B-171125, FEB 4, 1971

B-171125: Feb 4, 1971

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BETWEEN NATIONAL ENGINEERING AND PUBLICATIONS CORPORATION AND THE FORT WORTH NATIONAL BANK WHICH AGREEMENT IS THE ASSIGNMENT INSTRUMENT OF ALL SUMS DUE UNDER A CONTRACT BETWEEN NATIONAL ENGINEERING AND THE DEPARTMENT OF THE AIR FORCE. AS BETWEEN THE TWO COMPETING ASSIGNMENTS OF FUNDS UNDER THIS CONTRACT THE ASSIGNMENT TO MONARCH PAPER COMPANY WAS "ABSOLUTELY NULL AND VOID" UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940. 31 U.S.C. 203 BECAUSE IT WAS EXECUTED PRIOR TO THE ISSUANCE OF THE WARRANT FOR PAYMENT OF THE CLAIM DUE UNDER THE CONTRACT WHILE THE ASSIGNMENT TO THE BANK. ALTHOUGH ORIGINALLY DEFECTIVE BECAUSE IT DID NOT SPECIFY THE PARTICULAR CONTRACT INVOLVED WAS SAVED BY A LATER SPECIFYING AMENDMENT.

B-171125, FEB 4, 1971

CONTRACTS - ASSIGNMENT - VALIDITY AUTHORIZING PAYMENT OF A VOUCHER IN ACCORDANCE WITH THE COLLECTION PROVISIONS OF THE SECURITY AGREEMENT OF MAY 27, 1968, BETWEEN NATIONAL ENGINEERING AND PUBLICATIONS CORPORATION AND THE FORT WORTH NATIONAL BANK WHICH AGREEMENT IS THE ASSIGNMENT INSTRUMENT OF ALL SUMS DUE UNDER A CONTRACT BETWEEN NATIONAL ENGINEERING AND THE DEPARTMENT OF THE AIR FORCE. AS BETWEEN THE TWO COMPETING ASSIGNMENTS OF FUNDS UNDER THIS CONTRACT THE ASSIGNMENT TO MONARCH PAPER COMPANY WAS "ABSOLUTELY NULL AND VOID" UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. 203 BECAUSE IT WAS EXECUTED PRIOR TO THE ISSUANCE OF THE WARRANT FOR PAYMENT OF THE CLAIM DUE UNDER THE CONTRACT WHILE THE ASSIGNMENT TO THE BANK, ALTHOUGH ORIGINALLY DEFECTIVE BECAUSE IT DID NOT SPECIFY THE PARTICULAR CONTRACT INVOLVED WAS SAVED BY A LATER SPECIFYING AMENDMENT.

TO MAJOR CRAIG:

BY LETTER DATED OCTOBER 23, 1970, THE ACTING CHIEF, WORKING CAPITAL, CONTRACTUAL AND ACCOUNTABILITY SYSTEMS DIVISION, DIRECTORATE OF ACCOUNTING OPERATIONS, FORWARDED YOUR LETTER OF OCTOBER 14, 1970, WITH ENCLOSURES, REQUESTING OUR DECISION IN REGARD TO THE PROPER DISPOSITION OF $8,109.65 DUE UNDER CONTRACT NO. F41606-69-C-0300 AWARDED MAY 19, 1969, BY THE DEPARTMENT OF THE AIR FORCE, PROCUREMENT DIVISION, RANDOLPH AIR FORCE BASE, TEXAS.

THE SUBJECT CONTRACT, LET FOR THE PRINTING OF 1,000,000 EXAMINATION COVERS, HAS BEEN PERFORMED AND A VOUCHER FOR PAYMENT THEREUNDER WAS CERTIFIED ON OCTOBER 13, 1970. PAYMENT HAS BEEN DEFERRED PENDING OUR DECISION.

