A-28090, AUGUST 15, 1929, 9 COMP. GEN. 72

A-28090: Aug 15, 1929

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SUCH A TRANSFER IS NOT REQUIRED TO BE CONSIDERED AN ASSIGNMENT OF THE CONTRACT OR CLAIM PROHIBITED BY SECTIONS 3737 OR 3477 OF THE REVISED STATUTES. PAYMENT IS AUTHORIZED TO THE TRANSFEREE UPON COMPLIANCE WITH THE CONTRACT TERMS AND FURNISHING A WAIVER FROM THE ORIGINAL CONTRACTOR. AS FOLLOWS: REFERENCE IS MADE TO BUREAU CONTRACTS AND LEASES UNDER WHICH THE BUSINESS OR PROPERTY OR PART THEREOF ARE SOLD OR TRANSFERRED. WHERE THE CONTRACTOR IS AN INDIVIDUAL AND SELLS HIS ENTIRE BUSINESS TO ANOTHER INDIVIDUAL WHO IS WILLING TO ASSUME ALL OBLIGATIONS UNDER THE CONTRACT. 2. WHERE THE CONTRACTOR IS A CORPORATION AND SELLS OR TRANSFERS HIS ENTIRE BUSINESS TO ANOTHER CORPORATION AND THAT CORPORATION IS WILLING TO ASSUME THE OBLIGATIONS OF THE CONTRACT. 3.

A-28090, AUGUST 15, 1929, 9 COMP. GEN. 72

CONTRACTS - ASSIGNMENT WHERE EITHER AN INDIVIDUAL OR CORPORATION HAVING AN UNCOMPLETED CONTRACT WITH THE GOVERNMENT OR A VALID CLAIM AGAINST IT, SELLS HIS OR ITS ENTIRE BUSINESS, OR WHERE A PUBLIC-SERVICE CORPORATION SELLS OR TRANSFERS ALL OF THAT PORTION OF ITS BUSINESS RELATING TO THE PARTICULAR KIND OF SERVICE FOR WHICH IT HAS A CONTRACT WITH THE GOVERNMENT, AND THE TRANSFEREE ASSUMES THE OBLIGATION OF THE CONTRACT AND FURNISHES A NEW PERFORMANCE BOND, SUCH A TRANSFER IS NOT REQUIRED TO BE CONSIDERED AN ASSIGNMENT OF THE CONTRACT OR CLAIM PROHIBITED BY SECTIONS 3737 OR 3477 OF THE REVISED STATUTES, AND PAYMENT IS AUTHORIZED TO THE TRANSFEREE UPON COMPLIANCE WITH THE CONTRACT TERMS AND FURNISHING A WAIVER FROM THE ORIGINAL CONTRACTOR.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, AUGUST 15, 1929:

THERE HAS BEEN RECEIVED YOUR LETTER OF JULY 23, 1929, AS FOLLOWS:

REFERENCE IS MADE TO BUREAU CONTRACTS AND LEASES UNDER WHICH THE BUSINESS OR PROPERTY OR PART THEREOF ARE SOLD OR TRANSFERRED, PARTICULARLY IN THE FOLLOWING CLASSES OF CASES:

1. WHERE THE CONTRACTOR IS AN INDIVIDUAL AND SELLS HIS ENTIRE BUSINESS TO ANOTHER INDIVIDUAL WHO IS WILLING TO ASSUME ALL OBLIGATIONS UNDER THE CONTRACT.

2. WHERE THE CONTRACTOR IS A CORPORATION AND SELLS OR TRANSFERS HIS ENTIRE BUSINESS TO ANOTHER CORPORATION AND THAT CORPORATION IS WILLING TO ASSUME THE OBLIGATIONS OF THE CONTRACT.

3. WHERE THE CONTRACTOR IS A CORPORATION INVOLVED IN FURNISHING VARIOUS SERVICES, SUCH AS HEAT, GAS, ELECTRICITY, AND WATER, AND ONLY TRANSFERS THAT PART OF ITS BUSINESS WHICH HAS TO DO WITH THE FURNISHING OF ONE OF THESE SERVICES, SUCH AS GAS, TO ANOTHER CORPORATION, AND THAT CORPORATION IS WILLING TO ASSUME THE OBLIGATIONS OF THE SELLER'S CONTRACT FOR FURNISHING GAS TO THE GOVERNMENT.

4. WHERE A CORPORATION DISSOLVES AND SELLS ITS BUSINESS TO ANOTHER CORPORATION WHICH IS WILLING TO ASSUME THE OBLIGATIONS OF THE CORPORATION WITH WHICH THE BUREAU HAD A CONTRACT.

