B-144146, OCTOBER 12, 1960, 40 COMP. GEN. 213

B-144146: Oct 12, 1960

Additional Materials:

Contact:

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

 

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

CONTRACTS -ASSIGNMENTS - CASH DEPOSITS HELD BY THE GOVERNMENT - VALIDITY A CASH DEPOSIT HELD BY THE GOVERNMENT FOR PERFORMANCE OF A CONTRACT IN LIEU OF A PERFORMANCE BOND AND ASSIGNED BY THE CONTRACTOR TO AN ATTORNEY IS NOT A CLAIM AGAINST THE UNITED STATES SUCH AS MAY NOT BE TRANSFERRED OR ASSIGNED EXCEPT AS SPECIFICALLY PROVIDED. IS A PLEDGE HELD BY THE UNITED STATES. SINCE THE ASSIGNMENT IS NOT WITHIN THE EXCEPTIONS IN SECTION 3477. IT IS NOT AN INVALID ASSIGNMENT. OF ALL MONEYS DUE OR TO BECOME DUE UNDER THE CONTRACT IS REGARDED AS A GUARANTY AGREEMENT WHEREBY THE CONTRACTOR PLEDGED THE DEPOSIT. WHICH IS AN AGREEMENT SEPARATE AND DISTINCT FROM THE MAIN CONTRACT. SO THAT THE DEPOSIT WAS NOT INCLUDED IN THE ASSIGNMENT TO THE BANK.

B-144146, OCTOBER 12, 1960, 40 COMP. GEN. 213

CONTRACTS -ASSIGNMENTS - CASH DEPOSITS HELD BY THE GOVERNMENT - VALIDITY A CASH DEPOSIT HELD BY THE GOVERNMENT FOR PERFORMANCE OF A CONTRACT IN LIEU OF A PERFORMANCE BOND AND ASSIGNED BY THE CONTRACTOR TO AN ATTORNEY IS NOT A CLAIM AGAINST THE UNITED STATES SUCH AS MAY NOT BE TRANSFERRED OR ASSIGNED EXCEPT AS SPECIFICALLY PROVIDED, BUT IS A PLEDGE HELD BY THE UNITED STATES; THEREFORE, SINCE THE ASSIGNMENT IS NOT WITHIN THE EXCEPTIONS IN SECTION 3477, REVISED STATUTES, OR THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. 203, IT IS NOT AN INVALID ASSIGNMENT. THE ASSIGNMENT BY A CONTRACTOR OF A CASH DEPOSIT HELD BY THE GOVERNMENT TO AN ATTORNEY SUBSEQUENT TO AN ASSIGNMENT TO A BANK, PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. 203, OF ALL MONEYS DUE OR TO BECOME DUE UNDER THE CONTRACT IS REGARDED AS A GUARANTY AGREEMENT WHEREBY THE CONTRACTOR PLEDGED THE DEPOSIT, WHICH IS AN AGREEMENT SEPARATE AND DISTINCT FROM THE MAIN CONTRACT, SO THAT THE DEPOSIT WAS NOT INCLUDED IN THE ASSIGNMENT TO THE BANK; THEREFORE, THE DEPOSIT MAY BE PAID TO THE ATTORNEY PROVIDED THAT THE CONTRACTOR IS NOT OTHERWISE INDEBTED TO THE UNITED STATES FOR AN OBLIGATION WHICH MATURED PRIOR TO THE ASSIGNMENT.

TO LEROY MITCHELL, DEPARTMENT OF THE INTERIOR, OCTOBER 12, 1960:

OUR ADVICE HAS BEEN REQUESTED AS TO THE PROPER DISPOSITION OF A CASH DEPOSIT IN LIEU OF PERFORMANCE BOND SUBMITTED BY GENE L. MORRISON UNDER CONTRACT NO. 14-11-004-1127. THE MATTER IS THE SUBJECT OF YOUR LETTER OF SEPTEMBER 28, 1960, WITH ENCLOSURES.

