B-134449, JUL. 2, 1959

B-134449, JUL. 2, 1959

TO THE GENERAL INSURANCE COMPANY OF AMERICA:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 9, 1959, AND ITS ENCLOSED BRIEF, WHEREIN YOU CONTEND THAT OUR DECISION OF APRIL 27, 1959, AUTHORIZING THE SETOFF OF A TAX INDEBTEDNESS OF THE DEFAULTING CONTRACTOR AGAINST PERCENTAGES RETAINED FROM THE CONTRACTOR'S EARNINGS PRIOR TO DEFAULT WAS ERRONEOUS AND THAT THE RETAINED PERCENTAGES SHOULD BE PAID TO YOUR COMPANY, THE COMPLETING SURETY UNDER CONTRACT NO. DA-45-164-ENG-2255 WITH MAX M. STOECKERT, D/B/A) UNIVERSITY BRICK AND TILE COMPANY. YOU ALSO STATE THAT YOU DESIRE A HEARING IN THIS MATTER AND AN OPPORTUNITY TO ANSWER SUCH OPPOSING CONTENTIONS AS MAY BE RAISED.

IN SUPPORT OF YOUR CONTENTIONS, YOU ALLEGE THAT OUR DECISION IS INCONSISTENT WITH A PREVIOUS DECISION DATED SEPTEMBER 20, 1957, B 132347, AND THAT IT IS ALSO "CONTRARY TO THE WEIGHT OF AUTHORITY IN THIS COUNTRY ON ANALOGOUS FACTS.'

WE DO NOT CONSIDER THE FACTS INVOLVED IN THE 1957 DECISION ANALOGOUS. THAT CASE THE UNFINISHED WORK WAS COMPLETED UNDER AN ASSIGNMENT BY THE CONTRACTOR TO THE SURETY. IN THE INSTANT CASE THE SURETY COMPLETED THE WORK UNDER AN EXPRESS AGREEMENT WITH THE GOVERNMENT, PARAGRAPH 3 OF WHICH PROVIDED IN PERTINENT PART: "THE GOVERNMENT WILL PAY TO THE SURETY ALL PAYMENTS TO BECOME DUE AS BASED ON EARNED ESTIMATES FOR THE WORK PERFORMED BY IT AND, UPON COMPLETION AND ACCEPTANCE OF ALL WORK TO BE PERFORMED UNDER THE CONTRACT, THE GOVERNMENT WILL PAY RETAINED PERCENTAGES, IF ANY, APPLICABLE TO THE SURETY'S EARNINGS.' OUR DECISION GAVE EFFECT TO THE INTENTION OF THE PARTIES THUS CLEARLY EXPRESSED, AND MANIFESTLY ANY OTHER UNDERSTANDING YOU MAY HAVE HAD BECAME MERGED INTO AND SUPERSEDED BY THE EXPRESS AGREEMENT. IT IS NOT UNDERSTOOD THAT ANY OF THE COURT OPINIONS REFERRED TO IN YOUR BRIEF INVOLVED A SIMILAR "TAKEOVER" AGREEMENT. FURTHERMORE, OUR DETERMINATION IN THE INSTANT CASE IS CONSISTENT WITH THE RULE ESTABLISHED BY THE AUTHORITIES CITED THAT THE UNITED STATES CANNOT BE DEPRIVED OF ITS RIGHT TO APPLY MONEY DUE ITS DEBTOR IN SATISFACTION OF AN EXISTING DEBT MERELY BECAUSE THE COMPLETING SURETY RATHER THAN THE CONTRACTOR-DEBTOR IS CLAIMING THE FUND. UNITED STATES V. MUNSEY TRUST COMPANY, 332 U.S. 234; AND STANDARD ACCIDENT INSURANCE COMPANY V. UNITED STATES, 119 C.CLS. 749.

WITH RESPECT TO YOUR REQUEST FOR A HEARING, UNDER OUR PRACTICE MATTERS PRESENTED ARE CONSIDERED AND DETERMINED ON THE BASIS OF THE WRITTEN RECORD. INTERVIEWS ARE GRANTED, HOWEVER, TO AFFORD AN OPPORTUNITY FOR DISCUSSION AND THE PRESENTATION OF ADDITIONAL INFORMATION AND EVIDENCE, AND WHILE WE DO NOT BELIEVE AN INTERVIEW WOULD SERVE ANY USEFUL PURPOSE IN THE INSTANT CASE, NEVERTHELESS, IF YOU SO DESIRE, PLEASE ADVISE US A FEW DAYS IN ADVANCE OF THE TIME YOU EXPECT TO BE PRESENT IN ORDER THAT THE NECESSARY ARRANGEMENTS MAY BE MADE.