B-42669, JUNE 29, 1944, 23 COMP. GEN. 989

B-42669: Jun 29, 1944

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WHERE TRANSPORTATION OF GOODS IS ACCOMPLISHED PURSUANT TO A PREVIOUSLY EXECUTED CONTRACT. THE BILLS OF LADING ARE MERELY A RECEIPT FOR THE GOODS TO BE TRANSPORTED AND PAYMENTS FOR INDIVIDUAL SERVICES WOULD BE FOR CONSIDERATION AS BEING MADE UNDER THE PREVIOUSLY EXECUTED MASTER CONTRACT RATHER THAN UNDER THE PARTICULAR BILL OF LADING COVERING THE SERVICE. 000 PAYMENTS UNDER THE CONTRACT ARE ASSIGNABLE PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940 AS "AGGREGATING $1. WHERE PAYMENTS FOR HAULING SERVICES UNDER A MASTER CONTRACT WITH A PARTICULAR CARRIER ARE ASSIGNED PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940. THE BILL OF LADING AND VOUCHER COVERING EACH INDIVIDUAL HAULING SERVICE SHOULD INDICATE THAT PAYMENTS THEREON ARE TO BE MADE TO THE DESIGNATED ASSIGNEE.

B-42669, JUNE 29, 1944, 23 COMP. GEN. 989

ASSIGNMENT OF CLAIMS - PAYMENTS UNDER CONTRACTS FOR TRANSPORTATION SERVICES WHERE THE QUANTITY OF HAULING SERVICE TO BE ORDERED BY THE GOVERNMENT UNDER A PROPOSED CONTRACT WITH A CARRIER WOULD BE STATED ONLY AS AN ESTIMATE, WHICH ESTIMATE WOULD BE NOT LESS THAN $1,000, BUT WITH THE RIGHT RESERVED TO THE GOVERNMENT TO ORDER "MORE OR LESS, THAN SAID ESTIMATED AMOUNT, THE CONTRACT WOULD NOT BE ONE "PROVIDING FOR PAYMENTS AGGREGATING $1,000 OR MORE" WITHIN THE MEANING OF THE ASSIGNMENT OF CLAIMS ACT OF 1940 SO THAT THE PAYMENTS UNDER THE CONTRACT COULD BE ASSIGNED. WHILE IN SOME INSTANCES BILLS OF LADING MAY CONSTITUTE NOT ONLY A RECEIPT FOR THE GOODS INVOLVED BUT, ALSO, A CONTRACT FOR THEIR TRANSPORTATION, WHERE TRANSPORTATION OF GOODS IS ACCOMPLISHED PURSUANT TO A PREVIOUSLY EXECUTED CONTRACT, THE BILLS OF LADING ARE MERELY A RECEIPT FOR THE GOODS TO BE TRANSPORTED AND PAYMENTS FOR INDIVIDUAL SERVICES WOULD BE FOR CONSIDERATION AS BEING MADE UNDER THE PREVIOUSLY EXECUTED MASTER CONTRACT RATHER THAN UNDER THE PARTICULAR BILL OF LADING COVERING THE SERVICE. WHERE AN INDEFINITE-QUANTITY MASTER CONTRACT WITH A PARTICULAR CARRIER FOR HAULING SERVICES TO BE ENTERED INTO BY THE WAR DEPARTMENT UNDER ITS WAR POWERS AUTHORITY AS FACILITATING THE PROSECUTION OF THE WAR, WOULD OBLIGATE THE GOVERNMENT TO ORDER SERVICES FOR WHICH PAYMENTS WOULD AGGREGATE AT LEAST $1,000 DURING A GIVEN PERIOD, ALTHOUGH EACH INDIVIDUAL SERVICE WOULD BE COVERED BY A SEPARATE BILL OF LADING WHICH MIGHT INVOLVE A PAYMENT OF LESS THAN $1,000 PAYMENTS UNDER THE CONTRACT ARE ASSIGNABLE PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940 AS "AGGREGATING $1,000 OR MORE" WITHIN THE MEANING OF THE ACT. 21 COMP. GEN. 265, AMPLIFIED. WHERE PAYMENTS FOR HAULING SERVICES UNDER A MASTER CONTRACT WITH A PARTICULAR CARRIER ARE ASSIGNED PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, THE BILL OF LADING AND VOUCHER COVERING EACH INDIVIDUAL HAULING SERVICE SHOULD INDICATE THAT PAYMENTS THEREON ARE TO BE MADE TO THE DESIGNATED ASSIGNEE, WITH APPROPRIATE REFERENCE BEING MADE TO THE MASTER CONTRACT.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF WAR, JUNE 29, 1944:

