SHANAHAN, Justice.
Quality Equipment Company sued Transamerica Insurance Company on public contractor's bond issued by Transamerica for the contractor, Allstate Paving, Inc., pursuant to Neb.Rev.Stat. § 52-118 (Reissue 1988) for material and equipment furnished to a subcontractor on two highway projects for the State of Nebraska. Section 52-118(1) states:
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