B-212599, NOVEMBER 15, 1983, 63 COMP.GEN. 42

B-212599, NOVEMBER 15, 1983, 63 COMP.GEN. 42

CLAIMS - ASSIGNMENTS - ASSIGNMENT OF CLAIMS ACT - NOTICE REQUIREMENTS - NONCOMPLIANCE THE ASSIGNMENT OF CLAIMS ACT REQUIRES, FOR THE GOVERNMENT'S PROTECTION, THAT THE ASSIGNEE FILE WRITTEN NOTICES OF THE ASSIGNMENT WITH THE CONTRACTING OFFICER AND THE DISBURSING OFFICER DESIGNATED TO MAKE PAYMENT. WHERE THE ASSIGNEE NOTIFIED THE CONTRACTING OFFICER BUT FAILED TO NOTIFY THE DISBURSING OFFICER, WHO HAD NO OTHER REASON TO KNOW OF THE ASSIGNMENT, AND THE DISBURSING OFFICER THEN PAID THE ASSIGNOR, THE ASSIGNEE'S CLAIM FOR A SECOND PAYMENT IS DENIED.

MATTER OF: BANK LEUMI LE-ISRAEL, B.M., NOVEMBER 15, 1983:

THE DEPARTMENT OF THE AIR FORCE REQUESTS OUR DECISION AS TO THE PROPRIETY OF PAYING BANK LEUMI LE-ISRAEL, B.M'S CLAIM FOR $31,921.80, ARISING FROM THE APPARENT ASSIGNMENT TO THE BANK OF PROCEEDS FROM AIR FORCE CONTRACT NO. F04609-82-C-0025. WE DO NOT BELIEVE THE CLAIM SHOULD BE PAID.

THE CONTRACT FOR THE RENTAL OF ROOMS WAS AWARDED TO SILVER LAKES LODGE ON MARCH 3, 1982, FOR $43,921.80. THE PERIOD OF CONTRACT PERFORMANCE WAS MARCH 13 THROUGH APRIL 17, 1982. ON MARCH 1, THE AIR FORCE MADE A $12,000 ADVANCE PAYMENT TO SILVER LAKES LODGE AS REQUESTED BY THE FIRM PURSUANT TO THE CONTRACT'S ADVANCE PAYMENT CLAUSE.

BY LETTER DATED MARCH 12 THE CONTRACTOR REQUESTED THE AIR FORCE ACCOUNTING AND FINANCE OFFICER TO SEND ALL FUTURE PAYMENTS UNDER THE CONTRACT TO THE DESERT COMMUNITY BANK OF VICTORVILLE, CALIFORNIA, MADE OUT TO SILVER LAKES LODGE. TWELVE DAYS LATER, DESPITE PARAGRAPH 12 OF THE CONTRACT'S ADVANCE PAYMENT CLAUSE PROHIBITING ASSIGNMENT OF THE CONTRACT OR ANY CLAIM ARISING UNDER IT TO ANY PARTY, BANK, TRUST COMPANY OR OTHER FINANCIAL INSTITUTION, THE CONTRACTOR EXECUTED AN ASSIGNMENT TO THE CLAIMANT OF ALL SUMS DUE AND OWING UNDER THE CONTRACT. THE CLAIMANT ADVISED THE CONTRACTING OFFICER OF THE ASSIGNMENT BY LETTER OF MARCH 24, AND THE CONTRACTING OFFICER SIGNED THE ASSIGNEE'S CONSENT AND ACCEPTANCE FORM, THEREBY ACKNOWLEDGING THE ASSIGNMENT AND CONSENTING TO PAY THE REMAINING MONIES DUE DIRECTLY TO THE ASSIGNEE. THE ASSIGNEE, HOWEVER, DID NOT NOTIFY THE DISBURSING OFFICER OF THE ASSIGNMENT AS REQUIRED BY THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. 3727 (FORMERLY 31 U.S.C. 203 (1976)) AND 41 U.S.C. 15, AND BY THE IMPLEMENTING DEFENSE ACQUISITION REGULATION (DAR) SEC. 7 103.8 (1976 ED.).

A FINAL PAYMENT OF $31,921.80 WAS MADE TO THE DESERT COMMUNITY BANK TO THE ACCOUNT OF SILVER LAKES LODGE ON APRIL 23, AS REQUESTED BY THE CONTRACTOR'S LETTER OF MARCH 12. SUBSEQUENTLY, BANK LEUMI LE-ISRAEL, B.M. SUBMITTED ITS CLAIM.

