ÿWPC˜( 6# U: %I 04O4ƒ—¦w@® 0xî 0Dfª 0@ªU@êe* 0J+ 0Pu 0TÅÆ 0^ß 0h= AO¥ 0Dô 0r8 0|ª 0†& 0¬ 1u< U,± 0dÝ BA D3^ D/‘ BÀ U,Ý U * B)3 DC\ AMŸ ì Y ì[v~G!vÓÅ"˜HP LaserJet 4/4MHPPCL5E,,,,0 ,†r‰AZ‹"Arial RegularX( ¤U$¡¡Ó  ÓRU{ tÔôÔô3|xZ QRDSTUUVEWX«YÓ€Z(((3ÝÙ$¤¤Ý ƒ¤U!ÝÓ  ÓÝ  Ýà  àòòÚ  Ú0Ú  Úóó(#Ã$òòÚ  Ú0Ú  Úóó("ÿÿ$££Ò  ÒÒ  Ò É¸·`(ZapfCalligr BTTT2 ÿÿ0Indent1Ô2ÔÔ3  Ô((3¾¸$¢¢Ý ƒ¤U!ÝÓ  ÓÝ  Ý2" ÿÿ0Indent2à0 àÔ2ÔÔ3  ÔƒLevel 1Level 2Level 3Level 4Level 52, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô(Cþÿ<< Cÿÿ($$””ò òÚ  Ú1Ú  Úó ó2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)< Œ 9p`(ModernP ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ d$$$$'ÿÿdxd**'÷ÿ dxdüÿP Pd< Œ 9p`(Monaco< Œ 9p`(Arial% Line 7 d....7Border 1dd/Cþÿ << Gÿÿ Ý ƒ!ÝÑ  ÑÑ#€d#ÑÔ€ ÔÔ€-ÔÓ  ÓÝ  ÝÝ ƒ"ÝÝ  Ýò òÔ€-ÔÓ  ÓÔ eee ÔFILEDÔ€-XÔó óÌò òÔ€-¼ÔÔ"USú ú, úÔÔ ƒ ÔÔ!  Ôó óÔ€-XÔÌÌò òCecil€Crowson,€Jr.Ô€Ôó óÔ  ÔÌÔ€ÂÔÔ€-ÔÔ eee Ôò òAppellate€Court€Clerkó óÔ  ÔÔ€ÔÔ€XÔ O Ý ƒ!ÝÑ#€d#ÑÔ€ ÔÔ€-ÔÓ  ÓÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝÒ ž ÒÒ ° ÒòòSeeóó€òòByler€v.€Great€American€Ins.€Coóó.,€395€F.2d€273€(10th€Cir.€1968);ÏòòDancy€v.€William€J.€Howard,€Incóó.,€297€F.2d€686€(7th€Cir.€1961);€òòTrinityÏUniversal€Ins.€Co.€v.€Smithwickóó,€222€F.2d€16€(8th€Cir.€1955);€òòF.€W.€Sims,€Inc.,€v.ÏFederal€Ins.€Coóó.,€788€F.€Supp.€149€(E.D.N.Y.€1992);€òòArchitectural€Systems,€Inc.Ïv.€Gilbane€Bldg.€Coóó.,€760€F.€Supp.€79€(D.€Md.€1991);€òòStatesville€Roofing€&ÏHeating€Co.€v.€Duncanóó,€702€F.€Supp.€118€(W.D.N.C.€1988);€òòAesco€Steel€v.€J.A.ÏJones€Constr.€Coóó.,€621€F.€Supp.€1576€(D.€La.€1985);€òòHavens€Steel€Co.€v.ÏRandolph€Engineering€Coóó.,€613€F.€Supp.€514€(W.D.€Mo.€1985);€òòSeal€TiteÏCorp.€v.€Ehret,€Incóó.,€589€F.€Supp.€701€(D.N.J.€1984);€òòMoore€v.€Continental€Cas.ÏCoóó.,€366€F.€Supp.€954€(W.D.€Okla.€1973);€òòHowdeshell,€Inc.€v.€Kline€Corpóó.,€56ÏB.R.€122€(M.D.€Fla.€1985);€òòPioneer€Roofing€Co.€v.€MardianConstr.€Coóó.,€733ÏP.2d€652€(Ariz.€1986);€òòYaminshi€v.€Bleily€and€Collishaw,€Incóó.,€105€Cal.€Rptr.Ï580€(Cal.€1972);€òòDEC€Electric,€Inc.€v.€Raphael€Constr.€Corpóó.,€558€So.€2d€à à427Ï(Fla.€1990);€òòGrady€v.€S.E.€Gustafson€Constr.€Coóó.,€103€N.W.2d€737€(IowaÏ1960);òòNew€Amsterdam€Cas.€Co.€v.€Allen€Coóó.,€446€S.W.2d€278€(Ky.€App.Ï1969);€òòAtlanticStates€Constr.€Co.€v.€Drummond€&€Coóó.,€246€A.2d€251€(Md.Ï1968);€òòBayer€&€Mingolla€Indus.€v.€A.J.€Orlando€Contracting€Coóó.,€370€N.E.2dÏ1381€(Mass.€App.€1978);€òòMrozik€à àConstr.,€Inc.€v.€Lovering€Assocóó.,€461€N.W.2dÏ49€(Minn.€App.€1990);€òòAmerican€Drilling€Service€Co.€v.€City€of€Springfieldóó,€614ÏS.W.2d€266€(Mo.€App.€1981);€òòD.K.Meyer€Corp.€v.€Bevco,€Incóó.,€292€N.W.2d€773Ï(Neb.€1980);€òòAction€Interiors,€Inc.€v.Component€Assembly€Systems,€Incóó.,€535ÏN.Y.S.2d€55€(N.Y.€App.€Div.€1988);€òòHoward„Green€Electric€Co.€v.€Chaney€&ÏJames€Constr.€Coóó.,€182€S.E.2d€601€(N.C.App.€1971);€òòPower€&€Pollution€Serv.Ïv.€Surburan€Power€Piping€Corpóó.,€598€N.E.2d€69€(Ohio€App.€1991);€òòMignot€v.ÏParkhillóó,€391€P.2d€755€(Or.€1964);€òòUnited€Plate€Glass€Co.€v.€Metal€Trim€Indusóó.,Ï525€A.2d€468€(Pa.€Commw.€Ct.€1987);€òòElk€&€Jacobs€Drywall€v.€TownÏContractors,€Incóó.,€229€S.E.2d€260€(S.C.€1976);€òòSheldon€L.€Pollack€Corp.€v.ÏFalcon€Indusóó.,€794€S.W.2d€380€(Tex.€App.€1990);€òòAmelco€Electric€v.€Donald€M.ÏDrake€Coóó.,€583€P.2d€648€(Wash.€App.€1978);€òòRiley€Constr.€Co.€v.ÏSchillmoellerà à&€Krofl€Coóó.,€236€N.W.€195€(Wis.€1975).€€€€€€€€€€€Ì âÝ ƒ!ÝÑ#€d#ÑÔ€ ÔÔ€-ÔÓ  ÓÝ  ÝÝ ƒ $Ýà àòòÚ  ÚÚ  ÚóóÝ  ÝWhile€the€insolvency€of€the€owner€is€probably€the€most€common€risk€to€whichÏthe€à àsubcontractor€would€be€exposed€if€we€were€to€construe€these€clauses€asÏconditions€à àprecedent,€it€is€not€the€only€one.