Keydata Corporation v. United States

• Decision Date: 23 October 1974
• Docket Number: No. 299-72.,299-72.
• Citation: 504 F.2d 1115
• Parties: KEYDATA CORPORATION v. The UNITED STATES.
• Court: U.S. Claims Court

504 F.2d 1115

KEYDATA CORPORATION v. The UNITED STATES.

No. 299-72.

United States Court of Claims.

October 23, 1974.

Harold Baer, Jr., New York City, attorney of record for plaintiff. Howard B. Weinreich, New York City, and Guggenheimer & Untermyer, New York City, of counsel.

John E. Lindskold, Washington, D. C., with whom was Asst. Atty. Gen. Wallace H. Johnson, for defendant.

Before DAVIS, NICHOLS, and BENNETT, Judges.

ON PLAINTIFF'S MOTION AND DEFENDANT'S CROSS-MOTION FOR SUMMARY JUDGMENT

DAVIS, Judge.

In 1968, Keydata Corporation¹ and the National Aeronautics and Space Administration (NASA) were both leasing space at 575 Technology Square, Cambridge, Massachusetts, an office building owned by the Wyman Street Trust. Early in that year NASA decided to expand its footage in the structure, and at the same time Keydata was seeking to move to larger quarters in another location. After negotiations in which NASA was represented by the General Services Administration (GSA), an agreement was reached as to NASA's rental of Keydata's 2,093 square foot computer room on the first floor (and also other rental space, not now involved). The agreement was embodied in two lease amendments, one between Keydata and Wyman, the other between the Government and Wyman.² These modifications provided that Keydata would surrender possession of the computer room, and the Government would lease it (from Wyman), either on October 1, 1968 or on a date mutually agreeable to Keydata and the Government (with advance notice to Wyman) between August 1, 1968 and January 1, 1969.

The amendments also provided separately for the sale of certain fixtures. The Government promised to pay Wyman $39,000 for air conditioning equipment which Keydata had installed in the computer room, and Wyman obliged itself in the same amount in payment to Keydata.³ These improvements had been installed by Keydata with Wyman's consent, and the tenant retained the right to remove the equipment so long as the premises were returned to their original condition.

The two lease amendments summarized above were executed on March 11, 1968. Keydata and the Government later selected the January 1, 1969 move-in date, by using the mechanism set up in the lease-cum-amendments. There were subsequent exchanges between the parties concerning the move-in date; what was said is a matter of dispute, but it is not now necessary to examine that history.⁴ In any event, both parties agree that Keydata had not vacated by January 1, 1969, and that on the next day GSA sent Keydata a letter informing it "that the Government hereby cancels the proposed acquisition of 2093 square feet on the first floor at 575 Technology Square, as hitherto provided for under Amendment No. 7 to the above referred to lease. This action is necessary because of the fact that the space above referred to was not available for Government occupancy on January 1, 1969 * * *." The Government did not pay the $39,000 due under the agreements for the computer room improvements.

When the Wyman Street Trust refused to take action to collect this sum from the Government, Keydata brought suit against the Trust and its trustees in the Superior Court of the County of Suffolk, Massachusetts. Tried on the pleadings and a stipulation of facts, that action resulted in an order requiring the Wyman Street Trust to assign its rights to the $39,000 under the lease amendment to Keydata, and such an assignment was executed on April 21, 1971. Keydata sues here in place of Wyman and as its assignee.⁵

This suit involves two causes of action. The theory of the first is that Wyman fully performed its obligations as landlord under Massachusetts and federal law, therefore the Government's recission was illegal, and the United States now owes the $39,000. The second cause of action claims that in any case the conduct of the Government's agents constituted a waiver of any obligation on the part of Keydata to vacate by January 1, and that the defendant is estopped from so contending. Both parties have moved for summary judgment, the plaintiff as to its first claim only.

