State Ex Rel. Farmers State Bank v. Kuipers Const. Co.

(on reassignment).

The question raised in this appeal is whether one who lends money to a contractor who uses the funds to complete a public improvement contract is entitled to recover on the contractor's performance bond required under the provisions of SDCL 5-21.

In May of 1962 Kuipers Construction Company (Kuipers) opened a checking account in the Farmers State Bank of Parks-ton, South Dakota (Bank) and established a line of credit with the bank. Thereafter the bank made a number of loans to Kuipers, the proceeds of which were used in connection with Kuipers' construction activities. There…