O.C.G.A. § 13-10-1 (2019)

Annotations

JUDICIAL DECISIONS Analysis General Consideration

Payment Bonds 1. In General 2. Applicability 3. Machinery and Equipment Costs Recoverable 4. Pleadings and Practice General Consideration Editor’s note. - In light of the similarity of the statutory provisions, decisions under Ga. L. 1916, p. 94, former Code 1933, § 23-1705 and former O.C.G.A. § 13-10-1, are included in the annotations for this Code section. There are two main conditions of bond under the law; first, to guarantee and insure completion of contract in accordance with the contract’s terms and specifications and, second, to guarantee payment to third parties of work, tools, machinery, skill, and materials. Seibels, Bruce & Co. v. National Sur. Corp., 63 Ga. App. 520, 11 S.E.2d 705 (1940) (decided under former Code 1933, § 23-1705). Bond required by law is for use of two classes of persons: first, the state, county, or municipality; and, second, all persons doing work or furnishing skill, tools, machinery, or materials under or for purpose of such contracts. Hackman v. Fulton County, 77 Ga. App. 410, 48 S.E.2d 706 (1948) (decided under former Code 1933, § 23-1705). Court will look to decisions of federal courts construing this section. Amcon, Inc. v. Southern Pipe & Supply Co., 134 Ga. App. 655, 215 S.E.2d 712 (1975) (decided under former Code 1933, § 23-1705). Bond complying with law may be valid notwithstanding inclusion of condition not authorized by law. - Validity of bond given in compliance with a statute, and which meets requirements of the statute is not affected or its nature changed by inclusion in it of condition that is either not authorized or is repugnant to the statute, except in instances where law expressly provides that bond not made strictly in accordance with it is void. No law declares that a bond given in compliance with the law but which includes a condition not authorized by the law is void or invalid. St. Paul-Mercury Indem. Co. v. Koppers Co., 95 Ga. App. 687, 99 S.E.2d 275 (1957); H.W. Ivey Constr. Co. v. Southwest Steel Prods., 111 Ga. App. 527, 142 S.E.2d

394 (1965) (decided under former Code 1933, § 23-1705). Such unauthorized conditions are invalid and unenforceable. - Clause in bond requiring that notice be given to principal therein, or to state authority, designated as owner, is not authorized by law, in conformity with which the bond was made. Hence, the condition is invalid and unenforceable. St. Paul-Mercury Indem. Co. v. Koppers Co., 95 Ga. App. 687, 99 S.E.2d 275 (1957) (decided under former Code 1933, § 23-1705). Board of education was a public board within meaning of former Code 1933, § 23-1705, and was subject to suit under former Code 1933, § 23-1706. Lance Roofing Co. v. Board of Educ., 235 Ga. 590, 221 S.E.2d 23 (1975); Lance Roofing Co. v. Board of Educ., 138 Ga. App. 364, 226 S.E.2d 161 (1976) (decided under former Code 1933, § 23-1705). City housing authority is a public body within meaning of statute. Housing Auth. v. Marbut Co., 127 Ga. App. 379, 193 S.E.2d 574 (1972) (decided under former Code 1933, § 23-1705). Paragraph (8) of Ga. L. 1962, p. 734, § 32 (see O.C.G.A. § 8-3-30) did not prevent former Code 1933, §§ 23-1705 and 23-1706 from applying to Housing Authority. Housing Auth. v. Marbut Co., 127 Ga. App. 379, 193 S.E.2d 574 (1972) (decided under former Code 1933, § 23-1705). Reformation allowed when language of bond and circumstances evidences parties’ intent to execute statutory bond. - Reformation upheld when language in bond was similar to language of section and bond itself, taken in connection with other evidence and circumstances, was sufficient to authorize jury to find that it was intention of parties to contract to execute a statutory bond. Fidelity & Deposit Co. v. State Hwy. Dep’t, 174 Ga. 443, 163 S.E. 174 (1932) (decided under former Code 1933, § 23-1705).