I HAVE YOUR LETTER OF JUNE 12, 1944, IN PART AS FOLLOWS:

YOUR OPINION IS REQUESTED AS TO WHETHER YOUR OFFICE WOULD BE REQUIRED TO QUESTION THE FOLLOWING PROPOSED ASSIGNMENTS AND PROCEDURE UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940 (54 STAT. 1029).

ASSOCIATED TRANSPORT, INC., IS ENGAGED IN THE HAULING OF FREIGHT BY MOTOR TRUCK FOR VARIOUS SERVICES OF THE DEPARTMENT, INCLUDING THE ARMY AIR FORCES, THE TRANSPORTATION CORPS, AND THE QUARTERMASTER CORPS. UNDER PRESENT PROCEDURES IT MAKES SHIPMENTS UNDER STANDARD GOVERNMENT BILLS OF LADING, WHICH IN MOST INSTANCES ARE FOR LESS THAN $1,000. THE ASSIGNMENT OF CLAIMS ACT OF 1940 PROVIDES THAT THE STATUTORY PROVISIONS PROHIBITING ASSIGNMENTS ( R.S. 3471 AND 3737) SHALL NOT APPLY IN ANY CASE IN WHICH "MONEYS DUE OR TO BECOME DUE FROM THE UNITED STATES * * * UNDER A CONTRACT PROVIDING FOR PAYMENT AGGREGATING $1,000 OR MORE" ARE ASSIGNED TO A BANK, TRUST COMPANY, OR OTHER FINANCING INSTITUTION. THE FOLLOWING HAS BEEN PROPOSED: AN INDEFINITE-QUANTITY CONTRACT WOULD BE ENTERED INTO BETWEEN THE WAR DEPARTMENT AND THE COMPANY, PURSUANT TO THE FIRST WAR POWERS ACT, 1941, 55 STAT. 838, AND EXECUTIVE ORDER NUMBER 9001 WHICH WOULD CONTAIN THE FOLLOWING DESCRIPTION OF THE SERVICES TO BE RENDERED.

"HAULING SERVICE FOR A PERIOD OF ONE YEAR FROM THE DATE HEREOF AS MAY BE ORDERED BY THE GOVERNMENT, AT ESTABLISHED INTERSTATE COMMERCE COMMISSION RATES, OR AT THE SPECIAL TARIFFS SHOWN ON THE SCHEDULE ANNEXED HERETO, WHICHEVER ARE LOWER, OR AT SUCH OTHER RATES AS MAY BE AGREED UPON, ESTIMATED FOR SAID PERIOD AT $----------, BUT NOT LESS THAN $1,000. THE GOVERNMENT RESERVES THE RIGHT TO ORDER MORE OR LESS THAN SAID ESTIMATED AMOUNT.

"IN THE EVENT THAT THE MONEY, OR MONIES, TO BECOME DUE UNDER THIS CONTRACT ARE ASSIGNED TO A FINANCING INSTITUTION PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, VOUCHERS CLAIMING PAYMENT THEREUNDER SHALL BE ENDORSED WITH AN APPROPRIATE LEGEND INDICATING THAT THE PAYMENTS TO BE MADE THEREUNDER HAVE BEEN SO ASSIGNED AND ARE PAYABLE TO THE DESIGNATED ASSIGNEE, AND SUCH VOUCHERS SHALL BE ACCOMPANIED BY BILLS OF LADING STATED IN FAVOR OF SUCH ASSIGNEE AS PAYEE WITH REFERENCE TO THIS CONTRACT.'

