B-29657, DECEMBER 8, 1942, 22 COMP. GEN. 520

B-29657, DECEMBER 8, 1942, 22 COMP. GEN. 520

ASSIGNMENT OF CONTRACT PAYMENTS - EFFECT OF ASSIGNEE'S DELAY IN GIVING CONTRACTOR'S SURETY NOTICE OF ASSIGNMENT; RELEASE AND REASSIGNMENT THE ASSIGNMENT OF CLAIMS ACT OF 1940 DOES NOT SPECIFY ANY PERIOD OF TIME WITHIN WHICH WRITTEN NOTICE OF AN ASSIGNMENT OF MONEYS DUE OR TO BECOME DUE UNDER A GOVERNMENT CONTRACT MUST BE GIVEN TO THE CONTRACTOR'S SURETY, AND, THEREFORE, A DELAY OF 5 MONTHS BY THE ASSIGNEE IN FILING WRITTEN NOTICE OF THE ASSIGNMENT WITH THE CONTRACTOR'S SURETY DOES NOT, OF ITSELF, SUBORDINATE THE RIGHTS OF THE ASSIGNEE TO THOSE OF THE SURETY AS TO FUTURE PAYMENTS WHERE SUCH DELAY HAS NOT OPERATED TO THE PREJUDICE OF THE SURETY. EVEN THOUGH A GOVERNMENT CONTRACTOR'S ASSIGNEE UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940 DELAYED 5 MONTHS IN GIVING THE CONTRACTOR'S SURETY THE WRITTEN NOTICE REQUIRED BY THE ACT, THE CIRCUMSTANCE THAT THE FINANCIAL DIFFICULTIES OF THE CONTRACTOR MAY HAVE COME TO THE ATTENTION OF THE SURETY PRIOR TO SUCH NOTICE, OR THAT THE SURETY MAY HAVE MADE ADVANCES TO THE CONTRACTOR IN IGNORANCE OF THE ASSIGNMENT, WOULD NOT AFFECT THE RIGHT OF THE ASSIGNEE TO CONTINUE TO RECEIVE OTHERWISE PROPER PAYMENTS UNDER THE CONTRACT, IN THE ABSENCE OF AT LEAST A SHOWING THAT THE SURETY WOULD HAVE TAKEN A DIFFERENT COURSE OF ACTION HAD IT KNOWN OF THE ASSIGNMENT. A GOVERNMENT CONTRACTOR'S RIGHT UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940 TO ASSIGN MONEYS DUE OR TO BECOME DUE UNDER ITS CONTRACT IS NOT DEPENDENT UPON THE SURETY'S ACCEPTANCE OF OR ACQUIESCENCE IN THE ASSIGNMENT, AND, THEREFORE, THE ASSIGNEE'S RIGHT TO RECEIVE OTHERWISE PROPER PAYMENTS UNDER THE CONTRACT IS NOT AFFECTED BY THE FACT THAT THE CONTRACTOR'S SURETY HAS INDICATED A LACK OF CONSENT TO--- OR HAS "REFUSED TO ACCEPT"--- THE ASSIGNMENT. SINCE THE ASSIGNMENT OF CLAIMS ACT OF 1940 SPECIFICALLY PRECLUDES THE SIMULTANEOUS EXISTENCE OF MORE THAN ONE VALID ASSIGNMENT OF MONEYS DUE OR TO BECOME DUE UNDER A GIVEN GOVERNMENT CONTRACT UNLESS EXPRESSLY PERMITTED BY THE CONTRACT, THE SUBSEQUENT EXECUTION OF A SECOND ASSIGNMENT, UNDER A CONTRACT WHICH DOES NOT EXPRESSLY PERMIT MORE THAN ONE ASSIGNMENT TO BE MADE, PURPORTING TO ASSIGN ALL MONEYS DUE OR TO BECOME DUE, SUBJECT TO A RESERVATION OF THE AMOUNTS DUE UNDER THE ORIGINAL ASSIGNMENT, IS NULL AND VOID UNDER THE ASSIGNMENT-OF-CLAIMS PROHIBITION OF SECTION 3477, REVISED STATUTES. A CONTRACTOR WHO, PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, HAS ASSIGNED ALL MONEYS DUE OR TO BECOME DUE UNDER A GOVERNMENT CONTRACT MAY BE CONSIDERED AS HAVING REESTABLISHED HIS RIGHT TO DIRECT PAYMENT OF THE PROCEEDS OF THE CONTRACT UPON THE FILING, WITH THOSE PARTIES TO WHOM THE ASSIGNEE WAS REQUIRED BY THE ACT TO GIVE NOTICE AND A COPY OF THE ORIGINAL ASSIGNMENT, OF A WRITTEN NOTICE AND TRUE COPY OF A RELEASE AND REASSIGNMENT PROPERLY EXECUTED BY THE ASSIGNEE.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF AGRICULTURE, DECEMBER 8, 1942:

THERE HAS BEEN CONSIDERED YOUR LETTER OF OCTOBER 15, 1942, IN PERTINENT PART AS FOLLOWS:

THIS IS WITH REFERENCE TO THE LEGALITY OF TWO ASSIGNMENTS MADE BY A CONTRACTOR, J. VICTOR MARTIN, MIAMI, FLORIDA, PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, FOR THE ASSIGNMENT OF FUNDS DUE HIM UNDER TWO CONTRACTS, NOS. A-5-FSA-1239 AND A-5-FSA-1240, FOR THE CONSTRUCTION OF TWO MIGRATORY LABOR CAMPS AT REDLAND AND SOUTH DADE, FLORIDA.