CONTRACTS Payment Bonds 1. In General

Legislative intent as to parties to be protected. - Legislature intended that the bond required by paragraph (2) should protect those third parties only who would have liens under general lien laws of this state. Seibels, Bruce & Co. v. National Sur. Corp., 63 Ga. App. 520, 11 S.E.2d 705 (1940) (decided under former Code 1933, § 23-1705). County failing to take bond is liable for resulting losses of covered parties. - When political subdivision of this state fails to take from contractor with whom it has contracted to do public work, bond required of contractor as provided by this section, the political subdivision making the contract is liable to persons covered by section for any loss resulting to them from such failure. Sinclair Ref. Co. v. Colquitt County, 42 Ga. App. 718, 157 S.E. 358 (1931) (decided under Ga. L. 1916, p. 94). After county made contract for building public road without taking bond from contractor as required by section, and work was proceeded with, county became liable to materialman who furnished contractor with material used in work for loss sustained by materialman by reason of want of bond, notwithstanding county gave notice to materialman that it would not be responsible for material so furnished. Eatonton Oil & Auto Co. v. Greene County, 53 Ga. App. 145, 185 S.E. 296 (1936) (decided under former Code 1933, § 23-1705). 2. Applicability Statute covers freight and demurrage charges for transporting materials used in constructing state highway. - Claim of a railroad for unpaid freight and demurrage charges, due for transportation of materials used in construction of state highway project, is covered by contractor’s bond given pursuant to statute. Sommers Constr. Co. v. Atlantic C.L. Ry., 62 Ga. App. 23, 7 S.E.2d 429 (1940) (decided under former Code 1933, § 23-1705). Insurer performing administrative function. - When the insurer performed an administrative function on behalf of the contract, to the extent the insurer was seen

as providing a service, it was an administrative service provided for the benefit of the contractor and could not be seen as providing labor to the project. Gulf Ins. Co. v. GFA Group, Inc., 251 Ga. App. 539, 554 S.E.2d 746 (2001) (decided under former O.C.G.A. § 13-10-1). Subcontractors and their employees are protected by statute. - Statute not only protects persons doing work or furnishing materials to contractor but also protects subcontractors and employees of subcontractors furnishing work or materials for purpose of principal contract. Western Cas. & Sur. Co. v. Fulton Supply Co., 60 Ga. App. 710, 4 S.E.2d 690 (1939) (decided under former Code 1933, § 23-1705). Fact that subcontractor paid part of premium on bond does not prevent subcontractors recovery thereunder. Whitley v. Bryant, 59 Ga. App. 58, 200 S.E. 317 (1938) (decided under former Code 1933, § 23-1705). One furnishing material to subcontractor under or for purpose of contract is protected by bond required under paragraph (2). Western Cas. & Sur. Co. v. Fulton Supply Co., 60 Ga. App. 710, 4 S.E.2d 690 (1939) (decided under former Code 1933, § 23-1705). Materialman cannot recover from general contractor on public works contract not bonded as required by former Code 1933, §§ 23-1705 and 23-1706 for materials furnished to insolvent subcontractor and used on job. Electrical Equip. Co. v. Daniel, 109 Ga. App. 463, 136 S.E.2d 491 (1964) (decided under former Code 1933, § 23-1705). Paragraph (2) is inapplicable to contract for professional services, such as engineer employed to survey water system of city. Booker v. Mayor of Milledgeville, 40 Ga. App. 540, 150 S.E. 652 (1929) (decided under Ga. L. 1916, p. 94). Insurance premiums for workers’ compensation and public liability coverage not recoverable under paragraph (2). - Insurance premiums covering workmen’s compensation and employee’s liability coverage, and public liability and property damage coverage, may not be recovered from surety on the surety’s bond executed in compliance with paragraph (2). Seibels, Bruce & Co. v. National Sur. Corp., 63 Ga. App. 520, 11 S.E.2d 705 (1940) (decided under former Code 1933, § 23-1705).