MONEY DUE OR TO BECOME DUE UNDER THE CONTRACT WOULD BE ASSIGNED TO A BANKING INSTITUTION PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940 IN STRICT COMPLIANCE WITH THE REQUIREMENTS OF THE STATUTE AS TO FILING. BILLS OF LADING FOR ALL SERVICES FURNISHED PURSUANT TO THE CONTRACT WOULD INDICATE ON THEIR FACE THAT MONIES DUE HAVE BEEN ASSIGNED BY NOTATION AS FOLLOWS:

"MONEYS DUE FOR SERVICES RENDERED AS INDICATED HEREWITH HAVE BEEN ASSIGNED TO AND ARE PAYABLE TO---------------------UNDER WAR DEPARTMENT CONTRACT---------------------DATED--------------, 1944, PURSUANT TO ASSIGNMENT DATED AND EXECUTED-----------------------.'

THE VOUCHER WOULD RECITE THAT IT IS PAYABLE TO THE ASSIGNEE IN SUBSTANTIALLY THE SAME FORM AS THE BILL OF LADING TO WHICH THE VOUCHER RELATES. A SEPARATE NOTICE OF ASSIGNMENT WOULD NOT BE FILED WITH RESPECT TO EACH BILL OF LADING.

THE MAJOR PURPOSE OF THE ASSIGNMENT OF CLAIMS ACT WAS TO ENABLE PERSONS WHO MIGHT OTHERWISE LACK CAPITAL TO OBTAIN FINANCIAL ASSISTANCE BY OFFERING THEIR CONTRACTS AS SECURITY (20 COMP. GEN. 415; 40 OP ATTY. GEN. 67). IT IS BELIEVED BY THE DEPARTMENT, AS A MATTER OF POLICY, THAT THE PROPOSED AGREEMENT AND PROCEDURES ARE DESIRABLE IN FACILITATING THE FINANCING OF A CONTRACTOR WHOSE OPERATIONS ARE ESSENTIAL IN THE WAR EFFORT.

IN 21 COMP. GEN. 265 IT WAS HELD THAT A BILL OF LADING WAS A CONTRACT WITHIN THE MEANING OF THE STATUTE, BUT THAT AS TO EACH BILL FOR LESS THAT $1,000 PAYMENT SHOULD BE MADE IN THE NAME OF THE CONTRACTOR. HOWEVER, IN THAT DECISION THERE WAS NO MASTER ARRANGEMENT WITH THE CARRIER PURSUANT TO WHICH THE BILLS OF LADING WERE ISSUED. IT WOULD APPEAR THAT THE MERE FACT THAT A BILL OF LADING MAY CONSTITUTE A SEPARATE CONTRACT SHOULD NOT IMPAIR THE EFFECT AND CONSEQUENCES OF A BASIC OR MASTER CONTRACT, VALIDLY ASSIGNED WITHIN THE STATUTE, OF WHICH CONTRACT THE BILL OF LADING IS AN INCIDENT. THERE APPEAR TO BE MANY SITUATIONS IN WHICH A MASTER CONTRACT IS USED--- AS FOR REPAIRS OR OTHERWISE--- AND PURSUANT THERETO SEPARATE PURCHASE ORDERS OR DIRECTIONS FOR SERVICES ARE THEREAFTER ISSUED; WHILE EACH PURCHASE ORDER OR DIRECTION MIGHT BE REGARDED FOR CERTAIN PURPOSES AS A SEPARATE CONTRACT, THIS WOULD NOT SEEM TO PREVENT THE BASIC CONTRACT FROM BEING ASSIGNABLE AND ENTITLED TO THE USUAL CONSEQUENCES OF SUCH ASSIGNMENT.

THERE IS ALSO FOR CONSIDERATION YOUR HOLDING THAT "ASSIGNMENTS OTHERWISE PROHIBITED BY SECTION 3477 AND 3737, R.S. MAY BE BINDING AS BETWEEN THE ASSIGNORS AND ASSIGNEES WHEN RECOGNIZED BY THE GOVERNMENT" (20 COMP. GEN. 416, 417). IF AN ASSIGNMENT IS NOT RECOGNIZED BY THE GOVERNMENT AND PAYMENTS ARE MADE TO THE ASSIGNOR BUT IT IS ULTIMATELY DETERMINED, BY THE COURTS OR OTHERWISE, THAT THE ASSIGNMENT COMES WITHIN THE PURVIEW OF THE STATUTE, THE GOVERNMENT MIGHT BE INVOLVED IN A DOUBLE PAYMENT.

