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B-229724 1 (1988-03-04)

handle is hein.gao/gaobadnae0001 and id is 1 raw text is: ~ou-~ o~The Comptroller General of the Umted States Washington, D.C. 20548 Decision Priority ot Payment Between Payment Bond Surety Matterof- and Assignee File: B-229724 Date: March 4, 1988 DIGEST Consistent with doctrine ot subrogation which allows a payment bond surety who pays the debts of his principal to assert all the rights of the creditors who were paid to enforce the surety's right to be reimbursed, payment bond surety has priority over an assignee bank to $2,902.29 paid by the surety to subcontractor materialmen. DECISION A disbursing officer with the United States Army, Corps of Engineers, asks about priority of payment of remaining contract funds between a payment bond surety and an assignee bank. For the reasons given, we find that the payment bond surety has priority. BACKGROUND On July 30, 1985, the Pittsburgh District, Army Corps ot Engineers, awarded a contract (DACW 59-85-C-0083) to Danbury Construction Co. for dredging a boat launching ramp in the Buffalo Creek Recreation Area, Buffalo Creek, West Virginia. The contract price was just under $100,000. Consistent with Miller Act requirements, 40 U.S.C. §S 270a-270d, Danbury posted performance and payment bonds from the Fidelity and Deposit Company of Maryland. On October 4, 1985, the Danbury Construction Company assigned its right to all contract proceeds to the First National Bank of Bellevue, Ohio. The Corps of Engineers accepted the assignment on October 9, 1985. The facts indicate that the contractor completed the project; however, during the course of the work, the payment bond surety was required to make two payments to subcontractors totalling $2,902.29. On June 11, 1987, the Corps disbursing officer received a request from the Corps District Office ot Counsel requesting that he pay the surety the $2,902.29 the surety paid the two subcontractors under CAL L//-6J,

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