Court Opinion

ID: 9702963
Source: CourtListenerOpinion
Date Created: 2023-08-25 23:34:55.534757+00
Date Added: 2024-06-11T18:21:44.241508
License: Public Domain

MADDEN, Judge, dissenting.
I am unable to agree with the opinion of the court. I think that the Assignment of Claims Act; 54 Stat. 1029, 31 U.S.C.A. § 203, had the effect of 'giving to the intervenor, the Bank of America, the primary legal right to money owed by the United States to the contractor under the contract here involved. That legal right, like any other, might be subject to superior equities, such as the right of the United States, the debtor, to set off debts due to it from the contractor. United States v. Munsey Trust Company, 332 U.S. 234, 67 S.Ct. 1599, 91 L.Ed 2022. Schmoll v. United States, 63 F.Supp. 753, 105 Ct.Cl. 415. But if the assignment authorized by this recent legislation is to be of real use in enabling contractors to obtain financing for' the performance of Government contracts, the legal right of the money-lending -institution should be subj ected only to such asserted equities as are clear and meritorious. In this -case I think the asserted equity of subrogation of the plaintiff surety has little merit. I do not feel at all sure that it is out of pocket a penny by reason of the events which occurred.
The bank loaned money to the contractor for the construction, labor, and material costs incurred in the performance of- the contract in question. Such evidence as- is available indicates that the contractor used the borrowed money for that purpose, and, in the absence of any evidence to the contrary, I think the court should so find. The use of the borrowed money for this purpose, then, reduced dollar for dollar, the bills for labor and materials which the surety would have been obliged to pay if the contractor had not paid them with the money borrowed from the bank. The contractor did not pay all of its bills for. labor and material, and the surety had to pay the remaining ones. But if it also- gets the funds still held by the United States, and covered by the contractor’s assignment to the bank, it will have been relieved of the risk, of its surety obligation, largely with the bank’s money. I see no equity in that result. And' I see a substantial frustration of the purpose of the Assignment of Claims Act. I would *900hold that the intervenor is entitled to the money which is in the Government’s hands. What I have written is in substantial agreement with the decision in Coconut Grove Exchange Bank v. New Amsterdam Casualty Company, 5 Cir.1945, 149 F.2d 73.
Chief Judge Jones agrees with this dissent.