THE RELEVANT FACTS APPEAR TO BE AS FOLLOWS: ON JUNE 20, 1941, THE FARM SECURITY ADMINISTRATION OF THIS DEPARTMENT AWARDED THE REDLAND AND SOUTH DADE CONTRACTS TO MR. MARTIN IN THE AMOUNTS OF $264,634, AND $269,400, RESPECTIVELY. BOTH CONTRACTS WERE SIGNED ON JUNE 30, 1941, AND THE NOTICES TO PROCEED WERE ISSUED TO THE CONTRACTOR ON AUGUST 1, 1941. OCTOBER 8, 1941, MR. MARTIN EXECUTED AN AGREEMENT ASSIGNING THE PROCEEDS OF BOTH CONTRACTS TO THE COCONUT GROVE EXCHANGE BANK OF MIAMI, FLORIDA, AND THE ESTIMATED MONTHLY PAYMENTS WERE MADE THEREAFTER TO THE BANK IN ACCORDANCE WITH THIS ASSIGNMENT. ON APRIL 23, 1942, MR. MARTIN MADE ANOTHER ASSIGNMENT OF THE UNPAID BALANCES DUE ON BOTH CONTRACTS TO THE NEW AMSTERDAM CASUALTY COMPANY, THE SURETY ON HIS PERFORMANCE AND PAYMENT BONDS, EXCEPTING FROM THE OPERATION OF THE SECOND ASSIGNMENT THE SUM OF $6,500, ALLEGED TO BE STILL DUE AND OWING TO THE COCONUT GROVE EXCHANGE BANK. THE SURETY COMPANY, ON APRIL 29, 1942, FILED A CLAIM WITH THE FARM SECURITY ADMINISTRATION, TOGETHER WITH NOTICE AND INSTRUMENT OF ASSIGNMENT, FOR THE BALANCE DUE MR. MARTIN, EXCEPT THE $6,500 ABOVE NOTED. IN ITS CLAIM, THE SURETY COMPANY ALLEGES THAT IT WAS NOT NOTIFIED OF THE ASSIGNMENT TO THE BANK UNTIL MARCH 19, 1942, AND THAT IT "REFUSED TO ACCEPT THE ASSIGNMENT," DUE TO ITS KNOWLEDGE OF THE FINANCIAL DIFFICULTIES OF MR. MARTIN IN CONNECTION WITH THE COMPLETION OF THE WORK. IT FURTHER CONTENDS THAT SINCE THE REQUIRED NOTICE OF ASSIGNMENT WAS NOT FILED WITH IT UNTIL AFTER IT LEARNED OF MR. MARTIN'S FINANCIAL DIFFICULTIES, ITS EQUITY AS SURETY ON THE BONDS IS SUPERIOR TO THAT OF THE BANK, AND DENIES THE VALIDITY OF THE ASSIGNMENT MADE TO THE BANK.

IN VIEW OF THE DISPUTE EXISTING BETWEEN THE CONTRACTOR AND HIS TWO ASSIGNEES IN CONNECTION WITH THESE ASSIGNMENTS, THE ADMINISTRATIVE OFFICIALS OF THE FARM SECURITY ADMINISTRATION STOPPED FURTHER PAYMENTS ON THE CONTRACTS, PENDING DETERMINATION OF THE VALIDITY OF THE ASSIGNMENTS. THIS WAS DONE IN ORDER TO INSURE THAT PAYMENTS WERE PROPERLY MADE AND TO PROTECT THE RIGHTS OF ALL PARTIES INVOLVED. AS OF MARCH 19, 1942, THERE WAS A BALANCE OF $24,334.79 DUE TO THE CONTRACTOR IN CONNECTION WITH THE REDLAND CONTRACT, AND AS OF MARCH 23, 1942, THERE WAS A BALANCE OF $36,143.49 DUE HIM IN CONNECTION WITH THE SOUTH DADE CONTRACT.

SO FAR AS PERTINENT HERE, THE ASSIGNMENT OF CLAIMS ACT OF 1940 (41 U.S.C. 15), AMENDING SECTIONS 3477 AND 3737 OF THE REVISED STATUTES, PROVIDES AS FOLLOWS:

"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: PROVIDED.

