Section 10.26 Payment Bonds

• Library: Construction Law 2016 Supp

B. (§10.26) Payment Bonds

Payment bonds ensure the payment of persons or entities supplying labor or material in connection with construction projects, and they protect owners from the filing of mechanic’s liens. Because mechanic’s liens generally cannot be filed against public property, the federal government, through 40 U.S.C. § 3131 of the Miller Act, and most state governments, under similar “Little Miller Acts,” require payment bonds as a protection to laborers and materialmen.

Missouri mandates that every public official or agency contracting for public works require every contractor entering into a public contract to provide a payment bond. Section 107.170, RSMo 2000. The statute provides that the bond “shall be conditioned for the payment of any and all materials” consumed or used in the project, including equipment repairs, insurance premiums, and labor. Further discussion of the statutory requirements is found in §10.45 below.

The claimant on a public works payment bond must plead and prove that it performed labor or sold or delivered materials that were actually or reasonably believed to be incorporated into or consumed in the project. Sch. Dist. of Springfield R-12 ex rel. Midland Paving Co. v. Transamerica Ins. Co., 633 S.W.2d 238 (Mo. App. S.D. 1982). Generally, any party who would be entitled to protection under the mechanic’s lien statutes on a private project is entitled to the protection of the public works bond. Under the broad provisions of § 107.170 and § 522.300, RSMo 2000, a provider does not need to be a subcontractor or a vendor to avail itself of the protection of the bond. City of St. Louis ex rel. Stone Creek Brick Co. v. Kaplan-McGowan Co., 108 S.W.2d 987, 990 (Mo. App. E.D. 1937). Thus, unlike 40 U.S.C. § 3131(b)(2) of the Miller Act, the Missouri statute extends protection beyond suppliers of “labor and material.” Finch Equip. Corp. v. Frieden, 901 F.2d 665, 668 (8^th Cir. 1990).

While the Missouri statute offers broader protection than the Miller Act, counsel must still determine who is a proper claimant under the bond. For example, a road subcontractor’s foreman was held not to be a “laborer” entitled to protection of the bond. Mo. State Highway Comm’n ex rel. Onstad v. Coopers Const. Serv. Co., 268 S.W. 701 (Mo. App. S.D. 1925). But an architectural firm with the statutory right to file a real estate lien was entitled to protection of the bond because professional services of architects and engineers come within the protection of the mechanic’s lien statute. Section 429.015, RSMo 2000; Energy Masters Corp. v. Fulson, 839 S.W.2d 665 (Mo. App. W.D. 1992). But see § 107.170, which apparently reverses the Fulson decision and provides that...