Case Information
*1 . -
Honorable T. 0. Walton, President,
Agricultural & Mechanical College
of Texas
College Station, Texas
Opinion No. O-1915 Re: Right of materlalmen who Dear Sir:
furnish material for con- struction of public build- Ill@.
Your letter of January 30, 1940, making inquiry of this department with respect to the claim of certain parties for material furnished In connection with the'con- struction of certain buildings at your institution, re- ceived, and the following quotation Is taken therefrom:
"On November 7, 1938 a contract was exe- cuted by and between Curtis Eleotrlcal Company, (Charles E. Curtis, President) of Austin, Tex- as, a corporation created and operating under the State laws of the State of Texas, party of the first part and the Agricultural and Mechanl- cal College of Texas of College Station, Texas, acting by and through Its Board of Directors, party>-of the second part. This Is a contract for furnishing and Installing electrical wiring and equipment in twelve dormitory buildings and one dining hall building on the campus of the A. & M. College at College Station, Texas, work on which was substantially completed in Seotem- her, 1939.
"We have just received a letter from The Okonite Company of Chicago, Illinois, notifying us of their claim against the Austin Electrical Supply Company for materials furnished the Cur- tis Electrical Company for this project. We at- tach a copy of The Okonlte Company's letter cov- ering this claim in which it quotes a telegram from the Curtis Electrical Company by Charles E. Curtis, President, guaranteeing payment of the materials sold to the Austin Electrical Sup- ply Company for the A. & M. College project.
You will note that The Okonlte Company flies Its claim against the Curtis Electrical Company for the unpaid account against the Austin Elec- trical Supply Company for materials furnished the former for the A. & M. College project. We also attach a copy of the contract provisions relating to liens and claims.
"Will you please advise us at the earliest possible moment whether or not we should with- hold payment to the Curtis Electrical Company for the final estimate on this contract until the Curtis Electrical Company furnishes the Col- lege a release or waiver of lien or a receipt for payment in full from The Okonite Company for all materials furnished for the project covered by the contract. We know, of course, that where claims are filed with the College against the contractor, that payment of sufficient funds to Dover the alalms must be withheld unti,l the claims have been satisfied, but we do not how whether this applies to claims filed against contractors for materials furnished to the con- tra&or through a third party as appears to be the aase in this Instance.
"We should also like to have you advise us whether or not, before making final settlement to the contraotor on a contract of this type, we should require the contractor to furnish us with a certlfioate from the County Clerk of .this County to the effect that no liens or
claims have been filed in the County Clerk's Office against the contractor or the College for materials and/or labor used in conneotlon with the contract."
The letter which you enclose from The Okonlte Com- pany to you is as follows:
"Confirming our telephone advice we at- tach copy of our telegram giving $2452.55 as the total claim against the Austin Electrical Supply Company due Hazard'.~Insulated Wire Works, Division of The Okonite Company, and $92.18 due The Okonite Company.
"The facts in the case are as follows: *3 "On May 20, 1939 we received through our Dallas office an order from the Austin Electri- cal Supply Company for electrical wires and cables to be used in connection with some work being done'at your University by the Curtis~ Electrical Co. We advised our Dallas office that we would have to have an up-to-date flnan- ala1 statement from the Austin Electrical Supply Company before we would ship the material:
"On-May 22, 1939, we received the following telegram from the Curtis Electrloal Co.:
"RECARDINO FINANCIAL STATEMENT OF TRE AUSTIN ELECTRICAL SUPPLY COMPANY TIDIY STATE THIS CAN BE SUPPLIED WITHINP'EW DAYS. WB BUST HAVE WIRE ‘A&M COLLEGE IMMEDIATELYTHEREFORE WE WILL QUARARTEE PAYBENT WITHIN CASH DISCOUNT PERIOD. SEE OUR RAT- INO LATESTDUN& BRADSTREETBOOK. MAKE SHIPMENT TODAY NOTIFY BY WESTERN UNION IMMEDIATELY.
