B-120222, OCT. 27, 1955

B-120222, OCT. 27, 1955

TO GABRIEL G. MORZE, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 3, 1955, RELATIVE TO THE CLAIM PRESENTED IN YOUR CAPACITY AS TRUSTEE IN BANKRUPTCY OF RAHAIM TOOL COMPANY, INC., IN THE AMOUNT OF $15,312.44, FOR SERVICES PERFORMED UNDER CONTRACT NO. DA 19-020-ORD-1175, DATED DECEMBER 1, 1951.

BY SETTLEMENT DATED MAY 19, 1955, COVERING THE CLAIM FOR SERVICES PERFORMED BY RAHAIM TOOL COMPANY, INC., DURING THE PERIOD FROM FEBRUARY 18, 1952, TO JUNE 6, 1953, THE CLAIMS DIVISION, GENERAL ACCOUNTING OFFICE DISALLOWED $5.62 REPRESENTING MATHEMATICAL ERRORS, SUSPENDED THE AMOUNT $1,927.14 PENDING THE SUBMISSION PAYROLL EVIDENCE, AND ALLOWED THE BALANCE IN THE AMOUNT OF $13,379.68. OF THE AMOUNT SO ALLOWED, THE SUM OF $8,923.79 WAS WITHHELD AND APPLIED IN LIQUIDATION OF THE COMPANY'S INDEBTEDNESS TO THE UNITED STATES FOR THE BALANCE OF DELINQUENT TAXES, PLUS PENALTIES AND INTEREST TO JUNE 29, 1953, THE DATE ON WHICH STATE RECEIVERSHIP PROCEEDINGS WERE INSTITUTED AGAINST THE COMPANY.

ASSERTING THAT AMOUNTS ACCRUING UNDER THE CONTRACT HAD BEEN "ASSIGNED FOR VALUE TO A LOCAL BANK, PRIOR TO THE RECORDING OF THE TAX LIEN," YOU EXPRESS THE BELIEF THAT THE APPLICATION OF A PART OF THE AMOUNT DUE THE COMPANY TO LIQUIDATE ITS INDEBTEDNESS FOR TAXES WAS ERRONEOUS. THE RECORD INDICATES THAT THE ASSIGNMENT REFERRED TO IN YOUR LETTER WAS A REASSIGNMENT TO THE GARDNER TRUST COMPANY BY RICHARD WILDER OF THE BLANKET ASSIGNMENT OF ACCOUNTS RECEIVABLE TO HIM BY RAHAIM TOOL COMPANY, INC.

GENERALLY THE ASSIGNMENT OF THE CLAIM AGAINST THE UNITED STATES IS NULL AND VOID UNDER THE PROVISIONS OF SECTION 3477, REVISED STATUTES; HOWEVER, THE ACT OF OCTOBER 9, 1940, 54 STAT. 1029, AND THE ACT OF MAY 15, 1951, 65 STAT. 41, SECTION 3477, SUPRA, WAS AMENDED TO PERMIT ASSIGNMENT OF AMOUNTS ACCRUING UNDER A CONTRACT WITH THE UNITED STATES WHICH INVOLVES PAYMENTS AGGREGATING $1,000 OR MORE, TO A BANK, TRUST COMPANY, OR OTHER FINANCING INSTITUTIONS. IT HAS BEEN HELD THAT AN INDIVIDUAL OR PARTNERSHIP MAY BE RECOGNIZED AS A "FINANCIAL INSTITUTION," WITHIN THE CONTEMPLATION OF SUCH STATUTE AS AMENDED, IF REGULARLY ENGAGED IN THE BUSINESS OF LENDING. HOWEVER, THE LANGUAGE OF THE CITED AMENDMENTS APPEARS TO REQUIRE THE CONCLUSION THAT ANY ASSIGNMENT OF A CLAIM SHOULD SPECIFY THE CONTRACT COVERED AND, THEREFORE, THAT A BLANKET ASSIGNMENT SUCH AS HERE INVOLVED DOES NOT COME WITHIN THE PROVISIONS OF SUCH AMENDMENTS. FURTHERMORE"THERE IS NOTHING IN THE RECORD BEFORE OUR OFFICE TO ESTABLISH THAT RICHARD WILDER WAS ENGAGED IN THE BUSINESS OF FINANCING OF A CHARACTER WHICH WOULD JUSTIFY THE CONCLUSION THAT AN ASSIGNMENT TO HIM WOULD COME WITHIN THE PROVISIONS OF THE CITED AMENDMENTS. THEREFORE, ON THE PRESENT RECORD IT MUST BE CONCLUDED THAT THE ASSIGNMENT TO RICHARD WILDER OF AMOUNTS ACCRUING UNDER CONTRACT NO. DA 19-020-ORD-1175, WAS NULL AND VOID AND, SINCE THE REASSIGNMENT COULD GIVE RISE TO NO GREATER RIGHTS THAN WERE VESTED IN HIM, IT FOLLOWS THAT THE REASSIGNMENT TO THE GARDNER TRUST COMPANY DID NOT CONSTITUTE A VALID ASSIGNMENT OF AMOUNTS ACCRUING UNDER THE CONTRACT. ACCORDINGLY, THE SETTLEMENT OF MAY 19, 1955, IS SUSTAINED.

WITH RESPECT TO THE INQUIRY OF JUNE 29, 1955, REGARDING YOUR RECLAIM VOUCHER COVERING THE AMOUNT OF $1,927.14, YOU ARE ADVISED THAT PROMPT CONSIDERATION OF THE MATTER WILL BE GIVEN BY OUR ..END :