I

Defendant asks for summary judgment on both claims, urging as one ground that Wyman's assignment of its rights to Keydata violated the Assignment of Claims Act, 31 U.S.C. § 203 (1970), and is therefore void.⁶

Despite the broad language of the Act, and the courts' tendency at an earlier time to read it as an all-inclusive prohibition, numerous classes of assignments, although literally within the statutory ambit, have been judicially exempted from its operation. The largest category of excised assignments are those which, in one form or another, occur by operation of law. Various such assignments which are regularly held to be unaffected by the Act include the passage of claims to heirs and devisees (Erwin v. United States, 97 U.S. 392, 397, 24 L.Ed. 1065 (1878)), transfers made incident to proceedings in bankruptcy or receivership (Segal v. Rochelle, 336 F.2d 298, 302 (C.A.5, 1964), aff'd 382 U.S. 375, 86 S.Ct. 511, 15 L. Ed.2d 428 (1966); Danielson v. United States, 416 F.2d 408, 410 (C.A.9, 1969); New Rawson Corp. v. United States, 55 F.Supp. 291, 293 (D.Mass.1943)), transfers by the succession of one business entity for another (Consumers Ice Co. v. United States, 475 F.2d 1161, 1163, 201 Ct.Cl. 116, 119 (1973)), assignments made by judicial sale or order (Price v. Forrest, 173 U.S. 410, 419-425, 19 S.Ct. 434, 43 L.Ed. 749 (1899); 36 Comp.Gen. 157, 158 (1956)), and assignments produced by operation of the law of subrogation (United States v. Aetna Casualty & Surety Co., 338 U.S. 366, 376, 70 S.Ct. 207, 94 L.Ed. 171 (1949)). These classes of assignments are all thought to be outside the statute's scope because none of them threatens the dangers Congress sought to avoid by enacting the prohibition.

Within the past decade this court has once again explained the objectives of the Assignment of Claims Act:

The prohibitory language contained in the first paragraph of the statute above dates back in essentially its present form to 1853 (10 Stat. 170, Rev.Stat. § 3477 (1875)), and originally to an 1846 statute (9 Stat. 41). Over the years it has consistently been recognized by the courts to have two purposes—primarily, to prevent fraud; and secondarily, to avoid multiple litigation. More specifically, Congress is said to have had as its major objective the prohibiting of trafficking in claims against the Government such as by persons who would be in a position to exert political pressure or improper influence in prosecuting claims before the departments, the courts, or the legislature. citations omitted Secondarily, the courts have ascribed to Congress the motive of enabling the United States to deal exclusively with the original claimant instead of with several parties, thus obviating the necessity of having to inquire into the validity of specific transfers or assignments of the claim, minimizing subjection to successive litigation upon the same claim, and eliminating the risk of double payment or multiple liability. citations omitted Patterson v. United States, 354 F.2d 327, 329, 173 Ct.Cl. 819, 822-823 (1965) (footnote omitted).

When an assignment, or class of assignments, has been found not to pose those risks, the Act has ordinarily been held inapplicable.

The first significant fact about the assignment of Wyman's claim against the Government to Keydata is, of course, that it was done under order of the Superior Court of Massachusetts, as a result of an adversary proceeding.⁷ In that respect it is very close to the other classes set out above, which have been held not to transgress the Assignment of Claims Act. Like those exempted classes, recognition of the Wyman-Keydata assignment will not frustrate the Congressional objectives.

For one thing, the court-ordered assignment will not increase the number of parties with whom the Government must deal; as discussed more fully infra, Keydata, not Wyman, is basically, if not technically, the real party in interest; Wyman is involved as a conduit more than anything else. Also, the case presents no real risk of double liability because the court-ordered assignment fully empowers Keydata to "give releases or discharges" on behalf of Wyman for all or any part of the $39,000 claim. If Keydata should recover on its claim here, it would be a small matter to condition payment of the judgment on the execution of a release binding against Wyman; we have imposed this condition to prevent double recovery. Cf. Carchia v. United States, 485 F.2d 622, 637, 202 Ct.Cl. 723, 740 (1973).

The Government urges that, since the assignment was ordered as part of a suit instigated by Keydata "for the sole purpose of attempting to circumvent the provisions of the Assignment of Claims Act," the normal exemption granted to judicially-compelled transfers should not be extended. It is said that the exception should be applied only where the assignment is involuntary, and that the Keydata-Wyman litigation was not defended with sufficient vigor.

The case law does not bear out the first distinction. Among the transfers found not to invoke the Act are those by devise or inheritance, and assignments from a defunct business organization to its substantially identical successor (see supra). These categories have a considerable element of volition, perhaps even more than in the situation before us.

As for the second point, we might be persuaded to regard with suspicion some assignments ordered as the product of collusive or sham litigation, but this is not such a case. The Government gives us no good reason to suspect the Keydata-Wyman suit. The mere fact that both parties joined in a stipulation of facts is not enough, especially where the dispute centers on the legal rights arising from essentially uncontested events. The answer filed by Wyman to Keydata's complaint seems a bona fide adversary response in the context of Wyman's interest in...