A-59514, JANUARY 23, 1935, 14 COMP. GEN. 567

A-59514: Jan 23, 1935

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CONTRACTS - PAYMENT OF BALANCE INTO COURT WHERE A CONTRACTOR DEFAULTS AND THE GOVERNMENT COMPLETES THE CONTRACT AT A TOTAL COST LESS THAN THE CONTRACT PRICE AND SUIT IS PENDING UNDER THE ACT OF AUGUST 13. IF AND WHEN JUDGMENT IS RENDERED IN THEIR FAVOR. IS NOT AUTHORIZED. ABSCONDED AND THEIR WHEREABOUTS HAVE SINCE BEEN UNKNOWN TO THE NAVY DEPARTMENT. THEIR RIGHT TO PROCEED WITH THE WORK WAS TERMINATED AUGUST 31. NOY-1406 WAS $25. 593.38 AND DATE OF COMPLETION WAS OCTOBER 16 (18). THE VALUE OF THE MATERIALS DELIVERED AND WORK DONE BY THE CONTRACTORS AT THE TIME OF THEIR DEFAULT WAS ESTIMATED BY THE BOARD OF APPRAISAL APPOINTED UNDER THE TERMS OF THE CONTRACT AT $28. IT WOULD APPEAR THAT SAID PERSONS ARE ENTITLED TO THE DIFFERENCE BETWEEN THE CONSIDERATION FOR PERFORMANCE OF SAID CONTRACT AND THE AMOUNT OF EXPENDITURES MADE BY THE GOVERNMENT.

A-59514, JANUARY 23, 1935, 14 COMP. GEN. 567

CONTRACTS - PAYMENT OF BALANCE INTO COURT WHERE A CONTRACTOR DEFAULTS AND THE GOVERNMENT COMPLETES THE CONTRACT AT A TOTAL COST LESS THAN THE CONTRACT PRICE AND SUIT IS PENDING UNDER THE ACT OF AUGUST 13, 1894, 28 STAT. 278, AGAINST THE CONTRACT SURETY ON BEHALF OF PERSONS WHO FURNISHED LABOR AND/OR MATERIAL, PAYMENT INTO COURT BY DISBURSING OFFICERS OF THE BALANCE BELIEVED DUE FROM THE GOVERNMENT FOR DISTRIBUTION TO THE CLAIMANTS, IF AND WHEN JUDGMENT IS RENDERED IN THEIR FAVOR, IS NOT AUTHORIZED.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE NAVY, JANUARY 23, 1935:

THERE HAS BEEN RECEIVED YOUR LETTER DATED DECEMBER 31, 1934, AS FOLLOWS:

DURING PERFORMANCE OF CONTRACT NO. NOY-1406, FOR INSTALLATION OF SEWER AND STORM DRAINING SYSTEMS AT THE NAVAL AIR STATION, PENSACOLA, FLORIDA, THE CONTRACTORS, JACOBSON AND MORTENSON, ABSCONDED AND THEIR WHEREABOUTS HAVE SINCE BEEN UNKNOWN TO THE NAVY DEPARTMENT. THEIR RIGHT TO PROCEED WITH THE WORK WAS TERMINATED AUGUST 31, 1932, AND THE SURETY ON THE PERFORMANCE BOND ELECTED NOT TO COMPLETE THE WORK. THE GOVERNMENT COMPLETED THE WORK COVERED BY CONTRACT NO. NOY-1406 DURING MAY 1933 BY STATION LABOR.

THE ORIGINAL CONSIDERATION NAMED IN CONTRACT NO. NOY-1406 WAS $25,593.38 AND DATE OF COMPLETION WAS OCTOBER 16 (18), 1932. MINOR CHANGES MADE PRIOR TO THE DATE THE CONTRACTOR ABSCONDED, DURING AUGUST 1932 INCREASED THE CONSIDERATION TO $25,690.18, AND EXTENDED THE DATE OF COMPLETION TO OCTOBER 25, 1932.

PROGRESS PAYMENTS MADE TO THE CONTRACTOR AMOUNTED TO $15,765.29, AND THE COST OF COMPLETION OF THE WORK BY THE GOVERNMENT AMOUNTED TO $7,680.30, MAKING A TOTAL EXPENDITURE BY THE GOVERNMENT OF $21,445.59.

