Section 137. Bond to secure payment of certain claims arising from a public improvement; enforcement

1. In addition to other bond or bonds, if any,
  required by law for the completion of a work specified in a contract for
  the prosecution of a public improvement for the  state  of  New  York  a
  municipal  corporation,  a  public  benefit  corporation or a commission
  appointed pursuant to law, or in the absence of  any  such  requirement,
  the  comptroller  may  or  the other appropriate official, respectively,
  shall nevertheless require prior to the approval of any such contract  a
  bond guaranteeing prompt payment of moneys due to all persons furnishing
  labor  or  materials  to  the  contractor  or  any subcontractors in the
  prosecution of the work  provided  for  in  such  contract.  Whenever  a
  municipal corporation issues a permit subject to compliance with section
  two hundred twenty of the labor law, such permittee or its contractor or
  subcontractors  furnishing  workers shall post a payment bond subject to
  this section. Provided, however, that all performance bonds and  payment
  bonds  may,  at  the  discretion of the head of the state agency, public
  benefit corporation or commission, or his or her designee, be  dispensed
  with  for  the  completion  of  a  work  specified in a contract for the
  prosecution of a public improvement for the state of New York for  which
  bids  are  solicited where the aggregate amount of the contract is under
  one hundred thousand dollars and provided further, that in a case  where
  the  contract is not subject to the multiple contract award requirements
  of section one hundred thirty-five of this  article,  such  requirements
  may be dispensed with where the head of the state agency, public benefit
  corporation  or  commission  finds  it  to be in the public interest and
  where the aggregate amount of the contract awarded or to be  awarded  is
  less than two hundred thousand dollars. Provided further, that in a case
  where a performance or payment bond is dispensed with, twenty per centum
  may  be retained from each progress payment or estimate until the entire
  contract work has been completed and accepted, at which time the head of
  the state  agency,  public  benefit  corporation  or  commission  shall,
  pending   the   payment  of  the  final  estimate,  pay  not  to  exceed
  seventy-five per centum of the amount of the retained percentage.
    2. A copy of such payment bond shall be kept in the office of the head
  of the department or bureau having charge of the public  improvement  in
  connection  with  which the bond was given and a copy shall also be kept
  in the office of the comptroller or  other  appropriate  official;  such
  copies shall be open to public inspection.
    3. Every person who has furnished labor or material, to the contractor
  or  to a subcontractor of the contractor, in the prosecution of the work
  provided for in the contract and who has not been paid in full  therefor
  before  the expiration of a period of ninety days after the day on which
  the last of the labor was performed or material was furnished by him for
  which the claim is made, shall have the right to  sue  on  such  payment
  bond  in  his own name for the amount, or the balance thereof, unpaid at
  the time of commencement of the action; provided, however, that a person
  having a direct contractual relationship with  a  subcontractor  of  the
  contractor  furnishing  the payment bond but no contractual relationship
  express or implied with such contractor shall not have a right of action
  upon the bond  unless  he  shall  have  given  written  notice  to  such
  contractor  within  one  hundred  twenty days from the date on which the
  last of the labor  was  performed  or  the  last  of  the  material  was
  furnished,  for  which  his  claim  is  made,  stating  with substantial
  accuracy the amount claimed and the  name  of  the  party  to  whom  the
  material  was  furnished or for whom the labor was performed. The notice
  shall be served by delivering the same personally to the  contractor  or
  by  mailing the same by registered mail, postage prepaid, in an envelope
  addressed to the contractor at any place where he maintains an office or

  conducts his business or at his residence; provided, however, that where
  such notice is actually received by the contractor by other means,  such
  notice shall be deemed sufficient.
    4.  (a)  A  payment bond required pursuant to this section may provide
  that the place of trial of an action on the bond shall be in the  county
  in which the contract of the contractor who furnished the bond was to be
  performed  or  if  such  contract  was  to be performed in more than one
  county, then in any such county, and not elsewhere.
    (b) Except as provided in section two hundred twenty-g  of  the  labor
  law,  no  action  on  a  payment bond furnished pursuant to this section
  shall be commenced after the expiration of one year  from  the  date  on
  which final payment under the claimant's subcontract became due.
    (c)  In  any  action  on  a  payment  bond  furnished pursuant to this
  section, any judgment in favor of a subcontractor or  material  supplier
  may  include  provision  for  the  payment  of  interest upon the amount
  recovered from the date when demand for payment was made pursuant to the
  labor and material payment bond and provided further that the court  may
  determine  and  award  reasonable attorney's fee to either party to such
  action when, upon reviewing the entire record, it  appears  that  either
  the  original  claim  or the defense interposed to such claim is without
  substantial basis in fact or law.
    5. (a) The expression "furnishes material" or other similar expression
  wherever used in this section shall be deemed to include the  reasonable
  rental  value  for  the  period  of  actual  use  of machinery, tools or
  equipment, and the value of compressed gases furnished  for  welding  or
  cutting,  and  the  value  of  fuel and lubricants consumed by machinery
  operating on the improvement, or by motor vehicles  owned,  operated  or
  controlled  by  the  contractor  or  his  subcontractors  while  engaged
  exclusively  in  the  transportation  of  materials  to  or   from   the
  improvement for the purposes thereof.
    (b)  The  expression  "moneys  due  to persons furnishing labor to the
  contractor or his subcontractors" includes all sums  payable  to  or  on
  behalf   of   persons   furnishing   labor  to  the  contractor  or  his
  subcontractors, for wages, health, welfare, non-occupational disability,
  retirement, vacation benefits, holiday  pay,  life  insurance  or  other
  benefits,  payment  of which is required pursuant to the labor law or by
  the contract in connection with which the bond  is  furnished  or  by  a
  collective   bargaining   agreement  between  organized  labor  and  the
  contractor or subcontractor, and which are computed upon labor performed
  in the prosecution of the contract. A trustee or other person authorized
  to collect such payments shall have the right to sue on the payment bond
  in his own name and subject to the same conditions as  if  he  were  the
  person performing the labor upon which such sums are computed.