[Lienholder Claim Under Military Claims Act]

A credit union's claim concerning the Army's sale of an officer's car in which the claimant had a security interest was referred to GAO. After the officer failed to pick up the car at the port of entry and attempts to contact the officer were unsuccessful, the car was sold at public auction and the proceeds were deposited in the Treasury as miscellaneous receipts. Prior to the sale, the Army failed to conduct a title search as required by regulations. According to regulations, property which is subject to a lien may not be sold unless a release of the lien is obtained. The Army believed that the claim should be paid because of this error and referred the claim to GAO for payment under a statute which applies to claims to the proceeds derived from the sale of unclaimed property. Although the credit union had an interest in the car, it was not within the classes protected by the statute. However, since under Department of Defense Regulations the car should not have been sold without obtaining a release from the credit union, it would be proper for the Army to turn the proceeds over to the claimant. The fact that the proceeds were mistakenly deposited in the Treasury does not prevent correction of the mistake. Since no proceeds would remain after payment to the credit union, any subsequent claim filed by the owner of the car for proceeds could not be paid.