B-142240, MAR. 23, 1960

B-142240, MAR. 23, 1960

TO W. H. THIELE, M.D., VETERANS ADMINISTRATION HOSPITAL:

YOUR LETTER OF FEBRUARY 15, 1960, FILE REFERENCE 5048/132, REQUESTS OUR ADVICE REGARDING PAYMENT OF U.S. TREASURY CHECK NO. 6,936,571, ENCLOSED WITH YOUR LETTER, DRAWN TO THE ORDER OF NATURAL GAS EQUIPMENT CO., INC., OF ALBANY, GEORGIA, IN THE AMOUNT OF $4,816.10.

YOUR ATTENTION IS INVITED TO OUR CIRCULAR LETTER OF DECEMBER 13, 1946, B- 62476, 26 COMP. GEN. 993, CONCERNING REQUESTS FOR ADVANCE DECISIONS BY OTHERS THAN THE HEADS OF EXECUTIVE DEPARTMENTS. HOWEVER, IN VIEW OF THE FACT THAT PAYMENT OF THE CHECK WILL BE DEFERRED PENDING OUR REPLY, THE QUESTION OF PAYMENT WILL BE CONSIDERED AT YOUR REQUEST.

THE RECORD SHOWS THAT ON JANUARY 13, 1960, THE AFOREMENTIONED CHECK WAS DRAWN IN FAVOR OF NATURAL GAS EQUIPMENT CO., INC., AS FINAL PAYMENT ON CONSTRUCTION CONTRACT NO. C-5 FOR INSTALLATION OF A FLAME FAILURE CONTROL SYSTEM AND NEW BURNERS AT THE VETERANS ADMINISTRATION HOSPITAL, ATLANTA, GEORGIA. THE RECORD DISCLOSES FURTHER THAT THE PROJECT WAS COMPLETED ON DECEMBER 4, 1959, ACCEPTED BY THE ENGINEERING OFFICER ON DECEMBER 9, 1959, AND APPROVED BY THE CONTRACTING OFFICER ON DECEMBER 31, 1959. ADDITION, THE RECORD SHOWS THAT PURSUANT TO THE ACT OF AUGUST 24, 1935, 49 STAT. 793, AS AMENDED, 40 U.S.C. 270A-270E, THE NATURAL GAS EQUIPMENT COMPANY, AS PRINCIPAL, AND THE UNITED STATES FIDELITY AND GUARANTY CO., AS SURETY, EXECUTED A PERFORMANCE BOND TO GUARANTEE THE FAITHFUL PERFORMANCE OF THE CONTRACT HERE INVOLVED, AND A PAYMENT BOND FOR THE PROTECTION OF LABORERS AND MATERIALMEN.

IT IS REPORTED THAT ON JANUARY 18, 1960, A REPRESENTATIVE OF THE UNITED STATES FIDELITY AND GUARANTY CO. CONTACTED YOUR FISCAL OFFICER AND INFORMED HIM THAT A CREDITOR OF NATURAL GAS EQUIPMENT COMPANY HAD MADE A CLAIM AGAINST THE SURETY FOR APPROXIMATELY $2,400. ALSO, THE REPRESENTATIVE OF THE SURETY INFORMALLY REQUESTED THAT AN ATTEMPT BE MADE TO STOP PAYMENT ON THE CHECK IN QUESTION.

IT IS REPORTED FURTHER THAT ON JANUARY 20, 1960, YOUR OFFICE REQUESTED THE TREASURY DEPARTMENT TO STOP PAYMENT ON THE CHECK AND ON JANUARY 25, 1960, YOU WERE NOTIFIED BY THE TREASURY DEPARTMENT THAT THE CHECK WAS OUTSTANDING AND STOPPAGE HAD BEEN ENTERED. THE RECORD SHOWS THAT BY LETTER OF FEBRUARY 12, 1960, NATURAL GAS EQUIPMENT COMPANY RETURNED THE CHECK TO YOUR OFFICE AND REQUESTED THAT IT BE REDRAWN IN THE SAME AMOUNT PAYABLE TO NATURAL GAS EQUIPMENT CO., INC., AND UNITED STATES FIDELITY AND GUARANTY COMPANY AS SURETY. ALSO, NATURAL GAS EQUIPMENT COMPANY REQUESTED THAT THE CHECK BE MAILED TO UNITED STATES FIDELITY AND GUARANTY COMPANY, BOX 1830, ALBANY, GEORGIA.

