B-154628, FEB. 9, 1965

B-154628, FEB. 9, 1965

TO YEGGE, HALL, TREECE AND EVANS:

REFERENCE IS MADE TO YOUR LETTER DATED OCTOBER 21, 1964, WITH ENCLOSURES, REQUESTING FURTHER CONSIDERATION OF THE CLAIM OF THE GREAT AMERICAN INSURANCE COMPANY, AS COMPLETING SURETY OF THE RASMUSSEN CONSTRUCTION COMPANY, FOR AMOUNTS DUE THE CONSTRUCTION COMPANY ON COMPLETION OF THE CONTRACT WITH THE GOVERNMENT. BY GENERAL ACCOUNTING OFFICE SETTLEMENT DATED JULY 24, 1964, THE CLAIM WAS DENIED IN VIEW OF THE SEVERAL OTHER CONFLICTING CLAIMS FOR THE SAME FUNDS. YOU WERE ADVISED THAT UNLESS THE SEVERAL CLAIMANTS COULD COMPOSE THEIR DIFFERENCES BY MUTUAL AGREEMENT AND EVIDENCE THE SAME IN WRITING, THEY MUST SEEK RECOURSE IN A COURT OF COMPETENT JURISDICTION.

IT APPEARS THAT RASMUSSEN CONSTRUCTION COMPANY ENTERED INTO A CONTRACT WITH THE GOVERNMENT FOR CERTAIN CONSTRUCTION WORK WITH THE GREAT AMERICAN INSURANCE COMPANY AS SURETY ON THE PERFORMANCE BOND. UPON FINDING ITSELF UNABLE TO COMPLETE THE CONTRACT, RASMUSSEN ARRANGED, WITH GOVERNMENT ACQUIESCENCE, WITH THE PACKER CONSTRUCTION COMPANY TO COMPLETE THE WORK. RASMUSSEN THEN EXECUTED AN ASSIGNMENT OF SUMS DUE OR TO BECOME DUE UNDER THE GOVERNMENT CONTRACT TO THE FIRST NATIONAL BANK OF DENVER. THE ASSIGNMENT CONTAINED AN ESCROW PROVISION PROVIDING FOR THE PAYMENT OF SUMS TO PACKER FOR ITS WORK. IT FURTHER APPEARS THAT THE CONTRACT WAS COMPLETED AND WORK ACCEPTED BY THE GOVERNMENT, WITH CERTAIN SUMS UNPAID UNDER THE CONTRACT. CERTAIN LABOR AND MATERIALMEN WERE PAID BY GREAT AMERICAN INSURANCE COMPANY, WHICH FORMS THE BASIS FOR ITS CLAIM FOR THE UNPAID SUMS.

IT FURTHER APPEARS THAT RASMUSSEN AT A LATER DATE INSTRUCTED THE ASSIGNEE -BANK TO PAY, FROM SUMS RECEIVED FROM THE GOVERNMENT, ITS ATTORNEYS FOR LEGAL SERVICES RENDERED.

YOU HAVE NOW SUBMITTED CERTAIN DOCUMENTS AND AFFIDAVITS STATED TO EVIDENCE EXCLUSIVE ENTITLEMENT TO THE SUMS HELD BY THE GOVERNMENT IN THE GREAT AMERICAN INSURANCE COMPANY. IN ADDITION, THE CASES OF AQUILINO V. UNITED STATES, 363 U.S. 509 AND UNITED STATES V. DURHAM LUMBER COMPANY, 363 U.S. 522 ARE CITED AS AUTHORITY FOR THE PROPOSITION THAT THE CONTRACTOR'S SURETY WHO HAS PAID LABOR AND MATERIALMEN OF THE CONTRACTOR, IS ENTITLED TO PREVAIL AGAINST ALL OTHERS AS TO SUMS HELD, AS HERE, UP TO THE AMOUNT AS PROVEN AND LIQUIDATED BY JUDGMENT. THE ENCLOSURES WITH YOUR LETTER EVIDENCE THAT THE GREAT AMERICAN INSURANCE COMPANY HAS OBTAINED JUDGMENTS AGAINST THE RASMUSSEN PARTNERS SUBSTANTIALLY IN EXCESS OF THE SUMS HELD AND ALSO THAT THE PACKER CONSTRUCTION COMPANY HAS BEEN PAID IN FULL BY THE FIRST NATIONAL BANK OF DENVER FOR ITS WORK. IT APPEARS TO BE YOUR VIEW THAT SINCE THE ESCROW PROVISION OF THE ASSIGNMENT HAS BEEN COMPLETED INSOFAR AS PACKER IS CONCERNED, THAT THE SURETY'S CLAIM IS PARAMOUNT.