€€Several€authorities€have€noted€that€aÏvindictive€à àgeneral€contractor€could€delay,€or€avoid,€making€payment€to€theÏsubcontractor€à àsimply€by€refusing€to€make€a€final€settlement€with€the€owner.€€AÏfederal€district€court€à àin€Indiana€explained€this€situation€as€follows:ÌÌà àà8 àThe€facts€of€the€case€at€bar€inspire€a€hypothetical€factÏsituation€which€underscores€the€wisdom€of€the€òòDyeróó€rule.€ÏUnder€the€terms€of€a€general€contract€such€as€that€betweenÏSchools€and€Hall,€in€which€the€owner€retainage€for€theÏsecond€half€of€the€work€is€five€percent,€and€subcontractsÏsuch€as€we€find€here,€in€which€the€general€contractorÏretains€ten€percent€from€the€subcontractors€throughout€theÏjob,€it€is€a€virtual€certainty€that€the€prime€contractor€will€findÏhimself€owing€the€subcontractors€more€than€is€owed€to€himÏby€the€owner.€€Under€the€rule€for€which€Hall€argues,€it€wouldÏnot€be€inconceivable€that€a€malefic€general€contractor€mightÏintentionally€maintain€a€dispute€with€the€owner€which€wouldÏcause€the€owner€to€refuse€to€make€payment;€the€generalÏcontractor€could€thereby€avail€himself€for€several€years€ofÏfunds€to€which€he€has€no€right.€€The€òòDyeróó€rule€precludesÏsuch€an€intolerable€state€of€affairs.ÌÌà àòòMidland€Engineering€Co.€v.€John€A.€Hall€Constr.€Coóó.,€398€F.€Supp.€981,€994Ï(N.D.€à àInd.€1975).€€€ÌPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'@Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑMonacoÑÑ ÑÒ  BA Op Monaco ÒÒ  BA Op Monaco ÒÝ ƒ!ÝÔ . ÔÔ€ ÔÓ&€,,X„d&ÓÑ#€,,Xd#ÑÔ€-ÔÓ  ÓÝ  ÝÒ € ÒÒ À ÒÑ , ÑÑ ` Ñ›Ñ7€FXXdðdÈ7ÑÑ  ÑÑ\R AØ'\ÑØ ØÓ&€X°d&ӜـÙßL€01/;+'h|bâ `€€Lß›à@ àIN€THE€SUPREME€COURT€OFÏTENNESSEEÌÌà@ àAT€JACKSON€ÌÌÌÌÌMARK€KOCH,€d/b/a€COMMERCIALà à)à àà àòòFOR€PUBLICATIONóóÌPAINTING€COMPANY,ÏINC.,à àà à)à àà àà àà àà àà àà àà àà àà àà àà àœ)à àà àFiled:€May€20,€1996›Ìà àPlaintiff„Appellant,à àà àà à)à àà àà àà àÌà àà àà àà àà àà à)Ìv.à àà àà àà àà àà à)à àà àSHELBY€CIRCUITÌà àà àà àà àà àà à)ÌCONSTRUCTION€TECHNOLOGY,€€€à à)à àœ€€€€€Hon.›€James€Tharpe,€Judge€ÌINC.,€and€FIDELITY€AND€DEPOSITà à)ÌCOMPANY€OF€MARYLAND,à àà à)à àÌà àà àà àà àà àà à)à àÌà àDefendants„Appellees.à àà à)à àœ€€€€€No.›€02S01„9508„CV„00069Ìà àà àà àà àà àà àà àà àÌÌòòFor€Plaintiff„Appellantóó:à àà àà àœòòà àFor›€Defendants„Appelleesóó:ÌÌMichael€I.€Lessà àà àà àà àœà àDavid›€A.€VelanderÌScott€A.€Frickà àà àà àà àœà àCraig›€M.€BeardÌLess,€Getz€&€Lipmanà àà àà àœà àNovick,›€Velander€&€AndersonÌMemphis,€Tennesseeà àà àà àœà àMemphis,›€TennesseeÌÌòòAmicus€Curiaeóó:ÌÌGerald€B.€Kirkseyà@ àÌPatricia€C.€KussmanÌAmerican€Subcontractors€Assn.Ìof€Middle€Tennessee€ÌAmerican€Subcontractors€Assn.ÌOf€Western€TennesseeÌÌWesley€KlinerÌDavid€R.€KendrickÌWilliam€D.€FlattÌAmerican€Subcontractors€Assn.à@ àÌÌà@ àÔ€-„ÔO€P€I€N€I€O€NÌÌÌÌÓÓÔ€-XÔCOURT€OF€APPEALS€REVERSED.à àà àà àà àDROWOTA,€J.Ïà àà àThis€case€involves€a€contract€dispute€between€Mark€Koch€(d/b/aÏCommercial€Painting€Company,€Inc.)€and€Construction€Technology,€Inc.,€(CTI),Ïthe€former€a€painting€subcontractor€and€the€latter€the€general€contractor€on€aÏconstruction€project€owned€by€the€Memphis€Housing€Authority€(MHA).€The€issuesÏfor€our€determination€are€as€follows:€(1)€whether€the€Court€of€Appeals€erred€inÏconstruing€the€ð ðpay€when€paidðð€clause€in€the€subcontract€as€a€conditionÏprecedent,€thereby€making€Kochððs€right€to€payment€dependent€upon€CTIððs€receiptÏof€payment€from€MHA;€and€(2)€whether€the€Court€of€Appeals€erred€in€construingÏthe€bond€given€by€CTI€to€Koch€as€a€statutory€bond€rather€than€a€common€lawÍbond,€which€had€the€effect€of€precluding€Kochððs€right€of€action€against€FidelityÏand€Deposit€Company€of€Maryland€(FDCM),€the€surety€on€the€bond.