"3.THAT UNLESS OTHERWISE EXPRESSLY PERMITTED BY SUCH CONTRACT ANY SUCH ASSIGNMENT SHALL COVER ALL AMOUNTS PAYABLE UNDER SUCH CONTRACT AND NOT ALREADY PAID, SHALL NOT BE MADE TO MORE THAN ONE PARTY, AND SHALL NOT BE SUBJECT TO FURTHER ASSIGNMENT, . . . ( ITALICS SUPPLIED)

"4. THAT IN THE EVENT OF ANY SUCH ASSIGNMENT, THE ASSIGNEE THEREOF SHALL FILE WRITTEN NOTICE OF THE ASSIGNMENT TOGETHER WITH A TRUE COPY OF THE INSTRUMENT OF ASSIGNMENT WITH---

"/C) THE SURETY OR SURETIES UPON THE BOND OR BONDS, IF ANY, IN CONNECTION WITH SUCH CONTRACT.'

IT WILL BE NOTED THAT THE ASSIGNMENT PERMITTED BY THE SAID ACT RELATES TO CASES WHERE MONEYS DUE FROM THE UNITED STATES UNDER A CONTRACT " . . . ARE ASSIGNED TO A BANK, TRUST COMPANY, OR OTHER FINANCING INSTITUTION, . . .' IN VIEW OF YOUR HOLDING IN 21 COMP. GEN. 120, WE ARE INCLINED TO BELIEVE THAT THE "FINANCING ACTIVITIES" OF THE NEW AMSTERDAM CASUALTY COMPANY WERE ONLY "INCIDENTAL" TO THE CARRYING OF ITS INSURANCE BUSINESS. MOREOVER, THE ACT REQUIRES THAT ANY ASSIGNMENT "SHALL COVER ALL AMOUNTS PAYABLE UNDER SUCH CONTRACT . . ., " AND IT EXPRESSLY PROHIBITS THE ASSIGNMENT "TO MORE THAN ONE PARTY . . .' IT WOULD APPEAR, THEREFORE, THAT, WHEN THE MADE THE ASSIGNMENT TO THE BANK, AND THE LATTER NOTIFIED ALL PARTIES CONCERNED, THE CONTRACTOR WAS PRECLUDED FROM MAKING ANOTHER ASSIGNMENT. IT WILL ALSO BE OBSERVED THAT THE BANK FAILED TO GIVE NOTICE OF THE ASSIGNMENT TO THE SURETY UNTIL APPROXIMATELY SIX MONTHS AFTER IT WAS MADE. THE ACT, OF COURSE, DOES NOT REQUIRE THAT THE "WRITTEN NOTICE" TO THE SURETY BE GIVEN WITHIN ANY SPECIFIED TIME.

THE MATTER IS SUBMITTED FOR YOUR DECISION AS TO (1) WHETHER THE DEPARTMENT SHOULD CONSIDER THE ASSIGNMENT TO THE BANK AS VALID AND SUBSISTING AND MAKE PAYMENTS OF THE UNPAID BALANCES TO IT, DESPITE THE BANK'S FAILURE TO GIVE IMMEDIATE NOTICE TO THE SURETY; OR (2) WHETHER THE DEPARTMENT SHOULD DISREGARD BOTH ASSIGNMENTS AND MAKE PAYMENTS OF THE UNPAID BALANCES DIRECTLY TO THE CONTRACTOR.

THE FIRST QUESTION FOR CONSIDERATION HERE WOULD APPEAR TO BE THE EFFECT OF THE DELAY ON THE PART OF THE COCONUT GROVE EXCHANGE BANK, AS ASSIGNEE, IN FILING WRITTEN NOTICE OF SUCH ASSIGNMENTS WITH THE NEW AMSTERDAM CASUALTY COMPANY, SURETY ON THE PERFORMANCE AND PAYMENT BONDS OF THE CONTRACTOR. IT APPEARS THAT NOTICE WAS NOT GIVEN FOR APPROXIMATELY FIVE MONTHS AFTER THE EXECUTION OF THE ASSIGNMENTS. APPARENTLY, IT IS THE CONTENTION OF THE SURETY THAT THIS DELAY HAS SUBORDINATED THE RIGHTS OF THE ASSIGNEE TO THOSE OF THE SURETY AS TO FUTURE PAYMENTS BY THE UNITED STATES UNDER THE CONTRACTS INVOLVED.

THE ASSIGNMENT OF CLAIMS ACT OF 1940, 54 STAT. 1029, DOES NOT--- AS YOU POINT OUT--- SPECIFY ANY PERIOD OF TIME WITHIN WHICH THE "WRITTEN NOTICE" TO THE SURETY MUST BE GIVEN. THIS OFFICE PREVIOUSLY HAS HELD WITH RESPECT TO THE FILING OF A "WRITTEN NOTICE OF THE ASSIGNMENT TOGETHER WITH A TRUE COPY OF INSTRUMENT OF ASSIGNMENT" THAT AN ASSIGNEE WHO DOES NOT COMPLY--- AT LEAST SUBSTANTIALLY--- WITH SUCH STATUTORY REQUIREMENT WOULD APPEAR TO HAVE NO ENFORCEABLE RIGHT AGAINST THE GOVERNMENT UNDER THE ASSIGNMENT. COMP. GEN. 424. HOWEVER, SUCH RULING HAD NO REFERENCE TO THE TIME WITHIN WHICH SUCH SUBSTANTIAL COMPLIANCE MUST BE ACCOMPLISHED.

