The opinion of the court was delivered by
In this consolidated appeal, two suppliers of materials to a
second tier or "sub-subcontractor" seek to recover against the
general contractor's public works bond issued pursuant to K.S.A.
60-1111. The trial court entered summary judgment in favor of the
general contractor and the issuer of the bond on the basis that a
K.S.A. 60-1111 public works bond afforded no protection to the
suppliers herein. The suppliers appealed. The Court of Appeals
reversed the trial court, holding that the suppliers were not so
remote as to be precluded from protection under the statute
(Wichita Sheet Metal Supply, Inc. v. Dahlstrom & Ferrell Constr.
Co., 14 Kan. App. 2d 111, 783 P.2d 353 ). The matter is
before us on petition for review.
The relevant facts may be summarized as follows.
In 1986 the City of Leavenworth entered into a contract with
Dahlstrom & Ferrell Construction Company, Inc., (D&F) for the
construction of a community center. D&F provided a public works
bond as required by K.S.A. 60-1111. This bond was secured through
United States Fidelity and Guaranty Company, Inc. (USF&G).
In 1987 D&F subcontracted with High Tech Construction, Inc.,
(HTC) for certain mechanical work on the project. HTC, in turn,
subcontracted with ACI, Inc., for this same work. ACI ordered
supplies from Wichita Sheet Metal Supply, Inc., (WSM) and Air
Moving Equipment, Inc., (AME) which were allegedly delivered to
and incorporated into the project.
In 1988, ACI filed a bankruptcy petition. WSM and AME had not
been paid for the materials provided and, separately, filed
actions seeking recovery under the public works bond in effect
herein. Summary judgment was granted in each action in favor of
D&F and USF&G. The cases were consolidated on appeal.
K.S.A. 60-1111(a) and (b) provide:
"(a) Except as provided in subsection (c), whenever
any public official, under the laws of the state,
enters into contract in any sum exceeding $10,000
with any person or persons for the purpose of making
any public improvements, or constructing any public
building or making repairs on the same, such officer
shall take, from the party contracted with, a bond to
the state of Kansas with good and sufficient sureties
in a sum not less than the sum total in the contract,
conditioned that such contractor or the subcontractor
of such contractor shall pay all indebtedness
incurred for labor furnished, materials, equipment or
supplies, used or consumed in connection with or in
or about the construction of such public building or
in making such public improvements.
"(b) The bond required under subsection (a) shall
be approved by and filed with the clerk of the
district court of the county in which such public
improvement is to be made. When such bond is filed,
no lien shall attach under this article, and if when
such bond is filed liens have already been filed,
such liens shall be discharged. Any person to whom
there is due any sum for labor or material furnished,
as stated in the preceding section, or such person's
assigns, may bring an action on such bond for the
recovery of such indebtedness but no action shall be
brought on such bond after six months from the
completion of said public improvements or public
K.S.A. 60-1101 provides:
"Any person furnishing labor, equipment, material,
or supplies used or consumed for the improvement of
real property, under a contract with the owner or
with the trustee, agent or spouse of the owner, shall
have a lien upon the property for the labor,
equipment, material or supplies furnished, and for
the cost of transporting the same. The lien shall be
preferred to all other liens or encumbrances which
are subsequent to the commencement of the furnishing
of such labor, equipment, material or supplies at the
site of the property subject to the lien. When two or
more such contracts are entered into applicable to
the same improvement, the liens of all claimants
shall be similarly preferred to the date of the
earliest unsatisfied lien of any of them."
K.S.A. 1989 Supp. 60-1103(a) provides:
"Any supplier, subcontractor or other person
furnishing labor, equipment, material or supplies,
used or consumed at the site of the property subject
to the lien, under an agreement with the contractor,
subcontractor or owner contractor may obtain a lien
for the amount due in the same manner and to the same
extent as the original contractor. . . ."
The trial court held that under K.S.A. 60-1101 and K.S.A. 1989
Supp. 60-1103(a) lien protection is afforded to those in privity
with the owner, contractor, or subcontractor to the contractor.
The trial court further held that only those having lien rights
had protection under a K.S.A. 60-1111 public works bond. As
neither WSM nor AME were within such classification, they had no
claim under the public works bond. The trial court's judgment
relies upon and is consistent with our holdings in J.W.
Thompson Co. v. Welles Products Corp., 243 Kan. 503, 758 P.2d 738
The Court of Appeals reversed the trial court. In so doing, it
1. Privity with the owner, contractor, or first-tier
subcontractor is not required for protection under a public works
bond. There is language in Arrowhead Constr. Co. v. Essex
Corp., 233 Kan. 241, 662 P.2d 1195 (1983), supportive of this
conclusion. The protection is not extended ad infinitum but only
to those who are not too remote. A supplier to a second tier or
sub-subcontractor is not too remote to be protected. What is "too
remote" is not defined.
2. Summary judgment was inappropriate as a material fact
remained in dispute.
Before proceeding to the main issue, it should, perhaps, be
noted that D&F's bond limited liability thereto to those in
privity with D&F or a subcontractor of D&F. It specifically
stated that only those having mechanics' lien rights were
protected by the bond. In its contract D&F stated that each
subcontractor would be required to post a public works bond. This
provision was not enforced as to HTC but that fact has no bearing
on this litigation. The Court of Appeals correctly held:
"When a statute requires a bond to be given, the
statutory terms and conditions will be read into the
bond and conditions not required by statute will be
stricken from the bond as surplusage. Stevens v.
Farmers Elevator Mutual Ins. Co., 197 Kan. 74, 78,
415 P.2d 236 (1966)." 14 Kan. App. 2d at 116.
If privity with the contractor or a subcontractor of ...