B-129420, OCT. 1, 1957

B-129420, OCT. 1, 1957

TO MR. RUSSELL C. HARRINGTON:

REFERENCE IS MADE TO A LETTER DATED JANUARY 10, 1957, FROM THE CHIEF, COLLECTION OPERATIONS DIVISION, AND LETTER DATED JUNE 24, 1957, FROM THE COLLECTION OFFICER, OFFICE OF THE DISTRICT DIRECTOR, WASHINGTON 25, D.C., RELATIVE TO THE INDEBTEDNESS TO THE UNITED STATES OF THE BLUE BANNER LAUNDRY AND THE WASHINGTON LAUNDRY, INC., FOR WITHHOLDING TAXES AND SOCIAL SECURITY TAXES.

UNDER DATE OF SEPTEMBER 27, 1956, THE AIR FORCE FINANCE CENTER, DENVER, COLORADO, TRANSMITTED TO OUR OFFICE A LETTER DATED JULY 3, 1956, FROM THE FINANCE OFFICER, ANDREWS AIR FORCE BASE, WASHINGTON, D.C., ENCLOSING A VOUCHER IN THE AMOUNT OF $1,913.03 STATED IN FAVOR OF "BLUE BANNER LAUNDRY AND CLEANERS" FOR LAUNDRY AND CLEANING SERVICES FURNISHED UNDER CONTRACT NO. AF 49/608/-430, DATED JULY 26, 1955 (MADE IN THE NAME OF "BLUE BANNER CO., INC.'' WITH THE REQUEST THAT AN ADVANCE DECISION BE RENDERED AS TO WHETHER PAYMENT ON THE VOUCHER WAS AUTHORIZED. WITH THE VOUCHER THERE WERE TRANSMITTED INVOICES OF THE BLUE BANNER LAUNDRY AND CLEANERS IN THE TOTAL AMOUNT OF $1,913.03 COVERING SERVICE UNDER THE CONTRACT DURING THE PERIOD NOVEMBER 1, 1955, THROUGH APRIL 30, 1956; ALSO INVOICES OF THE WASHINGTON LAUNDRY, INC., IN THE TOTAL AMOUNT OF $968.28, COVERING IDENTICAL SERVICES DURING THE PERIODS NOVEMBER 1 TO DECEMBER 31, 1955, AND FEBRUARY 1 TO FEBRUARY 29, 1956.

INFORMATION WAS FURNISHED THAT UNDER DATE OF OCTOBER 5, 1955, SAM BURKA (WHO SIGNED THE CONTRACT AS PRESIDENT OF BLUE BANNER COMPANY, INC.), UNDER THE NAME OF BLUE BANNER LAUNDRY AND DRY CLEANERS, ENTERED INTO AN AGREEMENT PURPORTING TO MERGE THAT BUSINESS WITH WASHINGTON LAUNDRY, INC., EFFECTIVE NOVEMBER 1, 1955, THE NAME OF THE NEW COMPANY TO BE WASHINGTON LAUNDRY, INC. THE AGREEMENT CONTAINED CERTAIN CONDITIONS AND REQUIREMENTS TO BE FULFILLED BY THE PARTIES. IN A LETTER DATED JULY 24, 1956, TO THE BASE PROCUREMENT OFFICE, MR. BURKA STATED THAT AS A RESULT OF THE FAILURE OF THE WASHINGTON LAUNDRY TO FULFILL ITS PART OF THE AGREEMENT THE MERGER AGREEMENT NEVER BECAME EFFECTIVE. IT FURTHER APPEARED, HOWEVER, THAT WASHINGTON LAUNDRY, INC., HAD IN FACT OPERATED THE PLANT AND PERFORMED THE CONTRACT SERVICES DURING SOME PERIOD OF TIME.