IT HAS CONSISTENTLY BEEN HELD BY OUR OFFICE THAT WHERE A CONTRACTOR DOES NOT DEFAULT, BUT COMPLETES THE WORK UNDER THE CONTRACT, AS IN THIS CASE, IT IS ENTITLED TO BE PAID THE AMOUNT DUE THEREUNDER, REGARDLESS OF THE FACT THAT THERE MAY BE OUTSTANDING CLAIMS FOR MATERIAL AND LABOR. THIS HOLDING IS ON THE BASIS THAT THERE IS NO OBLIGATION ON THE PART OF THE GOVERNMENT TO PROTECT THE SURETY SINCE ONE OF THE PURPOSES OF THE ACT OF AUGUST 24, 1935, SUPRA, GIVING PERSONS FURNISHING LABOR AND MATERIALS THE RIGHT TO SUE IN THE NAME OF THE UNITED STATES ON THE PAYMENT BOND OF THE CONTRACTOR, IS TO RELIEVE THE GOVERNMENT OF ANY DUTY OR RESPONSIBILITY WITH RESPECT TO SUCH CLAIMS. UNITED STATES V. MUNSEY TRUST COMPANY, 332 U.S. 234.

REGARDING YOUR SPECIFIC QUESTION AS TO WHETHER YOU ARE AUTHORIZED TO MAKE THE CHECK PAYABLE TO NATURAL GAS EQUIPMENT CO., INC., AND UNITED STATES FIDELITY AND GUARANTY COMPANY AS REQUESTED BY THE CONTRACTOR, YOUR ATTENTION IS DIRECTED TO SECTION 3477 OF THE REVISED STATUTES, AS AMENDED, 31 U.S.C. 203, WHICH PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"203. ASSIGNMENTS OF CLAIMS; * * *

"ALL TRANSFERS AND ASSIGNMENTS MADE OF ANY CLAIM UPON THE UNITED STATES, OR OF ANY PART OR SHARE THEREOF, OR INTEREST THEREIN, WHETHER ABSOLUTE OR CONDITIONAL, AND WHATEVER MAY BE THE CONSIDERATION THEREFOR, AND ALL POWERS OF ATTORNEY, ORDERS, OR OTHER AUTHORITIES FOR RECEIVING PAYMENT OF ANY SUCH CLAIM, OR OF ANY PART OR SHARE THEREOF, EXCEPT AS HEREINAFTER PROVIDED, SHALL BE ABSOLUTELY NULL AND VOID, UNLESS THEY ARE FREELY MADE AND EXECUTED IN THE PRESENCE OF AT LEAST TWO ATTESTING WITNESSES, AFTER ALLOWANCE OF SUCH A CLAIM, THE ASCERTAINMENT OF THE AMOUNT DUE, AND THE ISSUING OF A WARRANT FOR THE PAYMENT THEREOF. SUCH TRANSFERS, ASSIGNMENTS, AND POWERS OF ATTORNEY, MUST RECITE THE WARRANT FOR PAYMENT, AND MUST BE ACKNOWLEDGED BY THE PERSON MAKING THEM, BEFORE AN OFFICER HAVING AUTHORITY TO TAKE ACKNOWLEDGEMENTS OF DEEDS, AND SHALL BE CERTIFIED BY THE OFFICER; AND IT MUST APPEAR BY THE CERTIFICATE THAT THE OFFICER, AT THE TIME OF THE ACKNOWLEDGEMENT, READ AND FULLY EXPLAINED THE TRANSFER, ASSIGNMENT, OR WARRANT OF ATTORNEY TO THE PERSON ACKNOWLEDGING THE SAME.

IN VIEW OF THE PROHIBITION AGAINST THE ASSIGNMENT OF CLAIMS AGAINST THE UNITED STATES CONTAINED IN THE ABOVE-QUOTED STATUTE, IT APPEARS THAT MAKING THE CHECK IN QUESTION PAYABLE TO THE CONTRACTOR AND THE SURETY JOINTLY WOULD BE IN VIOLATION OF SUCH PROHIBITION. HOWEVER, THERE APPEARS TO BE NO OBJECTION TO COMPLYING WITH THE CONTRACTOR'S REQUEST TO HAVE THE CHECK MAILED TO THE SURETY.

THEREFORE, A CHECK ISSUED PAYABLE TO NATURAL GAS EQUIPMENT CO., INC., MAY BE MAILED C/O UNITED STATES FIDELITY AND GUARANTY COMPANY, BOX 1830, ALBANY, GEORGIA. THE CHECK WHICH WAS ENCLOSED WITH YOUR LETTER OF FEBRUARY 15, 1960, IS RETURNED HEREWITH.