YOUR OPINION AND ADVICE ARE ACCORDINGLY REQUESTED AS TO WHETHER YOU WOULD BE REQUIRED TO OBJECT TO THE RECOGNITION OF THE PROPOSED ASSIGNMENT AND PROCEDURE AND TO PAYMENT TO THE ASSIGNEE OF AMOUNTS DUE ON THE SEPARATE BILLS OF LADING.

IN THE OMITTED PORTION OF YOUR LETTER IT IS STATED IN SUBSTANCE THAT THE WAR DEPARTMENT IS VITALLY INTERESTED IN THE CONTINUED AVAILABILITY OF SERVICES OF MOTOR CARRIERS AS ESSENTIAL TO THE WAR EFFORT AND QUOTES FROM A LETTER DATED MAY 18, 1944, FROM THE DIRECTOR OF DEFENSE TRANSPORTATION IN WHICH THERE IS STRESSED THE IMPORTANCE OF MOTOR TRANSPORTATION TO THE SUCCESSFUL PROSECUTION OF THE WAR, THE FINANCIAL DIFFICULTIES BEING EXPERIENCED BY MOTOR CARRIERS RESULTING PARTICULARLY FROM INCREASED OPERATING COSTS, AND THE DESIRABILITY OF AFFORDING FINANCIAL ASSISTANCE TO SUCH CARRIERS.

IT IS TRUE THAT THE MAJOR PURPOSE OF THE ASSIGNMENT OF CLAIMS ACT OF 1940, 54 STAT. 1029, WAS TO AID IN FINANCING THE NATIONAL DEFENSE PROGRAM BY PROVIDING AUTHORITY WHEREBY GOVERNMENT CONTRACTORS MIGHT ASSIGN MONEYS DUE OR TO BECOME DUE UNDER THEIR CONTRACTS TO FINANCING INSTITUTIONS AS SECURITY FOR ADVANCES OF FUNDS. LIKEWISE, IT IS TRUE THAT SUCH PURPOSE IS ENTITLED TO MATERIAL CONSIDERATION IN THE CONSTRUCTION OF THE ACT. SEE 20 COMP. GEN. 415. BUT AT THE SAME TIME, NEITHER THE DESIRABILITY NOR THE NECESSITY FOR FINANCIAL ASSISTANCE IN PARTICULAR CASES OR CLASSES OF CASES AFFORDS LICENSE FOR DISREGARDING THE EXPRESS REQUIREMENTS FOR A VALID ASSIGNMENT WHICH THE CONGRESS HAS SO METICULOUSLY PRESCRIBED IN THE ACT. AND ONE OF SUCH REQUIREMENTS IS THAT THE ASSIGNMENT BE OF AMOUNTS DUE OR TO BECOME DUE "UNDER A CONTRACT PROVIDING FOR PAYMENTS AGGREGATING $1,000 OR MORE.'

THUS, FIRST IT MUST BE DECIDED WHETHER THE INSTRUMENT DESCRIBED IN YOUR LETTER--- THAT IS, THE SO-CALLED "MASTER CONTRACT"--- IS IN FACT A CONTRACT AND, IF SO, WHETHER IT PROVIDES FOR PAYMENTS AGGREGATING AT LEAST $1,000. IN A PRIOR DECISION OF THIS OFFICE (B-29624, OCTOBER 29, 1942) INVOLVING THE QUESTION WHETHER MONEYS DUE OR TO BECOME DUE UNDER A LETTER OF INTENT OR NOTICE OF AWARD MIGHT BE THE SUBJECT OF A VALID ASSIGNMENT UNDER THE ASSIGNMENT OF CLAIMS ACT, IT WAS STATED:

