New York Law Allows Subcontractors' Assignees to Recover From Sureties
Quantum Corporate Funding, Ltd. v. Westway Indus., Inc., 4 N.Y.3d 211 (2005)
In Quantum Corporate Funding, a subcontractor sold its accounts receivable to an assignee. When the general contractor failed to pay its debts, the assignee, or factor, brought suit against the surety for the State Finance Law § 137 payment bonds that the general contractor had been required to purchase. The surety refused payment and the factor brought suit. Though the statute is silent on who may sue on the bond, the Court of Appeals ruled that State Finance Law § 137 allows subcontractors’ assignees to recover payment from bond sureties.
In Quantum Corporate Funding, a subcontractor sold its accounts receivable to an assignee. When the general contractor failed to pay its debts, the assignee, or factor, brought suit against the surety for the State Finance Law § 137 payment bonds that the general contractor had been required to purchase. The surety refused payment and the factor brought suit. Though the statute is silent on who may sue on the bond, the Court of Appeals ruled that State Finance Law § 137 allows subcontractors’ assignees to recover payment from bond sureties.
