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In apparent recognition of the lack of support for its position in the decisional law, defendant resorts to the contention that the set-off is permissible in this instance, since under the common law of assignments, plaintiff's interest in the assigned collateral ceased when the loan made for the performance of the contract was repaid. 6 C.J.S. Assignments § 93. This argument ignores the modern trend away from tying particular loans to particular security. Furthermore, the adoption of such a rule for the statutory assignment involved here would impair the familiar revolving credit financing device to which Congress referred when deleting the previously discussed set-off and reduction limitation provision from the 1951 amendments to the Act. As this court noted in
The 1940 Amendment to the Assignment of Claims Act was intended to facilitate the financing of Government contracts by private capital in the way in which private capital normally operates in financing the country's economy. [Emphasis added].
For the reasons stated, plaintiff's cross-motion for summary judgment is granted, and the defendant's motion for summary judgment is denied. Plaintiff is entitled to recover the amount General Development is indebted. to plaintiff on loans secured by the assignment. The amount of the recovery, which shall not exceed $43,848.41, plus accrued interest thereon from November 16, 1967, to date of payment, shall be determined pursuant to Rule 131(c) (2).
ASBCA No. 15663 (1973)
DECISION ON GOVERNMENT'S MOTIONS TO DISMISS
The Government has moved to dismiss these appeals on the ground that the named appellant is not a proper party. The parties were afforded a hearing on the motions.
ASBCA No. 15663 involves a claim for cost overrun and increase in fee in the total amount of $6,530 under a CPFF contract (hereinafter referred to as TRITON I) awarded to Hazelton Nuclear Science Corporation (hereinafter HNS), executed 21 February 1966. In ASBCA No. 15874 the contractor is seeking recovery of a cost overrun and additional fee in the total amount of $5,210 under another CPFF contract (hereinafter referred to as Flambeau) with HNS, executed 22 March 1966.
HNS at the time these contracts were executed was a a wholly-owned subsidiary of Isotopes. The proposal culminating in the Flambeau contract was submitted by HNS. That which led to the TRITON I contract was submitted by Isotopes but, at the request of the Navy, based principally on administrative convenience, the contract was awarded to HNS (ASBCA No. 15663, R4-5).
By resolution dated 18 April 1967 Isotopes merged HNS into itself, assuming all the liabilities and obligations HNS. A certificate of the merger, filed with the Secretary of State of the State of California on 11 July 1967, appears in the record (ASBCA No. 15663, R4-17).
By letter of 2 August 1967, Isotopes initiated a request to the Department of Defense to novate the Flambeau and TRITON I contracts along with several other contracts between military departments and HNS. For reasons not explained in the record, the request to novate Flambeau and TRITON
I was not honored (R4-C). The written record contains no response from DOD to the request for novation of these two contracts and no testimony was elecited at the hearing to clarify this matter.
Following the merger of HNS with Isotopes, the Navy and Isotopes dealt with each other both in correspondence and in conference as the contracting parties (ASBCA No. 15663, R4-12, 14, 16, 17, 18, 19, 20, 21, 23, 26; ASBCA No. 15874, R4-E, 3, 7, 8, 9, ió, ií, 14).
The claims which gave rise to these appeals were both filed by Isotopes (ASBCA No. 15663, R4-23, dated 28 August 1968; ASBCA No. 15874, R4-8, dated 13 September 1968). Subsequent correspondence concerning both claims including preliminary denials by the contracting officer, was between Isotopes and the Navy. At no time prior to the issuance of the contracting officer's final decisions did he make objection or even make comment to Isotopes as to its being the proper party to make the claims, or to its carrying on correspondence and negotiations concerning them. There is no indication or allegation that the making and pursuing of the claim by Isotopes in any way prejudiced the Government. From the time the claims were first advanced until the final decisions denying them were issued none of the letters written by the Government concerning them was addressed to HNS. However, the final decisions were addressed to HNS, c/o Isotopes, Inc.
Appeals from both denials were taken by and in the name of Isotopes. As far as we can determine it was not until the Government filed its answers to the complaints in these appeals that it first raised an objection to Isotopes as the proper party to make the claims and take the appeals.
We hold that from the time of the merger of HNS into Isotopes, when the former ceased to exist, Isotopes was the real party in interest with respect to these contracts, having succeeded to all the interests and rights of HNS in claims arising under these contracts. We further hold that Isotopes lawfully acquired its right, title and interest in these contracts by operation of law without violation of 31 U.S.C. Sec. 203 or 41 U.S.C. Sec. 15, the anti-assignment statutes. .
See Seaboard Air Line Railway v. United States, 256 U.S. 655 (1921); Consumer's Ice Company v. United States, Ct. Cl. No. 815-71, 16 March 1973; see also Aerospace Support Equipment, Inc., ASBCA No. 13579, 71-1 BCA par. 8904. The Government has recognized Isotopes as successor in interest by dealing with it, since the merger, in matters relating to the contracts and these particular claims. We find no prejudice to the Government in permitting Isotopes to pursue these appeals in its own name . We think that it would be proper, even at this time, for the Department of Defense to novate these contracts but attach no significance as far as these appeals are concerned to its failure to have honored Isotopes' earlier request that it do so.
The Government's motions to dismiss these appeals are denied. The Board will shortly schedule a hearing on the merits of the appeals unless, because of the relatively small monetary amounts involved, the parties would prefer to submit them on the written record.
To Stassen, Kephart, Sarkis & Kostos, December 3, 1969:
Further reference is made to your letters of October 7, 29, 31 and November 18, 1969, with enclosures, supplementing the telegram of September 25, 1969, from Propper International, Inc., protesting the award to Metz of California of a part of the non-set-aside portion or any portion of the set-aside for labor surplus area under invitation for bids No. DSA10069-B-2190.
The invitation was issued on June 30, 1969, as a partial labor surplus area set-aside and requested bids for the delivery of hot weather field caps. of the four destinations specified in the non-set-aside portion, two destinations involve the following quantitites set aside for labor surplus area concerns: Defense Depot, Memphis, Tennessee 141,660; Defense Depot, Ogden, Utah - 168,240, Other destinations are Defense Depot, Mechanicsburg, Pennsylvania, and Atlanta Army Depot, Atlanta, Georgia. Offers were received from eight bidders on all destinations in response to the invitation.
Metz received a non-set-aside award of 250,000 each on September 23, 1969, under contract No. DSA100-70-C-0583. Propper received a non-set-aside award of 250,000 each on the same date under contract No. DSA100-70-C-0584. Propper contends that it was entitled to receive the award made to Metz as well as the portion set aside for labor surplus area. No award of the set-aside portion has yet been made. The offers submitted by Metz and Propper on the non-set-aside portion were evaluated as follows: