A-3961, AUGUST 16, 1924, 4 COMP. GEN. 184

A-3961: Aug 16, 1924

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CONTRACT ASSIGNMENTS - CORPORATION MERGERS - CHANGE IN CORPORATE NAME THE MERGER OF A CORPORATION OR THE CHANGE OF THE CORPORATE NAME DOES NOT OPERATE TO ANNUAL EXISTING CONTRACTS BETWEEN SUCH CORPORATIONS AND THE GOVERNMENT AND IS NOT OF ITSELF A CHANGE IN THE CONTRACT RESPONSIBILITY. IN CASES WHERE CONTRACTING CORPORATIONS OR INDIVIDUALS HAVE CHANGED THEIR CORPORATE NAMES OR MERGED THEIR INTERESTS. DOES NOT CONSTITUTE AN ASSIGNMENT OF A CLAIM AGAINST THE UNITED STATES SUCH AS IS PROHIBITED BY SECTION 3737. 1924: I HAVE YOUR LETTER OF JULY 10. RELATIVE TO THE ASSIGNMENT OF CERTAIN CONTRACTS AND REQUESTING A DECISION WHETHER OR NOT THE TREASURY DEPARTMENT MAY CONTINUE TO USE THE FORMS OF ASSIGNMENT WHICH HAVE HERETOFORE BEEN RECOGNIZED BY THE GENERAL ACCOUNTING OFFICE.

A-3961, AUGUST 16, 1924, 4 COMP. GEN. 184

CONTRACT ASSIGNMENTS - CORPORATION MERGERS - CHANGE IN CORPORATE NAME THE MERGER OF A CORPORATION OR THE CHANGE OF THE CORPORATE NAME DOES NOT OPERATE TO ANNUAL EXISTING CONTRACTS BETWEEN SUCH CORPORATIONS AND THE GOVERNMENT AND IS NOT OF ITSELF A CHANGE IN THE CONTRACT RESPONSIBILITY. IN CASES WHERE CONTRACTING CORPORATIONS OR INDIVIDUALS HAVE CHANGED THEIR CORPORATE NAMES OR MERGED THEIR INTERESTS, INCLUDING GOVERNMENT CONTRACTS, AND THE GOVERNMENT DESIRES TO ACKNOWLEDGE THE MERGERS, ETC., THE SAME MAY BE ACCOMPLISHED IN THE FORM OF A SUPPLEMENTAL AGREEMENT. SUCH A SUPPLEMENTAL AGREEMENT, HOWEVER, DOES NOT CONSTITUTE AN ASSIGNMENT OF A CLAIM AGAINST THE UNITED STATES SUCH AS IS PROHIBITED BY SECTION 3737, REVISED STATUTES.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, AUGUST 16, 1924:

I HAVE YOUR LETTER OF JULY 10, 1924, RELATIVE TO THE ASSIGNMENT OF CERTAIN CONTRACTS AND REQUESTING A DECISION WHETHER OR NOT THE TREASURY DEPARTMENT MAY CONTINUE TO USE THE FORMS OF ASSIGNMENT WHICH HAVE HERETOFORE BEEN RECOGNIZED BY THE GENERAL ACCOUNTING OFFICE, WHEN USED IN CONNECTION WITH CHANGES OF NAME AND OWNERSHIP.

AS INDICATED IN OFFICE LETTER OF JUNE 24, 1924, IN REGARD TO THE CONTRACTS OF THE BIRMINGHAM RAILWAY, LIGHT AND POWER CO., AND THE EASTERN WISCONSIN POWER CO., THE DEFECT IN THE SO-CALLED ASSIGNMENT WAS THAT NOTHING APPEARED SHOWING THAT THE ACTION TAKEN WAS BECAUSE OF CHANGES IN THE CORPORATE NAMES. WHERE THE FORM OF SO-CALLED ASSIGNMENT IS USED TO TAKE CARE OF CHANGES IN THE NAMES OF CONTRACTORS IT WOULD SEEM ADVISABLE TO SHOW THE FACTS AS TO THE PURPOSE OF THE ACTION, WHICH, IN REALITY, DOES NOT REQUIRE AN ASSIGNMENT OR A TRANSFER.