Use of pasture land in performance does not fall within section’s coverage. - Utilization of pasture land by contractor in order for the contractor to properly perform the contractor’s contract does not fall within categories of supplying labor, material, machinery, and equipment. Chapman v. Argonaut Ins. Co., 135 Ga. App. 885, 219 S.E.2d 620 (1975) (decided under former Code 1933, § 23-1705). 3. Machinery and Equipment Costs Recoverable Paragraph (2) covers reasonable stipulated rental for machinery furnished and used in prosecution of such work. American Sur. Co. v. Corr Serv. Erection Co., 47 Ga. App. 295, 170 S.E. 325 (1933) (decided under former Code 1933, § 23-1705). Bond of contractor for public works includes within its purview stipulated rental for machinery furnished and used in prosecution of work. Moore v. Standard Accident Ins. Co., 48 Ga. App. 508, 173 S.E. 481 (1934) (decided under former Code 1933, § 23-1705). Wear and tear is essential element in establishing rental value recoverable for leased machinery. - While action cannot be maintained for compensation for wear and tear upon machinery furnished, in so many words, wear and tear is an essential, if not the principal element in establishing rental value of leased machinery, which value is recoverable. Moore v. Standard Accident Ins. Co., 48 Ga. App. 508, 173 S.E. 481 (1934) (decided under former Code 1933, § 23-1705). One furnishing machinery for purpose of completing contract under paragraph (2) may recover the following upon contractor’s bond: (a) stipulated rental for machinery used solely in prosecution of work, provided that this does not exceed reasonable rental value, which covers fair compensation for wear and tear upon such machinery in work itself; or (b) reasonable rental value for such use, in some degree measured by such wear and tear, when there is no expressly stipulated amount of rental; or (c) purchase price of machinery furnished in work, provided that machinery was necessary to particular work, and was not merely equipment used or available to contractor on other projects or in his general business, and amount sought

to be recovered does not exceed reasonable rental value, covering and to some extent measured by what would be a fair compensation for wear and tear caused only by work, if machine had been leased instead of sold, especially if machine had been worn out by work. Moore v. Standard Accident Ins. Co., 48 Ga. App. 508, 173 S.E. 481 (1934) (decided under former Code 1933, § 23-1705). Paragraph (2) covers incidental and current repairs to contractor’s machinery contributing only to execution of particular contract, and not amounting to substantial additions to contractor’s equipment. Yancey Bros. v. American Sur. Co., 43 Ga. App. 740, 160 S.E. 100 (1931) (decided under Ga. L. 1916, p. 94). While there may be recovery on public contractor’s payment bond for material and labor used in incidental and current repairs to contractor’s machinery, there can be none for major repairs involving replacement of old with new parts, in absence of proof that new parts were consumed in work covered by bond. Western Cas. & Sur. Co. v. Fulton Supply Co., 60 Ga. App. 710, 4 S.E.2d 690 (1939) (decided under former Code 1933, § 23-1705). Limitation on recovery under bond. - Surety on bond is liable to one who furnishes labor and material used in incidental and current repairs to contractor’s equipment and machinery employed in work, but there can be no recovery upon such bond for purchase price of machinery and equipment bought for use in carrying out contract, and available for other work as well, or for major repairs involving a substantial rebuilding of machinery by replacement of old with new parts, in absence of proof that new parts were consumed in work covered by bond. Moore v. Standard Accident Ins. Co., 48 Ga. App. 508, 173 S.E. 481 (1934) (decided under former Code 1933, § 23-1705). Paragraph (2) does not cover purchase price of machinery as permanent equipment in conduct of contractor’s general business, such as steam shovels, trucks, and other expensive and permanent equipment far exceeding entire cost of particular building upon construction of which they might first be employed. Moore v. Standard Accident Ins. Co., 48 Ga. App. 508, 173 S.E. 481 (1934) (decided under former Code 1933, § 23-1705).

Payment Bonds (Cont’d) 4. Pleadings and Practice Suits must be brought in name of body contracted with for use of persons covered. - Suits for recovery of the value of work, material and other items furnished to contractors constructing public buildings must be brought upon contractor’s bond in name of body contracted with, for use of person who furnished skill, labor, or materials of any kind. Yancey Tractor Co. v. Southern Sur. Co., 172 Ga. 110, 157 S.E. 298 (1931) (decided under Ga. L. 1916, p. 94). Subcontractor or employee may protect

rights by intervention. - Subcontractor or employee of subcontractor, although not initiating the action may protect the subcontractor’s rights by intervention. Whitley v. Bryant, 59 Ga. App. 58, 200 S.E. 317 (1938) (decided under former Code 1933, § 23-1705). One must prove as part of prima facie case that it had been unable to collect money from contractor and thus that its loss occurred because of contractor’s failure to take bond. Turner County Bd. of Educ. v. Pascoe Steel Corp., 240 Ga. 88, 239 S.E.2d 517 (1977) (decided under former Code 1933, § 23-1705).

