Skip to main content

B-144031, NOV. 7, 1961

B-144031 Nov 07, 1961
Jump To:
Skip to Highlights

Highlights

TROWBRIDGE AND MADDEN: WE HAVE YOUR LETTER OF SEPTEMBER 12. IT APPEARS TO BE YOUR POSITION THAT THE SET-OFF IS IMPROPER IN VIEW OF THE NO-SET-OFF PROVISION INCORPORATED BY REFERENCE IN CONTRACT NO. THE GOVERNMENT BILL OF LADING WAS ISSUED ON JUNE 30. BY THE CIVIL SERVICE COMMISSION ON WHOSE BEHALF THE CONTRACT WAS MADE. WHEN THE MATTER WAS PRESENTED TO US INITIALLY. YOUR FIRM TOOK THE POSITION THAT THE ASSIGNMENT WAS VALID SINCE IT WAS EXECUTED UNDER THE IDENTITY SHOWN ON THE GOVERNMENT BILL OF LADING. THE ASSIGNMENT WAS. IN THAT LETTER IT WAS FURTHER STATED: "* * * FIRST. THERE CAN BE NO QUESTION THAT EVEN THOUGH THERE WAS AN UNDERLYING CONTRACT BETWEEN CURLES MOVERS. THE ACTUAL SERVICES WERE PERFORMED PURSUANT TO A GOVERNMENT BILL OF LADING ISSUED TO CURLES MOVERS BY CIVIL SERVICE.

View Decision

B-144031, NOV. 7, 1961

TO SHAW, PITTMAN, POTTS, TROWBRIDGE AND MADDEN:

WE HAVE YOUR LETTER OF SEPTEMBER 12, 1961, AND SUBSEQUENT CORRESPONDENCE, SUBMITTING ON BEHALF OF THE AMERICAN SECURITY AND TRUST COMPANY, AS ASSIGNEE OF CURLES MOVERS, A CLAIM IN THE AMOUNT OF $28,185.44. THE AMOUNT HAS BEEN SET-OFF AGAINST A TAX INDEBTEDNESS OF THE CONTRACTOR WHICH HAD MATURED PRIOR TO NOTIFICATION OF THE ASSIGNMENT. IT APPEARS TO BE YOUR POSITION THAT THE SET-OFF IS IMPROPER IN VIEW OF THE NO-SET-OFF PROVISION INCORPORATED BY REFERENCE IN CONTRACT NO. GS-00T-1265 (TOI), DATED JUNE 17, 1960, BETWEEN THE GENERAL SERVICES ADMINISTRATION AND CURLES MOVERS, INC.

THE CONTRACT PROVIDED AT PARAGRAPH 11 THAT UPON COMPLETION OF THE WORK THEREUNDER THE INDIVIDUAL COMMERCIAL BILLS OF LADING WOULD BE CONVERTED TO A SINGLE GOVERNMENT BILL OF LADING. THE GOVERNMENT BILL OF LADING WAS ISSUED ON JUNE 30, 1960, BY THE CIVIL SERVICE COMMISSION ON WHOSE BEHALF THE CONTRACT WAS MADE. ON JULY 1, 1960, RICHARD E. SMITH, D/B/A CURLES MOVERS, ASSIGNED ALL SUMS DUE OR TO BECOME DUE UNDER "GOVERNMENT BILL OF LADING NUMBER A 0212891" TO THE AMERICAN SECURITY AND TRUST COMPANY. THE CIVIL SERVICE COMMISSION ACKNOWLEDGED RECEIPT OF A NOTICE OF ASSIGNMENT OF THE GOVERNMENT BILL OF LADING.

WHEN THE MATTER WAS PRESENTED TO US INITIALLY, WE HELD IN OUR DECISION B- 144031, NOVEMBER 15, 1960, THAT NO PAYMENT COULD BE AUTHORIZED TO THE ASSIGNEE BECAUSE OF THE DIFFERENCE IN THE IDENTITY OF THE CORPORATE CONTRACTOR AND THE SOLE PROPRIETORSHIP ASSIGNOR. BY LETTER OF DECEMBER 15, 1960, HOWEVER, YOUR FIRM TOOK THE POSITION THAT THE ASSIGNMENT WAS VALID SINCE IT WAS EXECUTED UNDER THE IDENTITY SHOWN ON THE GOVERNMENT BILL OF LADING, AND THE ASSIGNMENT WAS, UNDER ITS TERMS, OF MONIES PAYABLE UNDER THE BILL OF LADING RATHER THAN THE CONTRACT. IN THAT LETTER IT WAS FURTHER STATED:

"* * * FIRST, THERE CAN BE NO QUESTION THAT EVEN THOUGH THERE WAS AN UNDERLYING CONTRACT BETWEEN CURLES MOVERS, INC. AND GSA, THE ACTUAL SERVICES WERE PERFORMED PURSUANT TO A GOVERNMENT BILL OF LADING ISSUED TO CURLES MOVERS BY CIVIL SERVICE. AS A CONSEQUENCE, SUCH GOVERNMENT BILL OF LADING SUPERSEDED THE CONTRACT AND, UPON SATISFACTORY COMPLETION OF THE MOVE, CONSTITUTED A NOVATION FOR THE SERVICES RENDERED. A GOVERNMENT BILL OF LADING IS ASSIGNABLE TO THE SAME DEGREE AS A GOVERNMENT CONTRACT AND IS EQUALLY SUBJECT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940. * * *.'