THE TOTAL EXPENDITURES BY THE GOVERNMENT FOR THE PERFORMANCE OF THE WORK CONTEMPLATED BY CONTRACT NO. NOY-1406 AMOUNTED TO $4,244.59 LESS THAN THE CONSIDERATION SPECIFIED. A SUIT, UNDER THE PROVISIONS OF THE ACT OF AUGUST 13, 1894 (28 STAT. 278), AS AMENDED BY THE ACT OF FEBRUARY 24, 1905 (33 STAT. 811), HAS BEEN INSTITUTED AGAINST THE SURETY ON THE BOND GIVEN FOR THE FAITHFUL PERFORMANCE OF CONTRACT NO. NOY-1406 IN THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF FLORIDA, AT JACKSONVILLE, FLORIDA, ON BEHALF OF THE PERSONS WHO FURNISHED LABOR AND/OR MATERIAL USED IN PERFORMANCE OF THE WORK CONTEMPLATED BY SAID CONTRACT.

THE VALUE OF THE MATERIALS DELIVERED AND WORK DONE BY THE CONTRACTORS AT THE TIME OF THEIR DEFAULT WAS ESTIMATED BY THE BOARD OF APPRAISAL APPOINTED UNDER THE TERMS OF THE CONTRACT AT $28,038.15.

AS THE UNITED STATES RECEIVED THE BENEFIT OF THE LABOR AND MATERIALS FURNISHED BY SUBCONTRACTORS, IT WOULD APPEAR THAT SAID PERSONS ARE ENTITLED TO THE DIFFERENCE BETWEEN THE CONSIDERATION FOR PERFORMANCE OF SAID CONTRACT AND THE AMOUNT OF EXPENDITURES MADE BY THE GOVERNMENT, VIZ, THE SUM OF $4,244.59, AND IT IS PROPOSED TO PAY THIS SUM TO THE ABOVE- MENTIONED COURT FOR DISTRIBUTION AMONG THE CLAIMANTS IF AND WHEN JUDGMENT IS RENDERED IN THEIR FAVOR.

IT IS REQUESTED THAT THE NAVY DEPARTMENT BE INFORMED WHETHER THE PAYMENT PROPOSED WILL BE APPROVED BY YOUR OFFICE.

THE PERTINENT PROVISIONS OF THE INVOLVED CONTRACT ARE AS FOLLOWS:

ARTICLE 9. DELAYS--- DAMAGES.--- IF THE CONTRACTOR REFUSES OR FAILS TO PROSECUTE THE WORK, OR ANY SEPARABLE PART THEREOF, WITH SUCH DILIGENCE AS WILL INSURE ITS COMPLETION WITHIN THE TIME SPECIFIED IN ARTICLE 1, OR ANY EXTENSION THEREOF OR FAILS TO COMPLETE SAID WORK WITHIN SUCH TIME, THE GOVERNMENT MAY, BY WRITTEN NOTICE TO THE CONTRACTOR, TERMINATE HIS RIGHT TO PROCEED WITH THE WORK OR SUCH PART OF THE WORK AS TO WHICH THERE HAS BEEN DELAY. IN SUCH EVENT, THE GOVERNMENT MAY TAKE OVER THE WORK AND PROSECUTE THE SAME TO COMPLETION BY CONTRACT OR OTHERWISE, AND THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE TO THE GOVERNMENT FOR ANY EXCESS COST OCCASIONED THE GOVERNMENT THEREBY. IF THE CONTRACTOR'S RIGHT TO PROCEED IS SO TERMINATED, THE GOVERNMENT MAY TAKE POSSESSION OF AND UTILIZE IN COMPLETING THE WORK SUCH MATERIALS, APPLIANCES, AND PLANT AS MAY BE ON THE SITE OF THE WORK AND NECESSARY THEREFOR. IF THE GOVERNMENT DOES NOT TERMINATE THE RIGHT OF THE CONTRACTOR TO PROCEED, THE CONTRACTOR SHALL CONTINUE THE WORK, IN WHICH EVENT THE ACTUAL DAMAGES FOR THE DELAY WILL BE IMPOSSIBLE TO DETERMINE AND IN LIEU THEREOF THE CONTRACTOR SHALL PAY TO THE GOVERNMENT AS FIXED, AGREED, AND LIQUIDATED DAMAGES FOR EACH CALENDAR DAY OF DELAY UNTIL THE WORK IS COMPLETED OR ACCEPTED THE AMOUNT AS SET FORTH IN THE SPECIFICATIONS OR ACCOMPANYING PAPERS AND THE CONTRACTOR AND HIS SURETIES SHALL BE LIABLE FOR THE AMOUNT THEREOF: PROVIDED, THAT THE RIGHT OF THE CONTRACTOR TO PROCEED SHALL NOT BE TERMINATED OR THE CONTRACTOR CHARGED WITH LIQUIDATED DAMAGES BECAUSE OF ANY DELAYS IN THE COMPLETION OF THE WORK DUE TO UNFORESEEABLE CAUSES BEYOND THE CONTROL AND WITHOUT THE FAULT OR NEGLIGENCE OF THE CONTRACTOR, INCLUDING, BUT NOT RESTRICTED TO, ACTS OF GOD, OR OF THE PUBLIC ENEMY, ACTS OF THE GOVERNMENT, FIRES, FLOODS, EPIDEMICS, QUARANTINE RESTRICTIONS, STRIKES, FREIGHT EMBARGOES, AND UNUSUALLY SEVERE WEATHER OR DELAYS OF SUBCONTRACTORS DUE TO SUCH CAUSES: PROVIDED FURTHER, THAT THE CONTRACTOR SHALL WITHIN TEN DAYS FROM THE BEGINNING OF ANY SUCH DELAY NOTIFY THE CONTRACTING OFFICER IN WRITING OF THE CAUSES OF DELAY, WHO SHALL ASCERTAIN THE FACTS AND THE EXTENT OF THE DELAY, AND HIS FINDINGS OF FACTS THEREON SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO, SUBJECT ONLY TO APPEAL, WITHIN THIRTY DAYS, BY THE CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION ON SUCH APPEAL AS TO THE FACTS OF DELAY SHALL BE FINAL AND CONCLUSIVE ON THE PARTIES HERETO.

