B-165362, MAY 15, 1969

B-165362, MAY 15, 1969

TO JACKSON, KELLY, HOLT AND O-FARRELL:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 26, 1969, ON BEHALF OF THE KANAWHA VALLEY BANK, REQUESTING RECONSIDERATION OF THAT PART OF OUR DECISION, B-165362, NOVEMBER 8, 1968, WHICH DENIED THE BANK'S CLAIM AS ASSIGNEE FOR THE RECOVERY OF $21,862.12 PAID TO THE ASSIGNOR, GRIFFIN ELECTRIC, INCORPORATED, BY THE FEDERAL AVIATION AGENCY AS ESTIMATE NO. 6, UNDER CONTRACT NO. FA-EA-2963, DATED MAY 22, 1962.

THE PRIMARY BASIS FOR YOUR REQUEST FOR RECONSIDERATION IS FOUNDED UPON ADDED EVIDENCE, NOW FURNISHED OUR OFFICE, SHOWING THAT A VALID PROCEDURAL NOTICE OF ASSIGNMENT WAS GIVEN, IN ACCORDANCE WITH THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT, AS AMENDED, 31 U.S.C. 203, PRIOR TO THE PAYMENT OF ESTIMATE NO. 6 TO THE ASSIGNOR.

THE RECORD, IN SEQUENCE, SHOWS THAT ON NOVEMBER 30, 1962, THE KANAWHA VALLEY BANK SUBMITTED NOTICE OF ASSIGNMENT ALONG WITH A TRUE COPY OF THE ASSIGNMENT TO THE CONTRACTING OFFICER. THE SUBMITTED NOTICE INCLUDED THE FOLLOWING STATEMENT:

"WE ARE SENDING A COPY OF THIS LETTER AND OF THE ASSIGNMENT TO GRIFFIN'S BONDING COMPANY, THE FIDELITY AND CASUALTY COMPANY OF NEW YORK, 1116 QUARRIER STREET, CHARLESTON, WEST VIRGINIA. IN THE COPY OF THE CONTRACT FURNISHED TO US BY GRIFFIN ELECTRIC, INC., THERE IS NO DISBURSING OFFICER DESIGNATED TO MAKE PAYMENTS THEREUNDER. IF THERE ARE ANY OTHER PERSONS WHOM WE SHOULD NOTIFY OF THE ASSIGNMENT OR FURNISH WITH COPIES THEREOF, OR IF THERE IS ANYTHING ELSE TO BE DONE TO PERFECT THIS ASSIGNMENT PLEASE ADVISE US.' BY LETTER DATED DECEMBER 7, 1962, THE NOTICE OF THE ASSIGNMENT WAS RETURNED TO THE BANK ADVISING THAT THE NOTICE WAS IMPROPERLY PREPARED AND REQUESTED RESUBMISSION. ON DECEMBER 18, 1962, THE CONTRACTING OFFICER PROCESSED AND SENT TO ACCOUNTS FOR PAYMENT TO THE CONTRACTOR ESTIMATE NO. 6 IN THE AMOUNT OF $21,862.12. (THIS AMOUNT WAS CERTIFIED FOR PAYMENT ON JANUARY 3, 1963, AND THE ACTUAL CHECK WAS DATED JANUARY 8, 1963.) THE KANAWHA BANK RESUBMITTED THE NOTICE OF ASSIGNMENT BY LETTER DATED DECEMBER 15, 1962, WHICH WAS ACKNOWLEDGED BY THE CONTRACTING OFFICER ON DECEMBER 20, 1962. IN RESPONSE THERETO, BY LETTER OF JANUARY 3, 1963, THE CONTRACTING OFFICER REQUESTED TWO ADDITIONAL COPIES OF THE ASSIGNMENT INDICATING RECEIPT OF THE ASSIGNMENT BY THE SURETY AND ADVISED THAT UPON RECEIPT OF THE SURETY'S ACKNOWLEDGMENT, ALL PAYMENTS WOULD BE MADE TO THE KANAWHA BANK. THE SURETY'S ACKNOWLEDGMENT WAS FURNISHED TO THE CONTRACTING OFFICER ON JANUARY 11, 1963.