€€For€theÏfollowing€reasons,€we€hold€that€the€Court€of€Appeals€erred€on€both€issues;Ïtherefore,€we€reverse€the€judgment€of€that€court€and€remand€the€cause€for€furtherÏproceedings.à àà àà àà àà àà àà àÌÓ  Óòòò òÌFACTS€AND€PROCEDURAL€HISTORYó óóóÌÓ  ÓÌà àOn€March€17,€1988,€CTI€and€the€MHA€entered€into€a€contract€in€which€CTIÏagreed€to€make€improvements€to€the€Dixie€Homes€Housing€Development€inÏMemphis.€€On€March€30,€1988,€CTI€subcontracted€the€painting€portion€of€theÏproject€to€Koch;€CTI€also€provided€a€performance€and€payment€bond€to€himÏthrough€FDCM.€The€subcontract€included€a€ð ðpaymentðð€clause,€which€provides€inÏpertinent€part,€that:€ÌÌÓÓà8 àPartial€payments€subject€to€all€applicable€provisions€of€the€ContractÏshall€be€made€when€and€as€payments€are€received€by€theÏContractor.€€The€Subcontractor€may€be€required€as€a€conditionÍprecedent€to€any€payment€to€furnish€evidence€satisfactory€to€theÏContractor€that€all€payrolls,€material€bills,€and€other€indebtednessÏapplicable€to€the€work€have€been€paid.€€€Ìà8 àÌÌÌÓÓà àKoch€completed€all€work€required€by€the€contract€on€July€31,€1989;€and€heÏwas€paid€$148,110.96€for€this€work€by€CTI.€€However,€because€the€amount€ofÏactual€work€performed€exceeded€this€total,€and€because€CTI€refused€to€make€anyÏadditional€payments,€Koch€brought€an€action€against€it€for€breach€of€contract€inÏthe€Shelby€County€Circuit€Court.€€In€its€answer,€CTI€cited€the€payment€clause€asÏan€affirmative€defense,€alleging€that€ð ðCTI€has€not€been€paid€in€full€by€MHA€and,Ïtherefore,€is€not€obligated€to€pay€plaintiff€since€payment€to€CTI€by€MHA€is€aÏcondition€precedent€to€CTIððs€obligation€to€pay€plaintiff.ðð€€ÌÌà àKochððs€complaint€also€included€a€claim€against€FDCM€based€on€theÏperformance€and€payment€bond.€€In€its€answer,€FDCM€alleged€that€Kochððs€claimÏwas€barred€by€the€six€month€limitations€period€applicable€to€statutory€bonds,€andÏthat€Koch€had€failed€to€comply€with€the€notice€provisions€applicable€to€suchÏbonds.ÌÌà àAfter€a€bench€trial,€the€trial€court€found,€in€pertinent€part,€as€follows:ÌÌÓÓà8 àThis€contract€[between€Koch€and€CTI]€provided€that€the€workÏperformed€by€Plaintiff€would€be€paid€when€defendant€CTI€receivedÏpayment€from€MHA.ÌÌ€€€€€€€€€...ÌÌà8 àBased€on€the€sign„off€sheets€numbers€and€the€actual€observationsÏand€measurements€of€the€project€made€by€the€plaintiff€and/or€hisÏemployees€as€it€relates€to€the€painting€work,€the€Court€finds€thatÏMHA€has€paid€CTI€$28,307.22€for€work€actually€performed€byÏplaintiff€in€addition€to€the€$148,110.96€already€paid€to€plaintiff€byÏCTI.€€This€amount€...€does€not€include€any€amounts€for€other€workÏactually€performed€by€plaintiff€for€which€CTI€has€not€been€paid€byÏMHA.€ÌÌà8 à...ÌÌà8 àThe€plaintiff,€Mark€Koch€d/b/a€Commercial€Painting€Company,€isÏawarded€a€judgment€against€the€defendant€CTI€in€the€amount€ofÏ$28,307.22.€ÌÌà8 àPursuant€to€motion€made€at€the€close€of€plaintiffððs€proof,€theÏdefendant€FDCM€is€dismissed€from€this€action€with€full€prejudice.ÌÌà8 à...ÌÌà8 àThis€judgment€may€be€amended€by€proper€application€upon€finalÍadjudication€by€a€court€of€competent€jurisdiction€concerning€theÏtotal€quantities€to€be€paid€for€by€MHA€to€defendant€CTI€for€paintingÏwork€performed€by€plaintiff€on€the€Dixie€Homes€project.ÌÌÌÌÓÓà àThe€last€paragraph€of€the€order€was€presumably€included€because€CTIÏand€MHA€were€then€involved€in€litigation€in€another€division€of€the€Shelby€CountyÏCircuit€Court€concerning€MHAððs€liability€to€CTI€for€its€work€on€the€Dixie€HomesÏproject.€€òòBrown€v.€Bay€Architectural€Service,€Incóó.,€(Shelby€Circuit€Court,€No.Ï30132).€€After€the€òòBrownóó€litigation€had€concluded,€Koch€filed€a€motion€requestingÏthat€the€trial€court€increase€the€judgment€to€$39,650.14,€arguing€that€theÏuncontroverted€evidence€presented€at€trial€in€the€instant€case€showed€this€to€beÏthe€total€amount€due€him€under€the€subcontract.