ARTICLE 15. DISPUTES.--- EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS CONTRACT, ALL DISPUTES CONCERNING QUESTIONS OF FACT ARISING UNDER THIS CONTRACT SHALL BE DECIDED BY THE CONTRACTING OFFICER OR HIS DULY AUTHORIZED REPRESENTATIVE, SUBJECT TO WRITTEN APPEAL BY THE CONTRACTOR WITHIN THIRTY DAYS TO THE HEAD OF THE DEPARTMENT CONCERNED, WHOSE DECISION SHALL BE FINAL AND CONCLUSIVE UPON THE PARTIES THERETO AS TO SUCH QUESTIONS OF FACT. IN THE MEANTIME THE CONTRACTOR SHALL DILIGENTLY PROCEED WITH THE WORK AS DIRECTED.

ARTICLE 16. PAYMENTS TO CONTRACTORS.--- (A) UNLESS OTHERWISE PROVIDED IN THE SPECIFICATIONS, PARTIAL PAYMENTS WILL BE MADE AS THE WORK PROGRESSES AT THE END OF EACH CALENDAR MONTH, OR AS SOON THEREAFTER AS PRACTICABLE, ON ESTIMATES MADE AND APPROVED BY THE CONTRACTING OFFICER. IN PREPARING ESTIMATES THE MATERIAL DELIVERED ON THE SITE AND PREPARATORY WORK DONE MAY BE TAKEN INTO CONSIDERATION.

(B) IN MAKING SUCH PARTIAL PAYMENTS THERE SHALL BE RETAINED 10 PERCENT ON THE ESTIMATED AMOUNT UNTIL FINAL COMPLETION AND ACCEPTANCE OF ALL WORK COVERED BY THE CONTRACT:PROVIDED, HOWEVER, THAT THE CONTRACTING OFFICER, AT ANY TIME AFTER 50 PERCENT OF THE WORK HAS BEEN COMPLETED, IF HE FINDS THAT SATISFACTORY PROGRESS IS BEING MADE, MAY MAKE ANY OF THE REMAINING PARTIAL PAYMENTS IN FULL: AND PROVIDED FURTHER, THAT ON COMPLETION AND ACCEPTANCE OF EACH SEPARATE BUILDING, VESSEL, PUBLIC WORK, OR OTHER DIVISION OF THE CONTRACT, ON WHICH THE PRICE IS STATED SEPARATELY IN THE CONTRACT, PAYMENT MAY BE MADE IN FULL, INCLUDING RETAINED PERCENTAGES THEREON, LESS AUTHORIZED DEDUCTIONS.

