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B-165362, NOV. 13, 1968

B-165362 Nov 13, 1968
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067.01 IN SETTLEMENT OF THEIR CLAIMS UNDER THE SUBJECT CONTRACT EXCEPT FOR THE CONTRACTOR'S RESERVED RIGHT TO PURSUE ITS APPEAL FOR ROCK EXCAVATION COSTS AND THE BANK'S RESERVED CLAIM AS ASSIGNEE FOR THE AMOUNT WHICH ALLEGEDLY WAS IMPROPERLY PAID TO THE ASSIGNOR. WE HAVE TODAY AUTHORIZED PAYMENT OF THE CONTRACT BALANCE. THE NOTICE OF ASSIGNMENT WAS NOT EFFECTIVE UNTIL THE REQUIREMENTS OF 31 U.S.C. 203 HAD BEEN SATISFIED BY PROVIDING WRITTEN NOTICE OF THE ASSIGNMENT TO: "/A) THE CONTRACTING OFFICER OR HEAD OF HIS DEPARTMENT OR AGENCY. IT APPEARS THAT THE BANK FAILED TO SHOW COMPLIANCE WITH THE ABOVE QUOTED STATUTORY REQUIREMENT OF PROVIDING NOTICE TO THE SURETY BEFORE PAYMENT UNDER ESTIMATE NO. 6 WAS RELEASED TO THE CONTRACTOR.

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B-165362, NOV. 13, 1968

TO JACKSON, KELLY, HOLT AND O-FARRELL:

WE REFER TO YOUR LETTER OF SEPTEMBER 25, 1968, AND PRIOR CORRESPONDENCE FROM BOTH YOUR FIRM AND THE KANAWHA VALLEY BANK CONCERNING A BALANCE OF $18,067.01 REMAINING IN THE HANDS OF THE GOVERNMENT AND DUE GRIFFIN ELECTRIC, INCORPORATED, UNDER CONTRACT NO. FA-EA-2963 AWARDED MAY 22, 1962, BY THE FEDERAL AVIATION ADMINISTRATION FOR THE CONSTRUCTION OF AN APPROACH LIGHTING SYSTEM AT THE GREATER PITTSBURGH AIRPORT.

YOUR LETTER OF SEPTEMBER 20, 1968, ADDRESSED TO THE CHIEF, ACCOUNTING DIVISION, FEDERAL AVIATION AGENCY, EASTERN REGION, CONTAINS A JOINT AGREEMENT AMONG THE KANAWHA VALLEY BANK, AS ASSIGNEE, THE FIDELITY AND CASUALTY COMPANY OF NEW YORK, AS SURETY, AND GRIFFIN ELECTRIC, INCORPORATED, AS CONTRACTOR AND ASSIGNOR, OFFERING TO ACCEPT THE CONTRACT BALANCE OF $18,067.01 IN SETTLEMENT OF THEIR CLAIMS UNDER THE SUBJECT CONTRACT EXCEPT FOR THE CONTRACTOR'S RESERVED RIGHT TO PURSUE ITS APPEAL FOR ROCK EXCAVATION COSTS AND THE BANK'S RESERVED CLAIM AS ASSIGNEE FOR THE AMOUNT WHICH ALLEGEDLY WAS IMPROPERLY PAID TO THE ASSIGNOR, GRIFFIN ELECTRIC, UNDER PAYMENT ESTIMATE NO. 6. WE HAVE TODAY AUTHORIZED PAYMENT OF THE CONTRACT BALANCE, $18,067.01 IN ACCORDANCE WITH THIS JOINT AGREEMENT.

WITH RESPECT TO THE BANK'S CLAIM AS ASSIGNEE FOR THE $21,862.12 PAID THE ASSIGNOR, GRIFFIN ELECTRIC, UNDER PAYMENT ESTIMATE NO. 6, THE FEDERAL AVIATION ADMINISTRATION ADVISES THAT IN ITS OPINION, THE NOTICE OF ASSIGNMENT WAS NOT EFFECTIVE UNTIL THE REQUIREMENTS OF 31 U.S.C. 203 HAD BEEN SATISFIED BY PROVIDING WRITTEN NOTICE OF THE ASSIGNMENT TO: "/A) THE CONTRACTING OFFICER OR HEAD OF HIS DEPARTMENT OR AGENCY; (B) THE SURETY OR SURETIES UPON THE BOND OR BONDS, IF ANY, IN CONNECTION WITH SUCH CONTRACT; AND (C) THE DISBURSING OFFICER, IF ANY, DESIGNATED IN SUCH CONTRACT TO MAKE PAYMENT.'

FROM THE RECORD, IT APPEARS THAT THE BANK FAILED TO SHOW COMPLIANCE WITH THE ABOVE QUOTED STATUTORY REQUIREMENT OF PROVIDING NOTICE TO THE SURETY BEFORE PAYMENT UNDER ESTIMATE NO. 6 WAS RELEASED TO THE CONTRACTOR. BECAUSE THE BANK'S RIGHTS AS ASSIGNEE DEPENDED UPON COMPLIANCE WITH THIS STATUTE PERMITTING THE ASSIGNMENT OF CLAIMS AGAINST THE GOVERNMENT UNDER CERTAIN SPECIFIED CONDITIONS, SAID ASSIGNMENT BECAME EFFECTIVE ONLY AFTER THE STATUTORY CONDITIONS WERE SATISFIED. SINCE THIS EVENT OCCURRED SUBSEQUENT TO THE RELEASE OF PAYMENT NO. 6 TO GRIFFIN ELECTRIC, WE CONCLUDE THAT SAID ESTIMATE WAS PAID TO THE PROPER PARTY, GRIFFIN ELECTRIC, PRIOR TO THE EFFECTIVE DATE OF THE ASSIGNMENT TO THE BANK. VIEW THEREOF, AND THE LONG STANDING RULE THAT OUR OFFICE DOES NOT GIVE FAVORABLE CONSIDERATION TO CLAIMS AGAINST THE GOVERNMENT CONCERNING WHICH THERE REMAINS ANY SUBSTANTIAL QUESTION OF LAW OR FACT, PAYMENT OF THE $21,862.12 CLAIM OF THE KANAWHA VALLEY BANK FOR THE AMOUNT OF PAYMENT ESTIMATE NO. 6 CANNOT BE AUTHORIZED. SEE LONGWILL V UNITED STATES, 17 CT. CL. 288, 291 (1881) AND CHARLES V UNITED STATES, 19 CT. CL. 316, 319 (1884).

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