CHAPTER 163

EMPLOYERS AND EMPLOYEES

ARCHITECTS, ENGINEERS, CONTRACTORS, SUB-CONTRACTORS AND THEIR AGENTS, ETC.

AN ACT TO AMEND AN ACT ENTITLED "AN ACT PROHIBITING ARCHITECTS, ENGINEERS, CONTRACTORS, SUB-CONTRACTORS AND THEIR AGENTS FROM PAYING OUT, USING OR APPROPRIATING MONEYS AND FUNDS RECEIVED FOR THE ERECTION, CONSTRUCTION, ALTERATION, COMPLETION AND REPAIR OF BUILDINGS AND FOR ADDITIONS THERETO BEFORE FIRST PAYING IN FULL OR PRO RATA ALL CLAIMS DUE TO SURVEYORS, ENGINEERS AND PERSONS FURNISHING LABOR AND MATERIAL," THE SAME BEING CHAPTER 169, VOLUME 38, LAWS OF DELAWARE AND ARTICLE 8, CHAPTER 90 OF THE REVISED CODE OF DELAWARE, 1935.

Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:

Section 1. That Article 8, Chapter 90 of the Revised Code of Delaware, 1935, be and the same hereby is amended by repealing 3652 Sec. 62 thereof and by inserting in lieu thereof a new section to be known as 3652 Sec. 62 as follows:

3652 Sec. 62. Moneys Received for Erection of Building Declared Trust Funds; Unlawful to Use or Pay out Said Funds Until All Claims Due for Labor and Materials are Paid:--All moneys or funds whatsoever received by a contractor in connection with a contract for the erection, construction, completion, alteration or repair of any building or for additions to a building and all moneys or funds whatsoever received by a contractor in connection with a contract for the sale of land and the erection, construction, completion, alteration or repair of any building or addition thereon, are hereby declared to be trust funds in the hands of such contractor. The term "contractor" as herein used shall include, but shall not be limited to, an architect, engineer, real estate broker or agent, sub-contractor or other person, firm, association of persons or corporation, who shall enter into any contract with another person, firm, association of persons or corporation for the erection, construction, completion, alteration or repair of any building or for additions to a building, by such contractor, or, for the sale to such other person, firm, association of persons or corporation of any lands and premises, whether owned by such contractor or another, upon which such contractor undertakes to erect, construct, complete, alter or repair any building or addition to a building. The term "moneys or funds" as herein used shall include, but shall not be limited to, the entire amount of all moneys or funds received by a contractor, as herein defined, who, being the owner of the legal title to lands and premises, shall receive, in connection with a contract for the sale thereof and for the erection, construction, completion, alteration or repair of any building or addition thereon by such contractor, any moneys or funds by way of a loan or advance upon the security of such lands and premises for the purpose of such erection, construction, completion, alteration or repair and/or who shall receive from the other contracting party or vendee any deposit or sum of money on account of the purchase or contract price. For the purpose of this Article, no part of such moneys or funds, as herein defined, shall be deemed or construed applicable to the payment of the cost or selling price of land, unless that part of the contract price or selling price applicable to cost or selling price of land, be specifically so stated in such contract.

It shall be unlawful for any contractor, as above defined, or any agent of such contractor, to pay out, use or appropriate any of such moneys or funds until the same have first been applied to the payment of the full amount of all moneys due and owing by such contractor to all persons, firms, association of persons or corporations (including surveyors and engineers) furnishing labor and/or material (including fuel) for the erection, construction, completion, alteration or repair of, or for additions to, such building, whether or not said labor and/or material entered into or became a component part of any such building or addition and whether or not the same were furnished on the credit of such building or addition or on the credit of such contractor.

Section 2. That Article 8, Chapter 90 of the Revised Code of Delaware, 1935, be and the same hereby is amended by repealing 3653. Sec. 63 thereof and by inserting in lieu thereof a new section to be known as 3653 Sec. 63 as follows:

3653 Sec. 63. Penalty For Violation:--Any contractor, as above defined, or any agent of such contractor, who shall pay out, use or appropriate, or who shall consent to the paying out, use or appropriation of any such moneys or funds, prior to paying in full or pro-rata to the extent of the moneys or funds so received as aforesaid, all the lawful claims of all persons, firms, associations of persons or corporations (including surveyors and engineers) furnishing labor and/or materials (including fuel), as aforesaid, shall be guilty of a misdemeanor and upon conviction thereof, shall be sentenced to pay a fine not exceeding one thousand dollars or be sentenced to imprisonment for a term not exceeding three years, or both.

Section 3. That Article 8, Chapter 90 of the Revised Code of Delaware, 1935, be and the same hereby is amended by repealing 3654 Sec. 64 thereof and by inserting in lieu thereof a new section to be known as 3654 Sec. 64 as follows :

3654 Sec. 64. Failure to Pay Prima Facie Evidence of Misuse of Trust Funds:--Failure of a contractor, as above defined, or of an agent of such contractor, to pay or cause to be paid, in full or pro-rata, as aforesaid, the lawful claims of all persons, firms, association of persons or corporations (including surveyors and engineers), so furnishing labor and/or material (including fuel), as required by this Article, within thirty (30) days after the receipt of any moneys or funds as aforesaid, for the purposes aforesaid, shall be prima facie evidence of the payment, use or appropriation of such trust moneys or funds by such contractor in violation of the provisions of this Article.

Section 4. If any provision of this Act or the application thereof to any person or circumstances shall be held invalid by any court of competent jurisdiction, such invalidity shall not affect other provisions or applications of this Act which may be given effect without the invalid provision or application and to this end the several provisions of this Act are hereby declared to be severable.

Section 5. No act committed or criminal proceeding commenced, prior to the date of the approval of this Act shall be in any manner affected hereby but shall be governed by the law in force immediately prior to the approval hereof.

Approved March 12, 1943.