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149 O. Cls.

Veterans' Preference Act-Continued

Civil Service Commission recommendation mandatory-Con.
same mandatory effect as recommendations of the Commission made

under section 14. Feldman, 22.
Officers am 72(1)

When the Civil Service Commission rules that a reduction in force
of a veteran preference eligible violated the provisions of section
12 of the Veterans' Preference Act of 1944 (58 Stat. 390), and
orders his reinstatement, the plaintiff veteran must be deemed to
have been rendering service during the period of wrongful suspen-
sion and the employing agency was therefore not free to reemploy
another veteran with more retention rights than the plaintiff to fill
plaintiff's position which was not, as a matter of law, vacant. Plain-
tiff's second reduction in force immediately after reinstatement on

order of the Commission, was illegal. Harris, 15.
Officers en 69.11

What constitutes.

Reductions in grade incident to reorganizations.
When as the result of an agency reorganization the number of
encumbered positions in a particular grade are reduced thus necessi-
tating the removal of some employees from that rating, the proper
method of effecting such removals is by a reduction in force pro
cedure under section 12 of the Veterans' Preference Act of 1944,
58 Stat. 390, even though the employees affected are retained in
lower grade positions. Adler v. United States, 129 C. Cls. 150;

Parks v. United States, 137 C. Cls. 297. Alexander, 445.
Officers On 72(1)
CLASSIFICATION ACT OF 1949. See Civilian Pay.
Surplus war property.

Dormant estate.
Where the plaintiff, who purchased a surplus war plant subject to
the Government's right to repossess the property under a national
security clause (National Industrial Reserve Act of 1948, 62 Stat.
1225), fails to show that the refusal of the Government to release
the dormant estate was the proximate cause of plaintiff's losses,
plaintiff has neither legal nor equitable grounds for recovery.

Fawick Corp., 623.
United States con 58

149 C. Cls.

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CONTINUING CLAIM. See Civilian Pay; Limitation of Actions.
CONTRACTS. See also Congressional Reference.
Assignee liability of for obligations of assignor to the United

The 1951 amendment to the 1940 Assignment of Claims Act (65
Stat. 41, 41 U.S.C. § 15 (paragraph 4]), which exempts an assignee
of moneys due under a Government contract from liability for any
obligation of the assignor to the United States arising out of or
independent of the contract assigned, does not extend to amounts
which the assignor-contractor has failed to pay to his laborers and
materialmen, because money to pay these obligations would never
have been paid to the assignee if the terms of the contract had been
carried out and the payment of these amounts to the assignee bank
was a mistake which no Government agent has the authority to
make. Accordingly, in a suit by the surety on the bonds to pay
laborers and materialmen, the court will not dismiss the Govern-
ment's cross-claim against the assignee bank to whom a Govern-
ment agent had mistakenly paid amounts which should have been
used to reimburse the surety who had paid the laborers and material-

Newark Insurance Co., 170.
United States Om 111(10)
Assignment to party as trustee for parties participating in financ-

ing of Government contract.

Fraud of assignor.
Where a Government contractor has been found guilty of fraud
against the Government in connection with its contract, the se-
curity of the bank-assignee of the contractor, which bank acted as
trustee for the factoring organization financing the contractor's
work, is not forfeited although the claim, if any, of the fraudulent
contractor would be subject to forfeiture. Arlington Trust Co. v.
United States, 121 C. Cls. 32. The fraud of the contractor in no way
participated in by his assignee, is not imputable to the assignee
and does not result in the forfeiture of the assignee's rights under

the assignment. Chelsea Factors, 202.
United States am 111(12)

Where a bank who is assignee for the benefit of a factoring organi-
zation which is financing a Government contract for the contractor
reassigns the claims to the factoring organization, the factoring
organization's claims against the United States are not impaired
since at the time the factor and bank invested their money and
took the assignment of the contractor as security, they were good
faith purchasers and the later merger of the two rights into one did
not destroy or impair the equity which the original assignment

created before the merger. Chelsea Factors, 202.
United States em 111(12)

149 C. Cls.

Assignment to party as trustee for parties participating in financ-

ing of Government contract-Continued

Notice to Government.
The Assignment of Claims Act (as amended, 65 Stat. 41] (41 U.S.C.
§ 15) requires that assignments to a party as trustee for parties par-
ticipating in the financing of a Government contract must be filed
with the contracting agency. The assignments by the contractor of
its right to receive payment from the Government for food sold,
naming as assignee the bank which had lent money not to the con-
tractor but to the factoring organization which financed the con-
tractor, and the letter from the contractor to the bank instructing
the bank that it would receive the amounts due under the contract
for the benefit of the factoring organization, were, when filed with
the contracting Government agency, adequate notices within the

meaning of the Assignment of Claims Act. Chelsa Factors, 202.
United States Om 111 (10)

Validity of assignment.
Where a bank lends money to a factoring organization to enable
it to finance a wholesale food merchant supplying frozen food under
contract to the Government, and the wholesale food merchant assigns
to the bank its right to receive from the Government payment for
the frozen food, the assignment providing that all sums collected
by the bank under the assignment were to be turned over to the
factoring organization (which had financed the wholesaler) after
satisfying the factor's debt to the bank, the bank is the trustee for
the benefit of the factor in connection with the wholesaler's assign-
ment of its accounts receivable under its Government contract and
the assignment was valid under the third proviso of 41 U.S.C. $ 15
(Assignment of Claims Act of 1940 as amended) (65 Stat. 41).

Chelsea Factors, 202.
United States no 111(10)

Attempted assignment.

Effect of.
An attempted assignment of a claim which assignment would have
violated the Assignment of Claims Act, 31 U.S.C. $ 203, does not
result in a forfeiture of the claim. The claim is left as it was before

the purported assignment. Colonial Navigation Co., 242.
United States 111 (10)

Interest on loan from assignee.

Status of.
Where the Government owes a contractor sums under a contract
subject to a valid assignment to a financial institution the assign-
ment securing interest-bearing loans to the contractor, the Govern-

149 C. Cls.

Interest on loan from assignee-Continued

Status 01-Continued
ment may not withhold amounts otherwise due because they would
be applied to satisfy the contractor's obligation to pay interest and
other fees which the contractor had agreed to pay the assignee as
part of the consideration for its making the loan. In paying the
assignee of the contractor what it owes the contractor under the
contract, the Government is not paying interest but only for the
supplies or services received, used and not paid for. Under the
Ass iment of Claims Act the Government consented that its obliga-
tion to pay contractors might be used as collateral in borrowing
money to finance performance and that act did not require that the

loans be made without interest. Chelsea Factors, 202.
United States Om 111(10)

“No set-off” provision in contract.
The Assignment of Claims Act permits the insertion in Government
contracts of a provision that contract payments to the assignee
should not be subject to reduction or setoff for any liability of the
contractor-assignor to the Government arising independently of the
contract. Accordingly, the Government's claims against a contrac-
tor (filed and allowed in a bankruptcy proceeding) in connection
with contracts having nothing to do with the contract assigned to
the plaintiff-assignee, may not be set off against the assignee's
claim against the Government under its valid assignment. Chelsea

Factors, 202.
United States Om 111(12)
Notice of.

What constitutes.
Where the contractor notified the contracting officer immediately
upon discovering the alleged changed condition in the work and
thereafter the parties had numerous discussions and correspondence
concerning the contractor's claim for the payment of his excess
costs incurred in removing the hard rock material which constituted
the unforeseen or changed condition, the contractor has given suffi-
cient notice of the changed condition within the requirements of

the contract terms. Allied Contractors, 671.
United States Or 70(36)

What constitutes.

Information to bidders.
In a contract to perform excavation and embankment work for a
dam spillway where the contractor expected to be working under

149 C. Cls.

What constitutes Continued

Information to bidders—Continued
dry conditions and it turned out that the water table in the area was
at a higher elevation than he had supposed, and also that the work
had to be done in the wet, such wet conditions did not amount to
a changed condition within the meaning of the contract where there
was sufficient information in the drawings supplied to the bidders
to indicate the presence of the water, where a consideration of the
geological structure of the dam site area would have indicated
water, and where the evidence indicated that other bidders on the
project were fully aware of the elevation of the water table in the

area. Leal, 451.
United States anos 70(27)
Excusable delay.

Extension of time.
Where in a contract obligating the contractor to produce and sell
zinc to the Government, a force majeure clause provided in broad
terms that the contractor should be excused from performing during
the time work was delayed by reasons beyond the control of the
contractor and which reasons could not be overcome by due dili-
gence, the fact that the mine was one containing a lower grade
ore than anticipated and the time within which the quantities ex-
pected under the contract was necessarily too short, resulted in a
situation within the scope of the force majeure clause and the
contractor was entitled to an extension of time within which to

perform. Vinegar Hill Zinc Co., 494.
United States Or 70(34)

Notice of delay-necessity for giving.
The force majeure clause requirement that 10 days notice be given
of the occurrence of events which would hinder or delay perform-
ance of the contract to mine and deliver zinc to the Government
does not apply where the mine turned out to contain ore of a much
lower grade than the contractor anticipated but where the Govern-
ment was aware of this condition almost from the beginning of
work under the contract and knew that low grade ore would result

in slow production. Vinegar Hill Zinc Co., 494.
United States C 70(34)
Administrative decisions.

Finality of on question of fact.
Where the decision of the Armed Services Board of Contract Ap-
peals on the issue of whether or not a contractor had encountered

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