THE ASSIGNMENT OF CLAIMS ACT EXPRESSLY REQUIRES THAT THE ASSIGNEE FILE A WRITTEN NOTICE OF THE ASSIGNMENT WITH THE CONTRACTING OFFICER AND THE DISBURSING OFFICER DESIGNATED TO MAKE PAYMENT. IN THIS INSTANCE, IT IS UNDISPUTED THAT WHILE THE CONTRACTING OFFICER HAD NOTICE OF THE ASSIGNMENT, THE ASSIGNEE DID NOT NOTIFY THE DISBURSING OFFICER, AND THE DISBURSING OFFICER DID NOT OTHERWISE KNOW OF THE ASSIGNMENT. WE DENIED A SIMILAR CLAIM WHERE THE ASSIGNEE GAVE NOTICE TO THE CONTRACTING OFFICER AND NOT TO THE DISBURSING OFFICER, ON THE BASIS THAT BECAUSE THE ASSIGNEE HAD THE STATUTORY RESPONSIBILITY FOR GIVING PROPER NOTICE, THE ASSIGNEE MUST BEAR THE RISK OF ANY RESULTING DELAY IN NOTIFYING THE DISBURSING OFFICER. B-159494, SEPTEMBER 2, 1966.

THE AIR FORCE, WHILE AWARE OF OUR 1966 HOLDING, IS CONCERNED ABOUT THE COURT OF CLAIMS' DECISION IN TUFTCO CORPORATION V. UNITED STATES, 614 F.2D 740 (CT. CL. 1980), AND OUR REFERENCE TO IT IN CENTENNIAL SYSTEMS, INCORPORATED, 61 COMP.GEN. 53 (1982), 82-2 CPD 403, SINCE BOTH CASES ALLOWED CLAIMS BY ASSIGNEES WHO FAILED TO FURNISH NOTICE OF THE ASSIGNMENTS. IN BOTH CASES THE ASSIGNMENTS WERE HELD TO BE BINDING ON THE GOVERNMENT BECAUSE THE GOVERNMENT NONETHELESS HAD KNOWLEDGE OF THE ASSIGNMENT BEFORE ANY CONTRACT FUNDS WERE PAID. THE AIR FORCE IS CONCERNED BECAUSE HERE THE CONTRACTING OFFICER SIGNED THE ASSIGNEE'S CONSENT AND ACCEPTANCE FORM SO THAT AT LEAST HE KNEW OF THE ASSIGNMENT.

NEITHER TUFTCO NOR CENTENNIAL, HOWEVER, SUGGESTS A DEPARTURE FROM THE RULE WE ARTICULATED IN 1966. IN TUFTCO, DESPITE THE NOTICE FAILURE, THE DISBURSING OFFICER KNEW OF THE ASSIGNMENT SINCE HE HAD SENT PARTIAL PAYMENTS TO THE ASSIGNEE BEFORE SENDING THE DISPUTED PAYMENTS TO THE ASSIGNOR. THE COURT NOTED THAT THE GOVERNMENT THUS WAS AWARE OF, ASSENTED TO AND RECOGNIZED THE ASSIGNMENT, AND THE COURT THEREFORE WOULD NOT PERMIT THE GOVERNMENT TO AVOID LIABILITY FOR LATER PAYMENTS TO THE ASSIGNOR BASED ON THE FACT THAT THE NOTICE TECHNICALLY HAD NOT BEEN PROPER. CENTENNIAL, THE GOVERNMENT HAD SENT THE ASSIGNEE A LETTER RECOGNIZING THE ASSIGNMENT, THE ASSIGNOR'S INVOICE STATED THAT PAYMENT SHOULD BE MADE TO THE ASSIGNEE, AND, MOST IMPORTANTLY FOR PURPOSES OF THE CLAIM NOW IN ISSUE, THE ASSIGNEE'S FAILURE TO FURNISH PROPER STATUTORY NOTICE HAD NOT STRIPPED THE GOVERNMENT OF THE ASSIGNMENT OF CLAIM ACT'S PROTECTION AGAINST DOUBLE PAYMENTS SINCE NO PAYMENT HAD BEEN MADE. (WE ALSO ALLOWED THE ASSIGNEE'S CLAIM FOR ANOTHER SUM THAT ERRONEOUSLY HAD BEEN PAID TO THE ASSIGNOR AFTER PROPER NOTICE OF THE ASSIGNMENT.)

HERE, HOWEVER, $31,921.80 WAS PAID TO THE ASSIGNOR BECAUSE, UNLIKE THE SITUATIONS IN TUFTCO AND CENTENNIAL, THE DISBURSING OFFICER HAD NO REASON TO KNOW OF THE ASSIGNMENT. ONE OF THE PURPOSES OF THE PROHIBITORY ASPECTS OF THE ASSIGNMENT OF CLAIMS ACT IS TO PREVENT POSSIBLE MULTIPLE PAYMENT OF CLAIMS. BY ALLOWING THE ASSIGNEE'S CLAIM IN THIS CASE, WE WOULD BE CONDONING A DOUBLE PAYMENT THAT THE ASSIGNEE ITSELF CAUSED BY FAILING TO MEET ITS STATUTORY RESPONSIBILITY REGARDING NOTICE UNDER THE ASSIGNMENT OF CLAIMS ACT.

IN VIEW OF THE ABOVE, AND THE ASSIGNMENT OF CLAIMS ACT'S PURPOSE TO PROTECT THE GOVERNMENT FROM PRECISELY THIS SORT OF CLAIM FOR SECOND PAYMENT, SEE 47 COMP.GEN. 522, 524 (1968), WE DO NOT BELIEVE PAYMENT SHOULD BE MADE.