Wasatch Bank of Pleasant Grove v. Surety Insurance Co. of California

HALL, Chief Justice:

In February 1981, Surety Insurance Company of California (Surety) issued a $150,000 labor and materials payment bond on behalf of ATM Masonry (ATM), a subcontractor for the construction of a public school building. Wasatch Bank of Pleasant Grove (Wasatch) loaned ATM $50,000 to pay for labor and materials used in the performance of the subcontract, taking as security an assignment of ATM’s right to receive payment under ATM’s agreement with the prime contractor. The assignment was dishonored, and Wasatch sued Surety to recover on the bond. Based on the above facts, which…