IN THESE CIRCUMSTANCES, WE HELD IN OUR DECISION DATED NOVEMBER 16, 1956, TO THE FINANCE OFFICER, AS FOLLOWS:

"IN VIEW OF THE FACTS OF THE MATTER AS ABOVE SET OUT AND INFORMAL ADVICE RECEIVED IN THIS OFFICE THAT LITIGATION MAY BE INSTITUTED BETWEEN THE TWO CLAIMANTS TO DETERMINE THE QUESTIONS OF BREACH OF CONTRACT AND ENTITLEMENT TO PAYMENT OF THE AMOUNT DUE FROM THE UNITED STATES, IT IS QUESTIONABLE WHETHER THE GOVERNMENT COULD RECEIVE A FULLY BINDING ACQUITTANCE FROM EITHER OF THE CLAIMANTS ALONE. ACCORDINGLY, PAYMENT IS NOT AUTHORIZED ON THE VOUCHER, WHICH WILL BE RETAINED HERE FOR HANDLING AS A CLAIM, TO BE ALLOWED ON RECEIPT OF PROOF OF AGREEMENT OF THE CLAIMANTS OR IN ACCORDANCE WITH A JUDICIAL DETERMINATION OF THE MATTER.'

IN THE LETTER OF JANUARY 10, 1957, REFERRED TO ABOVE, REFERENCE WAS MADE ONLY TO UNPAID TAXES ASSESSED AGAINST WASHINGTON LAUNDRY, INC. IN THE LETTER OF JUNE 24, 1957, FROM THE OFFICE OF THE DISTRICT DIRECTOR, IT IS STATED THAT BOTH BLUE BANNER LAUNDRY AND WASHINGTON LAUNDRY, INC. (NOW BANKRUPT) ARE INDEBTED TO THE INTERNAL REVENUE SERVICE FOR UNEMPLOYMENT TAXES "AND IN THE INSTANT CASE THERE IS ONLY THE QUESTION OF ALLOCATION TO THE PROPER ACCOUNT THROUGH A DETERMINATION OF THE FACTS GOVERNING THE TIME WASHINGTON LAUNDRY, INC. WAS IN EXISTENCE OR WHETHER OR NOT THERE WAS A PERIOD OF TIME WHEN THE IDENTITIES OF BOTH WERE MERGED.' NO INFORMATION WAS FURNISHED AS TO THE AMOUNT DUE FROM EITHER DEBTOR NOR CAN IT BE DETERMINED FROM THE LETTER WHETHER THERE ARE SEPARATE CLAIMS AGAINST EACH OR A JOINT OR ALTERNATIVE CLAIM.

IN THE CIRCUMSTANCES WE CANNOT AGREE WITH THE VIEW APPARENTLY TAKEN BY THE DISTRICT DIRECTOR'S OFFICE THAT TRANSMITTAL TO HIM OF AN AMOUNT DUE TO ONE OR THE OTHER OF THE TWO DEBTORS WOULD OPERATE AS A VALID ACQUITTANCE TO THE GOVERNMENT OF THE CLAIMS OF BOTH. WE SHALL BE GLAD TO GIVE FURTHER CONSIDERATION TO THE MATTER UPON RECEIPT OF A MORE DEFINITE STATEMENT OF THE CLAIMS OF YOUR SERVICE.

INSOFAR AS CONCERNS AMOUNTS WHICH MAY BE DUE TO BLUE BANNER LAUNDRY FOR SERVICES RENDERED UNDER THE CONTRACT OF JULY 26, 1955, AFTER MAY 1, 1956, IT SEEMS PROPER THAT ANDREWS AIR FORCE BASE SHOULD NOT MAKE PAYMENT THEREOF, TO BE APPLIED FIRST AGAINST THE TAX INDEBTEDNESS OF BLUE BANNER PURSUANT TO THE NOTICE OF LEVY HERETOFORE SERVED ON THE FINANCE OFFICER AT ANDREWS AIR FORCE BASE AND THE BALANCE, IF ANY, TO BE PAID TO BLUE BANNER.

A COPY OF THIS DECISION IS BEING FURNISHED TO THE ACCOUNTING AND FINANCE OFFICER, ANDREWS AIR FORCE BASE, TO WHOM OUR DECISION OF NOVEMBER 16, 1956, WAS ADDRESSED AND WHO HAS MADE INFORMAL INQUIRIES RELATIVE TO THIS MATTER.