B-153608, MAR. 17, 1964

B-153608, MAR. 17, 1964

TO J. GEORGE STEWART, ARCHITECT OF THE CAPITOL, ACTING DIRECTOR, U.S. BOTANIC GARDEN:

WE REFER TO YOUR LETTER DATED FEBRUARY 25, 1964, MAKING INQUIRY AS TO THE PROPER MANNER FOR DISBURSEMENT OF A FINAL PAYMENT IN THE AMOUNT OF $6,146.40, OWING BY THE GOVERNMENT FOR WORK SATISFACTORILY COMPLETED BY MR. JOSEPH BARTKOWIAK, TRADING AS ARNCLIFFE PLUMBING AND HEATING COMPANY, UNDER CONTRACT ACBG-106. THE CONTRACT, AS AMENDED, WAS AWARDED BY THE OFFICE OF THE ARCHITECT OF THE CAPITOL IN THE TOTAL AMOUNT OF $48,684 AND CALLED FOR THE REPLACEMENT OF THE HEATING PLANT OF THE OLD POPLAR POINT NURSERY GREENHOUSES LOCATED AT THE U.S. BOTANIC GARDEN.

THE RECORD REVEALS THAT MR. BARTKOWIAK HAD ENCOUNTERED SOME FINANCIAL DIFFICULTIES IN THE LATER STAGES OF PERFORMANCE AND THAT, PRESUMABLY, THE SURETY ON HIS PERFORMANCE BOND, THE PACIFIC NATIONAL INSURANCE COMPANY, WAS FORCED TO COMPLETE THE WORK. THE SURETY, WHICH HAS CHANGED ITS NAME TO TRANSAMERICA INSURANCE COMPANY, NOW REQUESTS THAT THE FINAL PAYMENT BE MADE TO IT THROUGH ITS AGENTS ON THE BASIS OF AN ASSIGNMENT TO IT OF MONEYS RECEIVABLE UNDER THE CONTRACT EXECUTED BY THE CONTRACTOR.

THE RECORD DOES NOT DISCLOSE THE EXISTENCE OF ANY STATE OR FEDERAL INSOLVENCY PROCEEDINGS PENDING AGAINST THE CONTRACTOR. NOR, SO FAR AS WE KNOW, IS ANY OTHER VOLUNTARY ASSIGNMENT OUTSTANDING AGAINST THE FUND.

THE RECORDS OF THIS OFFICE, HOWEVER, SHOW THAT ONE MR. JOSEPH T. BARTKOWIAK, SERVICE NO. 9273126, OF 114 WESTBURY ROAD, LUTHERVILLE, MARYLAND, IS INDEBTED TO THE VETERANS ADMINISTRATION FOR THE AMOUNT OF $83.80 REPRESENTING UNPAID INTEREST ON G.I. LOAN NO. LHG 65301.

IRRESPECTIVE OF THE TERMS OF THE CONTRACT, AN ASSIGNMENT TO A SURETY PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, CH. 779, 54 STAT. 1029, 31 U.S.C. 203, 41 U.S.C. 15, OF MONEYS OWING OR TO BECOME DUE UNDER A CONTRACT WITH THE FEDERAL GOVERNMENT, WHILE IT MAY BE VALID BETWEEN THE PARTIES THERETO, IS UNENFORCEABLE AGAINST THE GOVERNMENT. A SURETY IS NOT A "FINANCING INSTITUTION" WITHIN THE MEANING OF THE ACT. GENERAL CASUALTY COMPANY V. SECOND NATIONAL BANK OF HOUSTON, 178 F.2D 679, 680; UNITED STATES CASUALTY COMPANY V. FIRST NATIONAL BANK OF COLUMBUS, 157 F.SUPP. 789. HENCE THIS OFFICE CANNOT RECOGNIZE THE PURPORTED ASSIGNMENT EXECUTED BY MR. BARTKOWIAK ON JANUARY 9, 1964, TO THE TRANSAMERICA INSURANCE COMPANY. NONETHELESS, BY PRINCIPLES OF EQUITABLE SUBROGATION, A SURETY WHO HAS BEEN CALLED UPON TO SATISFY THE PRINCIPAL'S OBLIGATIONS, IN THE ABSENCE OF OTHER CLAIMANTS, IS ENTITLED TO FUNDS UNPAID AND STILL OWING BY THE GOVERNMENT TO THE PRINCIPAL UNDER THE CONTRACT. AMERICAN FIDELITY COMPANY V. NATIONAL CITY BANK OF EVANSVILLE 266 F.2D 910; AETNA CASUALTY AND SURETY COMPANY V. HARVARD TRUST COMPANY, 181 NE2D 673.

IT HAS BEEN THE POLICY OF THIS OFFICE TO MAKE THE CHECK PAYABLE DIRECTLY TO THE CONTRACTOR IN SUCH SITUATIONS BUT TO MAIL THE CHECK IN CARE OF THE SURETY. YOU ARE THEREFORE ADVISED TO DEDUCT THE AMOUNT OF $83.80, TO DRAW A CHECK FOR THE BALANCE PAYABLE TO "JOSEPH BARTKOWIAK TRADING AS ARNCLIFFE PLUMBING AND HEATING COMPANY," AND TO DISPATCH THE ENVELOPE CONTAINING THE PAYMENT TO THE "TRANSAMERICA INSURANCE COMPANY," IN CARE OF EITHER MR. CHARLES W. CHAMBERLAIN, JR., MARYLAND TRUST BUILDING, BALTIMORE, MARYLAND 21202, OR MR. AVRUM K. RIFMAN, COUNSELOR AT LAW, 515 ONE CHARLES CENTER, BALTIMORE, MARYLAND, 21201. THE DEDUCTION SHOULD BE TRANSMITTED TO THIS OFFICE FOR SETOFF AGAINST THE AFOREMENTIONED PERSONAL INDEBTEDNESS OF MR. BARTKOWIAK.