ON MARCH 17, 1970, THE RANDOLPH AIR FORCE BASE ACCOUNTING AND FINANCE OFFICE RECEIVED AN INSTRUMENT OF ASSIGNMENT DATED FEBRUARY 20, 1970, FROM THE MONARCH PAPER COMPANY OF DALLAS AND FORT WORTH, TEXAS (MONARCH). THE ASSIGNMENT INSTRUMENT SPECIFICALLY PERTAINS TO SUMS OF MONEY DUE UNDER THE SUBJECT CONTRACT AND WAS EXECUTED BY THE CONTRACTOR, NATIONAL ENGINEERING AND PUBLICATIONS CORPORATION (NATIONAL), IN RETURN FOR ADVANCES OF MATERIALS FROM MONARCH WHICH ENABLED NATIONAL TO PERFORM THE CONTRACT.

ON OR ABOUT MAY 22, 1970, THE RANDOLPH AIR FORCE BASE PROCUREMENT OFFICE RECEIVED A LETTER DATED MAY 18, 1970, FROM THE FORT WORTH NATIONAL BANK (BANK) WHICH INCLUDED COPIES OF AN INSTRUMENT AND A FINANCING STATEMENT DATED MAY 27, 1968 AND MAY 28, 1968, RESPECTIVELY. NEITHER INSTRUMENT MAKES REFERENCE TO ANY PARTICULAR CONTRACT BUT THEY PURPORT TO TRANSFER FROM NATIONAL TO THE BANK "ALL ACCOUNTS AND CONTRACT RIGHTS WHETHER NOW EXISTING OR HEREAFTER ARISING --- ." THE COVER LETTER, HOWEVER, DOES REFER TO INVOICE NO. 2367 AND PURCHASE ORDER NO. ATC-AS-PP-C-41.

BY LETTER DATED AUGUST 5, 1970, W. I. SPITLER, GUARANTOR TO THE BANK, FORWARDED A LETTER, WITH ENCLOSURES, TO THE CONTRACTING OFFICER. AMONG THE ENCLOSURES IS A COPY OF INVOICE NO. 2367 DATED DECEMBER 15, 1969. THE INVOICE WHICH IS ADDRESSED TO THE CONTRACTING OFFICER AT RANDOLPH AIR FORCE BASE AND WAS ISSUED BY NATIONAL REPRESENTS A CHARGE OF $4,000 FOR THE "PREPARATION OF TRAINING MANUAL COVERS." STAMPED ON THE INVOICE IS THE LEGEND "MAKE CHECKS PAYABLE TO FORT WORTH NATIONAL BANK AND TO NATIONAL ENGINEERING AND PUBLICATIONS CORPORATION." THE NUMBER OF THE SUBJECT CONTRACT HAS BEEN ADDED IN PEN ON THE INVOICE'S UPPER RIGHT-HAND CORNER. ALSO INCLUDED WITH THE LETTER OF AUGUST 5 ARE FOUR COPIES OF "SCHEDULE A" ATTACHMENTS, DATED DECEMBER 15, 1969, JANUARY 2, JANUARY 14, AND JANUARY 28, 1970, RESPECTIVELY. EACH IS SIGNED BY NATIONAL'S PRESIDENT, REFERS TO INVOICE NO. 2367 (AMONG OTHER ASSIGNED ITEMS), AND PURPORTS TO BE ATTACHED TO AND TO BE AN INTEGRAL PART OF A PRIOR SECURITY AGREEMENT DATED SEPTEMBER 28, 1968, IN THE CASE OF THE SCHEDULE DATED DECEMBER 15, AND A SECURITY AGREEMENT OF SEPTEMBER 28, 1969, ON THE REMAINING SCHEDULES. WE ASSUME THAT IN EACH CASE THE INTENTION WAS TO IDENTIFY AS THE SECURITY AGREEMENT THE INSTRUMENT DATED MAY 28, 1968.

YOU REQUEST OUR DECISION AS TO THE PROPER PAYEE.