GENE L. MORRISON WAS AWARDED THE CONTRACT ON AUGUST 6, 1959. IN LIEU OF THE PERFORMANCE BOND, HE DEPOSITED A CASHIER'S CHECK IN THE AMOUNT OF $2,062 WITH THE BUREAU OF LAND MANAGEMENT. ON SEPTEMBER 9, 1959, CONTRACTOR, PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED, 31 U.S.C. 203, ASSIGNED "ALL THE MONEYS NOW DUE OR HEREINAFTER TO BECOME DUE" UNDER THE CONTRACT TO THE GLENNS FERRY BANK, LTD., OF GLENNS FERRY, IDAHO. RECEIPT OF NOTICE OF THE ASSIGNMENT WAS ACKNOWLEDGED ON SEPTEMBER 11, 1959. EXCEPT FOR LIQUIDATED DAMAGES ASSESSED BY THE BUREAU FOR DELAY IN COMPLETING THE WORK, PAYMENT HAS BEEN MADE IN FULL TO THE SATISFACTION OF ALL INTERESTED PARTIES.

THE CONTRACTOR, ON MAY 24, 1960, ASSIGNED TO VERNON K. SMITH, ATTORNEY AT LAW, THE CASH DEPOSIT, ERRONEOUSLY DESCRIBED IN THE ASSIGNMENT AS IN THE AMOUNT OF $2,250 RATHER THAN $2,062. THE ASSIGNEE OF THE DEPOSIT HAS DEMANDED PAYMENT. THE GLENNS FERRY BANK HAS NOT ASSERTED A CLAIM AGAINST THE DEPOSIT BUT HAS REFUSED TO FURNISH A WAIVER WITH RESPECT TO IT.

NO QUESTION, AS WE UNDERSTAND IT, EXISTS AS TO THE VALIDITY OF THE ASSIGNMENT TO THE BANK. THE ASSIGNMENT HELD BY THE ATTORNEY IS NOT WITHIN EITHER THE EXCEPTIONS IN SECTION 3477, REVISED STATUTES, 31 U.S.C. 203, OR THE ASSIGNMENT OF CLAIMS ACT OF 1940. HOWEVER, SINCE THE DEPOSIT IS HELD BY THE UNITED STATES SUCH AS MAY NOT BE TRANSFERRED OR ASSIGNED EXCEPT AS SPECIFICALLY PROVIDED. SEE 33 COMP. GEN. 262, 263, AND CASES CITED; SEE ALSO AMERICAN MEXICAN CLAIMS BUREAU, INC. V. MORGENTHAU, SECRETARY OF THE TREASURY, ET AL., 26 F.1SUPP. 904. THE ASSIGNMENT TO THE ATTORNEY MAY NOT, THEREFORE, BE REGARDED AS INVALID UNDER 31 U.S.C. 203.

THE QUESTION IS NEXT PRESENTED WHETHER THE ASSIGNMENT TO THE BANK, BEING PRIOR IN TIME, TAKES PRECEDENCE OVER THE ASSIGNMENT TO THE ATTORNEY. THE ASSIGNMENT TO THE BANK COVERS ALL MONEYS DUE OR TO BECOME DUE UNDER CONTRACT NO. 41-11-004-1127. WE HAVE NO QUESTION THAT WHAT WAS INTENDED TO BE COVERED BY THIS ASSIGNMENT WERE THE PAYMENTS TO BE MADE BY THE GOVERNMENT UNDER THE CONTRACT WHEREBY THE CONTRACTOR WAS TO PERFORM THE PLOWING AND RESEEDING WORK CALLED FOR THEREIN. THE CONTRACT OF GUARANTY WHEREBY THE CONTRACTOR PLEDGED THE DEPOSIT ON CONDITION OF FAITHFUL PERFORMANCE IS AN AGREEMENT SEPARATE AND DISTINCT FROM THE MAIN CONTRACT. NEW BEDFORD MORRIS PLAN CO. V. HICKS, 157 A. 421. WE FIND, ACCORDINGLY, THAT THE $2,062 CASH DEPOSIT HELD IN LIEU OF PERFORMANCE BOND IS NOT INCLUDED IN THE ASSIGNMENT BY THE CONTRACTOR TO THE BANK, AND THE AMOUNT ON DEPOSIT MAY BE PAID TO THE ASSIGNEE UNDER THE ASSIGNMENT DATED MAY 24, 1960, IF THE CONTRACTOR IS NOT OTHERWISE INDEBTED TO THE UNITED STATES AS THE RESULT OF AN OBLIGATION WHICH MATURED PRIOR TO THE DATE OF ASSIGNMENT. SEE 38 COMP. GEN. 476.