IN REGARD TO THE TRANSFER OF CONTRACTS TO WHICH THE GOVERNMENT IS A PARTY, SECTION 3737, REVISED STATUTES, PROVIDES:

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.

THIS STATUTE HAS OFTEN BEEN THE SUBJECT OF CONSTRUCTION AND IT HAS BEEN UNIFORMLY HELD THAT ITS PURPOSE IS THE PROTECTION OF THE UNITED STATES. THE TRANSFER OR ASSIGNMENT OF A CONTRACT SO AS TO ENABLE THE ASSIGNEE TO PERFORM THE SERVICE AND CLAIM THE COMPENSATION STIPULATED IS FORBIDDEN AND THE UNITED STATES CAN NOT BE HELD LIABLE TO THE ASSIGNEE, AS SUCH, FOR THE SERVICE. THE MERGER OF A CORPORATION OR THE CHANGE OF THE CORPORATE NAME DOES NOT OPERATE TO ANNUL ITS EXISTING CONTRACTS WITH THE GOVERNMENT, AND IS NOT OF ITSELF A CHANGE IN THE CONTRACT RESPONSIBILITY. IF IT WERE TO BE HELD THAT THE ASSIGNMENT OR TRANSFER OF A CONTRACT WOULD OPERATE TO AVOID THE CONTRACT IT WOULD HAVE A SERIOUS EFFECT ON ALL GOVERNMENT CONTRACTS, IN THAT THE PARTY MAKING THE CONTRACT WITH THE UNITED STATES COULD RELEASE HIMSELF FROM HIS CONTRACTUAL OBLIGATION BY TRANSFERRING OR ASSIGNING HIS INTEREST THEREIN.

IN CASES WHERE CONTRACTING CORPORATIONS OR INDIVIDUALS HAVE CHANGED THEIR CORPORATE NAMES OR MERGED THEIR INTERESTS WITH ANOTHER, INCLUDING GOVERNMENT CONTRACTS, AND THE GOVERNMENT DESIRES TO ACKNOWLEDGE THE MERGERS, ETC., BY RECORDING THE CHANGES IN NAMES, INSTEAD OF USING THE FORM OF SO-CALLED CERTIFICATE OF ASSIGNMENT THAT HAS HERETOFORE BEEN USED, IT WOULD SEEM THAT THE PURPOSE COULD BE MORE EFFECTIVELY ACCOMPLISHED IN THE FORM OF A SUPPLEMENTAL AGREEMENT,RECITING BRIEFLY THE FACTS CONNECTED WITH THE CHANGES AND THE REASONS THEREFOR, THE PARTIES AGREEING THEREIN TO ASSUME THEIR MUTUAL RESPONSIBILITIES AND THE GOVERNMENT ACCEPTING THE CHANGES IN SERVICE, ETC., BUT RESERVING ALL RIGHTS EXISTING OR ARISING UNDER THE ORIGINAL AGREEMENT AS AGAINST THE ORIGINAL AND NEW PARTIES.

SUCH TRANSACTIONS ARE NOT TO BE CONSIDERED ASSIGNMENTS OR TRANSFERS AND ARE NOT TO BE SO DENOMINATED. IN CASES WHERE CONTRACTORS HAVE BEEN ADJUDICATED BANKRUPT OR THERE HAS BEEN A VOLUNTARY OR INVOLUNTARY DISSOLUTION BY ACT OF THE PARTIES OR TRANSFER BY OPERATION OF LAW, PROPER DOCUMENTARY EVIDENCE THEREOF SHOULD ACCOMPANY AND BE MADE A PART OF THE SUPPLEMENTAL AGREEMENT.