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CLOYD HIMES v. CAMERON COUNTY CONSTRUCTION CORPORATION V. CARROLLTOWN BOROUGH MUNICIPAL AUTHORITY. APPEAL EMPORIUM TRUST COMPANY (07/24/81)

filed: July 24, 1981.

CLOYD HIMES, AL'S TIRE SERVICE, ALLEGHENY FOUNDARY COMPANY, CAMBRIA SLAG DIVISION OF THE STANDARD SLAG COMPANY, EMPORIUM TRUST COMPANY, NEW ENTERPRISE STONE AND LIME COMPANY, PATTON LUMBER AND SUPPLY, PENNSYLVANIA ELECTRIC COMPANY, UNITED SURVEY COMPANY, AND WARREN CONCRETE PRODUCTS
v.
CAMERON COUNTY CONSTRUCTION CORPORATION V. CARROLLTOWN BOROUGH MUNICIPAL AUTHORITY. APPEAL OF EMPORIUM TRUST COMPANY



No. 1145 April Term, 1978, Appeal from the Order of the Court of Common Pleas of Cambria County, Civil Action - Law, at No. 1008 of 1974.

COUNSEL

Judith Fellheimer, Philadelphia, for appellant.

Daniel Krause, Pittsburgh, for Himes, New Enterprise, Stone and Lime and Patton Lumber, appellees.

E. J. Strassburger, Pittsburgh, did not file a brief on behalf of Allegheny Foundary, appellee.

Sanford Anderson, Pittsburgh, for Cambria Slag, appellee.

Gary C. Horner, Johnstown, did not file a brief on behalf of Pennsylvania Electric, United Survey and Warren Concrete, appellees.

E. W. Tompkins, II, Emporium, did not file a brief on behalf of Cameron County Construction, appellee.

Thomas A. Swope, Jr., Ebensburg, did not file a brief on behalf of Carrolltown, appellee.

Cercone, President Judge, and Montgomery and Lipez, JJ.

Author: Montgomery

[ 289 Pa. Super. Page 145]

The appeal in this case arises from an interpleader action instituted by the Carrolltown Borough Municipal Authority (hereinafter referred to as the "Authority"), as a result of a public works project. The work on the project was done by the Cameron County Construction Corporation (hereinafter referred to as "Contractor"). Pursuant to its contract*fn1 with the Contractor, the Authority withheld 10% of the agreed contract price, a sum of almost $44,000. That sum constitutes the fund in dispute in this case. One of the claimants was the Emporium Trust Company (hereinafter referred to as the "Bank"), which had loaned money to the Contractor to finance its work on the project. The Contractor had not completed its repayments to the Bank on the loan. In opposition to the claim of the Bank, claims were asserted by a group of several persons and business entities which provided labor and material to the Contractor for the project. The members of this latter group will be referred to collectively herein as the "Suppliers". The lower court determined that the Suppliers should prevail and were entitled to

[ 289 Pa. Super. Page 146]

    the fund held by the Authority after the completion of the project. The Bank has appealed the lower court's rejection of its claim to a priority right to that fund.

A more detailed review is appropriate of what appear to be the undisputed facts of record. On October 18, 1972, the Contractor was awarded a construction contract by the Authority to construct sanitary sewers and related construction projects. The Contractor borrowed ninety five thousand eight hundred seventy dollars and seventy five cents ($95,870.75) from the Bank in order to begin work on the project. Simultaneously, the Contractor made an assignment of and granted a security interest in the proceeds of the contract to the Bank, as collateral for the loan. The Bank thereafter, in October and November, 1972, filed financing statements, pursuant to the provisions of the Uniform Commercial Code, 12A P.S. § 9-101 et seq., in the offices of the Prothonotary of Cambria County and the Department of State of the Commonwealth of Pennsylvania.*fn2

Pursuant to the requirements of the Public Works Contractors Bond Law of 1967, December 20, 1967, P.L. 869, 8 P.S. § 191 et seq., the Contractor obtained a bond from the Summit Insurance Company (hereinafter referred to as the "Insurer"), to insure the payment of bills from suppliers of labor or materials to the project.

In October, 1973, the Contractor commenced work on the project, which was completed in late November, 1974. At the time of the completion of the project, the Contractor owed the Bank more than $88,000 in principal and accumulated interest. The Authority had in its possession the sum of $43,694.50 representing the final payment due to the Contractor, which had been held pursuant to the following provisions of the construction agreement:

"In making partial payments there shall be retained 10% of the amount of each payment ...


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