CIVILIAN PAY-Continued
REDUCTION IN FORCE-Continued
Veterans' Preference Act-Continued
Civil Service Commission recommendation mandatory-Con. same mandatory effect as recommendations of the Commission made under section 14. Feldman, 22.
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
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
CLASSIFICATION ACT OF 1949. See Civilian Pay.
CLASSIFIED CIVIL SERVICE.
CONGRESSIONAL REFERENCE.
EQUITABLE CLAIMS.
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.
CONTINUING CLAIM. See Civilian Pay; Limitation of Actions. CONTRACTS. See also Congressional Reference.
Assignee-liability of for obligations of assignor to the United States.
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.
Assignment to party as trustee for parties participating in financ- ing of Government contract.
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.
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.
CONTRACTS-Continued
ASSIGNMENT OF CLAIMS-Continued
Assignment to party as trustee for parties participating in financ- ing of Government contract-Continued
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 111 (10)
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.
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.
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-
CONTRACTS—Continued
ASSIGNMENT OF CLAIMS-Continued
Interest on loan from assignee-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 Assignment 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 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.
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
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
CONTRACTS-Continued
CHANGED CONDITIONS-Continued
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.
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.
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 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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