CHAPTER 688

AN ACT TO AMEND TITLE 17, DELAWARE CODE, RELATING TO HIGHWAYS BY PROVIDING THAT HIGHWAY CONSTRUCTION PAYMENTS RECEIVED BY A CONTRACTOR ARE TRUST FUNDS AND FURTHER PROVIDING FOR VIOLATIONS AND PENALTIES FOR THE USE OF APPROPRIATION OF SUCH FUNDS BY THE CONTRACTOR PRIOR TO PAYING PERSONS FURNISHING LABOR OR MATERIAL IN THE CONSTRUCTION OF THE HIGHWAY.

Be it enacted by the General Assembly of the State of Delaware:

Section 1. Amend Title 17, Delaware Code, by adding a new chapter thereto to be designated as Chapter 8 and to read as follows:

CHAPTER 8. HIGHWAY CONSTRUCTION PAYMENTS

§ 801. Definitions

As used in this chapter —

"Contractor" includes, but is not limited to, an architect, engineer, nurseryman, landscaper, subcontractor or any other person, who enters into any contract with the State Highway Department, its agents or authorized employees for the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike, toll express highway, including shoulders, median strips, parkways and islands by such contractor;

"Moneys or funds" includes, but is not limited to, the entire amount of all moneys or funds received by a contractor, as defined in this section, in connection with a contract with the State Highway Department for the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike, toll express highway, including shoulders, median strips, parkways and islands by such contractor, and moneys or funds by way of a loan or advance for the purpose of such erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike, toll express highway, including shoulders, median strips, parkways and islands by such contractor.

§ 802. Payments to contractor impressed with trust

All moneys or funds received by a contractor in connection with the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike, toll express highway, including shoulders, median strips, parkways and islands by such contractor shall be trust funds in the hands of the contractor.

§ 0. Use or application of money received by contractor

No contractor, or agent of a contractor, shall pay out, use or appropriate any money or funds described in Section 802 of this Title until they have first been applied to the payment of the full amount of all moneys due and owing by the contractor to all persons furnishing labor or material for the erection, construction, completion, authorization or repair of any highway, right-of-way, turnpike, toll express highways, including shoulders, median strips, parkways and islands by such contractor whether or not the labor or material entered into or became a component part of any such highway right-of-way, turnpike, toll express highways, including shoulders, median strips, parkways and islands, and whether or not the same were furnished on the credit of such highway right-of-way, turnpike, toll express highways, including shoulders, median strips, parkways and islands or on the credit of such contractor.

§ 0. Contractor's failure to use or apply money in accordance with Section 803.

Failure of a contractor, or an agent of a contractor, to pay or cause to be paid, in full or pro-rata, the lawful claims of all persons, firms, association of person or corporations furnishing labor or material as required by Section 803 of this Title within 30 days after the receipt of any moneys or funds for the purposes of Section 802 of this Title shall be prima facie evidence of the payment, use or appropriation of such trust moneys or funds by the contractor in violation of the provisions of this chapter.

Prior to any payment made to any subcontractors for materials, workmanship and all other supplies furnished by said person, persons or corporations, an inspection shall be made by the State Highway Department of all supplies and work furnished by the subcontractors, and their approval of the work shall be required before payment is made.

§ 805. Violations and penalties

Whoever, being a contractor, or any agent of a contractor, pays out, uses or appropriates, or consents to the paying out, use or appropriation of any moneys or funds received for any of the purposes specified in Section 802 of this Title, prior to paying in full or pro-rata to the extent of the moneys or funds so received, all the lawful claims of all persons furnishing labor or materials, as prescribed by Section 803 of this Title, shall be fined not more than $1,000 or imprisoned not more than three years, or both.

Approved July 7, 1970.