*** The Government's right to recover funds, from a person who received them by mistake and without The Government's claim against the assignee bank calls within the class of cases where Congress has expressly debarred the Government's right to recover. Within the terms of the amendment, the $7,108 payment was an amount "received under the assignment. It makes no difference, as far as the Boulevard State Bank is concerned, that the Government's agent failed to recognize the surety's superior equitable interest in such payment. The Government paid the money in question to the bank as the contractor's assignee, and the assignee is entitled to retain the funds in the absence of a showing of fraud on its part. See American Fidelity Co. v. National City Bank of Evansville, 266 F. 2d 910, 916 (D.C. Cir. 1959). Cf. Industrial Bank of Washington v. United States, 424 F. 2d 932, 935 (D.C. Cir. 1970). III As we have noted above, the bank is not required to refund the erroneous payment of $7,108 because of the Assignment of Claims Act. However, this does not leave the Government without a remedy, since in paying the bank, the Government was satisfying a debt of the contractor to the assignee bank. Under the facts before us, the contractor thus received a double benefit which he would not have obtained were it not for the operation of the Assignment of Claims Act. His debt to the bank and his liability for restitution to his surety are both relieved by the Government's double payment of the $7,108. We do not believe that Congress intended, by enacting the Assignment of Claims Act, to strip the sovereign of all its historical rights to recover ex aequo et bono the erroneous payments made by its public officers. Cf. Wisconsin Central R.R. v. United States, 164 U.S. 190, 212 (1896). Otherwise, there would be an unjust enrichment of the contractor. See Restatement of Restitution 1 (1937). We therefore hold that the Government is subrogated to the bank's claim on the debt that was satisfied by the payment of the $7,108. Third-party defendant Williamson has countered the Government's claim by a general denial of liability and with an additional defense that he was discharged from his particular debt by the referee's order dated March 3, 1972, which is a discharge in bankruptcy. The Government asserts the discharge to be ineffective against its subrogated debt for several reasons. While recognizing that Congress specfically made contingent claims capable of proof (11 U.S.C.§103 (a)(8)), the Government asserts that its claim was not discharged because it was "too" contingent. The thrust of the Government's argument is that until the surety filed its claim against the Government, the contingency mentioned in section 103 (a)(8) was not created and hence could not have been discharged, because the surety filed its claim after the adjudication in bankruptcy. This is a persuasive argument, and with supporting affidavits or documentary evidence, could be sufficient to render judgment for the Government against the contractor. However, there are gaps in the record which need to be illuminated by trail or by stipulation. We do not know what debts due the Government, established or contingent, were included in the schedule of obligations filed by the contractor in his application to the bankruptcy court. The Government also argues that the head of the contracting agency (the Secretary of the Navy) was not duly notified of the first meeting of creditors as prescribed by 11 U.S.C. 94(e). However, Williamson, the bankrupt, shows by documentary evidence that a notice of the first meeting of creditors was mailed to the United States attorney in Topeka, Kansas. It is possible that the United States attorney forwarded this notice to the Secretary of the Navy so that he had actual notice. The documents before us raise a doubt as to whether the notice requirement was fulfilled. Conceivably, the Secretary of the Navy was listed on the general schedule of creditors of the contractor. In sum, there are factual issues which preclude the rendition of judgment for the Government against the contractor for the $7,108 paid to the assignee bank. IV Included in the unpaid balance on the contract is the sum of $10,200, which the Government asserts the right to retain under a change order executed August 16, 1971. It is well settled that the right of the United States to collect debts due it by a contractor, by offsetting these obligations against the funds retained under a Government contract, is superior to claims of a surety based upon the discharge of its obligations on its payment bond. United States v. Munsey Trust Co., 332 U.S. 234 (1947); United States Fidelity and Guaranty Co. United States, 201 Ct. Cl. 1, 12, 475 F. 2d 1377, 1378 (1973). v. Plaintiff concedes the Government's right of setoff as stated in the cited cases, but argues that it is entitled to a court trial to determine whether the Government's assessment of liquidated damages against the contractor was proper. This plea comes far too late and is rejected on that ground. Neither the contractor nor the surety, for itself or in behalf of the contractor, appealed from the assessment of liquidated damages. Consequently, the change order of August 16, 1971, is final and binding on the contractor and the surety as well. V There remain for