(C) ALL MATERIAL AND WORK COVERED BY PARTIAL PAYMENTS MADE SHALL THEREUPON BECOME THE SOLE PROPERTY OF THE GOVERNMENT, BUT THIS PROVISION SHALL NOT BE CONSTRUED AS RELIEVING THE CONTRACTOR FROM THE SOLE RESPONSIBILITY FOR THE CARE AND PROTECTION OF MATERIALS AND WORK UPON WHICH PAYMENTS HAVE BEEN MADE OR THE RESTORATION OF ANY DAMAGED WORK, OR AS A WAIVER OF THE RIGHT OF THE GOVERNMENT TO REQUIRE THE FULFILLMENT OF ALL OF THE TERMS OF THE CONTRACT.

(D) UPON COMPLETION AND ACCEPTANCE OF ALL WORK REQUIRED HEREUNDER, THE AMOUNT DUE THE CONTRACTOR UNDER THIS CONTRACT WILL BE PAID UPON THE PRESENTATION OF A PROPERLY EXECUTED AND DULY CERTIFIED VOUCHER THEREFOR, AFTER THE CONTRACTOR SHALL HAVE FURNISHED THE GOVERNMENT WITH A RELEASE, IF REQUIRED, OF ALL CLAIMS AGAINST THE GOVERNMENT ARISING UNDER AND BY VIRTUE OF THIS CONTRACT, OTHER THAN SUCH CLAIMS, IF ANY, AS MAY BE SPECIFICALLY EXCEPTED BY THE CONTRACTOR FROM THE OPERATION OF THE RELEASE IN STATED AMOUNTS TO BE SET FORTH THEREIN.

PARAGRAPH 29 OF THE GENERAL PROVISIONS FORMING PART OF THE SPECIFICATIONS FOR CONTRACTS FOR PUBLIC WORKS PROVIDES:

PROCEDURE AFTER TERMINATION OF RIGHT OF CONTRACTOR TO PROCEED.--- WHEN THE RIGHT OF THE CONTRACTOR TO PROCEED IS TERMINATED AS PROVIDED IN ARTICLE 9 OF THE CONTRACT A BOARD OF OFFICERS OR OTHER REPRESENTATIVES OF THE GOVERNMENT SHALL BE APPOINTED, WHICH SHALL ESTIMATE THE VALUE OF ALL MATERIALS DELIVERED AND WORK DONE, INCLUDING A FAIR PROFIT, AND SUBMIT ITS ESTIMATE TO THE CHIEF OF THE BUREAU OF YARDS AND DOCKS, WHO SHALL DETERMINE THE VALUE. THE GOVERNMENT MAY PROCEED TO COMPLETE THE WORK ACCORDING TO THE CONTRACT, WITH SUCH CHANGES AS MAY SUBSEQUENTLY BE FOUND NECESSARY OR DESIRABLE, IN SUCH MANNER AND BY SUCH MEANS AS IT MAY DEEM ADVISABLE, AND MAY, IF THE INTERESTS OF THE GOVERNMENT DEMAND IT, USE OR EMPLOY ANY MATERIAL, TOOLS, MACHINERY, APPLIANCES, AND ACCESSORIES BELONGING TO OR FURNISHED BY THE CONTRACTOR FOR USE IN CONNECTION WITH THE WORK COVERED BY THE CONTRACT. SAID BOARD SHALL ALSO INVENTORY AND ESTIMATE THE VALUE OF SAID MATERIAL, TOOLS, MACHINERY, APPLIANCES, AND ACCESSORIES, AND SAID INVENTORY AND ESTIMATE SHALL, IF APPROVED BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS, BE CONCLUSIVE IN ANY ACCOUNTING BETWEEN THE PARTIES TO THE CONTRACT, SUBJECT TO THE RIGHT OF APPEAL PROVIDED FOR IN ARTICLE 15 OF THE ONTRACT: PROVIDED, THAT THE GOVERNMENT SHALL NOT BE LIABLE FOR DEPRECIATION BY ORDINARY WEAR AND TEAR, OR INJURY OR DESTRUCTION BY SUPERIOR FORCE, OR FOR SUCH MATERIALS OR ARTICLES AS ARE CONSUMED IN USE. UPON THE COMPLETION OF THE WORK THE COST OF COMPLETING IT SHALL BE ASCERTAINED AND DETERMINED AND WHEN APPROVED BY THE CHIEF OF THE BUREAU OF YARDS AND DOCKS SHALL BE CONCLUSIVE UPON ALL PARTIES, SUBJECT TO THE RIGHT OF APPEAL PROVIDED FOR IN ARTICLE 15 OF THE CONTRACT. SHOULD THE TOTAL OF THE PAYMENTS MADE TO THE CONTRACTOR PLUS THE COST OF COMPLETING THE WORK EXCEED THE CONTRACT PRICE, MODIFIED BY THE COST OF ANY CHANGES MADE BEFORE OR AFTER THE TERMINATION OF THE RIGHT OF THE CONTRACTOR TO PROCEED, THE DIFFERENCE SHALL BE CHARGED TO THE CONTRACTOR, WHO PROMISES TO PAY IT UPON DEMAND. SHOULD THE TOTAL COST OF THE WORK BE LESS THAN THE CONTRACT PRICE, THE CONTRACTOR SHALL BE CREDITED WITH THE DIFFERENCE BETWEEN THE CONTRACT PRICE, AS MODIFIED BY CHANGES, AND THE TOTAL COST OF THE WORK, PROVIDED THE AMOUNT SO CREDITED SHALL NOT EXCEED THE VALUE OF THE MATERIALS DELIVERED AND WORK DONE BY THE CONTRACTOR, LESS PREVIOUS PAYMENTS TO HIM.