€€CTI€responded€by€filing€aÏmotion€to€reduce€the€judgment,€in€which€it€asserted€that€based€upon€the€trialÏcourtððs€findings€in€òòBrownóó,€Koch€was€due€only€$21,789.93€on€the€subcontract.€ÏThe€trial€court€denied€both€motions,€and€Koch€appealed€to€the€Court€of€Appeals.Ìà àÌà àThe€Court€of€Appeals€affirmed€the€judgment.€€As€to€Kochððs€claim€againstÏCTI,€the€Court€relied€heavily€upon€òòHussey€v.€Crassóó,€53€S.W.€986€(Tenn.€Chan.ÍApp.€1899),€in€determining€that€the€ð ðpay€when€paidðð€clause€was€a€conditionÏprecedent€to€CTIððs€promise€to€pay.€€With€respect€to€Kochððs€claim€against€FDCM,Ïthe€court€concluded€that€the€bond€executed€by€CTI€to€Koch€was€a€statutory€bond,Ïand€that€Koch€had€neither€brought€its€claim€on€the€bond€in€a€timely€fashion,€norÏadhered€to€the€notice€provisions€applicable€to€such€bonds.€€We€granted€KochððsÏapplication€for€permission€to€appeal€to€address€these€issues.€ÌÌà àà àà àà àà àà àòòò òIó óóó.Ìà@ àÌà@ àòòA.€Construction€of€the€Payment€ClauseóóÌÌà àThe€first€issue€for€our€determination€is€whether€the€payment€clause€in€theÏsubcontract€establishes€MHAððs€payment€to€CTI€as€a€condition€precedent€to€CTIððsÏobligation€to€pay€Koch.€€Koch€argues€that€the€lower€courts€erred€in€so€construingÏthe€clause.€€Although€conceding€that€the€òòHusseyóó€court€construed€similarÏlanguage€as€a€conditional€promise,€he€argues€that€an€overwhelming€majority€ofÏjurisdictions€reject€that€position,€and€instead€hold€that€such€language€establishesÍan€absolute€promise€to€pay€on€the€part€of€the€general€contractor,€but€simplyÏaffords€it€a€reasonable€amount€of€time€to€make€the€payments.€€This€majorityÏposition€is€sound€public€policy,€Koch€contends,€because€it€is€inequitable€to€makeÏthe€subcontractorððs€right€to€payment€dependent€upon€the€ownerððs€performance,Ïwhich€might€not€be€forthcoming€for€any€number€of€reasons€out€of€theÏsubcontractorððs€control.€€Because€òòHusseyóó€is€at€odds€with€the€compelling€majorityÏposition,€Koch€concludes,€it€should€be€overruled€and€the€majority€rule€adopted€inÏits€place.ÌÌà àCTI€responds€that€the€law€of€other€jurisdictions€is€of€no€consequence,€andÏthat€òòHusseyó󀄄€the€only€reported€Tennessee€decision€addressing€the€issue€„„Ïcontrols€this€case.€€€Therefore,€it€concludes,€the€lower€courtsðð€construction€of€theÏpayment€clause€should€be€affirmed.€€ÌÌà àBecause€the€parties€and€the€lower€courts€relied€so€heavily€upon€òòHusseyóó,Ïwe€must€first€examine€it€in€some€detail.€€In€that€case,€the€general€contractor,ÏCrass,€agreed€with€the€owner€to€build€a€section€of€railroad;€and€CrassÍsubcontracted€the€trestle€work€to€Hussey.€€The€subcontract€provided€that€HusseyÏwas€to€take€out€ð ðestimatesðð€on€or€about€the€1st€of€each€month,€and€that€ð ðòò90€perÏcent€of€said€estimate€was€to€be€paid€about€the€15th€of€the€following€month,€or€asÏsoon€thereafter€as€the€railroad€company€should€pay€or€cause€to€be€paid€J.T.ÏCrass€thereforóó€...ðð€€òòHusseyóó,€53€S.W.€at€986€(emphasis€added).€€While€the€workÏwas€in€progress,€the€railroad€company€became€insolvent.€€Because€of€thatÏdevelopment,€Crass€was€only€able€to€obtain€10%€of€the€money€due€under€hisÏcontract,€despite€extensive€negotiating€with€the€railroad€company€during€itsÏimpending€failure;€and€he€paid€his€subcontractors€on€that€pro€rata€basis.€€ÌÌà àHussey€then€brought€an€action€against€Crass€for€breach€of€contract.€€TheÏgeneral€contractor€defended€by€asserting€that€the€ð ðpay€when€paidðð€clause€was€aÏcondition€precedent€and€that,€furthermore,€Hussey€had€agreed€during€theÏnegotiations€with€the€railroad€that€his€claim€was€dependent€upon€CrassððsÏobtaining€a€settlement€with€that€entity.