Appellate Division of the Supreme Court of the State of New York September 16, 1997 (City of New York v. Cross Bay Contracting Corp.)

OPINION OF THE COURT

Sullivan, J.

The primary question on this appeal is whether a surety which has made payment under a payment bond issued in connection with a public improvement project is subrogated to the rights of the owner, the obligee under the bond, to contract *12funds it has withheld and entitled to priority over all other claimants to the withheld funds.