THE REASON FOR REQUIRING THE ASSIGNEE TO GIVE NOTICE TO THE SURETY OF THE ASSIGNMENT SEEMS OBVIOUS. IT WAS TO ENABLE THE SURETY AFTER HAVING BEEN INFORMED OF THE ASSIGNMENT TO TAKE WHATEVER STEPS IT MIGHT DEEM NECESSARY TO PROTECT ITS RIGHTS OR TO REFRAIN FROM TAKING ACTION WHICH MIGHT JEOPARDIZE THOSE RIGHTS. CONSIDERED IN THAT LIGHT THE EFFECT ASCRIBED BY THE SURETY TO THE DELAY ON THE PART OF THE ASSIGNEE IN THE INSTANT CASE IS MUCH AKIN TO THE EQUITABLE DOCTRINE OF "LACHES.' SEE MARYLAND CASUALTY COMPANY V. CITY OF CINCINNATI, 291 F. 825, 832. IT IS WELL SETTLED THAT SUCH DEFENSE MUST BE FOUNDED NOT UPON DELAY, ALONE, BUT UPON DELAY THAT HAS WORKED A DISADVANTAGE TO THE PARTY IN WHOSE FAVOR IT IS RAISED. BRIEN V. WHEELOCK, 184 U.S. 450, 493; WILKINSON V. LIVINGSTON, 45 F. (2D) 465; STANDARD OIL COMPANY OF COLORADO V. STANDARD OIL COMPANY, 72 F. (2D) 524.

THE SURETY COMPANY WROTE TO THE FARM SECURITY ADMINISTRATION UNDER DATE OF APRIL 29, 1942, IN PERTINENT PART, AS FOLLOWS:

* * * THE ASSIGNMENTS WERE NOT FILED WITH OUR COMPANY AS THE SURETY UNTIL MARCH 19, 1942, AND AS WE HAD BEEN VOLUNTARILY ADVISED AS OF THE DATE OF THEIR RECEIPT BY MR. MARTIN THAT HE WAS IN FINANCIAL DIFFICULTY WITH RESPECT TO THE COMPLETION OF THIS CONTRACT AND THE PAYMENT OF LABOR AND MATERIAL BILLS, WE REFUSED TO ACCEPT THE ASSIGNMENTS AND RETURNED SAME TO THE COCONUT GROVE EXCHANGE BANK, FULLY RESERVING UNTO OUR COMPANY ALL OF OUR RIGHTS, REMEDIES, PRIORITIES, ETC., IN THE PREMISES.

THE MERE FACT THAT THE FINANCIAL DIFFICULTIES OF THE CONTRACTOR HAD COME TO THE ATTENTION OF THE SURETY AT THE TIME OF ITS BEING NOTIFIED OF THE ASSIGNMENT WOULD APPEAR TO HAVE LITTLE, IF ANY, BEARING IN THE MATTER SINCE IT DOES NOT APPEAR THAT KNOWLEDGE THEREOF OPERATED, OF ITSELF, TO THE PREJUDICE OF THE SURETY. EVEN IF IT COULD BE SHOWN BY THE SURETY THAT ADVANCES HAD BEEN MADE TO THE CONTRACTOR IN IGNORANCE OF THE FACT THAT THE CONTRACTOR HAD ASSIGNED HIS RIGHT TO THE PROCEEDS OF THE CONTRACTS TO THE BANK, SUCH FACT ALONE WOULD BE INSUFFICIENT; AT LEAST THE SURETY MUST FURTHER SHOW THAT SUCH ACTION OPERATED TO ITS INJURY AND WOULD NOT HAVE BEEN TAKEN IF IT HAD KNOWN OF THE ASSIGNMENTS. IT IS NOT TO BE EXPECTED THAT SUCH A SHOWING COULD BE MADE IN THE INSTANT CASE WHERE IT APPEARS THAT THE SURETY, WITH FULL KNOWLEDGE OF THE ASSIGNMENT, CURRENTLY IS MAKING ADVANCES TO THE CONTRACTOR.

IT IS STATED THAT THE SURETY COMPANY "REFUSED TO ACCEPT THE ASSIGNMENT" UPON RECEIPT OF NOTICE THEREOF. HOWEVER, THE RIGHT OF A CONTRACTOR TO ASSIGN MONEYS DUE OR TO BECOME DUE UNDER A CONTRACT WITH THE GOVERNMENT IS NOT CONDITIONED BY THE TERMS OF THE ASSIGNMENT OF CLAIMS ACT UPON THE ACCEPTANCE OR EVEN THE ACQUIESCENCE OF THE SURETY. THE ACT PROVIDES ONLY THAT THERE BE FILED WITH THE SURETY "WRITTEN NOTICE OF THE ASSIGNMENT TOGETHER WITH A TRUE COPY OF THE INSTRUMENT OF ASSIGNMENT.' HENCE, IT IS IMMATERIAL, SO FAR AS CONCERNS OTHERWISE PROPER PAYMENTS TO THE ASSIGNEE, THAT THE SURETY IN A GIVEN CASE HAS INDICATED A LACK OF CONSENT TO--- OR HAS "REFUSED TO ACCEPT"--- THE ASSIGNMENT.