€€The€chancellor€ruled€in€Crassððs€favor,€andÏHussey€appealed.ÌÌà àOn€appeal,€the€Chancery€Court€of€Appeals€affirmed€the€ruling.€€AfterÏsetting€forth€the€factual€background,€the€court€stated:€ÌÌÓÓà8 àWe€think€there€can€be€no€doubt€that€the€understanding€between€theÏparties€was€that€the€money€that€Mr.€Crass€expected€to€pay€to€hisÏsubcontractors€was€to€be€realized€from€the€railroad€company,€andÏthat€he€would€not€be€liable€to€the€subcontractors,€and€complainantÏamong€the€number,€unless€he€could€make€collection€from€theÏrailroad€company.€€We€think€this€is€the€true€construction€of€theÏcontract€itself€on€its€face,€so€far€as€concerns€complainantððs€claim.ÌÌ€€òòHusseyóó,€53€S.W.€at€988.ÌÌÌÌÓÓAfter€making€that€statement,€the€Court€proceeded€to€quote€extensively€fromÏcorrespondence€between€the€parties€during€Crassððs€negotiations€with€theÏrailroad:€this€lengthy€recitation€was€undertaken€for€the€purpose€of€illustratingÏHusseyððs€willingness€to€accept€whatever€settlement€Crass€could€negotiate€withÏthe€financially€declining€railroad.€€The€Court€concluded€by€stating:ÌÌÓÓà8 àFrom€this€correspondence,€taken€in€connection€with€the€statementÏin€the€contract€that€the€complainant€was€to€be€paid€when€Crass€wasÏpaid€by€the€railroad€company,€we€have€no€doubt€that€theÍexpectation€of€both€parties€was€that€the€liability€of€Mr.€CrassÏdepended€upon€his€receiving€money€from€the€railroad€company.€ÏThe€correspondence€above€mentioned€is€unintelligible€otherwise.ÌÌòòIdóó.€at€988„89.ÌÌÌÌÓÓà àWe€believe€that€the€parties€attach€too€much€importance€to€òòHusseyóó€forÏpurposes€of€this€case.€€While€the€Court€did€state€in€a€single€sentence€that€theÏlanguage€in€the€contract€was€a€condition€precedent€to€the€subcontractorððs€right€toÏpayment,€that€conclusory€statement€was€supported€by€no€analysis.€€Indeed,€theÏcourt€spent€almost€no€time€on€the€contractual€language,€but€was€primarilyÏconcerned€with€the€overwhelming€evidence€that€tended€to€show€that€Hussy€hadÏagreed,€òòafteróó€the€railroad€company€began€to€show€signs€of€financial€collapse,€toÏaccept€whatever€payment€Crass€could€obtain€from€it.€€Because€of€the€CourtððsÏalmost€complete€reliance€on€parol€evidence,€and€because€of€the€manifest€lack€ofÏsuch€evidence€here,€we€cannot€agree€that€òòHusseyóó€requires€that€the€contractualÏlanguage€at€issue€here€be€construed€as€a€condition€precedent.€€ÌÌà àHaving€concluded€that€òòHusseyóó€is€not€determinative,€we€must€now€decideÍthe€proper€construction€of€that€language.€€Although€we€have€never€specificallyÏaddressed€the€issue,€there€are€a€number€of€settled€propositions€of€law€to€guideÏus.€€First,€it€is€well„established€that€condition€precedents€are€not€favored€inÏcontract€law,€and€will€not€be€upheld€unless€there€is€clear€language€to€supportÏthem.€€òòHarlan€v.€Hardawayóó,€796€S.W.2d€953,€958€(Tenn.€App.€1990).€ÏFurthermore,€this€general€rule€applies€with€particular€force€in€the€context€of€ð ðpayÏwhen€paidðð€clauses,€for€the€plaintiff€is€correct€that€an€overwhelming€majority€ofÏjurisdictions€do€not€construe€such€clauses€so€as€to€release€the€general€contractorÏfrom€all€obligation€to€make€payment€to€the€subcontractor€in€case€ofÏnonperformance€by€the€owner.€€Rather,€these€clauses€are€most€often€construedÏas€simply€affecting€the€timing€of€payments€that€the€general€contractor€is€requiredÏto€make€to€the€subcontractor,€regardless€of€whether€the€owner€performs€or€not.€ÏThese€courts€refuse€to€shift€the€risk€of€the€ownerððs€nonperformance€from€theÏgeneral€contractor€to€the€subcontractor€unless€the€language€clearly€indicates€thatÏthe€parties€intended€to€do€so.× ƒ2 ××  ×€€ÌÌà àA€good€example€of€this€reasoning€is€contained€in€the€seminal€case€ofÍòòThos.