B-152765, JAN. 8, 1964

B-152765: Jan 8, 1964

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YOUR LETTER CONCERNS THE PROPRIETY OF SET-OFFS MADE FROM ASSIGNED MONIES TO SATISFY LIABILITIES ARISING INDEPENDENTLY OF THE CONTRACTS UNDER WHICH THE ASSIGNED MONIES ARE DUE AND IN CIRCUMSTANCES WHERE SUCH CONTRACTS PERMIT ASSIGNMENTS NOT SUBJECT TO REDUCTION OR SET-OFF. THE CONTRACTS IN QUESTION ARE FOR AIR CARRIER TRANSPORTATION SERVICES. WE HAVE CONCLUDED THAT SET-OFFS OF THE KIND IN QUESTION ARE NOT PROPER. THE DISBURSING OFFICERS WILL BE NOTIFIED TO DISCONTINUE THE PRACTICE OF EFFECTING SUCH SET-OFFS. THAT BILLS FOR TRANSPORTATION SERVICES UNDER ASSIGNMENTS MADE NOT SUBJECT TO REDUCTION OR SET-OFF ARE NOW BEING PAID UPON PRESENTATION WITHOUT ANY PRE-PAYMENT EXAMINATION AS TO THEIR CORRECTNESS.

B-152765, JAN. 8, 1964

TO WILMER, CUTLER AND PICKERING:

WE REFER TO YOUR LETTER OF NOVEMBER 4, 1963 (AND ENCLOSURES), ON BEHALF OF YOUR CLIENT, THE CHEMICAL BANK NEW YORK TRUST COMPANY. YOUR LETTER CONCERNS THE PROPRIETY OF SET-OFFS MADE FROM ASSIGNED MONIES TO SATISFY LIABILITIES ARISING INDEPENDENTLY OF THE CONTRACTS UNDER WHICH THE ASSIGNED MONIES ARE DUE AND IN CIRCUMSTANCES WHERE SUCH CONTRACTS PERMIT ASSIGNMENTS NOT SUBJECT TO REDUCTION OR SET-OFF. THE CONTRACTS IN QUESTION ARE FOR AIR CARRIER TRANSPORTATION SERVICES.

WE HAVE CONCLUDED THAT SET-OFFS OF THE KIND IN QUESTION ARE NOT PROPER, AND THE DISBURSING OFFICERS WILL BE NOTIFIED TO DISCONTINUE THE PRACTICE OF EFFECTING SUCH SET-OFFS. IT APPEARS, HOWEVER, THAT BILLS FOR TRANSPORTATION SERVICES UNDER ASSIGNMENTS MADE NOT SUBJECT TO REDUCTION OR SET-OFF ARE NOW BEING PAID UPON PRESENTATION WITHOUT ANY PRE-PAYMENT EXAMINATION AS TO THEIR CORRECTNESS.

WE ARE NOW CONSIDERING THE ADVISABILITY OF INSTITUTING PROCEDURES TO REQUIRE PRE-PAYMENT EXAMINATION OF SUCH BILLS. ALSO TO BE CONSIDERED IS THE NEED FOR ACTION TO OBTAIN REMOVAL OF NO SET-OFF CLAUSES FROM FUTURE CONTRACTS FOR TRANSPORTATION SERVICES.