IT IS A CANON OF CONSTRUCTION TOO WELL ESTABLISHED TO REQUIRE CITATION OF AUTHORITIES THAT WHEN A STATUTE CONTAINS A WORD OR TERM HAVING AN ACCEPTED LEGAL SIGNIFICANCE IT IS TO BE PRESUMED THAT CONGRESS USED THE WORD IN THAT SENSE UNLESS A CONTRARY INTENTION IS CLEARLY INDICATED. THERE IS NOTHING IN EITHER THE ASSIGNMENT OF CLAIMS ACT OR ITS LEGISLATIVE HISTORY TO INDICATE THAT THE WORD "CONTRACT" IN THE ABOVE-QUOTED PORTION OF SAID ACT SHOULD BE CONSTRUED IN OTHER THAN ITS ORDINARY AND USUAL SENSE. HENCE, THE CRITERIA BY WHICH IT MAY BE DETERMINED WHETHER ASSIGNMENTS MAY BE MADE PURSUANT TO THE PROVISIONS OF SAID ACT UNDER LETTERS OF INTENT OR NOTICES OF AWARD ARE BUT THE FIRST PRINCIPLES OF THE LAW OF CONTRACTS.

ADMITTEDLY, THE INSTRUMENT HERE INVOLVED IS NOT SPECIFIC AS TO THE RATE AT WHICH PAYMENT FOR THE SERVICE WILL BE MADE; HOWEVER, IT DOES PROVIDE THAT PAYMENT WILL BE MADE AT ESTABLISHED INTERSTATE COMMERCE COMMISSION RATES OR AT SPECIAL TARIFFS SHOWN ON SCHEDULES ANNEXED THERETO, WHICHEVER ARE LOWER, OR AT SUCH OTHER RATES AS MAY BE AGREED UPON. THUS, FOR EACH INDIVIDUAL HAULING SERVICE, THE AMOUNT PAYABLE IS DEFINITE IN THE SENSE THAT IT IS ASCERTAINABLE UNDER THE TERMS OF THE CONTRACT, EXCEPT WHERE MODIFIED BY A SPECIAL AGREEMENT COVERING THE PARTICULAR SERVICE ORDERED. ALSO, THE QUANTITY OF SERVICE TO BE ORDERED WOULD BE STATED ONLY AS AN ESTIMATE, WHICH ESTIMATE WOULD BE NOT LESS THAN $1,000; AND THE GOVERNMENT WOULD RESERVE THE RIGHT TO ORDER "MORE OR LESS" THAN SAID ESTIMATED AMOUNT. IT WOULD SEEM THAT SUCH LANGUAGE COULD BE CONSTRUED AS NOT OBLIGATING THE GOVERNMENT TO ORDER ANY HAULING SERVICE FROM THE CONTRACTOR DURING THE PERIOD SPECIFIED (SEE WILLARD, SUTHERLAND AND CO. V. UNITED STATES, 262, U.S. 489, AND CASES CITED) OR AS OBLIGATING THE GOVERNMENT TO ORDER APPROXIMATELY THE ESTIMATED AMOUNT, WITH A REASONABLE VARIATION EITHER WAY. SEE BRAWLEY V. UNITED STATES, 96 U.S. 168, AND CASES CITED. IN EITHER EVENT, SUCH A CONTRACT WOULD NOT BE ONE "PROVIDING FOR PAYMENTS AGGREGATING $1,000 OR MORE," ESPECIALLY, FOR EXAMPLE, IF THE VALUE OF SERVICES TO BE ORDERED WAS ESTIMATED AT $1,000 OR BUT SLIGHTLY IN EXCESS THEREOF.

