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A.C. DAVENPORT & SON CO. v. UNITED STATES

April 28, 1982

A.C. DAVENPORT & SON CO., PLAINTIFF,
v.
UNITED STATES OF AMERICA, DEFENDANT.



The opinion of the court was delivered by: Getzendanner, District Judge.

MEMORANDUM OPINION AND ORDER

Plaintiff A.C. Davenport & Son Co. ("Davenport")*fn* brings this action for the purchase price of products delivered to the General Services Administration ("GSA"), an agency of defendant United States. The matter is before the court on the Government's motion to dismiss for lack of jurisdiction and on the parties' cross motions for summary judgment. The court denies defendant's motions to dismiss and for summary judgment and grants plaintiff's motion for summary judgment.

Factual Background

The parties agree that there is no genuine dispute as to any material fact and that the following facts are undisputed.

In December, 1975, the GSA contracted with Almark, Inc., of Arlington, Virginia, for the purchase of bulletin boards. In early 1976, Almark agreed with Davenport that the latter was to supply the bulletin boards that Almark was obligated to deliver under its contract with the GSA. Later that year, Davenport had reason to question Almark's ability to meet its payments under the subcontracting agreement and Davenport insisted on some arrangement to secure these payments. (See Affidavit of Duane Conwell and Plaintiff's Ex. #2.)

As a result, Almark modified its contract with the GSA,
changing the payment address from "Almark, Inc., 542  So.
23rd Street, Arlington, Virginia 22202" to "Almark, Inc., c/o
Davson, 306 East Helen[sic] Road, Palatine, IL 60067." A
Government Contracting Officer approved and signed this
modification. A few days later, Almark executed a corporate
resolution authorizing the First National Bank to accept for
deposit in a special account checks that were endorsed
"Almark, Inc., c/o Davson." The resolution further authorized
the Bank to pay out funds from this account only in the name
of Davenport by its president, Frank A. Davenport.

Almark executed the contract modification and corporate resolution pursuant to an agreement with Davenport. The parties intended that the combined effect of the modification and resolution would be that Davenport would receive Almark's checks directly from the Government, that it could then deposit them in the special account, and that only Davenport, through its president, could withdraw the proceeds from the account.[fn**] The purpose of this arrangement was to secure Almark's payment to Davenport under the subcontracting agreement.

Between February and April, 1977, the GSA issued checks pursuant to its contract with Almark. Despite the contract modification in effect, the GSA sent these checks to Almark's Virginia address. On April 4, 1977, Davenport's Account Manager wrote the Government informing it that Davenport had not received checks for shipments made in January and February, 1977, under Almark's contract as modified. Plaintiff's Ex. #3. The second sheet of this letter bears the following handwritten note:

"Called.

(1) All payment gone to Almark by Alton Franklin

  (2) Carol Dameron put stop payment on all Almark
    checks 4/13/77."

The record is not clear on this point, but apparently the stop order was ineffective as to one or more of the checks sent to Almark's Virginia address for a total of $11,822.89.

On April 28, 1977, the GSA issued what it terms a "duplicate" check for the same amount and sent this check to "Almark, Inc., c/o A.C. Davenport & Son Co." in Palatine, Illinois. Davenport endorsed and deposited this check in the special account and withdrew the funds, according to its agreement with Almark.

For some reason,*fn1 the Government did nothing more until November, 1977, when it wrote Davenport questioning the propriety of the latter's endorsement and deposit of the second Almark check. In July, 1978, the Government sent a formal demand to Davenport for the $11,822 and indicated that it would offset amounts due Davenport on totally unrelated contracts. Portions of this letter are significant:

  "It is [the GSA's] opinion that a duplicate
  payment was made to Almark, Inc. The first series
  of payments totalling $11,822.89 was made to
  Almark, Inc. between the period February 2, 1977,
  and April 4, 1977. . . . The payment of
  $11,822.89 made to Almark, Inc., c/o A.C.
  Davenport and Son on April 28, 1977, by Treasury
  check No. 1400521, ...

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