B-157563, FEB. 13, 1967

B-157563, FEB. 13, 1967

TO MR. ROBERT E. HERRMANN:

REFERENCE IS MADE TO YOUR LETTERS OF MAY 3 AND JUNE 8, 1965, TO THE DEPARTMENT OF AGRICULTURE, FOREST SERVICE, CALIFORNIA REGION, CONCERNING THE CLAIM OF YOUR CLIENT, THE NATIONAL UNION FIRE INSURANCE COMPANY, PITTSBURGH, PENNSYLVANIA, FOR PAYMENT OF THE BALANCE OF $6,123.56, DETERMINED TO BE DUE UNDER FOREST SERVICE CONTRACT NO. 39 451, DATED MAY 27, 1964, WITH THE GENERAL PAVING AND LANDSCAPE COMPANY, SAN DIEGO, CALIFORNIA, FOR THE CONSTRUCTION AND PAYMENT OF THE CRYSTAL LAKE CAMPGROUND ROAD, ANGELES NATIONAL FOREST, CALIFORNIA.

PAYMENTS DUE OR TO BECOME DUE UNDER THE CONTRACT WERE ASSIGNED TO QUALIFY FACTORS, SAN DIEGO, CALIFORNIA, PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED, 31 U.S.C. 203, 41 U.S.C. 15. THE VOUCHER COVERING A PROPOSED FINAL PAYMENT UNDER THE CONTRACT OF $6,123.56 WAS SIGNED BY THE OWNER OF THE GENERAL PAVING AND LANDSCAPE COMPANY BUT YOU REQUESTED THAT THE CONTRACT BALANCE BE PAID TO THE NATIONAL UNION FIRE INSURANCE COMPANY AS THE SURETY ON THE CONTRACT PAYMENT BOND. THE RECORD INDICATED THAT THE CONTRACTOR HAD FAILED TO SATISFY CERTAIN CLAIMS OF LABORERS AND MATERIALMEN AGGREGATING THE APPROXIMATE AMOUNT OF $42,000; AND THAT THE SURETY HAD, PRIOR TO JUNE 8, 1965, DEPOSITED THE AMOUNT OF $17,087.63, THE PENAL SUM OF THE PAYMENT BOND, WITH THE CLERK OF THE UNITED STATES DISTRICT COURT, A SOUTHERN DISTRICT OF CALIFORNIA, CENTRAL DIVISION, UPON THE FILING OF A COMPLAINT (NO. 65-780-FW) FOR INTERPLEADER AND DECLARATORY RELIEF CONCERNING THE SURETY'S OBLIGATIONS UNDER THE CONTRACT PAYMENT BOND.

THE MATTER WAS CONSIDERED IN OUR DECISION B-157563, OCTOBER 26, 1965, TO MR. L. P. WILSEY, REGIONAL FISCAL AGENT, FOREST SERVICE, WHEREIN IT WAS DETERMINED THAT NO PAYMENT SHOULD BE MADE ON THE VOUCHER FOR $6,123.56 IN VIEW OF THE APPARENT NECESSITY FOR A JUDICIAL DETERMINATION OR AGREEMENT CONCERNING THE RESPECTIVE RIGHTS OF THE CONTRACTOR, THE CONTRACTOR'S ASSIGNEE AND THE PAYMENT BOND SURETY IN THE REMAINING CONTRACT BALANCE. IT WAS SUGGESTED THAT THE DEPARTMENT OF JUSTICE BE REQUESTED TO PETITION FOR INTERVENTION IN THE INTERPLEADER PROCEEDINGS INSTITUTED BY THE SURETY SO THAT THE AMOUNT DUE UNDER THE CONTRACT COULD BE PAID INTO THE COURT AND DISPOSED OF IN ACCORDANCE WITH THE COURT'S JUDGMENT. THE VOUCHER AND ITS SUPPORTING PAPERS WERE RETAINED IN OUR FILES.

WE ARE ADVISED BY THE FOREST SERVICE THAT THE DEPARTMENT OF JUSTICE DECLINED TO INTERVENE IN THE SURETY'S INTERPLEADER ACTION. IT IS REPORTED, HOWEVER, THAT THE SURETY FILED A STIPULATION FOR DISMISSAL OF THE ACTION AND ORDER FOR DISBURSEMENT OF FUNDS, WHICH WAS ORDERED BY THE COURT ON APRIL 26, 1966. ON JULY 7, 1966, THE SURETY OBTAINED A RELEASE AND HOLD-HARMLESS DOCUMENT FROM QUALITY FACTORS. THE SURETY SUBSEQUENTLY SUBMITTED TO THE FOREST SERVICE A RELEASE FROM ASSIGNMENT EXECUTED ON OCTOBER 14, 1966, BY THE PRESIDENT OF T.F. LOANS, INCORPORATED, WHICH SET FORTH THAT THIS COMPANY WAS FORMERLY KNOWN AS QUALITY FACTORS, OF SAN DIEGO, CALIFORNIA, THE ASSIGNEE OF THE PROCEEDS OF CONTRACT NO. 39-451, DATED MAY 27, 1964. THE SURETY ALSO SUBMITTED A COPY OF THE COURT- APPROVED STIPULATION UNDER WHICH VARIOUS CLAIMANTS UNDER THE CONTRACT PAYMENT BOND AGREED TO RELEASE THE SURETY FROM FURTHER OBLIGATION TO THEM IN CONSIDERATION OF THE PAYMENT OF PRO RATA SHARES AGGREGATING THE SUM OF $16,017.91, WHICH WAS TO BE LEFT OUT OF THE DEPOSIT OF $17,087.63 AFTER ALLOWANCE OF THE SUM OF $1,069.72 TO THE SURETY FOR ATTORNEY FEES AND COSTS.

OUR RECORDS DO NOT DISCLOSE ANY INDICATION OF AN INDEBTEDNESS OF THE CONTRACTOR TO THE UNITED STATES AND, IN ACCORDANCE WITH OUR USUAL PRACTICE IN CASES OF THIS NATURE, WE WOULD BE WILLING TO AUTHORIZE THE ISSUANCE OF A CHECK IN FAVOR OF THE CONTRACTOR WITH THE DIRECTION THAT THE CHECK BE MAILED IN CARE OF THE SURETY, PROVIDED THAT THE SURETY WILL SUBMIT TO US A LETTER FROM THE CONTRACTOR GIVING ITS CONSENT TO THE MAILING OF THE CHECK IN CARE OF THE SURETY.

PENDING THE RECEIPT OF ADVICE FROM YOU IN THE MATTER, NO FURTHER ACTION WILL BE TAKEN BY OUR OFFICE WITH RESPECT TO THE REPORTED BALANCE DUE UNDER THE CONTRACT.