THE ASSIGNMENT BY THE CONTRACTOR TO THE COCONUT GROVE EXCHANGE BANK, A COPY OF WHICH WAS ENCLOSED WITH YOUR LETTER, PROVIDES THAT---

KNOW ALL MEN BY THESE PRESENTS: THAT J. VICTOR MARTIN, PARTY OF THE FIRST PART, IN CONSIDERATION OF THE SUM OF TEN DOLLARS AND OTHER VALUABLE CONSIDERATIONS TO HIM IN HAND PAID BY COCONUT GROVE EXCHANGE BANK, OF THE SECOND PART, AT OR BEFORE THE ENSEALING AND DELIVERY OF THESE PRESENTS, THE RECEIPT WHEREOF IS HEREBY ACKNOWLEDGED, HAS GRANTED, BARGAINED, SOLD, ASSIGNED, TRANSFERRED AND SET OVER, AND BY THESE PRESENTS DOES GRANT, SELL, BARGAIN, ASSIGN, TRANSFER AND SET OVER UNTO THE SAID PARTY OF THE SECOND PART, THE PROCEEDS FROM THAT CERTAIN CONTRACT AS FOLLOWS:

DATED JUNE 30, 1941, PROJECT NAME, REDLAND MIGRATORY LABOR CAMP, LOCATED AT HOMESTEAD, FLORIDA, PROJECT NO. RR-FL-29, CONTRACT NO. A-5 FSA-1239. SIMILAR ASSIGNMENT WAS MADE WITH RESPECT TO CONTRACT NO. A 5-FSA-1240. BOTH ASSIGNMENTS ARE DATED OCTOBER 8, 1941.

THE AGREEMENT AND ASSIGNMENT, DATED APRIL 22, 1942, BETWEEN THE CONTRACTOR AND THE SURETY PROVIDES, IN PART, AS FOLLOWS:

WHEREAS, THE FIRST PARTY (THE CONTRACTOR) HAS REQUESTED THE SECOND PARTY AS HIS SURETY UPON THE CONTRACT BONDS EXECUTED IN CONNECTION WITH SAID CONTRACT, TO MAKE ADVANCEMENTS, EITHER FOR OR ON ACCOUNT OF THE PAYMENT OF CLAIMS AGAINST THE FIRST PARTY ARISING OUT OF SAID CONTRACT, AND THE SECOND PARTY AS SUCH SURETY HAS ALREADY MADE ADVANCEMENTS TO SUB- CONTRACTORS, MATERIALMEN, AND FOR LABOR, AND THE SECOND PARTY WILL IN THE FUTURE MAKE ADDITIONAL ADVANCEMENTS OF LIKE NATURE IN ORDER TO COMPLETE THE WORK REQUIRED OF THE FIRST PARTY UNDER SAID CONTRACT, * * *

NOW, THEREFORE, IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:

1. THAT THE FIRST PARTY WILL COMPLETE THE CONTRACT HEREINBEFORE RECITED ACCORDING TO ITS TERMS, STIPULATIONS, PROVISIONS, AND THE PLANS AND SPECIFICATIONS THEREOF UNDER THE SUPERVISION AND DIRECTION OF THE SECOND PARTY. THE FIRST PARTY WILL FURTHER DEVOTE HIS ENTIRE TIME AND ATTENTION TO THE COMPLETION OF SAID CONTRACT WITHOUT COMPENSATION TO HIMSELF.

2. THE SECOND PARTY WILL MAKE SUCH ADVANCEMENTS AS MAY BE NECESSARY TO ENABLE THE FIRST PARTY TO COMPLETE SAID CONTRACT AS AFORESAID.