THE ASSIGNMENT OF CLAIMS AGAINST THE UNITED STATES IS GOVERNED BY THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED, 31 U.S.C. 203 WHICH PROVIDES IN PERTINENT PART AS FOLLOWS:

"ALL TRANSFERS AND ASSIGNMENTS MADE OF ANY CLAIM UPON THE UNITED STATES, OR OF ANY PART OR SHARE THEREOF, OR INTEREST THEREIN, WHETHER ABSOLUTE OR CONDITIONAL, AND WHATEVER MAY BE THE CONSIDERATION THEREFOR, AND ALL POWERS OF ATTORNEY, ORDERS, OR OTHER AUTHORITIES FOR RECEIVING PAYMENT OF ANY SUCH CLAIM, OR OF ANY PART OR SHARE THEREOF, EXCEPT AS HEREINAFTER PROVIDED, SHALL BE ABSOLUTELY NULL AND VOID, UNLESS THEY ARE FREELY MADE AND EXECUTED IN THE PRESENCE OF AT LEAST TWO ATTESTING WITNESSES, AFTER THE ALLOWANCE OF SUCH A CLAIM, THE ASCERTAINMENT OF THE AMOUNT DUE, AND THE ISSUING OF A WARRANT FOR THE PAYMENT THEREOF. SUCH TRANSFERS, ASSIGNMENTS, AND POWERS OF ATTORNEY, MUST RECITE THE WARRANT FOR PAYMENT, AND MUST BE ACKNOWLEDGED BY THE PERSON MAKING THEM, BEFORE AN OFFICER HAVING AUTHORITY TO TAKE ACKNOWLEDGMENTS OF DEEDS, AND SHALL BE CERTIFIED BY THE OFFICER; AND IT MUST APPEAR BY THE CERTIFICATE THAT THE OFFICER, AT THE TIME OF THE ACKNOWLEDGMENT, READ AND FULLY EXPLAINED THE TRANSFER, ASSIGNMENT, OR WARRANT OF ATTORNEY TO THE PERSON ACKNOWLEDGING THE SAME. THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO PAYMENTS FOR RENT OF POST OFFICE QUARTERS MADE BY POSTMASTERS TO DULY AUTHORIZED AGENTS OF THE LESSORS.

"THE PROVISIONS OF THE PRECEDING PARAGRAPH SHALL NOT APPLY IN ANY CASE IN WHICH THE MONEYS DUE OR TO BECOME DUE FROM THE UNITED STATES OR FROM ANY AGENCY OR DEPARTMENT THEREOF, UNDER A CONTRACT PROVIDING FOR PAYMENTS AGGREGATING $1,000 OR MORE, ARE ASSIGNED TO A BANK, TRUST COMPANY, OR OTHER FINANCING INSTITUTION, INCLUDING ANY FEDERAL LENDING AGENCY: *** "

SINCE MONARCH IS CLEARLY NOT A "FINANCING INSTITUTION", THE VALIDITY OF ITS ASSIGNMENT DEPENDS ON SATISFACTION OF THE CRITERIA PRESCRIBED IN THE FIRST PARAGRAPH OF 31 U.S.C. 203 WHICH PERTAINS TO ASSIGNEES OTHER THAN FINANCING INSTITUTIONS. SEE 22 COMP. GEN. 44 (1942). THE ASSIGNMENT TO MONARCH, HAVING BEEN EXECUTED FEBRUARY 20, 1970, PRIOR TO THE ISSUANCE OF THE WARRANT FOR PAYMENT OF THE CLAIM DUE UNDER THE SUBJECT CONTRACT ON OCTOBER 30, 1970, DOES NOT MEET THE STANDARDS OF THE STATUTE.

THE VALIDITY OF THE ASSIGNMENT TO THE BANK LIKEWISE MUST BE DETERMINED ACCORDING TO THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT, SUPRA. TO PERFECT AN ASSIGNMENT UNDER THAT ACT, THE ASSIGNEE BANK MUST FILE WRITTEN NOTICE OF THE ASSIGNMENT TOGETHER WITH A TRUE COPY OF THE INSTRUMENT WITH THE PARTIES SPECIFIED IN THE ACT, NAMELY, THE CONTRACTING OFFICER, THE SURETY, IF ANY, AND THE DISBURSING OFFICER, IF ANY, DESIGNATED IN THE CONTRACT TO MAKE PAYMENT. THE NOTICE DATED MAY 18, 1970, SENT BY THE BANK CLEARLY SATISFIES THE NOTICE REQUIREMENTS.

