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B-68587 July 14, 1948

B-68587 Jul 14, 1948
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New York Gentleman: Reference is made to your letter of May 27. Your letter advise that you have "notified the War Department that we claimed an attorney's lien against sums recovered in Proceeding #86 to the extent of $10. " and that you will "consider any appropriation of this portion of a judgement obtained by American Foods. You are advised that this office has requrested the Department of the Army to transmit here any amount found due American Foods. The contemplated set-off action here will be taken by virtue of the previsions of section 236. All accounts whatever in which the Government of the United States is concerned. Thus it is to be seen that whenever any debt due the United States is of record in.

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B-68587 July 14, 1948

Attorneys

Raichle, Tucker and Moore, Attorneys at Law 806 Genesse Building Buffalo 2, New York

Gentleman:

Reference is made to your letter of May 27, 1949, advising that your law firm represented American Foods, Inc., in Proceeding #86 before the Appeal Board of the Office of Contract Settlement, and that your client recovered in that proceeding a judgement in the amount of $43,368.91.

Your letter requests information with respect to the procedure required in accomplishing set-off of that amount against the outstanding indebtedness to the Government of American Foods, Inc., in the amount of $125,000, plus interest, representing the amount determined to be due under Order no. WC PAB-78, dated May 23, 1947, as a refund of excessive profits realized by the debtor under Government contracts and subcontracts during the fiscal year ended August 31, 1946. Also, your letter advise that you have "notified the War Department that we claimed an attorney's lien against sums recovered in Proceeding #86 to the extent of $10,292.61," and that you will "consider any appropriation of this portion of a judgement obtained by American Foods, Inc. to debts owed the United States, a misappropriation of our property for which we must hold those in authority responsible."

You are advised that this office has requrested the Department of the Army to transmit here any amount found due American Foods, Inc., for direct settlement and set-off against the indebtedness of said company to the United States. However, the referred-to judgement in Proceeding #86 has not as yet been vouchered here.

The contemplated set-off action here will be taken by virtue of the previsions of section 236, Revised Statutes, as amended by section 305 of the Budget and Accounting Act of June 10, 1921, 42 Stat. 24 (31 U.S.C. 71), which reads as follows:

"All claims and demands whatever by the Government of the United States or against it, and all accounts whatever in which the Government of the United States is concerned, either as debtor or creditor, shall be settled and adjusted in the General Accounting Office."

Thus it is to be seen that whenever any debt due the United States is of record in, or reported to, this office, it becomes the duty of this Office to protect the interests of the United States by withholding the amount of such indebtness from any payment to which the debtor thereafter otherwise may become entitled, even though the indebtedness arose in a totally distinct matter. The language used by the Court of Claims of the United States in its opinion in the case of of Taggart v. United States, 17 C, Cls, 322, 327, seems especially appropriate in this connection. In that case, the court, in discussing the duty of accounting officers of the Federal Government in matters of set-off, said:

"Where a person is both debtor and creditor of the United States, in any form, the officers of the Treasury Department, in settling the accounts, not only have the power, but are required in the proper discharge of their duties, to set off the one indebtedness against the other, and to allow and certify for payment only the balance found due on one side or the other.***"

(The duties of the officers of the Treasury Department referred to were by the act of June 10, 1921, supra, transferred to and imposed upon the Comptroller General of the United States.) See, also, United States v. Ramsey Trust Company, 332 U.S. 234, at pages 239-240, and Cherry Cotton Mills, Inc., United States, 103 C. CLS. 243, 252, affirmed 327 U.S. 536.

With respect to your "notice" regarding an alleged attorney's lien on the proceeds of said judgement, you are informed that recognition of such a lien as a valid claim against the United States would be in violation of the provisions of section 3477 of the Revised Statutes, 31 U.S.C. 203, since attorney's liens operate as assignments by purchase rather then by operation of law. See 25 Op. Atty. Gen. 279; Spotford v. Kirk, 97 U.S. 484. No statute exists which authorizes an attorney's lien on public funds in the Treasury of the United States; on the contrary, many decisions are to the effect that an attorney's retainer agreement is unenforceable as in violation of said section 3477 of the Revised Statutes. Conlon v. Adamski e.t. al., 77 F. 2d 397; 5 Op. Atty. Gen. 85; 16 id. 227; 19 id. 483.

Very truly yours,

(Signed) Frank L. Yates Assistant Comptroller General of the United States

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