THE RECORD INDICATES THAT IT WAS THE VIEW OF THE CONTRACTING OFFICER THAT THE ASSIGNMENT COULD NOT BE CONSIDERED A VALID, EFFECTIVE AND BINDING ASSIGNMENT UNTIL EVIDENCE WAS FURNISHED TO THE GOVERNMENT THAT THE SURETY CONSENTED AND AGREED TO THE ASSIGNMENT.

WE DO NOT AGREE WITH THIS CONCLUSION. 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.'

WE THINK IT UNNECESSARY, FOR PRESENT PURPOSES, TO DECIDE WHETHER THE NOVEMBER 30, 1962, NOTICE WAS SUFFICIENT TO CONSTITUTE VALID NOTICE TO THE GOVERNMENT AS CONTEMPLATED BY THE ACT, SINCE THE RECORD DISCLOSES THAT THE CONTRACTING OFFICER ACKNOWLEDGED PROPER NOTICE OF ASSIGNMENT UNDER THE NOTICE GIVEN ON DECEMBER 15, 1962, PRIOR TO THE DISBURSEMENT OF ESTIMATE NO. 6.

IT IS WELL-SETTLED LAW THAT ONCE AN OBLIGOR (THE UNITED STATES) HAS NOTICE OF A VALID ASSIGNMENT, IT PAYS THE ASSIGNOR AT ITS PERIL AND IS, THEREFORE, LIABLE TO THE ASSIGNEE FOR THE AMOUNT OF THE ERRONEOUS PAYMENT. SEE CENTRAL BANK OF RICHMOND, VA. V THE UNITED STATES, 117 CT.CL. 389. THE ONLY QUESTION THAT REMAINS THEN, IS WHETHER THE ASSIGNEE IS ENTITLED TO INTEREST ON THE AMOUNT OF THE ERRONEOUS PAYMENT FOR THE PERIOD IT HAS BEEN WITHHELD FROM THE ASSIGNEE. THE PAYMENT OF INTEREST BY THE GOVERNMENT OF THE UNITED STATES ON ITS UNPAID ACCOUNTS OR CLAIMS MAY NOT BE MADE EXCEPT WHERE INTEREST IS STIPULATED BY CONTRACT OR IS PROVIDED BY THE LAWS OF THE UNITED STATES.

THE FOREGOING RULE IS SUPPORTED BY NUMEROUS COURT DECISIONS. IN SEABOARD AIR LINE RY. V UNITED STATES, 261 U.S. 299, 304, THE COURT STATED THE RULE AS FOLLOWS:

"THE RULE IS THAT, IN ABSENCE OF A STIPULATION TO PAY INTEREST OR A STATUTE ALLOWING IT, NONE CAN BE RECOVERED AGAINST THE UNITED STATES UPON UNPAID ACCOUNTS OR CLAIMS. UNITED STATES V ROGERS, 255 U.S. 163, 169; UNITED STATES V NORTH AMERICAN TRANSPORTATION AND TRADING CO., 253 U.S. 330; UNITED STATES V NORTH CAROLINA, 136 U.S. 211, 216; ANGARICA V BYARD, 127 U.S. 251; HARVEY V UNITED STATES, 113 U.S. 243.'

IN VIEW OF THE ABOVE RULE AND THE ABSENCE OF ANY STATUTE PROVIDING FOR THE PAYMENT OF INTEREST UPON SETTLEMENTS BY OUR OFFICE WE HAVE NO BASIS FOR ALLOWING THE INTEREST CLAIMED.

ACCORDINGLY, WE HAVE TODAY AUTHORIZED PAYMENT IN THE AMOUNT OF $21,862.12 TO THE KANAWHA VALLEY BANK, AS ASSIGNEE.