United States Fidelity & Guaranty Co. v. Hamilton & Spiegel, Inc.

Horney, J., delivered the opinion of the Court. The appeal in this case is a sequel to the case of Hamilton & Spiegel, Inc. v. Board of Education of Montgomery County, 233 Md. 196 , 195 A. 2d 710 (1963). In both cases, the subcontractor (Hamilton & Spiegel, Inc.) sought to recover from the board of education as well as the prime contractor (Technical Engineers and Contractors, Inc.) and the bonding company (United States Fidelity and Guaranty Company) the unpaid balance due by the prime contractor to the subcontractor for work done and materials furnished in connection with the construction of additional classrooms to the Bethesda Elementary School. In the first case, where the counts in the declaration claiming payment from the prime contractor and the bonding company were not before us, it was held that the subcontractor could not recover from the board of education either on the theory that the subcontractor was a creditor beneficiary of the prime contractor or on the theory that the board had been unjustly enriched at the expense of the subcontractor.

In the instant case, in which the subcontractor sued the bonding company on the payment bond required by Code (1964 Replacement Volume 8A), Art. 90, § 11, as well as the prime contractor and the board of education, judgment was entered in favor of the subcontractor against the prime contractor and the bonding company and the latter appealed. Chronologically, the record shows that the board of education took actual possession of the additional classrooms on August 26, 1961; that the board accepted the project “contingent upon the completion of certain contractual items” by formal resolution on September 25, 1961; that suit was filed in this case on March 29, 1963; that the final certificate of the architect was issued on November 22, 1963; and that final payment under ¹³⁵ the construction contract was made (to the bonding company) on June 15, 1964, after the prime contractor had furnished the board of education with a release of the liens of all subcontractors. The record, in addition to showing that no work was done by the prime contractor after the acceptance of the classrooms by the board of education, also shows that although the architect was required to make a final inspection after completion of the work and, upon finding such work acceptable, to issue a final certificate to that effect, he, for reasons which are not explained in the record, failed to issue the final certificate until after the expiration of more than two years following acceptance of the project by the board of education. At the close of the subcontractor’s case, the bonding company moved for a directed verdict on the ground that the suit was barred by limitations because it was not brought within one year from the dates on which the board of education took possession of or formally resolved to accept the classrooms.

Although the record is silent as to whether there was a formal ruling on the motion, the lower court did, in effect,