3. THE FIRST PARTY, IN CONSIDERATION OF THE ADVANCEMENTS HERETOFORE MADE, AND HEREAFTER TO BE MADE BY THE SECOND PARTY FOR THE PAYMENT OF CLAIMS FOR LABOR, MATERIAL AND SUPPLIES, ARISING OUT OF SAID CONTRACT, HAS GRANTED, BARGAINED, SOLD, ASSIGNED, TRANSFERRED, AND SET OVER, AND BY THESE PRESENTS DOES GRANT, SELL, BARGAIN, ASSIGN, TRANSFER AND SET OVER UNTO THE SECOND PARTY, ALL OF THE PROCEEDS NOW DUE OR HEREAFTER PAYABLE TO SAID FIRST PARTY UNDER SAID CONTRACT, WHICH PROCEEDS SHALL INCLUDE ALL MONIES NOW REMAINING PAYABLE FOR WORK ALREADY PERFORMED UNDER THE CONTRACT, AND MONIES THAT MAY HEREAFTER BECOME DUE AND PAYABLE AS ESTIMATES FOR WORK DONE, AND ALL RETAINED PERCENTAGES, AND FINAL PAYMENT ON SAID CONTRACT. AND THE FIRST PARTY FURTHER AUTHORIZES AND DIRECTS FARM SECURITY ADMINISTRATION, OR ANY OTHER PERSONS, FIRMS OR CORPORATIONS WHICH ARE NOW OR WILL HEREAFTER BECOME INDEBTED TO THE FIRST PARTY BY REASON OF SAID CONTRACT, TO PAY SUCH INDEBTEDNESS, WHETHER NOW OWING OR TO BECOME OWING IN THE FUTURE, DIRECTLY TO THE SECOND PARTY. 4. IT IS FURTHER AGREED THAT ALL DRAFTS, CHECKS, VOUCHERS, CHOSES IN ACTION, EVIDENCES OF INDEBTEDNESS, OR RETAINED PERCENTAGES, NOW OR HEREAFTER DUE AND PAYABLE TO THE FIRST PARTY UNDER SAID CONTRACT, AND ALL ACCOUNTS RECEIVABLE AND MONIES RECEIVED OR TO BE RECEIVED THEREUNDER, BY OR FOR HIM, SHALL BE MADE AND DELIVERED TO THE SECOND PARTY. 5. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THIS AGREEMENT SHALL NOT TO ANY EXTENT OR IN ANY MANNER WHATSOEVER CONSTITUTE OR BE DEEMED TO CONSTITUTE A WAIVER OR RELINQUISHMENT BY THE SECOND PARTY OF ANY RIGHT OR RIGHTS WHICH SAID SECOND PARTY NOW HAS OR MAY HEREAFTER HAVE AS AGAINST SAID FIRST PARTY FOR REIMBURSEMENT FOR EXPENSES INCURRED, OR HEREAFTER INCURRED, OR FOR ANY LOSS INCURRED OR SUSTAINED BY SAID SECOND PARTY BY REASON OF ITS UNDERTAKING AS SURETY IN CONNECTION WITH ANY OF SAID CONTRACTS OR UNDER ANY OF SAID BONDS; AND IT IS FURTHER EXPRESSLY UNDERSTOOD AND AGREED THAT THIS AGREEMENT SHALL IN NO WISE AFFECT, MODIFY OR AMEND ANY INDEMNITY AGREEMENTS MADE OR EXECUTED TO THE SECOND PARTY IN CONNECTION WITH THE AFORESAID BONDS, AND THAT EACH AND ALL OF BENEFITS, AND PRIVILEGES UNDER SUCH INDEMNITY AGREEMENTS, AND UNDER THE AGREEMENTS MADE AND EXECUTED BY THE FIRST PARTY IN HIS APPLICATION FOR THE BONDS EXECUTED BY THE SECOND PARTY AS SURETY FOR THE FIRST PARTY, AND ALL OF THEM ARE EXPRESSLY RETAINED AND RESERVED BY SAID SECOND PARTY.

6. IT IS UNDERSTOOD BETWEEN THE PARTIES THAT COCONUT GROVE EXCHANGE BANK, A FLORIDA BANKING CORPORATION, OF COCONUT GROVE, FLORIDA, CLAIMS AN INTEREST IN THE PROCEEDS PAYABLE TO THE FIRST PARTY HEREIN, AND HEREBY ASSIGNED BY THE FIRST PARTY TO THE SECOND PARTY. THE AMOUNT CLAIMED BY SAID BANK IS FIFTY-NINE HUNDRED ($5900.00) DOLLARS, TOGETHER WITH INTEREST ON SAID SUM FROM AN UNCERTAIN DATE, EITHER IN MARCH, 1942, OR LATER. IS FURTHER UNDERSTOOD THAT THE RIGHT OF THE SAID BANK TO PRIORITY IN PAYMENT OF SAID SUM AND THE RIGHT OF SAID BANK TO CLAIM AN INTEREST IN OR OWNERSHIP OF THE PROCEEDS NOW DUE OR HEREAFTER PAYABLE UNDER SAID CONTRACT HAS NOT BEEN SETTLED. IT IS THEREFORE UNDERSTOOD AND AGREED BETWEEN THE PARTIES HERETO THAT FARM SECURITY ADMINISTRATION MAY RETAIN THE SUM OF SIXTY-FIVE HUNDRED ($6,500.00) DOLLARS FROM THE PROCEEDS DUE OR TO BECOME DUE UNDER SAID CONTRACT, UNTIL THE SAID CLAIM OF COCONUT GROVE EXCHANGE BANK FOR A PRIORITY INTEREST IN SAID PROCEEDS TO THE EXTENT HEREINBEFORE STATED, HAS BEEN DETERMINED, EITHER BY AGREEMENT OR BY FINAL DECISION OF SUCH COURT OR COURTS (INCLUDING APPELLATE COURTS) AS MAY HAVE JURISDICTION OF THE SUBJECT MATTER, AND BOTH PARTIES HERETO HEREBY CONSENT THAT SAID FARM SECURITY ADMINISTRATION MAY RETAIN SAID SUM OF SIXTY-FIVE HUNDRED ($6500.00) DOLLARS FOR THE PERIOD HEREIN STATED, ALL BALANCES OVER AND ABOVE SAID SUM TO BE PAID BY FARM SECURITY ADMINISTRATION DIRECTLY TO THE SECOND PARTY IN ACCORDANCE WITH THE TERMS HEREINBEFORE EXPRESSED. IT IS TO BE NOTED THAT THIS LATTER INSTRUMENT COVERS ONLY CONTRACT NO. A-5-FSA- 1239.

