Assignment of Payments
The assignment of two Department of Housing and Urban Development
contracts to Winchester is at issue. The first was contract H-3154 for the
purchase of 200 new mobile homes for flood disaster use which was awarded
by HUD to the Grant Enterprises Division of Prudential Mortgage Investment
Corporation (hereinafter, “Grant,,) on July 24. Grant immediately sought out
Winchester to manufacture and make delivery of all the mobile homes called
for by this contract. Winchester was agreeable to assignment of the contract
provided all paymen?s due under it would be made directly to Winchester.
After discussing the assignment with HUD,s contracting officer, Mr. Ralph
Scroggs, Grant assigned the contract to Winchester on July 27. By letter of the
same day, Mr. Harold Gradsky, Vice-President of Grant, advised the
contracting officer of the assignment and informed him that all payments due
under the contract were to be made directly to Winchester. By letter of July 28,
Mr. David N. Meyers, Secretary-Treasurer of Winchester, sent five copies of
the notice of assignment from Grant, signed by Gradsky, to the contracting
officer in Washington, D.C. The Meyers letter closed with the statement, “We
look forward to working with you in furnishing this emergency housing.”
Accordingly, mobile homes were delivered by Winchester to HUD and
accepted by HUD. As contemplated by the assignment agreement, HUD, on
September 7, made the first payment due under the contract of $300,457.80 to
Winche$ter. For so?e reason, however, of the remaining nine payments made
. under the contr?ct through December 11, only one other, on Octoberv, in the
amount of $114,258.60 was sent to Winchester; all the other: payments went
. directly to Grant without notice to Winchester, though Winchester, upon
discovery, complained to HUD about the undelivered payments.
It is appropriate to emphasize that before each as?ignment was effected both
Winchester and Grant contacted Scroggs, the contracting officer, t inform
him of their proposed arrangements. Scroggs advised them that, despite the
Anti-Assignment Ad, if Winchester would assume Grant’s obligations HUD
would make all payments directly to Winchester on the first contract.
Grant agreed to ?ssignment of a second contract on .August 11. Unlike the first
assignment, all payments due under the second contract were to be sent to the
Atlanta law firm of McClain, Millen, Bowling & Hickman, which would act as
disbursu:ig agent for such funds. By letter of August 11, Gradsky informed
Scroggs of assignment of the second contract. At the bottom of this letter the
contracting officer wrote “Assignment acknowledged, Ralph T. Scroggs, 8/15.—inchester proceeded to deliver mobile homes to HUD under this second
contract, as under the first. HUD made a total of 11 payments under the
second contract. The first three, all dated September 19, were made directly to
Grant. The fourth and fifth went to the Atlanta law firm. The re1naining s?
payments again were made directly to Grant.
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