TO GUARANTEE THE PERFORMANCE OF THE SAID CONTRACT IN ACCORDANCE WITH THE CONDITIONS THEREOF, THE CONTRACTOR, JACOBSON AND MORTENSON, AS PRINCIPAL, AND THE NATIONAL SURETY CO., OF NEW YORK CITY, N.Y., AS SURETY, EXECUTED A PERFORMANCE BOND IN THE SUM OF $12,797, DATED MARCH 22, 1932, PAYABLE TO THE UNITED STATES OF AMERICA.

THE RECORD HERE AVAILABLE DOES NOT DISCLOSE THAT EITHER THE CONTRACTOR OR THE SURETY HAS MADE ANY CLAIM TO THE BALANCE DUE FROM THE UNITED STATES. HOWEVER, IT IS REPORTED THAT A SUIT UNDER THE PROVISIONS OF THE ACT OF AUGUST 13, 1894, 28 STAT. 278, AS AMENDED BY THE ACT OF FEBRUARY 24, 1905, 33 STAT. 811, HAS BEEN INSTITUTED IN THE DISTRICT COURT OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF FLORIDA AGAINST THE SURETY ON THE INVOLVED BOND ON BEHALF OF PERSONS WHO SUPPLIED THE CONTRACTOR WITH LABOR AND/OR MATERIALS IN THE PROSECUTION OF THE INVOLVED WORK. YOU PROPOSE TO PAY THE SAID BALANCE, $4,244.59, INTO COURT FOR DISTRIBUTION AMONG THE CLAIMANTS IF AND WHEN JUDGMENT IS RENDERED IN THEIR FAVOR.

THE PERFORMANCE BOND PROVIDED:

NOW, THEREFORE, IF THE PRINCIPAL SHALL WELL AND TRULY PERFORM AND FULFILL ALL THE UNDERTAKINGS, COVENANTS, TERMS, CONDITIONS, AND AGREEMENTS OF SAID CONTRACT DURING THE ORIGINAL TERM OF SAID CONTRACT AND ANY EXTENSIONS THEREOF THAT MAY BE GRANTED BY THE GOVERNMENT, WITH OR WITHOUT NOTICE TO THE SURETY, AND DURING THE LIFE OF ANY GUARANTY REQUIRED UNDER THE CONTRACT, AND SHALL ALSO WELL AND TRULY PERFORM AND FULFILL ALL THE UNDERTAKINGS, COVENANTS, TERMS, CONDITIONS, AND AGREEMENTS OF ANY AND ALL DULY AUTHORIZED MODIFICATIONS OF SAID CONTRACT THAT MAY HEREAFTER BE MADE, NOTICE OF WHICH MODIFICATIONS TO THE SURETY BEING HEREBY WAIVED, AND IF SAID CONTRACT IS FOR THE CONSTRUCTION OR REPAIR OF A PUBLIC BUILDING OR A PUBLIC WORK WITHIN THE MEANING OF THE ACT OF AUGUST 13, 1894, AS AMENDED BY ACT OF FEBRUARY 25, 1905, SHALL PROMPTLY MAKE PAYMENT TO ALL PERSONS SUPPLYING THE PRINCIPAL WITH LABOR AND MATERIALS IN THE PROSECUTION OF THE WORK PROVIDED FOR IN SAID CONTRACT, AND ANY SUCH AUTHORIZED EXTENSION OR MODIFICATION THEREOF, THEN THIS OBLIGATION TO BE VOID; OTHERWISE TO REMAIN IN FULL FORCE AND VIRTUE.

