Flintkote Co. v. Presley of Northern California

The instant appeal is from an award of damages to respondent Presley of Northern California for an improper bonded stop notice issued against it by appellant Flintkote Company. The other appellant, Fidelity and Deposit Company of Maryland, was the surety on the bond. The other respondent, Hyer Quality Painters, was declared bankrupt and is not a party to this appeal.

Presley was the owner and developer of certain residential tracts in Alameda County. Hyer, a licensed painting subcontractor, entered into various subcontracts with Presley to paint and install wallboard in the residential units under construction on those tracts. Flintkote, a material dealer in gypsum wallboard, supplied the wallboard to Hyer on an open account basis.

Payment under this arrangement was made by Presley submitting to Hyer a check made payable jointly to Flintkote and Hyer. Hyer would endorse the check and submit it to Flintkote who would in turn endorse and cash it, retaining amounts currently due on the open account and refunding the balance to Hyer.

On July 12, 1974, Flintkote, with Fidelity as surety, served a bonded stop notice on Presley and United California Bank. On July 15, 1974,…