€J.€Dyer€Co.€v.€Bishop€International€Engineering€Coóó.,€303€F.2d€655€(6th€Cir.Ï1962),€wherein€the€Court€was€called€upon€to€construe€a€clause€which€providedÏthat€ð ðno€part€of€[the€subcontract€price]€shall€be€due€until€five€days€after€OwnerÏshall€have€paid€Contractor€therefor€...ðð€€òòDyeróó,€303€F.2d€at€656.€€In€holding€that€theÏclause€was€not€a€condition€precedent,€the€òòDyeróó€court€explained:€€ÌÌÓÓà8 àIt€is,€of€course,€basic€in€the€construction€business€for€the€generalÏcontractor€on€a€construction€project€of€any€magnitude€to€expect€toÏbe€paid€in€full€by€the€owner€for€the€labor€and€material€he€puts€intoÏthe€project.€€He€would€not€remain€in€business€for€long€unless€suchÏwas€his€intention€and€such€intention€was€accomplished.€€That€is€aÏfundamental€concept€of€doing€business€with€another.€€The€solvencyÏof€the€owner€is€a€credit€risk€necessarily€incurred€by€the€generalÏcontractor,€but€various€legal€and€contractual€provisions,€such€asÏmechanicððs€liens€and€installment€payments,€are€used€to€reduce€thisÏto€a€minimum.€€These€evidence€the€intention€of€the€parties€that€theÏcontractor€be€paid€even€though€the€owner€may€ultimately€becomeÏinsolvent.€€This€expectation€and€intention€of€being€paid€is€evenÏmore€pronounced€in€the€case€of€a€subcontractor€whose€contract€isÏwith€the€general€contractor,€not€with€the€owner.€€In€addition€to€hisÏmechanicððs€lien,€he€is€primarily€interested€in€the€solvency€of€theÏgeneral€contractor€with€whom€he€has€contracted.€He€looks€to€him€forÏpayment.€€Normally€and€legally,€the€insolvency€of€the€owner€will€notÏdefeat€the€claim€of€the€subcontractor€against€the€general€contractor.€ÏAccordingly,€in€order€to€transfer€this€normal€credit€risk€incurred€byÏthe€general€contractor€from€the€general€contractor€to€theÏsubcontractor,€the€contract€between€the€general€contractor€and€theÍsubcontractor€should€contain€an€express€condition€clearly€showingÏthat€to€be€the€intention€of€the€parties.ÌÌà8 àIn€the€case€before€us€we€see€no€reason€why€the€usual€credit€risk€ofÏthe€ownerððs€insolvency€assumed€by€the€general€contractor€shouldÏbe€transferred€from€the€general€contractor€to€the€subcontractor.€€ItÏseems€clear€to€us€under€the€facts€of€this€case€that€it€was€theÏintention€of€the€parties€that€the€subcontractor€would€be€paid€by€theÏgeneral€contractor€for€the€labor€and€materials€put€into€the€project.€ÏWe€believe€that€to€be€the€normal€relationship€between€the€parties.€€IfÏsuch€was€not€the€intention€of€the€parties€it€could€have€beenÏexpressed€in€unequivocal€terms€dealing€with€the€possibleÏinsolvency€of€the€owner€...ÌÌòòDyeróó,€303€F.2d€660„61€(citations€omitted).× ƒ3 ××  ×€€ÌÌÌÌÓÓà àWith€these€rules€in€mind,€we€conclude€that€the€language€here€does€notÏevidence€the€partiesðð€intention€to€shift€the€risk€of€the€ownerððs€nonperformanceÏfrom€the€general€contractor€to€the€subcontractor€with€sufficient€clarity€to€qualify€asÏa€condition€precedent.€€The€first€sentence€„„€ð ðpayments€...€shall€be€made€whenÏand€as€they€are€received€by€the€contractorðð€„„€could€be€interpreted€as€a€timingÏprovision;€it€is€not€necessarily€indicative€of€the€partiesðð€intent€to€make€CTIððsÏobligation€to€pay€Koch€dependent€upon€CTIððs€first€being€paid€by€MHA.€€This€isÏparticularly€so€in€light€of€the€following€sentence€in€the€clause,€which€provides:Ïð ð[t]he€€subcontractor€may€be€required€as€a€condition€precedent€to€any€payment€toÏfurnish€evidence€satisfactory€to€the€contractor€that€all€payrolls,€material€bills,€andÍother€indebtedness€applicable€to€the€work€have€been€paid.ðð€€This€sentenceÏillustrates€that€the€parties€certainly€knew€how€to€create€a€condition€precedent€ifÏthey€so€desired.