disposition only the contending claims of the assignee bank and the surety to $11,400 of the contract balance, which the Government acknowledges it holds purely as a stakeholder. As we recognized in part I of this opinion, the plaintiff as surety has a claim to the unpaid contract balance at the time of notification ($28,718) which is superior to that of the bank. Consequently, the plaintiff is entitled to recover the $11,400 still held by the Government. VI In view of the foregoing opinion, it is ordered: (1) the cross-motion of plaintiff, Great American Insurance Company, for summary judgment is granted to the extent that plaintiff is entitled to recover the $7,108 which defendant erroneously paid to the assignee bank on May 19, 1971, plus the contract retainage of $11,410 which defendant holds as a stakeholder. Judgment is hereby entered for plaintiff against defendant for the sum of $18,518; (2) plaintiff's cross-motion against defendant for the recovery of $10,200, deducted by defendant as liquidated damages, is denied and defendant's motion for summary judgment as to such liquidated damages is granted; (3) defendant's motion for summary judgment against the Boulevard State Bank for recovery of the $7,108 paid to the bank on May 19, 1971 is denied; (4) defendant's claim against the contractor, T. G. Williamson, for recovery of the $7,108 paid to the assignee bank is hereby remanded to the trial division of this court for determination of the factual and legal issues pertinent to the claim, and (5) the cross-motion for summary judgment of the Boulevard State Bank is, except as stated in paragraph (3) of this part VI, denied. CONTINENTAL BANK AND TRUST COMPANY v. THE UNITED STATES ON DEFENDANT'S MOTION AND PLAINTIFF'S CROSS-MOTION FOR COWEN, Chief Judge, delivered the opinion of the court: Plaintiff, Continental Bank and Trust Company,1 a Pennsylvania banking corporation, sues to recover $43,848.41 to which it alleges it is entitled as assignee of a contract between the defendant and the General Development Corporation. Plaintiff lent funds to General Development for the performance of the contract. The funds have been repaid; however, plaintiff asserts that General Development is otherwise indebted to it, and that it is, accordingly, entitled to the funds still owing on that contract by the government. This case is before the court on cross-motions for summary judgment.2 The pertinent facts, which, for purposes of this motion, the defendant admits, are as follows: On February 23, 1965, the defendant, acting through its Department of The Army, awarded the General Development Corporation of Elkton, Maryland, Contract No. DA-18-035-AMC-459 (A). Thereafter, to secure anticipated performance loans, General Development assigned plaintiff all proceeds of that contract. The disbursing and contracting officers were duly notified of the assignment, and received copies of the assignment instrument. The assignment instrument, dated March 15, 1965, in pertinent part provided: For and in consideration of the sum of $1.00 and in further consideration of loans 1plaintiff is successor in interest to the Broad Street Trust Company by virtue of a change in corporate name. 2On November 25, 1968, the defendant filed a motion to dismiss plaintiff's petition. Thereafter, in the course of oral argument on the motion, the defendant submitted several exhibits; and suggested that the case was ripe for disposition on the merits. In a post-argument brief, plaintiff requested that the court consider that brief and its response to the defendant's motion as a cross-motion for summary judgment. See Rule 38(b) [formerly Rule 20 (b)]. about to be made to General Development General Development Corporation represents As permitted by the Assignment of Claims Act of 1940, as amended [41 U.S.C. § 15, 31 U.S.C. § 203 (1964)], the contract included the standard Defense contract Assignment of Claims clause, which provided that "[a]ny *** assignment or reassignment shall cover all amounts payable under this contract and not already paid"; and that payments to be made to the assignee of the contract would not be subject to reduction or set-off for any liability of the contractor-assignor arising "independently" of the contract. ASPR 7-103.8. On or about November 15, 1965, Contract No. DA-18-035-AMC-459 (A) was terminated for the convenience of the government. All of General Development's obligations thereunder have been fulfilled. Still outstanding, however, and at issue in this litigation, is $43,848.413 due General Development under the terms of the convenience termination. All advances made by plaintiff for the performance of the contract have been repaid, but plaintiff claims that General Development is indebted to plaintiff in the sum of $43,848.41 on other loans secured by the assignment. On September 15, 1966, an involuntary petition in Bankruptcy was filed against General Development Corporation in the United States District Court for the District of Maryland; and, on October 6, 1966, the corporation was adjudged bankrupt. As of that date, General 3The defendant concedes that it is indebted to General Development in the sum of $100,141.05 under the terms of the convenience termination. Plaintiff here seeks $43,848.41 of that sum, the amount to which General Development is indebted to it. |