B-165031, OCTOBER 10, 1968, 48 COMP. GEN. 196

B-165031, OCTOBER 10, 1968, 48 COMP. GEN. 196

CLAIMS - ASSIGNMENTS - CONTRACTS - BUSINESS OPERATION SOLD, ETC. THE PURCHASER OF A MANUFACTURING CONCERN WHICH COMPLETED SHIPMENT OF FIVE GOVERNMENT CONTRACTS ASSIGNED TO IT BY THE SELLER--- WHERE TWO OF THE CONTRACTS HAD BEEN AWARDED PRIOR TO THE SELLER'S CHANGE OF FIRM NAME BUT NO FILING MADE OF THE CHANGE AS REQUIRED BY PARAGRAPH 1-1602 OF THE ARMED SERVICES PROCUREMENT REGULATION, AND TWO OF THE REMAINING THREE CONTRACTS, WITH THE PURCHASER'S CONSENT, HAD BEEN ASSIGNED TO A BANK PURSUANT TO 31 U.S.C. 203--- MAY BE RECOGNIZED AS THE SUCCESSOR IN INTEREST TO THE CONTRACTOR OF RECORD ON ALL FIVE CONTRACTS, NO CLAIM HAVING BEEN RECEIVED FROM THE CONTRACTOR OF RECORD OR THE BANK. HOWEVER, CONSIDERATION OF THE CLAIM FOR PAYMENT UNDER 31 U.S.C. 71, REQUIRES TWO RELEASES, ONE FROM THE CONTRACTOR OF RECORD, IDENTIFYING THE FIVE CONTRACTS, THE OTHER FROM THE BANK RELINQUISHING ANY CLAIM AGAINST THE GOVERNMENT.

TO THE DIRECTOR, DEFENSE SUPPLY AGENCY, OCTOBER 10, 1968:

WE REFER TO A LETTER DATED AUGUST 7, 1968, FROM THE CHIEF, ACCOUNTING AND FINANCE DIVISION, OFFICE OF THE COMPTROLLER, DEFENSE SUPPLY AGENCY, FORWARDING FOR ADVANCE DECISION BY OUR OFFICE A CLAIM BY ELECTRIC APPARATUS COMPANY (ELECTRIC APPARATUS), HOWELL, MICHIGAN, FOR PAYMENT FOR ELECTRICAL EQUIPMENT FURNISHED TO THE DEFENSE CONSTRUCTION SUPPLY CENTER (DCSC), COLUMBUS, OHIO, UNDER FIVE CONTRACTS AWARDED TO HOWELL ELECTRIC MOTORS COMPANY (HOWELL ELECTRIC MOTORS). THE SUBMISSION OF THE MATTER IS ON BEHALF OF THE ACCOUNTING AND FINANCE OFFICER, DCSC.

THE CLAIM FILE SHOWS THAT DURING THE PERIOD OCTOBER 5, 1966, TO JUNE 6, 1967, DCSC ISSUED TO HOWELL ELECTRIC MOTORS THE FIVE CONTRACTS CITED IN THE ELECTRIC APPARATUS CLAIM, NOS. DSA 700-67-C-4227, 700-67 M-RY32, 700- 67-M-TY18, 700-67-C-3993 AND 700-67-M-ZG64. ON NOVEMBER 1, 1966, HOWELL ELECTRIC MOTORS FILED WITH THE TREASURER OF THE STATE OF MICHIGAN A CERTIFICATE OF AMENDMENT TO ITS ARTICLES OF INCORPORATION STATING THAT PURSUANT TO A MAJORITY VOTE OF ITS SHAREHOLDERS AT A MEETING HELD ON AUGUST 25, 1966, THE CORPORATE NAME HAD BEEN CHANGED TO HOWELL INTERNATIONAL, INC. (HOWELL INTERNATION). THE CERTIFICATION BORE THE SIGNATURES OF PAUL S. DOPP, PRESIDENT, AND JOHN T. ANDERSON, SECRETARY, OF HOWELL ELECTRIC MOTORS, AND UNDER THE LAWS OF MICHIGAN THE CHANGE OF NAME WAS EFFECTIVE AS OF THE DATE OF SAID FILING.

ON JUNE 22 AND 23, 1967, HOWELL INTERNATIONAL, REPRESENTED BY PAUL S. DOPP, PRESIDENT, AND JOHN T. ANDERSON, SECRETARY, JOINED IN AN AGREEMENT WITH ELECTRIC APPARATUS, A COMPANY WHICH HAD BEEN INCORPORATED UNDER THE LAWS OF MICHIGAN EFFECTIVE JUNE 13, 1967, WHEREBY ELECTRIC APPARATUS PURCHASED FROM HOWELL INTERNATIONAL THE HOWELL MANUFACTURING FACILITY AND OTHER PROPERTY ORIGINALLY HELD BY HOWELL ELECTRIC MOTORS. THE AGREEMENT WAS SIGNED FOR ELECTRIC APPARATUS BY W. C. MCCONNELL, JR., PRESIDENT, AND PAUL H. DUBACK, SECRETARY. AS PART OF THE TRANSACTION, HOWELL INTERNATIONAL EXECUTED AN ASSIGNMENT TO ELECTRIC APPARATUS WHICH INCLUDED EIGHT DSA CONTRACTS, AMONG WHICH WERE CONTRACTS NOS. 700-67-C-4227, 700-67 -M RY32, 700-67-MTY18 AND 700-67-C-3993. (CONTRACT NO. 700-67-M-ZG64, WHICH IS ALSO COVERED BY THE CLAIM OF ELECTRIC APPARATUS, WAS NOT LISTED IN THE SALES DOCUMENTS.)

BY LETTER OF NOVEMBER 28, 1967, ELECTRIC APPARATUS NOTIFIED THE DIRECTOR OF PROCUREMENT AND PRODUCTION, DCSC, THAT ELECTRIC APPARATUS HAD PURCHASED FOR CASH, ON JUNE 23, 1967, ALL OF THE ASSETS OF HOWELL INTERNATIONAL, INCLUDING CERTAIN CONTRACTS WITH DSA; THAT FROM THE ASSETS SO ACQUIRED ELECTRIC APPARATUS HAD PRODUCED AND SHIPPED ITEMS UNDER CONTRACTS NOS. 700 -67-M-ZG64, 700-67-M-TY18, AND 700-67-C-3993; AND THAT INVOICES HAD NOT BEEN PREPARED BY ELECTRIC APPARATUS FOR THE ITEMS IN QUESTION FOR THE REASON THAT HOWELL INTERNATIONAL HAD NOT YET SIGNED A NOVATION AGREEMENT (A PREREQUISITE UNDER ARMED SERVICES PROCUREMENT REGULATION (ASPR) 1-1602 TO RECOGNITION BY DCSC OF ELECTRIC APPARATUS AS SUCCESSOR IN INTEREST TO HOWELL ELECTRIC MOTORS). ACCORDINGLY, ELECTRIC APPARATUS REQUESTED THE DCSC NOT HONOR ANY INVOICES BY HOWELL INTERNATIONAL UNDER THE THREE CONTRACTS.

ON DECEMBER 26, 1967, G. WILLARD DOPP, AS VICE PRESIDENT, AND JOHN T. ANDERSON, AS SECRETARY, FOR HOWELL INTERNATIONAL, EXECUTED ASSIGNMENTS OF THE PROCEEDS OF CONTRACTS NOS. 700-67-C-4227 AND 700-67 M-RY32, PURSUANT TO 31 U.S.C. 203 IN FAVOR OF THE MCPHERSON STATE BANK, HOWELL, MICHIGAN. THE ASSIGNMENTS WERE FILED WITH DCSC.

A LETTER DATED MARCH 28, 1968, FROM ELECTRIC APPARATUS TO DCSC INCLUDES INFORMATION TO THE EFFECT THAT THE HOWELL ELECTRIC MOTORS FACILITY IN HOWELL, MICHIGAN, WAS ONE OF THREE COMPANIES OWNED BY THE CORPORATION WHICH CHANGED ITS NAME TO HOWELL INTERNATIONAL, INC.; THAT HOWELL INTERNATIONAL HAS CARRIED ON A VARIETY OF BUSINESS ACTIVITIES INCLUDING THE MANUFACTURING AT THE HOWELL PLANT; AND THAT THE ASSIGNMENT TO THE MCPHERSON STATE BANK BY HOWELL INTERNATIONAL WAS EXECUTED PURSUANT TO AGREEMENT OF ELECTRIC APPARATUS AND HOWELL INTERNATIONAL WITH THE BANK BEING AUTHORIZED BY LETTER (PRESUMABLY FROM HOWELL INTERNATIONAL) TO REMIT THE PROCEEDS OF THE TWO CONTRACTS TO ELECTRIC APPARATUS UPON RECEIPT BY THE BANK.

COPIES OF BILLS OF LADING AND OTHER SHIPPING RECORDS FOR THE FIVE CONTRACTS INDICATE THAT SHIPMENTS UNDER CONTRACTS NOS. 700-67-M-ZG64, 700- 67-M-TY18 AND 700-67-C-3993 WERE MADE ON VARIOUS DATES FROM JUNE 27, 1967, TO AUGUST 25, 1967, BUT SHIPMENTS UNDER CONTRACTS NOS. 700 67-M-RY32 AND 700-67-C-4227 WERE NOT MADE UNTIL JANUARY 2, 1968, AND FEBRUARY 29, 1968, RESPECTIVELY, OR SUBSEQUENT TO THE DECEMBER 26, 1967, ASSIGNMENT OF SUCH CONTRACTS TO THE BANK. ALL OF THE SHIPMENTS ORIGINATED AT 409 NORTH ROOSEVELT STREET, HOWELL, MICHIGAN, THE ADDRESS SHOWN FOR HOWELLELECTRIC MOTORS ON ALL FIVE CONTRACTS AND FOR ELECTRIC APPARATUS IN ITS ARTICLES OF INCORPORATION FILED WITH THE TREASURER OF THE STATE OF MICHIGAN ON JUNE 13, 1967; IN THE SALES AGREEMENT OF JUNE 22, 1967, SIGNED BY BOTH HOWELL INTERNATIONAL AND ELECTRIC APPARATUS; AND ON ALL OF THE INVOICES PRESENTED BY ELECTRIC APPARATUS WITH ITS CLAIM.

IN CONNECTION WITH CONTRACTS NOS. 700-67-C-4227 AND 700-67-C-3993, WHICH HAD BEEN AWARDED TO HOWELL ELECTRIC MOTORS PRIOR TO THE CHANGE OF NAME ON NOVEMBER 1, 1966, THE DISBURSING OFFICER TAKES THE POSITION THAT ELECTRIC APPARATUS MAY NOT BE RECOGNIZED AS SUCCESSOR IN INTEREST TO THE CONTRACTOR OF RECORD DUE TO THE FAILURE OF HOWELL INTERNATIONAL TO FILE A CHANGE OF NAME AGREEMENT IN ACCORDANCE WITH ASPR 1-1602, AN ACTION WHICH THE DISBURSING OFFICER VIEWS AS ESSENTIAL TO CREATING ANY LEGAL OR EQUITABLE RIGHT ON THE PART OF HOWELL INTERNATIONAL IN THESE TWO CONTRACTS. HOWEVER, ON THE BASIS THAT THE AVAILABLE EVIDENCE INDICATES THAT ELECTRIC APPARATUS PERFORMED BOTH CONTRACTS, THAT THE GOVERNMENT HAS RECEIVED THE BENEFITS THEREOF, AND THAT THE CLAIM IS FAIR AND REASONABLE, THE DISBURSING OFFICER RECOMMENDS THAT PAYMENT BE AUTHORIZED THEREUNDER ON A QUANTUM VALEBANT BASIS.

AS TO CONTRACTS NOS. 700-67-M-RY32 AND 700-67-M-TY18, WHICH WERE AWARDED IN THE NAME OF HOWELL ELECTRIC MOTORS AFTER THE CORPORATE NAME HAD BEEN CHANGED TO HOWELL INTERNATIONAL, THE DISBURSING OFFICER URGES THAT ELECTRIC APPARATUS SHOULD BE RECOGNIZED AS THE LEGAL ASSIGNEE IN VIEW OF THE TRANSFER OF THE BUSINESS TO ELECTRIC APPARATUS WHICH INCLUDED ASSIGNMENT OF THE CONTRACTS. IN THIS CONNECTION, REFERENCE IS MADE TO SEABOARD AIR LINE RAILWAY V UNITED STATES, 256 U.S. 655; 4 COM. GEN. 184; AND 9 COMP. GEN. 72, WHICH STAND FOR THE PROPOSITION THAT THE TRANSFER OF RIGHTS AND OBLIGATIONS INCIDENT TO A SALE OR MERGER OF A CONTRACTING CORPORATION OR INDIVIDUAL DOES NOT CONSTITUTE AN ASSIGNMENT IN VIOLATION OF THE ANTI-ASSIGNMENT STATUTES. IN LINE WITH THESE DECISIONS, IT IS RECOMMENDED THAT THE PROVISIONS OF 31 U.S.C. 203 BE WAIVED BY THE GOVERNMENT.

