B-131129, DEC. 13, 1963

B-131129, DEC. 13, 1963

TO THE SANTA FE NATIONAL BANK:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 22, 1963, PRESENTING CLAIM, AS ASSIGNEE UNDER AN ASSIGNMENT OF CLAIM EXECUTED BY THE FOSTER CONSTRUCTION COMPANY ON JUNE 1, 1955, FOR THE SUM OF $5,904.83, REPRESENTING THE BALANCE DUE UNDER DEFAULTED CONTRACT NO. DA-29-005-ENG 1473.

IN YOUR LETTER OF JUNE 30, 1958, IN RESPONSE TO OFFICE LETTER OF JUNE 27, 1958, YOU STATED, AMONG OTHER THINGS, AS FOLLOWS:

"WE DID NOT ADVANCE ANY MONEY TO TRAVELERS INDEMNITY COMPANY FOR COMPLETION OF CERTAIN CONTRACTS. WE ADVANCED THIS MONEY TO FOSTER CONSTRUCTION COMPANY WITH A GUARANTEE FROM TRAVELERS INDEMNITY COMPANY THAT ALL MONEY ADVANCED TO FOSTER CONSTRUCTION COMPANY WOULD BE PAID EITHER FROM ESTIMATES OR BY TRAVELERS INDEMNITY COMPANY.

"WE RECEIVED SEVERAL ESTIMATES ON THE AMOUNT THAT WE LOANED TO MR. FOSTER, HOWEVER, IT WAS NECESSARY TO CALL ON TRAVELERS INDEMNITY COMPANY TO PAY THE BALANCE OF $6,674.58, AS WE COULD NOT CONTINUE TO CARRY THIS AMOUNT ON OUR BOOKS, AS THERE SEEMED TO BE CONSIDERABLE DELAY IN OBTAINING THE FINAL ESTIMATE.'

THE QUOTED LETTER WAS EXPLANATORY OF YOUR PRIOR LETTER OF JANUARY 23, 1958, IN WHICH YOU HAD INDICATED THAT YOU HAD AN AGREEMENT WITH THE TRAVELERS INDEMNITY COMPANY, THE SURETY ON THE FOSTER COMPANY'S BONDS, UNDER WHICH ANY AMOUNTS RECEIVED BY YOU PURSUANT TO THE ASSIGNMENT, IN EXCESS OF YOUR ADVANCES, WOULD BE PAID OVER TO TRAVELERS.

IT WAS OUR UNDERSTANDING FROM THIS CORRESPONDENCE THAT WHILE THE FOSTER CONSTRUCTION COMPANY DID NOT DISCHARGE THE BALANCE OF THE LOAN MADE TO THEM, $6,674.58, THE TRAVELERS INDEMNITY COMPANY PAID THAT AMOUNT IN FULL TO YOUR BANK UNDER THEIR GUARANTEE OF PAYMENT. SINCE YOUR BANK APPEARED TO HAVE BEEN MADE WHOLE IN THE MATTER, WE THEREFORE APPLIED THE BALANCE DUE UNDER THE CONTRACT TO THE SATISFACTION OF CLAIMS BY THE GOVERNMENT AGAINST THE FOSTER CONSTRUCTION COMPANY RESULTING FROM DEFAULTS UNDER OTHER CONTRACTS, FOR WHICH THE TRAVELERS INDEMNITY COMPANY WAS ALSO OBLIGATED AS SURETY. SUCH APPLICATION HAVING RESULTED IN A DECREASE OF THE AMOUNT OF THE GOVERNMENT'S CLAIM AGAINST THE SURETY, IT IS OUR VIEW THAT ANY FURTHER PAYMENTS UNDER THE ASSIGNMENT WHICH WOULD BE MERELY FOR THE BENEFIT OF THE SURETY WOULD BE IMPROPER.

IF OUR UNDERSTANDING OF THE FACTS IS INCORRECT, AND IF THERE IS ANY UNLIQUIDATED BALANCE ON THE FOSTER LOANS STILL DUE YOU IN YOUR OWN RIGHT, WE SHALL BE GLAD TO GIVE FURTHER CONSIDERATION TO THE MATTER UPON RECEIPT OF A MORE EXPLICIT STATEMENT OF YOUR CLAIM.