People Ex Rel. Department of Public Works v. McNamara Corp.

Plaintiffs in action No. 191001 appeal the trial court’s order granting defendant’s motion for summary judgment herein.

On January 25, 1963, a major contract for state highway construction was entered into between the State of California and McNamara-Mannix, a joint venture between two Canadian corporations, McNamara Corporation Ltd. and Mannix Co. Ltd. Both of these corporations were legally qualified to enter into such contract. The contract- contained in Standard Specification 8-1.02 the proviso that “The performance of the contract may not be assigned, except upon the written consent of the Director of Public Works. Consent will not be given to any proposed assignment which would relieve the original contractor or his surety of their responsibilities under this contract nor will the Director consent to any assignment of a part of the work under the contract.”

The joint venturers concluded that, for reasons of tax advantage, each would assign its interest in the contract to a wholly owned American subsidiary corporation. For such purpose, Mannix Co. Ltd., with the consent of the Director of Public Works, assigned its interest in the contract to Mannix Construction,…