THE PROCEDURE IN CASES OF THIS KIND WHICH HAS BEEN FOLLOWED IN THE BUREAU HAS BEEN TO SECURE COPIES OF THE BILL OF SALE OR OTHER DEFINITE EVIDENCE OF THE SALE AND IN ADDITION A STATEMENT FROM THE BUYER TO THE EFFECT THAT HE AGREES TO FURNISH THE SERVICE IN ACCORDANCE WITH THE CONTRACT PREVIOUSLY ENTERED INTO WITH THE ORIGINAL CONTRACTOR AND TO HOLD THE GOVERNMENT FREE FROM ANY AND ALL LIABILITIES TO THE ORIGINAL CONTRACTOR. THESE PAPERS HAVE BEEN ACCEPTED AS SUPPLEMENTAL AGREEMENTS TO THE ORIGINAL CONTRACTS. SUCH EVIDENCE HAS BEEN REQUESTED AND ACCEPTED BY YOUR OFFICE AND WHEN IT HAS BEEN FURNISHED PAYMENTS IN FAVOR OF THE NEW CONTRACTOR HAVE BEEN APPROVED UNDER THE SUPPLEMENTAL AGREEMENTS.

INASMUCH AS A QUESTION HAS ARISEN AS TO WHETHER THE PROCEDURE CITED IS CORRECT OR WHETHER THE PAYMENTS ON ACCOUNT OF WORK PERFORMED OR SERVICE RENDERED SHOULD BE MADE TO THE ORIGINAL CONTRACTOR, LEAVING THE TWO COMPANIES TO SETTLE THEIR EQUITIES BETWEEN THEMSELVES, THE MATTER IS SUBMITTED WITH THE REQUEST THAT INFORMATION BE FURNISHED AS TO THE PROPER PROCEDURE TO BE FOLLOWED IN THESE CASES.

SECTIONS 3737 AND 3477, REVISED STATUTES, PROVIDE AS FOLLOWS.:

SEC. 3737. NO CONTRACT OR ORDER, OR ANY INTEREST THEREIN, SHALL BE TRANSFERRED BY THE PARTY TO WHOM SUCH CONTRACT OR ORDER IS GIVEN TO ANY OTHER PARTY, AND ANY SUCH TRANSFER SHALL CAUSE THE ANNULMENT OF THE CONTRACT OR ORDER TRANSFERRED, SO FAR AS THE UNITED STATES ARE CONCERNED. ALL RIGHTS OF ACTION, HOWEVER, FOR ANY BREACH OF SUCH CONTRACT BY THE CONTRACTING PARTIES ARE RESERVED TO THE UNITED STATES.

SEC. 3477. ALL TRANSFERS AND ASSIGNMENTS MADE OF ANY CLAIM UPON THE UNITED STATES, OR OF ANY PART OR SHARE THEREOF, OR INTEREST THEREIN, WHETHER ABSOLUTE OR CONDITIONAL, AND WHATEVER MAY BE THE CONSIDERATION THEREFOR, AND ALL POWERS OF ATTORNEY, ORDERS, OR OTHER AUTHORITIES FOR RECEIVING PAYMENT OF ANY SUCH CLAIM, OR OF ANY PART OR SHARE THEREOF, SHALL BE ABSOLUTELY NULL AND VOID, UNLESS THEY ARE FREELY MADE AND EXECUTED IN THE PRESENCE OF AT LEAST TWO ATTESTING WITNESSES, AFTER THE ALLOWANCE OF SUCH A CLAIM, THE ASCERTAINMENT OF THE AMOUNT DUE, AND THE ISSUING OF A WARRANT FOR THE PAYMENT THEREOF. SUCH TRANSFERS, ASSIGNMENTS, AND POWERS OF ATTORNEY MUST RECITE THE WARRANT FOR PAYMENT AND MUST BE ACKNOWLEDGED BY THE PERSON MAKING THEM BEFORE AN OFFICER HAVING AUTHORITY TO TAKE ACKNOWLEDGMENTS OF DEEDS, AND SHALL BE CERTIFIED BY THE OFFICER; AND IT MUST APPEAR BY THE CERTIFICATE THAT THE OFFICER, AT THE TIME OF THE ACKNOWLEDGMENT, READ AND FULLY EXPLAINED THE TRANSFER, ASSIGNMENT, OR WARRANT OF ATTORNEY TO THE PERSON ACKNOWLEDGING THE SAME.

IT HAS BEEN HELD IN SEVERAL INSTANCES THAT THE TRANSFER OF TITLE TO PREMISES LEASED TO THE GOVERNMENT FOR PUBLIC PURPOSES DOES NOT COME WITHIN THE SCOPE OF SECTION 3737 OR SECTION 3477, REVISED STATUTES, AND THAT THE RENT ACCRUING UNDER THE LEASE MAY BE PAID TO THE TRANSFEREE. MILLS V. UNITED STATES, 19 CT.CLS. 79; FREEDMAN'S SAVINGS AND TRUST COMPANY V. SHEPHERD, 127 U.S. 494; 4 COMP. DEC. 43; 15 ID. 195; 4 COMP. GEN. 193, AND A-26168, MARCH 8, 1929.