€€That€they€did€not€use€such€unambiguous€language€in€the€firstÏsentence€prevents€us€from€construing€that€sentence€as€a€condition€precedent€toÏKochððs€right€to€payment.€€ÌÌà@ àòòB.€Amount€of€the€JudgmentóóÌÌà àHaving€determined€that€the€payment€clause€is€not€a€condition€precedent€toÏKochððs€right€to€payment,€we€must€determine€the€proper€amount€due€him€underÏthe€contract.€€Koch€argues€that€the€evidence€presented€by€him€at€trial€establishesÏthat€he€performed€$39,€650.14€worth€of€actual€work€on€the€project.€€€Since€CTI€didÏnot€dispute€that€evidence€at€trial,€but€simply€relied€upon€the€payment€clause€andÏoffered€proof€as€to€how€much€of€the€painting€work€had€been€paid€for€by€MHA,ÏKoch€concludes€that€his€evidence€as€to€the€actual€amount€of€work€performedÏmust€be€regarded€as€conclusive.ÌÌà àCTI€responds€by€first€citing€the€provision€in€the€trial€courtððs€order€thatÏstates:€ÌÌÓÓà8 àThis€judgment€may€be€amended€by€proper€application€upon€finalÏadjudication€by€a€court€of€competent€jurisdiction€concerning€theÏtotal€quantities€to€be€paid€for€by€[MHA]€to€defendant€[CTI]€forÏpainting€work€performed€by€plaintiff€on€the€Dixie€Homes€project.ÌÌÌÌÓÓCTI€argues€that€this€provision€was€included€because€of€the€then„pendingÏlitigation€in€òòBrownó󀄄€a€case€in€which€the€issue€of€CTIððs€liability€to€each€of€itsÏsubcontractors€was€litigated.€€CTI€then€contends€that€the€findings€of€the€òòBrownóóÏcourt€establish€that€Koch€is€due€only€$21,789.93.€€Thus,€it€concludes,€Koch€mayÏonly€recover€that€amount.€€ÌÌà àWe€cannot€accept€the€argument€advanced€by€CTI.€€First€of€all,€it€is€not€clearÏwhether€the€$21,789.23€figure€represents€the€actual€amount€of€work€done€byÏKoch€under€the€contract,€or€whether€that€figure€represents€the€amount€owed€toÏCTI€by€MHA€for€the€painting€work.€€If€it€is€the€latter,€then€the€figure€avails€CTIÍnothing,€for€we€have€already€concluded€that€Kochððs€right€to€payment€is€notÏdependent€upon€the€amount€that€CTI€is€due€from€MHA.€€More€important,€however,Ïis€the€fact€that€although€CTIððs€liability€to€its€subcontractors,€including€Koch,€mayÏhave€been€litigated€in€òòBrownóó,€Koch€was€not€a€party€to€that€litigation.€€Therefore,Ïhe€is€not€bound€by€the€findings€of€that€court.€€Because€evidence€that€isÏuncontroverted€at€trial€must€be€taken€as€true,€òòCleveland€Wrecking€Co.€v.€Butleróó,Ï421€S.W.2d€380€(Tenn.€1967),€òòMcReynolds€v.€Cherokee€Ins.€Coóó.,€815€S.W.2dÏ208€(Tenn.€App.€1991),€and€because€there€is€uncontroverted€evidence€in€theÏrecord€that€the€total€work€done€by€Koch€amounted€to€$39,650.14,€the€judgment€isÏhereby€increased€to€that€amount.€€€ÌÌà@ àòòò òIIó óóó.ÌÌà àThe€next€issue€for€our€determination€is€whether€the€Court€of€Appeals€erredÏin€holding€that€the€bond€issued€by€FDCM€was€a€statutory€rather€than€common„law€bond,€which€resulted€in€the€dismissal€of€Kochððs€claim€against€FDCM.€€ÌÌà àEvery€general€contractor€who€undertakes€a€public€work€in€TennesseeÏmust€furnish€a€bond€that€complies€with€certain€minimum€statutory€criteria.€€TheÏbasic€statute€addressing€these€bonds,€Tenn.€Code€Ann.€ðð€12„4„201,€provides€inÏpertinent€part€that:ÌÌÓÓà8 àNo€contract€shall€be€let€for€any€public€work€in€this€state,€by€any€city,Ïcounty€or€state€authority,€until€the€contractor€shall€have€firstÏexecuted€a€good€and€solvent€bond€to€the€effect€that€the€contractorÏwill€pay€for€all€labor€and€materials€used€by€the€contractor,€or€anyÏimmediate€or€remote€subcontractor€under€the€contractor,€in€suchÏcontract,€in€lawful€money€of€the€United€States.ÌÌÌà àÌÓÓà àAlthough€a€subcontractor€or€other€furnisher€of€labor€or€materials€may€sueÏunder€this€bond,€Tenn.€Code€Ann.€ðð€12„4„204,€such€a€person€must€notifyÏinterested€parties€of€its€claim€before€initiating€the€suit.