HOWEVER, IT MAY BE THAT IT IS INTENDED BY SUCH AGREEMENT TO BIND THE GOVERNMENT TO ORDER AT LEAST $1,000 WORTH OF HAULING SERVICE FROM THE CONTRACTOR DURING THE YEAR ENSUING THE DATE OF ITS EXECUTION. SUCH IS NOT THE FAIR MEANING OF THE LANGUAGE AS IT NOW READS, SINCE THE FIGURE $1,000 IS INSERTED MERELY AS A MINIMUM LIMITATION UPON THE ESTIMATED VALUE OF SERVICES TO BE ORDERED, AND SUCH ESTIMATE IS SUBJECT TO A RESERVATION OF RIGHT TO ORDER A LESSER AMOUNT. IF IT SHOULD BE DETERMINED TO REVISE THE FORM OF AGREEMENT SO AS TO REQUIRE THE GOVERNMENT TO ORDER HAULING SERVICE FOR WHICH PAYMENTS WOULD AGGREGATE AT LEAST $1,000 FOR THE ONE-YEAR PERIOD, CLEARLY THERE WOULD RESULT "A CONTRACT PROVIDING FOR PAYMENTS AGGREGATING $1,000 OR MORE" WITHIN THE MEANING OF THE ASSIGNMENT OF CLAIMS ACT. OF COURSE, THE DESIRABILITY AND EXPEDIENCY FOR SUCH AN AGREEMENT IS PRIMARILY AN ADMINISTRATIVE MATTER, ITS STATUS UNDER THE ASSIGNMENT OF CLAIMS ACT BEING CONSIDERED AT THIS TIME MERELY WITH THE VIEW THAT POSSIBLY THE LANGUAGE SET FORTH IN YOUR LETTER DOES NOT TRULY REPRESENT THE INTENDMENT OF THE PROPOSED AGREEMENT.

THE PRINCIPLE UPON WHICH THE DECISION IN 21 COMP. GEN. 265 WAS BASED, NAMELY, THAT BILLS OF LADING CONSTITUTE NOT ONLY A RECEIPT FOR THE GOODS INVOLVED BUT, ALSO, A CONTRACT FOR THEIR TRANSPORTATION, IS NOT NECESSARILY APPLICABLE WHERE TRANSPORTATION OF THE SUBJECT GOODS IS ACCOMPLISHED PURSUANT TO A PREVIOUSLY EXECUTED CONTRACT. THUS, IN THE MAR MEDITERRANEO, F.2D 459, IT WAS HELD THAT A BILL OF LADING EXECUTED AFTER A CONTRACT FOR CARRIAGE HAS BEEN ENTERED INTO IS MERELY A RECEIPT FOR THE GOODS TO BE TRANSPORTED. ALSO, SEE NORTHERN PAC. RY. CO. V. AMERICAN TRADING CO., 195 U.S. 439, 465. IT WOULD SEEM THAT UNDER THE FORM OF AGREEMENT PROPOSED SEPARATE BILLS OF LADING WOULD CONSTITUTE IN MOST CASES MERE RECEIPTS FOR THE GOODS TO BE HAULED; HOWEVER, WHERE NEW RATES COVERING AN INDIVIDUAL HAULING SERVICE ARE AGREED UPON AND STATED IN THE BILL OF LADING, THE BILL WOULD, IN SUCH CASES, APPEAR TO CONSTITUTE A MODIFICATION OF THE MASTER CONTRACT IN THAT RESPECT. IN ANY EVENT, PAYMENTS FOR INDIVIDUAL SERVICES WOULD BE FOR CONSIDERATION AS BEING MADE UNDER THE PREVIOUSLY EXECUTED MASTER CONTRACT RATHER THAN UNDER THE PARTICULAR BILL OF LADING COVERING THE SERVICE.

ACCORDINGLY, SHOULD IT BE ADMINISTRATIVELY DETERMINED NECESSARY AND EXPEDIENT IN THE PROSECUTION OF THE WAR TO EXECUTE AN AGREEMENT OBLIGATING THE GOVERNMENT TO ORDER HAULING SERVICE FROM A PARTICULAR FIRM OR INDIVIDUAL FOR WHICH PAYMENTS WOULD AGGREGATE AT LEAST $1,000 DURING A GIVEN PERIOD, THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO ASSIGNMENTS OF AMOUNTS DUE OR TO BECOME DUE UNDER SUCH AN AGREEMENT PROVIDED SUCH ASSIGNMENTS ARE MADE IN STRICT COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE ASSIGNMENT OF CLAIMS ACT AND EACH BILL OF LADING AND VOUCHER INDICATES THAT PAYMENTS THEREON ARE TO BE MADE TO THE DESIGNATED ASSIGNEE WITH APPROPRIATE REFERENCE BEING MADE TO THE MASTER CONTRACT.