B-164399, JUL. 11, 1968

B-164399: Jul 11, 1968

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ERICKSON: REFERENCE IS MADE TO YOUR LETTER OF MAY 15. IT IS REPORTED IN THE LETTER OF MAY 15. RENTAL AND MATERIALS ON THAT PROJECT AND ON THE GRASS VALLEY CANAL REHABILITATION PROJECT ON WHICH CROWN WAS A SUBCONTRACTOR. TOTAL PAYMENTS BY THE SURETY ON BEHALF OF CROWN UNDER THE TWO PROJECTS WERE APPROXIMATELY $100. REPORTEDLY THE BULK OF THE PAYMENTS WERE MADE ON THE DAVIE DITCH PROJECT. AN ASSIGNEE BANK IS ALSO INVOLVED. THERE IS A LETTER IN THE FILE IN WHICH THE ASSIGNEE RECOGNIZES THAT THE SURETY HAS PRIORITY TO PAYMENTS DUE UNDER THE CONTRACT. WE ASSUME THIS WILL BE SATISFACTORY TO THE SURETY.

B-164399, JUL. 11, 1968

TO MR. R. T. ERICKSON:

REFERENCE IS MADE TO YOUR LETTER OF MAY 15, 1968, WITH ENCLOSURES, 4-360, REQUESTING A DECISION AS TO WHETHER THE BALANCE DUE UNDER CONTRACT NO. 14- 06-D-5575, DATED APRIL 30, 1965, BETWEEN CROWN, INCORPORATED, AND THE DEPARTMENT OF THE INTERIOR FOR CERTAIN CONSTRUCTION WORK ON THE DAVIE DITCH PROJECT, IN THE AMOUNT OF $27,926.06, MAY BE CERTIFIED FOR DIRECT PAYMENT TO UNITED PACIFIC INSURANCE COMPANY, THE SURETY ON THE ABOVE CONTRACT.

IT IS REPORTED IN THE LETTER OF MAY 15, 1968, THAT THE CONTRACTOR COMPLETED THE DAVIE DITCH PROJECT, BUT DUE TO CROWN'S FINANCIAL DIFFICULTIES THE SURETY, IN ACCORDANCE WITH THE PAYMENT BOND, PAID VARIOUS OBLIGATIONS FOR LABOR, RENTAL AND MATERIALS ON THAT PROJECT AND ON THE GRASS VALLEY CANAL REHABILITATION PROJECT ON WHICH CROWN WAS A SUBCONTRACTOR. TOTAL PAYMENTS BY THE SURETY ON BEHALF OF CROWN UNDER THE TWO PROJECTS WERE APPROXIMATELY $100,000, AND REPORTEDLY THE BULK OF THE PAYMENTS WERE MADE ON THE DAVIE DITCH PROJECT. AN ASSIGNEE BANK IS ALSO INVOLVED; HOWEVER, THERE IS A LETTER IN THE FILE IN WHICH THE ASSIGNEE RECOGNIZES THAT THE SURETY HAS PRIORITY TO PAYMENTS DUE UNDER THE CONTRACT.

SINCE THE AGREEMENT BETWEEN THE SURETY AND THE CONTRACTOR GIVES THE SURETY AUTHORITY TO EXECUTE RELEASES AND TO ENDORSE CHECKS PAYABLE TO THE CONTRACTOR, WE CONCLUDE THAT, IN ACCORDANCE WITH THE USUAL PROCEDURE IN CASES OF THIS TYPE, A CHECK PAYABLE TO THE CONTRACTOR SHOULD BE MAILED IN CARE OF THE SURETY. WE ASSUME THIS WILL BE SATISFACTORY TO THE SURETY. SEE B-153608, MARCH 17, 1964, COPY ENCLOSED.