WE DO NOT CONSIDER EITHER THE AQUILINO CASE OR THE DURHAM CASE AS AUTHORITY IN SUPPORT OF YOUR VIEW. IN NEITHER CASE WERE THERE CONSIDERED THE RIGHTS OF AN ASSIGNEE OF THE CONTRACTOR. IN BOTH CASES, THE DECISION INVOLVED THE RIGHTS OF THE SURETY AS OPPOSED TO THOSE OF THE GOVERNMENT WHOSE CLAIMS WERE BASED ON INTERNAL REVENUE TAX LIENS.

THE AFFIDAVIT OF AN OFFICER OF THE PACKER CONSTRUCTION COMPANY THAT PACKER HAS BEEN PAID IN FULL EVIDENCES THAT THAT PROVISION OF THE ASSIGNMENT HAS BEEN FULFILLED, BUT WE CANNOT VIEW IT AS TERMINATING THE ASSIGNMENT. THAT CAN BE DONE ONLY BY AN APPROPRIATE RELEASE SIGNED BY THE ASSIGNEE. WE VIEW THE ASSIGNMENT AS PROPER UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. 263, AND STILL IN EFFECT. HOWEVER, WE CANNOT DETERMINE DEFINITIVELY THE PRIORITY OF CLAIMS IN THIS MATTER. SINCE OUR AUTHORITY IS NOT JUDICIAL, BUT ADMINISTRATIVE, OUR DECISION WOULD BE BINDING ONLY ON ADMINISTRATIVE OFFICERS OF THE GOVERNMENT. THE UNSUCCESSFUL CLAIMANT OR CLAIMANTS COULD STILL RESORT TO THE COURTS FOR ADJUDICATION OF THEIR RIGHTS AND CONCEIVABLY THE GOVERNMENT COULD BE REQUIRED TO MAKE A SECOND PAYMENT. IT IS FOR THIS REASON THAT WE REQUIRE A COMPOSITION OF DIFFERENCES OR A JUDICIAL DETERMINATION WHERE CONFLICTING CLAIMS ARE PRESENTED.

WE APPRECIATE THE DIFFICULTIES ATTENDANT IN THIS MATTER ON THE PART OF THE CLAIMANTS, YET WE MUST OBTAIN A GOOD AND VALID ACQUITTANCE FOR THE GOVERNMENT TO FORESTALL ANY FUTURE CLAIM UNDER THE CONTRACT CONCERNED HERE. IN THIS CONNECTION WE MAY SUGGEST THAT WE ARE NOT UNWILLING TO AUTHORIZE A SETTLEMENT IN FAVOR OF RASMUSSEN, THE ASSIGNOR, FIRST NATIONAL BANK OF DENVER, ASSIGNEE, AND GREAT AMERICAN INSURANCE COMPANY, SURETY, JOINTLY. IN THIS MANNER THE GOVERNMENT WOULD OBTAIN ITS ACQUITTANCE AND THE OPPOSING CLAIMANTS COULD RESOLVE THEIR DIFFERENCES AMONG THEMSELVES.

ACCORDINGLY, UPON REVIEW OF THE MATTER WE MUST DETERMINE THAT THE DENIAL OF THE CLAIM WAS PROPER.