Plaintiff, Rumsey Electric Company, a Delaware corporation (Rumsey) seeks recovery of $106,421.94 for electrical equipment supplied by it in connection with the construction of a dormitory building at the University of Delaware. The defendants are Ogden Development Corporation (Ogden); Frederic G. Krapf & Sons, Inc. (Krapf) doing business as a joint venture under the name of Ogden Development-Krapf (the Joint Venture); Insurance Company of North America (INA) the surety on the labor and material payment bond executed by the Joint Venture as the general contractor and the University of Delaware (University) the owner of the dormitory building. All defendants have filed motions to dismiss, initially under Rule 12(b) of the Superior Court Civil Rules, Del.C.Ann., but, because of the record supplementation requested by the Court, they will be treated as motions for summary judgment under Rule 56.
In order to appreciate the legal basis for the pending motions it is necessary to allude to the background of this litigation. As part of its construction efforts at the University, the Joint Venture engaged as the electrical subcontractor, a New Jersey corporation, Burlington Electric Corporation (Burlington). Rumsey dealt solely with Burlington in the delivery of electrical materials to the campus. These deliveries took place between June 26, 1971 and June 2, 1972. On November 16, 1972, the date when Burlington was adjudged a bankrupt in the United States District Court for the District of New Jersey, Burlington owed Rumsey approximately $450,000, covering several projects including the University of Delaware project. Four days later, Rumsey filed a mechanics lien action in this Court (No. 4358 C.A. 1972) against Burlington, Krapf (as the general contractor) and the University as the property owner. Burlington did not appear in the mechanics lien action, apparently because of its protected status as a bankrupt, but both Krapf and the University filed motions to dismiss, raising various legal defenses. After briefs had been filed by both Krapf and the University, Rumsey did not respond. As a result, on January 3, 1973, then Judge Quillen, dismissed the action as to Krapf and the University. The defendants in the present action now assert the disposition of the mechanics lien action as res judicata.
The present action was filed on February 12, 1974, and contains three counts. Count I, directed against the University, has become moot in view of Rumsey's position not to dispute the entry of judgment in favor of that defendant. In Count II. Rumsey seeks recovery against the Joint Venture on the theory that the Joint Venture agreed, in its contract with the University, to ensure the payment of all contractors and suppliers. In Count III Rumsey seeks recovery directly against INA as the surety on the Joint Venture's performance bond. In essence, both Counts II and III proceed on the performance bond and thus the positions of the Joint Venture and INA are co-extensive. If recovery is available to plaintiff under the bond, both the Joint Venture and INA must respond. In addition to raising the defense of res judicata, the defendants claim that this action, to the extent it seeks recovery on the bond, has been filed too late. Defendants also assert that Rumsey has accepted a promissory note representing Burlington's total debt to it and its claim is limited to a proceeding on the note, not on a mere component of that debt. These contentions will be disposed of seriatim. For purpose of their motions Joint Venture and INA have employed a common position.
Defendants maintain that the dismissal of the mechanics lien action served as a final judgment upon the merits of the dispute between the parties and thus constitutes a judicial bar to the maintenance of further litigation. Defendants argue that, in addition to being an action for recovery under the Delaware Mechanics Lien Act (25 Del.C. Ch. 27), the prior proceeding also sought the imposition of a general judgment against both Krapf and the University. Rumsey counters that, while the actions bear comparability to the extent that they arose out of the same transaction and seek recovery for the same debt, neither the parties nor the causes of action are the same.
The parties agree that the applicability of the doctrine of res judicata was judicially formulated in Epstein v. Chatham Park, Inc., Del.Super., 52 Del. 56, 153 A.2d 180 (1959) where Chief Justice Wolcott announced a five pronged test:
While there is serious doubt whether a State court has jurisdiction to enter a decree involving a Federal bankrupt,
The present action, in sum, is a claim by a third party beneficiary arising out of an undertaking by a general contractor to ensure the payment of suppliers in a construction project. While the principal beneficiary of this undertaking is the University, as the property owner protected against the assertion of such claims, the supplier is also an interested beneficiary. Even if the privity deficiency which arises from the dissimilarity between Krapf as a defendant in the mechanics lien action and Krapf as a partner in the Joint Venture in the present action were ignored, it is obvious that the causes of action and the issues decided, or to be decided, are dissimilar. Rumsey's recovery, if any, in the mechanics lien action against Krapf either separately, or as a part of the Joint Venture, was statutorily founded. In the
Defendants next assert that the complaint must be dismissed because Rumsey failed to file a claim under the indemnity bond within one year of the completion of the construction contract. The University has certified the completion date as July 15, 1972, and Rumsey has not disputed that certification. Rumsey maintains, however, that the University is not considered a State agency and thus the one year claim period authorized by 29 Del.C. § 6910(d)
The question of whether the University of Delaware is an agency of the State is a vexing one because of its mixed proprietary activities and public funding. Parker v. University of Delaware, 31 Del.Ch. 381, 75 A.2d 225 (1950); City of Newark v. University of Delaware, Del.Ch., 304 A.2d 347 (1973). In the contractual area its status appears to have been legislatively defined. In 1964, by specific enactment, the General Assembly conferred upon the University's Board of Trustees "the entire control and management" of its affairs including "the manner of awarding contracts" (14 Del.C. § 5106). But, while the University does not contract as a State agency in the construction of its buildings, it, nonetheless, follows the general statutory scheme of protecting suppliers and subcontractors by requiring the execution of a performance bond. In doing so, however, it acts in a private capacity extending protection gratuitously to persons with whom it is not in privity. While it obviously seeks to protect its own interests, it is under no legal requirement to do so and thus may limit the terms of such protection so long as it does not alter the conditions of the bond after the potential claimant has extended credit in reliance thereon.
That a one year limitation period is not arbitrary or unreasonably short is evidenced by the legislative imprimatur appearing in Section 6910(d) authorizing its use in general State agency construction. A one year claim period has also been upheld as not unreasonably brief within the context of fire insurance contracts which so provide. Murray v. Lititz Mut. Ins. Co., 5 Del.Super. 447, 61 A.2d 409 (1948); Godwin v. Continental Insurance Company, D.Del., 306 F.Supp. 238 (1969). Rumsey's present claim, as distinguished from its earlier mechanics lien action, is not statutorily based, but springs from its status as an intended third party beneficiary under the bond agreement. Daniel-Morris Co. v. Glens Falls Indemnity Co., 283 App.Div. 504, 128 N.Y.S.2d 760 (1954); affd. 308 N.Y. 464,
Since the Court rules that this action must fail for lack of timeliness, it is unnecessary to deal with defendants' final contention that subject matter of this action is embraced within the "total debt" promissory note given by Burlington to Rumsey.
Summary judgment is granted in favor of all defendants.
It is so ordered.