THE INSTRUMENT WHICH WAS RECEIVED FROM THE BANK IS ENTITLED "SECURITY AGREEMENT". THIS TRANSACTION IS GOVERNED BY CHAPTER 9 OF THE TEXAS UNIFORM COMMERCIAL CODE WHICH BEARS THE TITLE, "SECURED TRANSACTIONS, SALES OF ACCOUNTS, CONTRACT RIGHTS AND CHATTEL PAPER". SECTION 9.102(B) OF THE ABOVE-CITED CHAPTER PROVIDES IN PERTINENT PART, "THIS CHAPTER APPLIES TO SECURITY INTERESTS CREATED BY CONTRACT INCLUDING PLEDGE, ASSIGNMENT, CHATTEL MORTGAGE, *** ."

THE INSTRUMENT SUBMITTED IS OF A GENERIC TYPE CREATED TO COVER ALL THE VARIOUS CATEGORIES OF SECURITY INTERESTS WHICH ARE VALID UNDER THE TEXAS UNIFORM COMMERCIAL CODE, IN THIS CASE AN ASSIGNMENT OF NATIONAL'S ACCOUNTS RECEIVABLE TO THE BANK. THE COMMENT UNDER SECTION 9.101 OF THE CODE MAKES CLEAR THAT THE DISTINCTIONS AMONG THE VARIOUS SECURITY DEVICES ARE NOT RETAINED.

HOWEVER, THE INSTRUMENT WHICH WAS RECEIVED IS BLANKET IN FORM AND MAKES NO DIRECT REFERENCE TO THE SUBJECT CONTRACT. REFERENCE INSTEAD IS MADE TO NATIONAL'S INVOICE OF DECEMBER 12, 1969, AND PURCHASE ORDER NO. ATC-AS-PP- C-41 IN THE LETTER OF MAY 18, 1970, WHICH TRANSMITTED THE INSTRUMENTS OF ASSIGNMENT TO THE CONTRACTING OFFICER. THE INVOICE IN TURN REFERS TO THE SUBJECT CONTRACT NUMBER.

WE HAVE HELD THAT UNDER THE LANGUAGE OF THE ASSIGNMENT OF CLAIMS ACT, SUPRA, ANY ASSIGNMENT OF A CLAIM AGAINST THE GOVERNMENT SHOULD SPECIFY THE PARTICULAR CONTRACT INVOLVED AND, THEREFORE, THAT A BLANKET ASSIGNMENT DOES NOT MEET THE REQUIREMENTS OF THE ACT. SEE B-120222, OCTOBER 27, 1955. IN THE INSTANT CASE, ALTHOUGH THE ASSIGNMENT INSTRUMENTS ARE BLANKET IN FORM, THERE ARE IN EXISTENCE LATER AMENDMENT SCHEDULES, SIGNED BY THE ASSIGNOR, WHICH PURPORT TO BE AN INTEGRAL PART OF THE ORIGINAL ASSIGNMENT INSTRUMENT. THESE SCHEDULES MAKE SPECIFIC REFERENCE TO NATIONAL'S INVOICE NO. 2367 ISSUED UNDER THE SUBJECT CONTRACT.

IN VIEW OF THE FACT THAT THE AIR FORCE WAS PUT ON NOTICE OF THE ASSIGNMENT OF THE SUBJECT CONTRACT BY THE INCLUSION OF THE INVOICE AND PURCHASE ORDER NUMBER CONTAINED IN THE LETTER OF MAY 18, 1970, FROM THE BANK AND THE FACT THAT SUPPLEMENTARY SCHEDULES SIGNED BY THE PRESIDENT OF NATIONAL IDENTIFY THE INVOICE ISSUED UNDER THE SUBJECT CONTRACT, WE CONCLUDE THE ASSIGNMENT DOES REFER TO THE SUBJECT CONTRACT AND IS, THEREFORE, VALID.

ACCORDINGLY, THE SUBJECT VOUCHER, IF OTHERWISE CORRECT, MAY PROPERLY BE PAID IN ACCORDANCE WITH THE COLLECTION PROVISIONS CONTAINED IN SECTION III, PARAGRAPH 2 OF THE SECURITY AGREEMENT OF MAY 27, 1968, BETWEEN NATIONAL AND THE BANK. THE VOUCHER AND FILE ARE RETURNED.