Charles Kellas & Co. v. Slack & Slack Co.

Burke, J., delivered the opinion of the Court. The controlling; facts in this record are few and undisputed. They are here stated. The Slack & Slack Company, hereinafter referred to as the contractor, entered into a contract- with the Mayor and City Council of Baltimore for the paving of German street between Eutaw and South streets.

Section 51A of the contract, which was known as contract No. 113, is here inserted: “The Contractor shall furnish the Commission with satisfactory evidence that all persons who have done work or furnished materials under the contract, and who have given written notices to the Commission before or within ten (10) days after the final completion and acceptance of the whole work under the contract, that any balance for such work or materials is due and unpaid have been fully paid or satisfactorily se1 cured, and in case such evidence is not furnished as aforesaid, such amount as may be necessary to meet the claims of the persons aforesaid may be retained from any moneys due the Contractor under the contract until the liabilities aforesaid shall be fully discharged or such notices withdrawn. The City or the Commission may also, with the written consent of the - ⁵³⁷ Contractor, use any money retained, due or to become due under the contract, for the purpose of paying for both labor and material for the work, for which claims have been filed in the office of the Commission.” The contractor completed the work according to the requirements of the contract, the work was accepted by the City, and final settlement and payment were made by the City for the work according to the terms of a voucher and voucher check No. 9087J to which reference will presently be made. The contractor sub-let a portion of the work to Kell as & Company, hereinafter referred to as the sub-contractor, the appellants on this record. The subcontractor completed its paid of the work to the satisfaction of the City.

The total amount due the sub-contractor was $7,928.80. During the progress of tbe work they were paid $6,460,— leaving a balance of $1,460 due for which amount the subcontractor recovered a judgment against the contractor. In accordance with the terms of the provisions of the contract quoted above, the sub-contractor gave written notice to the Paving Commission of the balance due. This notice was not withdrawn, and the balance due has not been paid or secured, and no evidence to that effect was given to the Paving Commission, and the City retained the amount in the final settlement with the contractor as it was authorized to do under the contract.

The basis for the final payment to the contractor by the City was a voucher made up by the Paving Commission and furnished to the City Comptroller. This voucher showed that there was due the contractor the sum of $6,595.11, and that from this sum was deducted and retained the sum of $3,420.44, leaving a balance of $3,174.67 to be paid on final estimate. A list of bills, which included that of the subcontractor, filed against tbe contractor under Clause 51A of the contract, was shown upon the voucher. The City Comptroller issued to the contractor a warrant cheek in final payment on contract No. 113 in accordance with the voucher ⁵³⁸ mentioned.

This check also showed that the City had retained on the final settlement the identical bills shown by the voucher. On the back of the warrant check, over the signature of the contractor, appears the following endorsement : “The endorsement of this warrant cheek by the payee constitutes a receipt and release for the items and account stated in the body of the warrant, and it is so understood and agreed.” The contractor accepted the check, endorsed the same andi received the money under the cheek, and the City has now in its possession the sum of money, including the sum due the sub-contractor, which was retained for the bills filed against the contractor in accordance with Clause 51-A. On November 13, T915, the contractor made a deed of trust for the benefit of its creditors to Albert J. Boyle, Samuel A. Vervalen and James J. Kelley. Upon a petition filed by the trustees, the Circuit Court No. 2 of Baltimore City assumed jurisdiction of the administration of the trust. The sub-contractor filed a petition in the proceedings, in which the trust was being administered, in which, after reciting substantially the facts which we have stated, it prayed for the passage of an order “authorizing and directing Albert J. Boyle, Samuel A. Vervalen and James J. Kelley, trustees for the said Slack and Slack Company, to give their written consent to the City of Baltimore and the Paving Commission to use the sum of $1,468.80, the amount retained by them under ■ Contract No. 113, for the purpose of paying your petitioners for the work for which they filed their claim in the office of said commission,” and for other and further relief.

An answer was filed by the trustees and testimony was taken by the respective parties. The lower Court by its order dated May 9, 1916, dismissed the petition—holding that the petitioners were not entitled to any priority of payment for any portion of their claim against the contractor. ⁵³⁹ The appeal before us was taken by the petitioners from that order. Emm the above statement of facts it