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Baltimore County Department of Education v. Henry A. Knott Inc.

Decided: April 14, 1964.


Appeal from the Circuit Court for Baltimore County; Berry, J.

Brune, C. J., and Henderson, Prescott, Horney and Marbury, JJ. Prescott, J., delivered the opinion of the Court.


The trial judge found that appellant's suit had not been brought within the time permitted by Code (1963 Cum. Supp.), Article 90, Section 11, and entered judgment in favor of the appellee (defendant below) for costs.

Appellant raised several questions in its brief, but has abandoned all except one: "Upon a showing by the appellant that on the specifications final payment to the contractor shall be due within thirty days after final satisfactory completion of work has been certified by the architect and upon further proof that the architect's final certificate issued December 20, 1961, is the legal effect thereof that final acceptance occurred on December 20, 1961, and that therefore suit was filed timely under the limitation period of the statute, suit having been instituted on December 4, 1962?"

The appeal was submitted on an agreed statement of facts, pertinent portions of which follow:

"About January 12, 1960, Henry A. Knott, Inc., Appellee, was awarded a contract by the Baltimore County Department of Education for the erection of a junior high school in the amount of $2,118,312. The Knott Company subcontracted the mechanical work to the Kasten Engineering Company and the Kasten Engineering Company in turn sub-subcontracted the insulation phase of its contract to Reid Hayden, Inc., Appellant.

"Article 90, Section 11 of the Annotated Code of Maryland requires that the contractor on a Department of Education contract furnish a labor and material payment bond and the pertinent restriction applicable to a bond to be furnished under subsection 'd' of the Act is as follows:

'No suit shall be commenced after the term of one (1) year after date of final acceptance of the work performed under the contract.'

"Suit was filed by the Appellant on December 4, 1962. Appellee contends that the building was accepted on July 14, 1961, and that action under the bond was brought too late. Appellant contends that architect's certificate of payment was dated December 20, 1961 (although it covered work up to December 1, 1961) and that work actually continued on the job as late as February, 1962, and that consequently the action was filed timely. Reid Hayden, Inc. completed its work during the summer of 1961 and during the last week of October, 1961, was called back to the job site by Kasten to do corrective work. It was agreed that timely notification was sent (90 days as provided by the Act) by Reid Hayden to the Knott Company of the nonpayment of $2,370 still owed by Kasten to Reid Hayden, the amount for which this suit was brought.

"Kasten got into financial difficulties and was unable to complete all the work required of it under the contract. The Knott Company consequently employed C. George Mills, another mechanical contractor, to complete on behalf of Kasten what is known as a 'punch list.' The County Engineer approved Mills as a subcontractor on October 17, 1961. A punch list is a list of uncompleted items or defectively finished items which is prepared by the supervising engineer or architect and sent to the contractor in the final stages of the job.

"The records of the Mills Company indicated that they began work at the Loch Raven School on October 10, 1961, and they rendered a bill to Knott for work from October through February, 1962, for labor and materials in the amount of $1,969.28, and that they did some minor work in March, May and August of 1962 with bill totaling over $200.

"Morris R. Baker, Construction Engineer for the Board of Education of Baltimore County, testified that a letter was written on July 14, 1961, to the Principal of the newly constructed school stating that final acceptance of the job was made on that date, and that the school was under the usual guarantee period

of one year from that date. Mr. Baker stated that this date was agreed upon by the architect, the general contractor and Mr. Baker, on behalf of the Board of Education. At that time the sum of $152,744 was paid to Henry A. Knott, Inc., the general contractor. Mr. Baker further testified that Article 5 of the Specifications read as follows: 'Final payment shall be due thirty (30) days after work fully completed and contract fully performed.' In compliance with that section on August 8, 1961, Mr. Baker authorized a payment of $99,278 to Henry A. Knott, Inc. From the total contract figure of $2,118,312 this left a balance due to Henry A. Knott, Inc. as of August 8, 1961, of $23,000. Mr. Baker testified that it is customary to have an oral agreement to hold back a minor sum, of what would otherwise be the final payment, until miscellaneous items are cleared up. That there was such an oral agreement with Henry A. Knott, Inc. in this case ...

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