CURTIS ELECTRICAL COMPANY BY CHAS. E. CURTIS, PRESIDENT" "&I 'the strength of the guarantee oontained In - . _ the roregolng telegram we shlpped the merchandise
direct to your University and charged same to the account of the Austin Electrical Supply Company.
"We oompleted delivery of the entire order, and the unpaid balance at this time Is $2544.73 which includes $2452.55 due the Hazard Insulated Wire Works, Division of The Okonite Company, and $92.18 due The Okonite Company.
"You should understand that Hazard Insulated Wire Works is simply a division of The Okonite Company and not a separate oompany or corporation.
'We have not been able to oolleot this bal- ance from either the Austin Electrioal Supply Com- Pang or Curtis Electrical Co. and we learned last Saturday morning that the Electrical Co.
has furnished your archlteats final estimates on this job with receipts or waivers covering all materials, including a waiver from the Aus- tin Eleotrloal Supply Company.
"We believe that with the Information we *4 - .
Honorable T. 0. W&ton, President, page 4 (No. O-1915)
have given you, you will be in a position to demand that the Curtis Electrical Co. either furnish you a waiver or reoelpt from us, or give you an order to pay us our balanoe. We have never heard of any dispute as to this balance and we oannot understand why the Cur- tis Eleotrloal Co. or the Austin Eleotrloal Supply Company have not paid this aooount in full long ago, slnoe Mr. chas. E. Curtis, from the Information that he personally has given us, Is a partner in the Austin Electrical Supply Company and Is president of the Curtis Electri- cal Co.
"We trust therefore that you will withhold payment from the Curtis Electrical Co. In the sum of $2544.73 until you are provided with a receipt or release direct from us, or until you reoeive an order from the Curtis Electrical Co.
directing you to pay that sum of money to us.
Unless the matter Is handled In that way, we do not feel secure in the payment of our aooount."
You likewise enclosed the following excerpt from your contract with the Electriaal Company for the construction of the electrical work on the buildings Into which the material furnished by The Okonlte Company was usedr
"EXCERPT FROM THE CONTRACT DATED NOV. 7, 1938, BETWEEN THE CURTIS ELECTRI- CAL COMPANY AND THE A. & M. COLLEGE OF TEXAS FOR ELECTRICAL WORE ON TWELVE DORMITORIES AND ONE DINING HALL "It being understood that the final pay- shall be made within ten days after this ment oontract is oompletely finished, wlth.the ex- aeption of ten per centum of total aontract price which (at option of Owner.,,.) shall be held for days, for protection of labor, as provided by law; provided, that in each of the said cases the Architect shall oertify that all the work upon the performance of whioh the pay- ment Is to beoome due has been done to their satisfaotion; provided, further, that before each payment, if required, the Contractor....
shall give the Architect good and suffloient pv*rlence that the premises are free from all *5 Honorable T. 0. Walton, President, page (No. O-1915)
liens and claims chargeable to the sald.Contract- or...., and, further, that If at any time there shall be any lien or claim for which, if estab- lished, the Owner . . ..or the said premises might be made liable, and which would be chargeable ~to the said Contractor...., the Owner....shall have the right to retain out of any payment then due or thereafter to become due, an amount sufficient to completely Indemnify it against such lien or claim...., until the claim shall be effectually satisfied, discharged or cancelled. And should there prove to be any such claim....after all payments are made, the Contractor....shall re- fund to the Owner . . ..a11 moneys that the latter may be compelled to pay in discharging any lien on said premises made obligatory In consequence of the former's default. ,.And It Is further un- derstood and agreed that the Contractor....shall and will pay off and satisfy all claims of,sub- contractors or others for labor or material fur-' nished upon said building and which may be found to be justly due and owing, whether or not the same can be established as a lien against said property for which said property or the Owner...
