Court Opinion

ID: 9640687
Source: CourtListenerOpinion
Date Created: 2023-08-22 17:12:04.529095+00
Date Added: 2024-06-11T18:10:31.984966
License: Public Domain

MADDEN, Judge
(dissenting).
I must respectfully dissent.
The problem in this case is to determine as best we can how far Congress intended to go in its 1951 amendment of the 1940 Act, in the direction of making payments made by the United States to assignees of contracts irrecoverable by the Government. The hearings and committee reports1 show that Congress was dissatisfied with the Comptroller General’s rulings in the cases involving the contractor’s unpaid taxes, and the reduction of price pursuant to a price revision article in the contract. The language of the 1951 amendment was, however, much broader than it would have needed to be to take care of those situations. It may be that, taken literally, it would make irrecoverable a payment made to the as-signee as a result of a purely mathematical mistake, for example, if the Government’s bookkeeping showed $10,000 still owing to the contractor when it should have shown only $5,000, and the contractor owed the bank $10,000 or more on his debt secured by the assignment. It is obvious that the 1951 amendment is not so plain as to be self-interpreting. *250But I think the reasoning of the majority goes too far. It holds the payments made to the bank-assignee recoverable merely because they were not properly made, and therefore not made “under the contract.” The Assignment of Claims Act protects payments made to an as-signee “under the assignment.” As the majority states, the Government “paid the money in question to the bank as assignee of Gray.” The money may have been paid mistakenly, but it was certainly paid under the assignment, which was the only basis for the as-signee’s claim to it.
The difficult question in this case, as I view it, concerns the nature of the liability upon which the Government’s claim for recovery against the assignee is based. The Government, in urging that the paragraph of the statute on which the bank relies is inapplicable, points to the words “no liability of any nature of the assignor to the United States,” and says that, in the instant case, the recovery which it seeks from the assignee bank by its cross-claim is not based upon a liability of Gray, the contractor-assignor, to the United States, which should have been, but, by mistake, was not set off against the money otherwise owing to Gray. It is rather, the Government says, based upon the duty of the Government to pay the money in question to the plaintiff surety, which duty it, by mistake, neglected to perform when it paid the money instead to the bank-assignee. I think that there was in the instant case a “liability of the assignor to the United States” within the meaning of the statute. Gray, the contractor-assignor, had completed the contract work but had not paid his laborers and materialmen. His contract with the Government obligated him to pay them. The surety bond which he gave was for the purpose of securing the performance of this obligation. In Continental Casualty Co. v. United States, February 11, 1959, Ct.Cl., 169 F.Supp. 945, the court said that when a surety paid laborers and materialmen it was satisfying two obligations of the contractor, one to the laborers and materialmen and the other to the United States. See also National Surety Corporation v. United States, 133 F.Supp. 381, 132 Ct.Cl. 724, 728, certio-rari denied First Nat. Bank in Houston v. United States, 350 U.S. 902, 76 S.Ct. 181, 100 L.Ed. 793.
The payment which the Government made to the bank-assignee, and which it seeks by its cross-claim to recover if it should be held liable to the plaintiff-surety, it will owe, if at all, to the plaintiff-surety only because of the surety’s subrogation to the right of the laborers- and materialmen against the contractor,, which right was correlative to the obligation of the contractor to the United States to pay his laborers and material-men. Thus substantially, if somewhat indirectly, the Government’s cross-claim-against the bank-assignee is to recover money which the contractor-assignor was obligated to the Government to pay to his laborers and materialmen and which he did not pay to them, thus creating a “liability of the assignor to the-United States.” It was this liability of the contractor-assignor to the United' States which the plaintiff-surety discharged by paying the laborers and ma-terialmen, and as a result of which the surety became entitled, under the assignment contained in the surety bond, to-the contractor’s claim against the Government upon which it is suing here.
The solution of this problem depends-upon whether we give to the 1951 statute a fairly liberal interpretation in the direction of affording relief to assignees of Government contracts, or, on the other hand, give it a grudging interpretation because a more liberal interpretation would result in the waiver by the-Government of its traditional right to recover money paid by mistake. I think the circumstances leading up to the legislation, and the Congressional purpose-disclosed by the legislative history, require us to give the statute the liberal interpretation usually accorded to a relief statute.
I would- grant the motion of the third party defendant to dismiss the defendant’s cross-claim.

. Hearings before Subcommittee No. 4 of the House Committee on the Judiciary on H.R. 2947 (subsequently amended, reintroduced, and reported as H.R. 3692), 82d Cong., 1st Sess. p. 9, pp. 2, 4, 8-13, 14, 22-25, 31 etc.). House Report No. 376 (to accompany H.R. 3692), 82d Cong., 1st Sess., pp. 1-3. Senate Report No. 217 (to accompany S. 998), 82d Cong., 1st Sess., pp. 1-2.