B-137321, OCT 13, 1958

B-137321: Oct 13, 1958

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SECRETARY: REFERENCE IS MADE TO LETTER DATED SEPTEMBER 5. IS STATED TO BE INDEBTED TO THE UNITED STATES IN THE AMOUNT OF SOME $63. THE ASSIGNMENT OF ALL SUMS DUE AND TO BECOME DUE UNDER THE CONTRACT INVOLVED TO THE PROVIDENT TRUST COMPANY WAS MADE PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940. WAS EFFECTIVE ON OR BEFORE APRIL 1. THE CONTRACT IS STATED TO CONTAIN THE USUAL "NO SET -OFF" PROVISION PROHIBITING ANY REDUCTION OR SET-OFF FROM AMOUNTS PAYABLE TO THE ASSIGNEE: "FOR ANY LIABILITY OF THE ASSIGNOR ON ACCOUNT OF *** TAXES. IT IS FURTHER STATED THAT THE ASSIGNMENT TO THE BANK WAS MADE AS COLLATERAL FOR LOANS MADE BY THE BANK TO THE CONTRACTOR FROM TIME TO TIME OVER A PERIOD OF YEARS.

B-137321, OCT 13, 1958

PRECIS-UNAVAILABLE

MR. SECRETARY:

REFERENCE IS MADE TO LETTER DATED SEPTEMBER 5, 1958, FROM THE ACTING CHIEF, TAX & LITIGATION DIVISION, OFFICE OF THE JUDGE ADVOCATE GENERAL, HEADQUARTERS, UNITED STATES AIR FORCE (FILE NO. AFCJA-15), REQUESTING OUR ADVICE WHETHER PAYMENT SHOULD BE MADE TO THE PROVIDENT TRUST COMPANY, PITTSBURGH, PENNSYLVANIA, AS ASSIGNEE OF THE PROCEEDS OF SOME $36,000 PAYABLE UNDER CONTRACT NO. AF 40(604)-7101 WITH FORT PITT PACKAGING INTERNATIONAL, INC.

FORT PITT PACKAGING INTERNATIONAL, INC., IS STATED TO BE INDEBTED TO THE UNITED STATES IN THE AMOUNT OF SOME $63,000 FOR UNPAID WITHHOLDING TAXES. THE ASSIGNMENT OF ALL SUMS DUE AND TO BECOME DUE UNDER THE CONTRACT INVOLVED TO THE PROVIDENT TRUST COMPANY WAS MADE PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED, AND WAS EFFECTIVE ON OR BEFORE APRIL 1, 1957. THE CONTRACT IS STATED TO CONTAIN THE USUAL "NO SET -OFF" PROVISION PROHIBITING ANY REDUCTION OR SET-OFF FROM AMOUNTS PAYABLE TO THE ASSIGNEE:

"FOR ANY LIABILITY OF THE ASSIGNOR ON ACCOUNT OF *** TAXES, SOCIAL SECURITY CONTRIBUTIONS, OR THE WITHHOLDING OR NONWITHHOLDING OF TAXES OR SOCIAL SECURITY CONTRIBUTIONS, WHETHER ARISING FROM OR INDEPENDENTLY OF SUCH CONTRACT."

IT IS FURTHER STATED THAT THE ASSIGNMENT TO THE BANK WAS MADE AS COLLATERAL FOR LOANS MADE BY THE BANK TO THE CONTRACTOR FROM TIME TO TIME OVER A PERIOD OF YEARS, AND THAT THE CONTRACTOR PRESENTLY OWES THE BANK SOME $130,000 WITH THE ASSIGNMENT AS THE ONLY SECURITY.

ON THE BASIS OF THE FACTS AS STATED ABOVE, AND SO LONG AS THE BANK IS NOT ACTING MERELY AS AN ASSIGNEE FOR COLLECTION ON BEHALF OF THE CONTRACTOR, IT APPEARS THAT CONTRACT PAYMENTS SHOULD BE MADE TO THE ASSIGNEE BANK. SEE 37 COMP. GEN. 318.