§ 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 the public improvement has been completed and accepted by the
public owner.

(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.