THERE CAN BE NO QUESTION BUT THAT THE TERMS OF THE ASSIGNMENT OF CLAIMS ACT--- SPECIFICALLY THAT PORTION OF THE ACT QUOTED AND UNDERLINED IN YOUR LETTER--- PRECLUDE THE SIMULTANEOUS EXISTENCE OF MORE THAN ONE VALID ASSIGNMENT UNDER A GIVEN CONTRACT UNLESS EXPRESSLY PERMITTED BY SUCH CONTRACT. THE ASSIGNMENTS BY THE CONTRACTOR TO THE BANK COVERED ALL AMOUNTS PAYABLE UNDER THE CONTRACTS HERE INVOLVED AND THE CONTRACTS DO NOT EXPRESSLY PERMIT MORE THAN ONE ASSIGNMENT TO BE MADE. PROPER NOTICES AND COPIES OF SUCH ASSIGNMENTS WERE FILED--- IF NOT PROMPTLY, AT LEAST PRIOR TO THE DATE OF THE ASSIGNMENT BY THE CONTRACTOR TO THE SURETY. SINCE THE BANK AS ASSIGNEE UNDER THE FIRST ASSIGNMENT WOULD APPEAR TO HAVE COMPLIED WITH THE ASSIGNMENT OF CLAIMS ACT IN ALL MATERIAL ESPECTS; AND SINCE SUCH ASSIGNMENT--- UNDER THE TERMS OF THE ACT--- CONSTITUTES "A VALID ASSIGNMENT FOR ALL PURPOSES," IT NECESSARILY FOLLOWS THAT THE SUBSEQUENT ASSIGNMENT TO THE SURETY IS NULL AND VOID UNDER SECTION 3477, REVISED STATUTES, 31 U.S.C.A. 203.

FURTHERMORE, ASIDE FROM THE ASSIGNMENT OF CLAIMS ACT, SINCE THE CONTRACTOR TRANSFERRED ALL HIS RIGHTS IN ALL AMOUNTS PAYABLE UNDER THE TWO CONTRACTS TO THE BANK UNDER THE FIRST ASSIGNMENT, HE HAD NOTHING LEFT TO CONVEY UNDER THE LATER ASSIGNMENT TO THE SURETY. SEE JUDSON V. CORCORAN, 17 HOW. 612, 614; SALEM COMPANY V. MANUFACTURERS' COMPANY, 264 U.S. 182, 197.

ACCORDINGLY, IT IS UNNECESSARY, FOR PRESENT PURPOSES, TO DECIDE WHETHER THE NEW AMSTERDAM CASUALTY COMPANY MAY BE CONSIDERED A "FINANCING INSTITUTION" WITHIN THE MEANING OF THE ASSIGNMENT OF CLAIMS ACT. HOWEVER, IT HAS BEEN HELD THAT SUCH TERM DOES NOT COMPREHEND AN INDIVIDUAL OR CONCERN WHICH LENDS MONEY ONLY IN CONNECTION WITH ITS PRINCIPAL BUSINESS FUNCTIONS AS AN INSURANCE AGENCY (21 COMP. GEN. 120) OR AS SELLING AGENT FOR PACKING COMPANIES (22 COMP. GEN. 44). AND IN 20 COMP. GEN. 415, 417, IT WAS STATED---

* * * WHILE THE INTENT OF THE CONGRESS IN USING THE TERM "FINANCING INSTITUTION" IS NOT ENTIRELY CLEAR, ONE OF THE PURPOSES OF THE ASSIGNMENT OF CLAIMS ACT OF 1940, WAS TO "ASSIST IN THE NATIONAL DEFENSE PROGRAM" BY MAKING IT POSSIBLE FOR PERSONS TO OBTAIN FINANCIAL ASSISTANCE IN THE PERFORMANCE OF GOVERNMENT CONTRACTS. HENCE, IN DETERMINING WHETHER A PARTICULAR ASSIGNMENT MAY BE RECOGNIZED UNDER THE SAID ACT THE PURPOSE FOR WHICH THE ASSIGNMENT IS MADE WOULD APPEAR TO BE ENTITLED TO MORE CONSIDERATION THAN THE CHARACTER OR DESIGNATION OF THE CONCERN TO WHICH THE ASSIGNMENT IS GIVEN. * * *

