Section 10.45 Payment Bonds

• Library: Construction Law 2016 Supp

B. (§10.45) Payment Bonds

Because a public project is not subject to mechanic’s liens, Camdenton Consol. Sch. Dist. No. 6 of Camden County ex rel. W.H. Powell Lumber Co. v. N.Y. Cas. Co., 104 S.W.2d 319 (Mo. 1937), to give a right of action to every person who would have had a right to file a mechanic’s lien on public real estate—except for the fact that public real estate is exempt from mechanic’s liens—the General Assembly enacted § 107.170, now RSMo 2000. Hydraulic Press Brick Co. v. Sch. Dist. of Kirkwood, 79 Mo. App. 665 (E.D. 1899). Missouri has long held that no mechanic’s liens may be obtained on public works for work performed or material furnished and that the statutory remedy under the public works bond is the sole and exclusive remedy. State ex rel. Francesconi v. Aetna Cas. & Sur. Co., 350 S.W.2d 418 (Mo. App. W.D. 1961); Energy Masters Corp. v. Fulson, 839 S.W.2d 665 (Mo. App. W.D. 1992).

Section 107.170 contains the general requirement for bonds to guarantee payment of labor and material on public work by any county, city, town, township, school, or road district within Missouri. All official boards or agents of these entities are directed to require the bonds, and the coverage of the bonds by statute is deemed to be coextensive with the statutory requirement. Energy Masters Corp., 839 S.W.2d 665; Fogarty v. Davis, 264 S.W. 879 (Mo. 1924).

The statutory requirement that public officials obtain bonding for public works projects imposes that duty on the officials, boards, or agents of the entity and not the entity itself. S & W Cabinets, Inc. v. Consol. Sch. Dist. No. 6 of Jefferson County, 901 S.W.2d 266 (Mo. App. E.D. 1995). The discretionary function of setting the bond amount and accepting a particular surety is protected by official immunity. Id. at 269. On the other hand, a city’s mere passage of an ordinance requiring the furnishing of a statutory public work payment bond does not prevent the city’s executive officers from being held liable for failing to require the furnishing of the bond. Union Pac. R.R. Co. v. St. Louis Marketplace, Ltd. P’ship, 212 F.3d 386 (8^th Cir. 2000).

Section 107.170 requires every contractor on public works projects exceeding $25,000 to furnish a payment bond conditioned for the payment of all:

· materials incorporated, consumed, or used in connection with the construction of the work;

· insurance premiums, both for compensation and for all other kinds of insurance; and

· labor performed in the work whether by subcontractor or otherwise.

Section 107.170 further provides that, regardless of the language of the particular bond, it is deemed to contain all of the requirements and conditions imposed by the statute. See also Camdenton Consol. Sch. Dist. No. 6 ex rel. W.H. Powell Lumber Co., 104 S.W.2d at 322. But the parties to the bond may add other provisions beyond the obligations provided by statute, and the provisions are enforceable as in common law bonds. County of Audrain ex rel. First Nat’l Bank of Mexico v. Walker, 155 S.W.2d 251 (Mo. App. E.D. 1941).

The right of action to sue on a bond executed under § 107.170 is given by § 522.300, RSMo 2000, which gives to any person furnishing material or performing labor the right to sue in the name of the obligee for his or her use and benefit...