AFTER FURTHER CORRESPONDENCE AND THE RECEIPT OF A HOLD HARMLESS AGREEMENT FROM THE ASSIGNEE, OUR OFFICE DIRECTED PAYMENT TO THE AMERICAN SECURITY AND TRUST COMPANY, ON THE BASIS OF THE ASSIGNMENT OF THE GOVERNMENT BILL OF LADING, OF THE AMOUNT OF THE CLAIM LESS ANY TAXES OR OTHER DEBTS DUE FROM THE ASSIGNOR WHICH COULD BE SET-OFF NOTWITHSTANDING THE ASSIGNMENT UNDER THE DOCTRINE OF SOUTH SIDE BANK AND TRUST COMPANY V. UNITED STATES, 221 F.2D 813.

IN SUPPORT OF YOUR CONTENTION THAT THE NO-SET-OFF PROVISION IS APPLICABLE YOU CITE PARAGRAPH 8 OF STANDARD FORM NO. 32, INCORPORATED IN THE CONTRACT BY REFERENCE, WHICH STATES THAT IF THE CONTRACT IS WITH THE GENERAL SERVICES ADMINISTRATION, OR OTHER DESIGNATED AGENCIES NOT INCLUDING THE CIVIL SERVICE COMMISSION, PAYMENTS DUE THE ASSIGNEE SHALL NOT TO THE EXTENT PROVIDED IN THE ASSIGNMENT OF CLAIMS ACT, 31 U.S.C. 203, BE SUBJECT TO SET-OFF. IN A MEMORANDUM OF SEPTEMBER 27, 1961, YOU CONTEND THAT THE BILL OF LADING IS NOT SEPARATE AND DISTINCT FROM THE UNDERLYING CONTRACT. THEREFORE, YOU CONCLUDE, THE SET-OFFS WERE IMPROPERLY TAKEN.

AS INDICATED ABOVE, OUR DECISION TO AUTHORIZE PAYMENT TO THE ASSIGNEE WAS BASED IN LARGE MEASURE ON THE FACT THAT THE DESIGNATION OF THE CONTRACTOR ON THE BILL OF LADING, WHICH COULD BE REGARDED AS A CONTRACT, WAS THE SAME AS THAT OF THE ASSIGNOR IN THE COPY AND NOTICE OF THE ASSIGNMENT. FURTHER, IT APPEARS FROM THE COURSE OF RELATIONSHIPS AMONG THE SEVERAL PARTIES THAT THE CONTRACTOR AND THE ASSIGNEE REGARDED THE GOVERNMENT BILL OF LADING AS THE VEHICLE UNDER WHICH THE MONIES DUE WERE TO BE PAID. THIS IS SHOWN BY THE FACTS THAT THE CONTRACTOR'S DESIGNATION IN THE ASSIGNMENT AND NOTIFICATION THEREOF FOLLOWED THAT ON THE BILL OF LADING, AND THE NOTICE OF ASSIGNMENT WAS SENT ONLY TO THE CIVIL SERVICE COMMISSION, THE GOVERNMENT AGENCY DESIGNATED ON THE BILL, RATHER THAN TO THE AGENCY WHICH HAD EXECUTED THE CONTRACT.

THE ASSIGNMENT OF CLAIMS ACT, 31 U.S.C. 203, REQUIRES THAT A COPY OF THE ASSIGNMENT AND NOTIFICATION OF THE ASSIGNMENT BE FILED WITH THE CONTRACTING AGENCY. AN ASSIGNMENT BECOMES EFFECTIVE UPON RECEIPT OF NOTICE THEREOF BY THE CONTRACTING AGENCY. SEE CENTRAL NATIONAL BANK OF RICHMOND V. UNITED STATES, 117 CT.CL. 389. IN THIS INSTANCE, AS NOTED, THE COPY OF THE ASSIGNMENT AND THE NOTIFICATION OF ASSIGNMENT WERE SENT TO THE CIVIL SERVICE COMMISSION. THE FILE CONTAINS NO INDICATION THAT THEY WERE SENT TO THE GENERAL SERVICES ADMINISTRATION. IF THE BILL OF LADING DOES NOT SUPERSEDE THE CONTRACT, THEN THE CONTRACTING AGENCY IS THE GENERAL SERVICES ADMINISTRATION AND THE NOTIFICATION REQUIREMENTS OF THE ACT NECESSARY TO VALIDATE THE ASSIGNMENT HAVE NOT BEEN MET. IF, HOWEVER, NOTIFICATION WAS PROPERLY MADE, THE CIVIL SERVICE COMMISSION MUST BE REGARDED AS THE CONTRACTING AGENCY, IN WHICH CASE THE NO-SET-OFF PROVISION IS INAPPLICABLE BOTH UNDER THE LANGUAGE OF THE CONTRACT AND THE LAW.

IN VIEW OF THE FOREGOING, AND PARTICULARLY OUR CONSIDERATION OF THE CLAIM ON THE BASIS OF YOUR PRIOR CONTENTION THAT THE BILL OF LADING SUPERSEDED THE ORIGINAL CONTRACT DOCUMENT, WE MUST CONTINUE TO HOLD THAT THE SET-OFFS WERE PROPERLY MADE. ACCORDINGLY, YOUR CLAIM IS DENIED.

GAO Contacts

Office of Public Affairs