B-146593, NOV. 29, 1961

B-146593, NOV. 29, 1961

TO PROVIDENT TRADESMENS BANK AND TRUST COMPANY:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 18, 1961, RELATIVE TO AN ASSIGNMENT BY DIETERLY BROTHERS OF PAYMENTS DUE BY THE GOVERNMENT UNDER CONTRACT DA-28-013-AI-2241.

WE HAVE READ WITH INTEREST THE LEGAL MEMORANDUM ENCLOSED WITH YOUR LETTER OF OCTOBER 18, AND THE CONCLUSION STATED THEREIN THAT MRS. JENNIE V. DIEHL HAS BECOME SUBROGATED BY OPERATION OF LAW TO THE RIGHTS OF YOUR BANK UNDER THE ASSIGNMENT. IT IS OUR OPINION, HOWEVER, THAT THIS MEMORANDUM DOES NOT CONSIDER THE PRIMARY QUESTION WHICH IS PRESENTED BY YOUR REQUEST FOR PAYMENT OF THE FULL AMOUNT REMAINING UNPAID UNDER THE CONTRACT IN QUESTION.

AS INDICATED IN OUR LETTER OF SEPTEMBER 29, WE ARE ADVISED BY THE INTERNAL REVENUE SERVICE THAT TAX INDEBTEDNESSES ACCRUING AGAINST DIETERLY BROTHERS DURING 1959 AND THE FIRST AND SECOND QUARTERS OF 1960, PLUS INTEREST TO JUNE 17, 1960, TOTAL $5,859.85. UNDER SUCH CIRCUMSTANCES IT IS THE POSITION OF THIS OFFICE THAT AN ASSIGNMENT IS ENFORCEABLE ONLY TO THE EXTENT OF THE AMOUNT OWED, AND UNPAID, BY THE ASSIGNOR. WE ARE ENCLOSING COPIES OF OUR DECISIONS OF AUGUST 25, 1955, B-124314 (PUBLISHED AT 35 COMP. GEN. 104), AND OF NOVEMBER 12, 1957, B-134029 (PUBLISHED AT 37 COMP. GEN. 318), SETTING OUT THE AUTHORITIES ON WHICH THIS CONCLUSION IS BASED. APPLYING THE PRINCIPLES SET OUT IN THESE DECISIONS TO THE ASSIGNMENT BY DIETERLY BROTHERS, IT IS OUR OPINION THAT YOUR BANK CAN ENFORCE SUCH ASSIGNMENT ONLY TO THE EXTENT AMOUNTS ADVANCED TO DIETERLY BROTHERS IN RELIANCE UPON THE ASSIGNMENT HAVE NOT BEEN REPAID, WITH INTEREST, FROM THE PARTIAL PAYMENT OF $5,481 MADE TO YOUR BANK UNDER THE ASSIGNMENT ON MAY 5, 1960. WHILE WE DO NOT AGREE THAT MRS. JENNIE V. DIEHL HAS ANY ENFORCEABLE RIGHTS AGAINST THE GOVERNMENT AS A SUBROGEE BY OPERATION OF LAW, IT IS APPARENT THAT IF SUCH RIGHTS DID EXIST THEY WOULD NOT EXCEED THE RIGHTS OF THE BANK TO WHICH SHE WOULD BE SUBROGATED.

IN VIEW OF THE FOREGOING, THE OFFER IN OUR LETTER OF SEPTEMBER 29 TO CONSIDER PAYMENT TO YOUR BANK OF THE UNPAID BALANCE, PLUS INTEREST, OF ANY AMOUNT ADVANCED TO DIETERLY BROTHERS IN RELIANCE UPON THE ASSIGNMENT AND NOT SATISFIED FROM THE MAY 5, 1960, PARTIAL PAYMENT UNDER THE CONTRACT WILL REMAIN OPEN FOR 30 DAYS FROM THIS DATE. IN THE EVENT YOU DO NOT INDICATE WITHIN SUCH PERIOD THAT THE ARRANGEMENT PROPOSED IS SATISFACTORY, THE ENTIRE UNPAID BALANCE UNDER CONTRACT NO. DA-28-013-AI-2241 WILL BE APPLIED AGAINST THE TAX INDEBTEDNESS OF DIETERLY BROTHERS. ANY FURTHER CONSIDERATION OF THE BANK'S RIGHTS, OR THE RIGHTS OF MRS. JENNIE V. DIEHL, UNDER THE ASSIGNMENT WOULD THEREAFTER APPEAR TO BE AVAILABLE ONLY BY PROPER JUDICIAL PROCEEDINGS AGAINST THE UNITED STATES.