B-52600, B-97131 May 7, 1962

B-52600, B-97131 May 7, 1962

Administrator of General Services General Services Administration

My dear Mr. Administrator:

Reference is made to the case of Harry A. Shindler, d/b/a/, Defense Apparels v. United States, Civil No. 3012, decided by the United States District Court for the District of Connecticut on June 27, 1951, in which a judgement for $2,590.05, plus court costs of $37, was entered in favor of the plaintiff.

The record discloses that this suit was brought under the Tucker Act, as amended, 28 U.S.C. 1346(a)(2), for damages resulting from a breach of contract by the General Services Administration in shipping the wrong merchandise, which was later returned, and for refund of purchase price, and reimbursement of expenses.

The estimate of an appropriation to pay the judgement was submitted to the Congress, the appropriation was made by the Supplemental Appropriation Act, 1952, Public Law 253, 65 Stat. 736, approved November 1, 1951, and payment therefor was made pursuant to certificate of settlement No. 1986888, dated November 8, 1951, in the amount of $2,666.79, representing the amount of the judgement, $2,590.05, plus interest thereon, $39.74, and costs, $37.00.

The check issued pursuant to such settlement was returned by the attorney for the judgement creditor with the advice that payment of the judgement had already been received from the General Services Administration, New York, N.Y.. In reply to letter dated November 21, 1951, from the Claims Division of this office to the General Services Administration at New York requesting citation to the voucher involved and to the legal authority for the payment by the General Services Administration, the General Counsel of your Administration by letter dated January 15, 1952, furnished the voucher citation and advised that the payment was made "in accordance with General Services Administration procedures and section 204 (c) of Public Law 152, 81st Congress."

Title 31 United States Code, section 583, requires estimates of appropriations for the payment of judgements against the United States to be submitted to the Congress, and when the appropriations are made, payment of the judgements is required to be accomplished by the General Accounting Offices, 28 U.S.C. 2414. By reason of these statutes, appropriations or funds for operations or activities out of which the causes of action arose are not available to pay judgements of courts, in the absence of express provision in the appropriations, or statutes setting up the funds, making the amounts available for payments of judgements. 15 Comp. Gen. 933.

Section 204 of the Federal Property and Administration Services Act of 1949, 63 Stat. 377, 389, governing the disposition of proceeds from the sale, lease or other disposition of surplus property provides in subsection (c) that:

"Any Federal agency disposing of surplus property under this title (1) may deposit, in a special account with the Treasurer of the United States, such amount of the proceeds of such dispositions as it deems necessary to permit appropriate refunds to purchasers when any disposition is rescinded or does not become final, or payments for breach of any warranty, and (2) may withdraw therefrom amounts so to be refunded or paid, without regard to the origin of the funds withdrawn."

The purpose and intent of this provision is to provide disposal agencies with sufficient funds from the proceeds from surplus property to make authorized refunds or payments for breach of any warranty in connection with surplus property disposed by them. However, there is nothing therein making funds do deposited in the special deposit account specifically available for payment of judgements, and, accordingly, they were not available therefor. The purchaser of property in this case filed suit for damages and recovery of his cash outlay in the United States District Court and upon the entry of judgement against the United States, the provisions of section 204(e) of the 1949 act no longer applied and there came into operation the provision of 31 U.S.C. 583 and 28 U.S.C. 2414, supra.

Since the funds of the General Services Administration were not available for the payment of the judgement, and as the payment was not authorized to be made by said Administration, the check issued in favor of the judgement creditor pursuant to certificate of settlement No. 1986888, will be canceled and action taken to credit from its proceeds, the account of the General Services Administration with the amount of the erroneous payment made by it, and to deposit the balance to the appropriation on which the check was drawn.

The matter is called to your attention with the view to avoiding a recurrence of the unauthorized payment procedure followed in this case, which might well result in duplicate payment of judgements and possibly unrecoverable losses to the United States.

Sincerely yours,

Lindsay C. Warren Comptroller General of the United States