OPINIONS OF THE ATTORNEY GENERAL Editor’s notes. - In light of the similarity of the statutory provisions, opinions under Ga. L. 1916, p. 94, former Code 1933, § 23-1705 and former O.C.G.A. § 13-10-1, are included in the annotations for this Code section. Both bonds required by section may be included in same instrument. - Section requires giving of two bonds, a performance bond, and a payment bond, each to be in

penal sum of not less than amount of contract for which given, but, those bonds being contracts between same parties and growing out of same transaction, there is no legal reason why both of such bonds should not be included in the same instrument. 1958-59 Op. Att’y Gen. p. 179. No election permissible between requirements of former Code 1933, §§ 23-1704 and 23-1705. 1977 Op. Att’y Gen. No. U77-15.

RESEARCH REFERENCES Am. Jur. 2d. - 17 Am. Jur. 2d, Contractors’ Bond, § 21. C.J.S. - 72 C.J.S. Supp., Public Contracts, § 42 et seq. ALR. - Leave of court as prerequisite to action on statutory bond, 2 ALR 563. Validity of condition in bond of contractor for public work which is beyond requirements of statute or ordinance with respect to claims of third persons, 18 ALR 1227. Liability of municipal corporations and their licensees for the torts of independent contractors, 25 ALR 426; 52 ALR 1012. Estoppel to deny validity of municipal bonds issued under an unconstitutional statute, 37 ALR 1310. Recovery of premiums paid on bond of contractor for public improvement not legally authorized, 42 ALR 307. Rental of equipment as within contractor’s bond, 44 ALR 381. Contractor’s bond as covering clothing, food, or lodging for laborers, 46 ALR 511; 65 ALR 260.

Effect of affirmative provision in public contractor’s bond excluding statutory conditions, 47 ALR 502; 89 ALR 457. Labor and materials furnished to subcontractor as within the coverage of principal contractor’s bond for public improvements, 70 ALR 308; 111 ALR 311; 92 ALR2d 1250. Construction and effect of provision in bond purporting to protect contractee in building contract against release of surety, 77 ALR 229. Statutory conditions prescribed for public contractor’s bond as part of bond which does not in terms include them, 89 ALR 446. Claims for gasoline and oil as within contractor’s bond, 91 ALR 1027. Liability of public contractor for damages from acts or conditions necessarily incident to work which would otherwise amount to nuisance, 97 ALR 205. Workmen’s compensation insurance premiums as within coverage of contractor’s bond, 102 ALR 135; 164 ALR 1468.

Liability of surety on subcontractor’s bond to principal contractor for public improvement or to his surety, in respect claims for labor or materials furnished to subcontractor, 117 ALR 662. Loss of profit of subcontractor, laborer, or materialman as within coverage of contractor’s bond, 119 ALR 1281. Validity of statute or ordinance which requires liability or indemnity insurance or bond as condition of license for conduct of business or profession, 120 ALR 950. Value of services or material furnished by subcontractor, laborer, or materialman, or price fixed by the contract by which they were employed, as measure of their recovery on bond of principal contractor, or as against amount earned by contractor withheld by contractee or paid into court, 123 ALR 416. Money loaned or advanced to contractor as within coverage of bond of building or construction contractor, 127 ALR 974; 164 ALR 782. Contractor’s bond as covering insurance premiums other than workmen’s compensation insurance, 129 ALR 1087. Money loaned or advanced to contractor as within coverage for bond of building or construction contractor, 164 ALR 782. Workmen’s compensation insurance premiums as within coverage of contractor’s bond, 164 ALR 1468. False receipts or the like as estopping

materialmen or laborers from recovering on public work bond, 39 ALR2d 1104. Relative rights, as between surety on public work contractor’s bond and unpaid laborers or materialmen, in percentage retained by obligee, 61 ALR2d 899. Surety’s liability for obligee’s attorney fees under provisions of performance bond of public contractor or subcontractor, 69 ALR2d 1046. Surety’s liability on bid bond for public works, 70 ALR2d 1370. What constitutes supplying labor and material ‘‘in the prosecution of the work’’ provided for in the primary contract under Miller Act, 79 ALR2d 843. Protection under bond given under Miller Act [40 USC §§ 270a-270e] of one supplying labor or material to one other than the prime contractor or his immediate subcontractor, 79 ALR2d 855. Labor or material furnished subcontractor for public work or improvement as within coverage of bond of principal contractor, 92 ALR2d 1250. Construction of attorneys’ fees provision in contractor’s bond, 8 ALR3d 1438. Building contractor’s liability, upon bond or other agreement to indemnify owner, for injury or death of third persons resulting from owner’s negligence, 27 ALR3d 663. What constitutes ‘‘public work’’ within statute relating to contractor’s bond, 48 ALR4th 1170.