would be liable; it being the true Intent and: meaning hereof that the Contractor....shall pay, off and satisfy all bills incurred for labor,and material In the erection of said building and found to be justly due and owing, whether estab- ?Hshed as liens or not." (Underscoring ours)
It Is made very plain from the foregoing that the material furnished by The Okonite Company was furnished to' the contraator and used In the buildings aovered by its.oon- tract. The telegram of the Curtis Electrical Company to The Okonlte Company is certainly sufficient to make It liable for the payment of this material. When this fact Is .taken in con- nection with your contraot with the Curtis Electrical Company, and especially the underscored portion thereof) we have no' hesitancy in advising you that you should wlthhold'payment to the .Curtis Electrical Company of the final estimates on this contract until the Electrical Company furnishes you a release, or a receipt of payment in full from The.Okon1t.e Company for its material furnished for the projeot .covered by the oontract.
Article 5472a provides:
"That any person, firm or corporation, or *6 furnishing any material, appara- trust estate, tus, fixtures, machinery or labor to any con- tractor for any public improvements $n this State, shall have a lien on the moneys, or bonds, 'or warrants, due or to beoome due to such contraotors for such lmpr+vements; pro- vided, such person, firm, corporation, or
stock assoolatlon, shall, before any payment is made to suoh oontraotor, notify in writing the officials of the State, county, town or municipality whose duty it Is to pay such con- tractor of his olalm."
Article 5472b provides:
"That no public official, when so notified in writing, shall pay all of said moneys, bonds or warrants, due said contractor, but shall re- ,. taln enough of said moneys, bonds ore warrants to pay said alaim, In case It Is establish.ed by, judgment In a court of proper jurisdiction."
The foregoing Articles govern the fixing of claims for materials furnished in the construction of permanent lm- provements in this State. It has been held that these statu- tes must be given a liberal and not a strict oonstruotlon. smith v. Texas Co., S. W. (2) 774.
Certainly, these statutes under the above rule of oonstruotlon are sufficient to protect any person, firm or corporation who furnished material to a contractor under alr- aumstanoes suoh as these here under consideration. Wilson vs. Hlnton et ux, 1.16 S. W. (2) 365. These statutes were lntend- ed to give additional security to the party furnishing the material, and should be construed to accomplish such end.
As to the second question you ask you are advised that It Is the opinion of this department that you should not require the contractor to furnish you with a certificate from then County Clerk of your county to the effect that no liens or claims have been filed in the County Clerk's office against the contraotor or the college for material and labor furnish- ed in oonneotion with the contract. The contract was for a public Improvement, and a party who furnishes material or labor would have to proceed under the above Articles to se- oure a lien on the funds of the contractor. And there is no provision in said statutes providing for the filing with the County Clerk of their claims. Furthermore, it has been *7 Honorable T. 0. Walton, President, Page 7 (No. O-1915) specifically held that no lien can be fixed against public property. 29 C. J. 483, &! 22, from which we quote, sustains this view:
"PUBLIC PROPERTY .--Upon grounds of neces- sity and public polioy, buildings, grounds, lm- provements and works used for and devoted to public purposes are not within the operation of nor subject to mechanics' or materialmen's liens, unless, of course, they are expressly made subject thereto by law. Indeed the Con- stitution provides that
"'The property of oounties, cities and towns, owned and held only for public purposes, such as publia buildings and the sites therefor. Fire engines and the furniture thereof, and all property used, or Intended for extlngulsh- lng fires, publla grounds and all other property devoted exoluslve- ly to the use and benefit of the public shall be exempt from forced sale and fran taxation, . . .I "Accordingly, It has been heid that a me- chanic's lien cannot be fixed on a aourthouse and public square, a city hall, a school build- ing, a lot In a cemetery dedicated and held for sepulture, or public works such as highways; ,streets and pipe lines s 0 + *"
Since there can be no lien created against public property, we can see no reason for requiring a certificate of the contractor that~ no such liens have been recorded be- fore payment is made to him,
Trusting that the above answers your questiona, we are
Very truly yours, APPROVED FEB 9, 1940 ATTORREY GENERAL OF TEXAS
Grover Sellers Grover Sellers Assistant