university of illinois - UIHistories Project

2.72 BOARD OF TRUSTEES [February 14
scholarships authorized by the Board in 1949. There is a higher number of
potential students among arriving refugees which justifies the provision of
fifteen scholarships.
I recommend approval.
On motion of Mr. Swain, the Board authorized the award of fifteen
four-year scholarships, as recommended above.
DEFAULT ON CONTRACT BY B. AND E. PLUMBING AND HEATING
(20) Edward M. Brumit, an individual doing business as the B. and E. Plumbing
and Heating, Champaign, Illinois, has encountered financial difficulties. He
was awarded contracts for Division III plumbing and heating work on the Band
Building and for Division II plumbing work on Men's Residence Halls Addition
No. 3 and No. 4, Champaign, Illinois. By Notice of Assignment under date
of November 20, 1956, the Commercial Bank of Champaign, Champaign, Illinois,
informed the University that it held assignments from Mr. Brumit of funds
that might become due and owing to him on these contracts and which assignments
were given as security for loans made to him by the Bank. By letter
dated November 30, 1956, the surety on the bonds covering these contracts, the
Aetna Casualty and Surety Company, informed the University that it held
assignments of all remaining funds on these contracts, which assignments were
given in connection with Mr. Brumit's applications for the bonds and requested
that no further payments be made in connection with these contracts except to
the bonding company or with its written consent. Notices were also received by
the University from unpaid suppliers and materialmen and from the federal
government for unpaid taxes.
The University, in reliance upon the contractual provision prohibiting assignment
of any monies due or to become due under the contract without its
previous consent, did not recognize either assignment but payments were withheld
pursuant to the contractual provision which provides in part:
"The Architect may withold or, on account of subsequently discovered evidence,
nullify the whole or a part of any certificate to such extent as the
Architect may deem to be necessary to protect the Owner from loss on
account of:
2. Claims against Contractor and/or Owner filed by any person or persons,
including Owner, or reasonable evidence indicating probable filing of such
claims.
3. Failure of the Contractor to make payments properly to subcontractors or
for material or labor.
4. A reasonable doubt that the Contract can be completed for the balance
then unpaid."
The Surety, through an arrangement with the Commercial Bank of Champaign,
continued to finance these projects until January 11, 1957, when it
informed the Contractor and University that it was not going to continue to do
so. Since Mr. Brumit appeared to be unable to secure financing, a request was
made that the Aetna Casualty and Surety Company take such action as may be
necessary in order to keep the work in progress and an offer made on behalf of
the University whereby funds would be released for payments made directly
to laborers and materialmen. Due to the nearness of completion of the Men's
Residence Halls project, and the importance to the University that this work
not be delayed, the Surety consented to funds being released for payments for
material and labor used upon it. An agreement was made whereby the President
of the Commercial Bank of Champaign makes direct payment to laborers and
materialmen with the consent of Mr. Brumit and upon the approval of the
University's superintendent on the job site and upon such payment being made
the University then makes payment in reimbursement for such costs. It is hoped
that Mr. Brumit will be able to complete the work on this project under this
arrangement.
The Surety did not consent to such payments being made on the Band
Building project but continued its financing arrangements with regard to it. On
January 29, 1957, the Surety informed the Contractor, the Bank, and the University
that it would not continue such financing after February 8, 1957. The