Untitled Texas Attorney General Opinion ( 1947 )

Xoh. T, B. Warden, Me&r
State Board of Control
.Austin, Texas Ilo: Whether the Board of
"' 6 Control is authorized
under Artiols 5160,
: v. c. so, to aooept a
.'~ .( payment bona in lieu
of wsatisraotorgevi-
denoe" that all bills
for labor and materials
" fuaished the oontno-
tor.have been paid+
'~ D&r Sir:
The basis of your request ?or an'epinion is an
Interpretation of the last paragraph of Article 5160,
~’ T. 0, 9.) whioh proridsa as follons:. :.
'
.' vroviaea rurther thst arter oomple-
: tlon and aooeptsnca of completed project
all moneys due.contractorunder da con-
track shall be hold by the State or its
ocuntles or school dlstrlote or other sub-
division thereof or any municipalityun-
til such a time that satisfaotoryevidence
is submitted and affidavits made by the
oontractor thst all just bills for labor
an% material under this contract haa been
paid
.. in rull by the oontmo$or~”
.
:..., Acoordia to your letter, you construe the pro-
vision for "satisfactoryevidencea to require %ceiptea
bills” furnished by the oontraotorto show that the ma-
terials and labor have been rully paid for. You further
say that this interpretationresults in hardship upon
numerous,contrsotorsbecause of their inability to iur-
nish receipted bills for every item pur0bssea and whioh
goeg into every project. You give as an example of the
heraship rsrerrea to, the roilowing set cb facts:
WAcontractorpurohaaes and pays far
a oar load of cement. The concretemade'
.
. .
Hon. T. B. Warden, Page 2, V-321.
from this oar load of cement &y go into
as many projeots as there are sacks of
oement in the car lead, and it would thers-
. fore follow that the contractorwould be
raqnimd to have as many reoeipts showin&
'that the oar load of cement had been paid
for. The efieot .otthis requirementhas
0cluseamany competent contractorsto re-
fuso to bid on any State project.*
In oonnectionwith the above quoted statute
and related feats, you ask two questions: (1) Whether
it would be possibla to take a payment bona executed by
a contractoras prinaipal ana a solvent surety company
to.proteotlabor and material men after acceptance of
the completed projeot. If the payment bona is possible
you ask us to prepare the necessary form for such bond,
,(2)’ In the event the use of a payment bond is an im-
possibility,what is the meaning of the term "satisfao-
tory evidencan as used in the quoted part or the Arti-’
0187
We shall first determine whether in any case
the Pinal payment of funds may be made to the oontmo-
tor without his submitting satisfactoryevidence and
his making affidavits that all past bills for labor and
'materialunder the contraat hnve been paid in full by
the oontmator.
In addition to orrering proteotion to furnish-
ers of labor and materials, this statute has been held
in E&public National Bank & Trust Company v. Massaohu-
setta Banking & Trust Company, 68 P (2%) k&5, and Frank-
lin Broa. v. Standard Mfg. Company, 78 S. W. (26) 29&,
error dismissed, to operate as additional security for
the surety on the performanoabond. In each oase the
public body (being the State in the latter case) was
held liable to the surety on the perrormanoabond for
payments made by it on labor and material claims where
final payment was made by the publio body to the con-
tractor prior to the time allowed for filing such claims
under Artiole 5160 and without requiring the oontra'otor
to furnish the required evidence and affidavits Of sat-
isfaotion of suoh bills. It thereiore appears that the
Board of Control would be acting at its and the State's
peril in releasing the funds under any circumstances
other than as authorized by Article 5160. This it is
not authorized to do. We do not mean to hold that a
payment bona may not also be accepted; but we find no
Hon. T. B. Warden, Page 3, V-321.
authority to require it, nor to accept it in lieu of‘the
requirementsof Article 5160.
Since we have concludedthat a payment bond
cannot be substituted for the prooedure under Artiale
51.60,this brings us to your question as to the mean-
ing of the term "satiafaotoryevidenoew as used in the
quoted section of Article 5160. In Volume 1 of Jones
Ccmmentarieson J8videnoe,pages 25 ana 26, wsatisfao-
tory evidencew is aerinea as rollows:
11
. . D By satisraotoryevidence,whioh~
is sometimes called suffioientevidsnoe, is
intended that amount of prool.whioh ordinari-
ly satisries an unprejudicedmind beyond rea-
sonable doubt. The circumstanceswhich will
amount to this degree of proof can never be.
previously aarinea; the only legal test or
which they are susceptibleis their suiii-
oianoy to satisry the mind and conscience of
a cOtmuonman; and so to convince him that he
would venture to act upon that conviction,
in matters oi the highest concern and impor-
tanoe to his own interest e e .
"That 8via8nce is deemed satisractory
which ordinarilyproduces moral oertainty or
conviotionin an unprejudicedtina . . ."
While most of the authorities cited speak of
"satisfactoryevidence" in connectionwith evidence in-
troduced in litigation,nevertheless,the definitions
.are to our minds consistentwith the standard which
should be applied by you in connectionwith your res-
ponsibilitiesunder Article 5160. This same meaning
has been expressed many times by the Courts. For a
series of such delinitions,sea Words and Phrases, Vol*
ume 38, page 266, et seq.
The meaning of the term "satisfsctorysvi-
dence* is broad in its scope, and as stated "can never
be previously aerined,w It does not maan on8 specirio
kind 0r evidence as applied to a psrtioular situat%on;
it can mean other kinds of evidence -- any that "sat-
isfies an unprejudicedmind beyond reasonable doubt."
Applying these rules to the example stated in your let-
ter, "setisfaotoryevidanoe" as used in the statute can-
not be aOnrinad to a single constructionas "receipted
E&n. T. B. Warden, Page Ic, V-321,
' bills." That is straining the rule -- rendering it too
inflexibleto embrace such situationsas you have out-
lined. This is not to say that receipted bills am not
satisfaotoryevidence. It is, or should be in most in-
stances. But where oiroumstanoesam different and un-
usual, other evidenoe aould be just as desirable and
work no hardship upon one who bears the burden of proof.
The rule is not made to lax the requirements,but is
laid down as a Klexible guide under which, with proper
and reasonableapplication rendervarying circumstances,
justice oan be obtained,
Under the two aeoisions first referred to here-
in, the funds required to be held constitntea trust fund
and the liability of the State arises upon a misapplica-
tion of such funda, oontmry to the statute. since the
term *satisieotoryeviaenoe* is not susceptibleof exaot
aerinition,it necessarily follows that the Board or Con-
trol must exercise sound discretion in each situation as
it arises.
1. A payment bond executed by a oon-
tractor operating under the provisions of
Artiale 5160, V. C. S., msy not be 6Ocepted
by the Board or Control in lieu of satisiao-
tory aridence and affidavits that all just
bills for labor and materials hsve been paid.
2. *Satisfactoryevidence" of such pey-
ment is such evidenos as convinoas the Boara
of Control that the obligationsfor all labor
ana material have been satisfied by the oon-
tractor.
Yours very truly
APPROVED: ATTOBWBY GIIIWRALOF TEXAS
.:. jz& t&i?i?~;y p-d. Gzy+@J
ATTORNEY GENRRAL. Charles Bi Crenshaw
Assistant.
CRC:jmo