€€Tenn.€Code€Ann.€ðð€12„4„205.€€Moreover,€the€party€must€bring€the€action€within€six€months€following€theÏcompletion€of€the€public€work,€or€of€the€furnishing€of€the€labor€or€materials.€€Tenn.ÏCode€Ann.€ðð€12„4„206.€ÌÌà àThese€statutes,€however,€merely€set€forth€the€minimum€requirements;€theÏprincipal€and€surety€on€the€bond€work€are€free€to€provide€suppliers€of€labor€andÏmaterials€with€more€rights€and€privileges€than€those€called€for€by€the€statutes€ifÏthey€so€desire.€€If€the€principal€and€surety€extend€rights€above€and€beyond€thoseÏcontained€in€the€statutes,€the€bond€is€characterized€as€a€common„law€bond€andÏis€enforceable€as€written.€€òòNational€Surety€Corp.,€v.€€Fischer€Steel€Corpóó.,€374ÏS.W.2d€372€(Tenn.€1964);€òòWal„Board€Supply€Co.,€v.€Danielsóó,€629€S.W.2d€686Ï(Tenn.€App.€1981).€ÌÌà àThe€bond€issued€by€FDCM€provides,€in€pertinent€part,€as€follows:ÌÌÓÓà8 àWe,€[CTI],€are€held€and€firmly€bound€unto€[MHA]€...€for€use€of€[MHA],Ïand€all€persons€doing€work€or€furnishing€skill,€tools,€machinery,Ïsupplies€or€materials€under€or€for€the€purpose€of€the€contractÏdescribed€below...ÌÌà8 à...ÌÌà8 àNow,€therefore,€the€conditions€of€this€obligation€are€such€that€if€theÏPrincipal€...€shall€promptly€pay€all€just€claims€for€damages€or€injuryÏto€property€and€for€all€work€done,€or€skill,€tools,€or€machinery,Ïsupplies,€labor€and€materials€furnished€and€debts€incurred€by€theÍcontractor€in€or€about€the€performance€of€the€work€contracted€for,Ïthis€obligation€is€to€be€void.ÌÌà8 à...ÌÌà8 àThe€undersigned€principal€and€surety€do€further€hereby€consentÏand€yield€to€the€jurisdiction€of€the€state€civil€courts€of€Shelby€County,ÏTennessee,€and€shall€assure€and€protect€all€laborers€and€furnishersÏof€material€on€said€work€both€òòas€required€by€applicable€lawóó.ÌÌÌÌÓÓà àThe€Court€of€Appeals€reasoned€that€because€the€principal€and€suretyÏmerely€agreed€to€protect€suppliers€of€labor€and€materials€on€the€project€ð ðasÏrequired€by€applicable€law,ðð€the€bond€was€statutory.€€€Since€Koch€failed€to€giveÏthe€notice€required€by€ðð€12„4„205,€and€since€he€brought€the€action€on€the€bondÏmore€than€six€months€after€the€completion€of€the€project€in€violation€of€ðð€12„4„206,€the€Court€dismissed€the€claim€against€FDCM.€€ÌÌà àWe€cannot€agree€with€the€Court€of€Appealsðð€conclusion€that€the€bond€isÏstatutory.€€While€ðð€12„4„201€merely€requires€the€general€contractor€to€pay€for€allÏthe€labor€and€materials€used€by€the€general€contractor€or€an€immediate€or€remoteÏsubcontractor,€the€bond€in€the€instant€case€goes€further.€€In€the€second€paragraphÍquoted€above,€€the€principal€and€surety€agree€not€only€to€pay€for€labor€andÏmaterials,€but€also€to€pay€ð ðall€just€claims€for€damages€and€injuries€to€property.ðð€ÏThis€is€clearly€an€obligation€above€and€beyond€that€contemplated€by€the€statutes.€ÏMoreover,€the€bond€makes€no€explicit€reference€to€the€Tenn.€Code€Ann.€ðð€12„4„201€„„€12„4„206,€a€fact€that€this€Court€found€significant€in€òòFischeróó,€òòsupraóó;€and€itÏneither€expressly€sets€forth€any€notice€requirements€nor€limits€the€time€forÏbringing€an€action€on€the€bond.€€Therefore,€we€conclude€that€the€bond€is€of€theÏcommon„law€variety.€€ÌÌà àBecause€we€conclude€that€the€Court€of€Appeals€erred€in€characterizing€theÏbond€as€statutory,€its€dismissal€of€FDCM€from€this€action€on€that€ground€is€herebyÏreversed.ÌÌà àFor€the€aforementioned€reasons,€the€judgment€of€the€Court€of€appeals€isÏreversed€and€the€case€remanded€for€further€proceedings€consistent€with€thisÏopinion.€€€à àà àà àà àà àà àà àÌÓÓà àà àà àà àà àœ_______________________________________›Ìà àà àà àà àà àFRANK€F.€DROWOTA€IIIÌà àà àà àà àà àJUSTICEÌÌœÌConcur:̛̜Anderson,€CJ.ÌReid,›€Birch,€œWhite,€JJ.›€€