IN THE CASE OF THE SEABOARD AIR LINE RAILWAY COMPANY V. UNITED STATES, 256 U.S. 655, IT WAS HELD BY THE SUPREME COURT OF THE UNITED STATES THAT THE MERGER OF A CONTRACTING CORPORATION WITH ANOTHER CORPORATION DID NOT CONSTITUTE AN ASSIGNMENT OF THE CONTRACT WITHIN THE PURVIEW OF THE SECTIONS OF THE REVISED STATUTES QUOTED ABOVE.

SECTION 3477, REVISED STATUTES, APPLIES TO VOLUNTARY ASSIGNMENTS AND DOES NOT EMBRACE CASES IN WHICH THE TRANSFER OF TITLE IS BY OPERATION OF LAW. THE PASSING OF A CLAIM TO THE HEIRS, DEVISEES, OR ASSIGNEES IN BANKRUPTCY IS NOT WITHIN THE EVIL AT WHICH THE STATUTE IS AIMED. NATIONAL BANK OF COMMERCE V. DOWNIE, 218 U.S. 345; 10 COMP. DEC. 159, 168; 3 COMP. GEN. 623; 4 ID. 184.

IN DECISION OF THIS OFFICE, A-26771, APRIL 30, 1929, IT WAS HELD THAT WHERE AN INCORPORATED EXPRESS AGENCY IS THE SUCCESSOR OR ASSIGNEE OF A FORMER EXPRESS COMPANY AND HAS ACQUIRED ALL OF THE RIGHTS, PRIVILEGES, AND PROPERTY, INCLUDING THE ASSETS AND LIABILITIES OF THE FORMER COMPANY, THE TRANSFEREE MUST BE RECOGNIZED AS THE LOGICAL CLAIMANT FOR ANY AMOUNTS DUE AND THAT THERE IS NOT INVOLVED AN ASSIGNMENT OF THE CLAIM WITHIN THE PURVIEW OF SECTION 3477, REVISED STATUTES, BUT RATHER THE CASE OF THE CLAIM OF A DEFUNCT CORPORATION, THE AMOUNT OF WHICH IS PAYABLE TO THE SUCCESSOR OR LEGAL REPRESENTATIVE OF THE FORMER CORPORATION.

ANSWERING YOUR QUESTIONS SPECIFICALLY, YOU ARE ADVISED THAT WHERE EITHER AN INDIVIDUAL OR A CORPORATION HAVING A CONTRACT WITH, OR A VALID CLAIM AGAINST, THE GOVERNMENT SELLS HIS OR ITS ENTIRE BUSINESS TO ANOTHER INDIVIDUAL OR CORPORATION, AS DISTINGUISHED FROM MERELY AN ASSIGNMENT OF THE GOVERNMENT CONTRACT, THE TRANSFEREE MAY BE RECOGNIZED BY THE UNITED STATES AS THE LAWFUL SUCCESSOR IN INTEREST OF THE CONTRACTOR OR CLAIMANT PROVIDED DEFINITE EVIDENCE OF THE SALE OR TRANSFER OF THE BUSINESS IS FILED, TOGETHER WITH A STATEMENT OR OTHER SHOWING BY THE TRANSFEREE IN CASE OF AN UNCOMPLETED CONTRACT THAT HE OR IT UNDERTAKES TO FURNISH THE SERVICE OR SUPPLIES IN ACCORDANCE WITH THE CONTRACT PROVISIONS AND A STATEMENT OR OTHER SHOWING BY THE ORIGINAL CONTRACTOR OR CLAIMANT WAIVING ALL RIGHTS THEREUNDER AS AGAINST THE UNITED STATES. A NEW PERFORMANCE BOND, ALSO, SHOULD BE REQUIRED TO COVER PERFORMANCE BY THE NEW PRINCIPAL, IF THERE WAS A BOND UNDER THE ORIGINAL CONTRACT.

IN THE CASE OF A PUBLIC UTILITY OR SERVICE CORPORATION FURNISHING A NUMBER OF KINDS OF SERVICE, SUCH AS HEAT, GAS, ELECTRICITY, OR WATER, THE TRANSFER TO ANOTHER CORPORATION OF THE ENTIRE PORTION OF ITS BUSINESS AS PERTAINS TO THE KIND OF SERVICE EMBRACED IN THE CONTRACT WITH THE GOVERNMENT IS NOT REQUIRED TO BE CONSIDERED AN ASSIGNMENT OF THE CONTRACT OR CLAIM WITHIN THE PURVIEW OF SECTIONS 3737 OR 3477, REVISED STATUTES,PROVIDED EVIDENCE, AS REQUIRED IN THE FOREGOING PARAGRAPH, BE FURNISHED.