IT THUS APPEARS THAT THE SURETY MAY BE HELD LIABLE TO PAY THE CLAIMS OF PERSONS SUPPLYING THE CONTRACTOR WITH LABOR OR MATERIALS, WITHIN THE LIMIT OF THE PENALTY OF THE BOND. IT IS A WELL-SETTLED PRINCIPLE OF LAW THAT WHERE A SURETY UPON A CONTRACTOR'S BOND HAS PAID CLAIMS IT WAS OBLIGATED TO PAY, IF ITS PRINCIPAL DID NOT, IT IS ENTITLED BY RIGHT OF SUBROGATION TO BE REIMBURSED FOR SUCH PAYMENTS FROM AND NOT TO EXCEED THE AMOUNT OF ANY FUNDS IN THE HANDS OF THE GOVERNMENT OTHERWISE DUE THE CONTRACTOR FOR WORK PERFORMED UNDER THE INVOLVED CONTRACT. SEE 8 COMP. GEN. 318, 323, AND AUTHORITIES THERE CITED; SEE, ALSO, FARMERS BANK V. HAYES, 58 FED./2D) 34, 37, AND AUTHORITIES THERE CITED. HOWEVER, IN THE INSTANT CASE IT DOES NOT APPEAR THAT THE SURETY HAS MADE ANY SUCH PAYMENTS OR THAT IT IS CONTEMPLATED THAT THE SURETY WILL MAKE SUCH PAYMENTS PRIOR TO THE PROPOSED PAYMENT INTO COURT BY THE UNITED STATES. NEITHER DOES IT APPEAR THAT ANY ORDER OF COURT HAS BEEN ENTERED, OR IS CONTEMPLATED, DIRECTING PAYMENT OF THE INVOLVED BALANCE INTO COURT. MOREOVER, IT HAS BEEN HELD THAT DISTRICT COURTS MAY NOT ENTER ORDERS DIRECTING THE PAYMENT BY DISBURSING OFFICERS OF PUBLIC MONEY TO THE CLERK OF COURT FOR DISTRIBUTION. SEE HOWDEN V. SHIPBUILDING CORPORATION, 17 FED./2D) 530, 532, CITING COVINGTON BRIDGE COMPANY V. HAGER, 203 U.S. 109; SEE, ALSO, BARBER V. HETFIELD, 4 FED./2D) 245. PAYMENTS UNDER SUCH CIRCUMSTANCES MIGHT NOT AFFORD ACQUITTANCE TO THE UNITED STATES. SEE UNITED STATES V. BORCHERLING, 185 U.S. 223.

A SOMEWHAT SIMILAR SITUATION WAS DISCUSSED IN DECISION DATED FEBRUARY 10, 1934, A-53234, TO THE SECRETARY OF WAR. IN THAT CASE, HOWEVER, THE COURT HAD DIRECTED A UNITED STATES DISTRICT ENGINEER TO DEPOSIT THE AMOUNT DUE THE CONTRACTOR WITH THE CLERK OF THE COURT. WHILE DISAPPROVING SUCH PROCEDURE AS A PRECEDENT, BECAUSE NOT AUTHORIZED BY LAW, IT WAS CONCLUDED THAT IN VIEW OF THE FACTS THERE PRESENT, INCLUDING THAT THE SURETY'S LIABILITY WAS FAR IN EXCESS OF THE SMALL AMOUNT DUE CONTRACTOR FROM THE GOVERNMENT AND REQUESTED TO BE DEPOSITED WITH THE COURT, CHECKS MIGHT BE ISSUED IN FAVOR OF THE CONTRACTOR WITH DELIVERY OF THE CHECKS TO THE CLERK OF THE COURT. IN THE INSTANT CASE, IT IS SUGGESTED THAT PROPER PROCEDURE REQUIRES THAT THE UNITED STATES REFRAIN FROM FURTHER INVOLVEMENT IN THE PENDING LITIGATION AND THAT THE CLAIMS OF THE SURETY AND THE CONTRACTOR TO THE SAID BALANCE, REPORTED BY YOU TO BE $4,244.59, BE SUBMITTED FOR THE CONSIDERATION OF THIS OFFICE IF AND WHEN PRESENTED.

SPECIFICALLY, YOU ARE ADVISED THAT ON THE FACTS AS BEFORE ME THE PROPOSED PAYMENT INTO COURT MAY NOT BE APPROVED BY THIS OFFICE.