IT IS NOT THE PROVINCE OF THIS OFFICER NOR OF THE DISBURSING OFFICER TO LOOK BEHIND A VALID ASSIGNMENT MADE PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT FOR INFORMATION RELATIVE TO THE AMOUNT OF THE LOAN INDEBTEDNESS OF A CONTRACTOR-ASSIGNOR TO AN ASSIGNEE. HOWEVER, IN THE INSTANT CASE, THIS OFFICE IS IN RECEIPT OF A CLAIM BY THE COCONUT GROVE EXCHANGE BANK AS ASSIGNEE UNDER CONTRACT NO. A-5-FSA-1239 IN THE AMOUNT OF $5,900, PLUS INTEREST AT THE RATE OF EIGHT PERCENT FROM APRIL 19, 1942. PARAGRAPH 6 OF THE AGREEMENT AND ASSIGNMENT BETWEEN THE CONTRACTOR AND THE SURETY, QUOTED IN PART ABOVE, ALSO STATES THAT THE CONTRACTOR'S INDEBTEDNESS TO THE BANK IS IN THAT AMOUNT.

IT MAY WELL BE THAT THE BANK WILL RELEASE AND REASSIGN TO THE CONTRACTOR ITS RIGHT TO FUTURE PAYMENTS UNDER THE CONTRACTS IN QUESTION WHEN ITS LOAN TO THE CONTRACTOR SHALL HAVE BEEN PAID IN FULL OR SUBJECT TO A RESERVATION OF THE AMOUNT STILL DUE THE BANK. APPARENTLY, THE CONTRACTOR HAS NOT BEEN DECLARED IN DEFAULT BY THE GOVERNMENT NOR DOES IT APPEAR THAT HIS RIGHT TO COMPLETE THE WORK UNDER THE CONTRACTS HAS BEEN TERMINATED. IF NOT, THE CONTRACTOR MAY BE CONSIDERED AS HAVING RE ESTABLISHED HIS RIGHT TO DIRECT PAYMENT OF THE PROCEEDS OF THESE CONTRACTS UPON FILING A WRITTEN NOTICE AND TRUE COPY OF SUCH RELEASE AND REASSIGNMENT WITH THOSE PARTIES TO WHOM THE ASSIGNEE BANK WAS REQUIRED BY THE ASSIGNMENT OF CLAIMS ACT TO GIVE NOTICE AND A TRUE COPY OF THE ORIGINAL ASSIGNMENT. IN THE EVENT THAT NO RELEASE OR REASSIGNMENT IS EXECUTED BY THE BANK AND THE CONTRACTOR CONTINUES THE WORK CALLED FOR BY THE CONTRACTS IN QUESTION, NO REASON IS APPARENT FROM THE FACTS NOW BEFORE THIS OFFICE WHY PAYMENTS DUE OR TO BECOME DUE UNDER THE CONTRACTS SHOULD NOT BE MADE TO THE COCONUT GROVE EXCHANGE BANK AS ASSIGNEE.

THERE HAS BEEN FORWARDED TO THIS OFFICE FOR DIRECT SETTLEMENT BY LETTER DATED JUNE 22, 1942, VOUCHERS NOS. 5-31197 AND 5-32701 IN THE RESPECTIVE AMOUNTS OF $6,646.45 AND $12,815.60 DRAWN IN FAVOR OF THE COCONUT GROVE EXCHANGE BANK REPRESENTING THE NINTH PARTIAL PAYMENT DUE UNDER THE CONTRACTS IN QUESTION. IN REPLY TO A LETTER FROM THIS OFFICE REQUESTING SUCH INFORMATION, THE BUREAU OF INTERNAL REVENUE REPORTS OUTSTANDING EMPLOYMENT TAXES AGGREGATING $7,126 AGAINST THE CONTRACTOR, J. VICTOR MARTIN. SINCE THE VOUCHERS NOW BEFORE THIS OFFICE FOR SETTLEMENT ARE SUFFICIENT IN AMOUNT TO LIQUIDATE THE INDEBTEDNESS OF MR. MARTIN TO THE UNITED STATES, OFFSET ACTION WILL BE TAKEN ACCORDINGLY. HOWEVER, AS TO THE BALANCE DUE UNDER THE VOUCHERS NO ACTION WILL BE TAKEN FOR A REASONABLE TIME PENDING RECEIPT OF A RELEASE AND REASSIGNMENT BY THE BANK TO THE CONTRACTOR, AT WHICH TIME THIS OFFICE WILL GIVE CONSIDERATION TO ALLOWING THE CLAIMS EITHER IN FAVOR OF THE BANK, OR THE CONTRACTOR, AS MAY BE PROVIDED IN THE RELEASE AND REASSIGNMENT. IN THE ABSENCE OF RECEIPT OF SUCH A RELEASE AND REASSIGNMENT WITHIN 30 DAYS FROM THE DATE HEREOF SETTLEMENT OF ANY AMOUNT OTHERWISE DUE ON THE VOUCHERS WILL BE STATED IN FAVOR OF THE ASSIGNEE BANK.