First Nat. Bank of St. Paul v. McHasco Electric, Inc.

Rogosheske, Justice.

This appeal from a judgment presents the question of the priority of claims to funds withheld by municipalities on construction contracts as between the surety for the contractor (which performed the contractor’s obligation to pay claims for labor and materials) and a lender bank (which loaned money to the contractor to pay such claims upon a security assignment of the contractor’s right to payment upon completion of the contracts). The trial court found in favor of the bank and the surety appeals.

McHasco Electric, Inc., (the contractor) entered into construction contracts…