid the claimants. This notice was disregarded by the city. Three grounds of defense were presented by the affidavit filed by the surety: (1) that the use plaintiffs, being day laborers, were not entitled to the protection of the bond; (2) that the surety was released because of the payment to the contractor by the city after notice; (3) that the laborers were aliens employed by the contractor in violation of the Act of Assembly of June 25, 1895, P. L. 269, and of the ordinance of December 16, 1896, and of the terms of the contract.

The ordinance of March 30, 1896, provides that all persons entering into contracts with the city for the construction or repair of public works shall give, in addition to the usual bond for the faithful performance of the work, another bond with the condition that they shall pay %11 persons supplying them with labor or materials; and it authorizes such persons to bring suit in the name of the city for their benefit against a defaulting contractor and his surety. The power of the city to exact the additional bond was upheld in Philadelphia v. Stewart, 195 Pa. 309, in which it was decided that the condition was not ultra vires and contrary to public policy, as it was the right of the city to protect itself against the risk of defective materials and workmanship in the construction of its public works, against which there is no right of lien, by exacting assurance from the contractor that he will pay the debts which he incurs. It is now argued in support of the defendant’s first contention that as the purpose of the ordinance and bond is to give to those supplying materials and labor the same protection they would have if the supply had been to a private party, that the construction which precludes a mechanic or laborer from maintaining a mechanic’s lien should be adopted, and that it should be held that one who performs labor is not within the intent of the ordinance or of the bond given to carry out its provisions. This contention cannot be sustained. The municipal policy was to protect the city by securing the claims of those who furnished materials or labor, and the language of the bond, to pay those who performed labor, is too clear to admit of doubt.

The notice not to pay the contractor would have exonerated the surety if the payment was one which the city ought to have withheld, but it was not. The city was under no obligation to pay the claimants, nor to see that they were paid. They had no claim upon the fund in its possession which could be enforced, and the city could not retain the money in order that the creditors of the contractor or his surety could reach it by any process: Lesley v. Kite, 192 Pa. 268. The city had no direct financial interest in the bond, for, although it was a nominal plaintiff, it was merely a trustee for those who might become beneficially interested: Philadelphia v. Stewart, 201 Pa. 526. It is equally clear that the surety cannot set up the violation of the law and of the contract forbidding the employment of alien labor by its principal as a defense in an action on the bond.

The judgment is affirmed.