B-183305 March 25, 1975

B-183305 March 25, 1975

Donnie Hoover, Esquire Court of Claims Section Civil Division Department of Justice

Dear Mr. Hoover:

Subject: Cagle Wholesale Lumber Co. v. United States, Court of Claims No. 47-75

Reference is made to a letter dated February 20, 1975, CAH:DH:cvh, 154-47-75, transmitting a copy of the petition in the above-entitled suit and requesting a litigation report.

No claim relating to the subject matter of this action has been filed in the General Accounting Office and we have no factual information with respect thereto. Also, our records show no claim against the plaintiff which could be made the basis of a counterclaim or setoff in the present action.

It is your opinion that the decision of the Court of Claims in Uniroyal, Inc. v. United States, 454 F. 2d 1394 (1972) is dispositive of the instant case and you request our views in this regard. The subject plaintiff, whose complaint is for money due under an assignment to it of proceeds due under a Government contract, appears to be a materialman to the contractor. Under the Assignment of Claims Act of 1940, 31 U.S.C. 203 (1970) a valid assignment by a contractor of proceeds due under a Government contract may be made only to a bank, trust company or other financing institution. In the Uniroyal case plaintiff was a manufacturer that agreed to fill a Government contractor's orders for tires by extending credit to the contractor in consideration of an assignment of the contract proceeds. The Court of Claims held that Uniroyal was not a proper assignee under the act inasmust as it was not a financial institution. Likewise, plaintiff in the instant case does not appear to be a financing institution whithin the meaning of the Act and we agree that the Uniroyal case is dispositive of the matter.

In addition we note the act provides that unless otherwise expressly permitted under the contract, an assignment is required to cover all amounts payable under the contract and not already paid and it may not be subject to further assignment. We have no information whether the instant Government contract permits more than one assignment of the contract proceeds. If the contract is silent in this regard, the Government should argue that the act is violated since there are two assignments, neither of which purports to cover all of the amounts payable under the contract.

The attorney assigned to this matter is Vincent A. LaBella, who may be reached at 386-4387.

Sincerely yours,

Paul G. Dumbling General Counsel