Segovia Development Corporation and Federal Insurance Co. v. Constructora Maza, Inc., Jorge M. Guillermety, Banco De Ponce

DAVIS, Judge.

The question is whether the Puerto Rico law governing a surety’s right vis-a-vis the owner and contractor accords with that “widely applied in this country.” Pearlman v. Reliance Ins. Co., 371 U.S. 132, 137, 83 S.Ct. 232, 235, 9 L.Ed.2d 190 (1962). Holding that it did, the District Court ruled that a surety paying the laborers and material-men of its bankrupt contractor and performing its contractor’s other obligations to the owner has a right to receive reimbursement of the surety’s expenses from contract retainages which is superior to the right of the bankrupt contractor and…