AS TO THE ASSIGNMENTS WHICH WERE EXECUTED BY HOWELL INTERNATIONAL ON DECEMBER 16, 1967, IN FAVOR OF THE MCPHEARSON STATE BANK UNDER CONTRACTS NOS. 700-67-C-4227 AND 700-67-C-3993, THE DISBURSING OFFICER ASSERTS THAT SUCH ACTION WAS OBVIOUSLY INTENDED TO AVOID THE NOVIATION AGREEMENT REQUIREMENT; THAT HOWELL INTERNATIONAL HAD NO RIGHT OR EXPECTANCY IN THE CONTRACTS (APPARENTLY BECAUSE IT FAILED TO FILE WITH DCSC THE CHANGE OF NAME AGREEMENT REQUIRED BY ASPR 1-1602); AND THAT THE DOCTRINE OF ESTOPPEL IS NOT FOR APPLICATION BECAUSE IT APPLIES ONLY WHEN RECOVERY IS SOUGHT OF SUMS WHICH HAVE ALREADY BEEN PAID. ACCORDINGLY, THE DISBURSING OFFICER CONTENDS THAT NEITHER ASSIGNMENT IS ENTITLED TO RECOGNITION EITHER AT LAW OR IN EQUITY.

WITH RESPECT TO CONTRACT NO. 700-67-M-ZG64, THE DISBURSING OFFICER RECOMMENDS THAT SINCE THIS ORDER WAS NOT SHIPPED UNTIL AFTER THE EFFECTIVE DATE OF THE TRANSFER OF THE HOWELL, MICHIGAN, MANUFACTURING FACILITY AND SINCE IT WAS NOT SPECIFICALLY INCLUDED IN THE LIST OF CONTRACTS OR CUSTOMERS IN THE TRANSFER AGREEMENT FROM HOWELL INTERNATIONAL, TO ELECTRIC APPARATUS, PAYMENT NOT BE MADE THEREON.

THERE APPEARS TO BE NO QUESTION BUT THAT ELECTRIC APPARATUS COMPLETED SHIPMENT UNDER ALL FIVE CONTRACTS AFTER IT ASSUMED OWNERSHIP OF THE FACILITY FORMERLY OWNED AND OPERATED, FIRST BY HOWELL ELECTRIC MOTORS AND THEN BY HOWELL INTERNATIONAL. FURTHER, THERE IS NO RECORD OF THE FILING OF ANY CLAIM BY HOWELL INTERNATIONAL, IN EITHER ITS OWN NAME OR THE NAME OF HOWELL ELECTRIC MOTORS, UNDER ANY OF THE CONTRACTS, OR OF THE RECEIPT OF ANY CLAIM BY THE MCPHEARSON STATE BANK AS ASSIGNEE OF CONTRACTS NOS. 700-67-C-4227 AND 700-67-M-RY32.

IN THE CIRCUMSTANCES, IT IS OUR VIEW THAT IN LINE WITH THE DECISIONS CITED BY THE DISBURSING OFFICER ELECTRIC APPARATUS MAY BE RECOGNIZED AS THE SUCCESSOR IN INTEREST TO THE CONTRACTOR OF RECORD ON ALL FIVE CONTRACTS. SEE, ALSO, 32 COMP. GEN. 227 AND COURT CASES THEREIN CITED. WE THEREFORE WILL CONSIDER THE CLAIM UNDER OUR CLAIMS SETTLEMENT AUTHORITY (31 U.S.C. 71). IN ORDER TO DO SO, HOWEVER, IT WILL BE NECESSARY THAT ELECTRIC APPARATUS FURNISH TO OUR OFFICE FROM HOWELL INTERNATIONAL, INC., A RELEASE OF ANY CLAIM IN EITHER ITS OWN NAME OR THE NAME OF HOWELL ELECTRIC MOTORS COMPANY AGAINST THE GOVERNMENT UNDER EACH OF THE FIVE CONTRACTS, WHICH SHOULD BE SPECIFICALLY IDENTIFIED IN THE RELEASE, AND FROM THE MCPHEARSON STATE BANK A RELEASE SIGNED BY DULY AUTHORIZED OFFICIALS OF THE BANK RELINQUISHING ANY CLAIM AGAINST THE GOVERNMENT UNDER THE ASSIGNMENTS OF DECEMBER 26, 1967. WE HAVE SO ADVISED ELECTRIC APPARATUS BY LETTER OF TODAY.