39-3-705. Suit on bond. (1) Any person, firm, or corporation having a claim against the contractor for any of the items referred to in 39-3-703 may bring an action on the surety bond in the district court in the county in which the work was performed or in any county that has jurisdiction over the contractor.
     (2) The surety issuing the bond must be named as a party to any suit upon the bond. Action upon the bond or deposit must be commenced by filing the summons and complaint with the clerk of the appropriate district court within 1 year from the date of expiration of the certificate of registration that was in force at the time the claimed labor was performed and benefits accrued, the taxes and contribution owing the state became due, or the claimed contract work was completed. Service of process in an action against the contractor, the contractor's bond, or the deposit must be exclusively by service upon the department. Three copies of the summons and complaint and a fee of $10 for handling costs must be served by certified mail upon the department at the time suit is started. The $10 fee must be deposited in the state special revenue fund to the credit of the department. The department shall maintain a record, available for public inspection, of all suits served. Service is not complete until the department receives the $10 fee and three copies of the summons and complaint. The service constitutes service on the registrant and the surety for suit upon the bond or deposit. The department shall mail the summons and complaint or a copy of the summons and complaint to the registrant at the address listed in the registrant's application and to the surety within 48 hours after it has been received.
     (3) The surety is not liable in an aggregate amount in excess of the amount named in the bond or for any penalty assessed pursuant to Title 39, chapter 9. The liability for the surety may not accumulate when the bond has been renewed, continued, reinstated, reissued, or otherwise extended. The surety may, upon notice to the department and the parties, tender to the clerk of the court that has jurisdiction over the claim an amount equal to the claims under the bond or the amount of the bond less any judgments, if any, previously satisfied from the bond and exonerate the bond to the extent of the tender. However, if the actions commenced and pending at any one time exceed the amount of the bond then unimpaired, claims must be satisfied from the bond in the following order:
     (a) labor, including employee benefits;
     (b) taxes and contributions due to the state; and
     (c) any court costs, interest, and attorney fees that a plaintiff may be entitled to recover.
     (4) If a final judgment impairs the liability of the surety to the extent that the bond is no longer in effect in the full amount required in 39-3-703, the department shall suspend the registration of the contractor until the bond liability has been furnished in the required amount, unimpaired by unsatisfied judgment claims. If the bond becomes fully impaired, a new bond must be furnished in the amount prescribed by 39-3-703.
     (5) A person who filed and served a summons and complaint as required by this section and who has an unsatisfied final judgment against the registrant for any items referred to in 39-3-703 may execute upon the security held by the department by serving a certified copy of the unsatisfied final judgment within 1 year of the date of the entry of the judgment. Upon the receipt of service of the certified copy, the department shall pay or order to be paid from the deposit, through the district court that rendered the judgment, a payment toward the unsatisfied judgment. The priority of payment by the department must be the order of receipt by the department, but the department has no liability for payment in excess of the amount of the deposit.

     History: En. 41-2503 by Sec. 3, Ch. 208, L. 1975; R.C.M. 1947, 41-2703; amd. Sec. 28, Ch. 500, L. 1995.