A-13806, SEPTEMBER 13, 1928, 8 COMP. GEN. 110

A-13806: Sep 13, 1928

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SUITS - COMPROMISES - INTEREST ON MONEYS WITHHELD WHERE MONEYS DUE A CLAIMANT UNDER CERTAIN CONTRACTS WERE WITHHELD PENDING THE ADJUSTMENT OF A SUIT BROUGHT AGAINST THE CLAIMANT ON ACCOUNT OF AN INDEBTEDNESS TO THE UNITED STATES. SUCH SUIT WAS SETTLED BY THE ACCEPTANCE OF AN OFFER IN COMPROMISE TENDERED BY THE CLAIMANT. THE WITHHOLDING IN QUESTION WAS NOT BE THE SECRETARY OF THE TREASURY PURSUANT TO THE ACT OF MARCH 3. WAS BY THE GENERAL ACCOUNTING OFFICE PURSUANT TO SECTION 236 OF THE REVISED STATUTES. IS NOT AUTHORIZED. WHEREIN WAS DISALLOWED ITS CLAIM FOR INTEREST ON CERTAIN CLAIMS AMOUNTING TO $66. THE CLAIM WAS DISALLOWED FOR THE REASON THAT THERE WAS NO PROVISION IN THE CONTRACTS UNDER WHICH THE MATERIALS OR SUPPLIES WERE FURNISHED STIPULATING FOR THE PAYMENT OF INTEREST AND THAT THERE WAS NO STATUTE AUTHORIZING THE PAYMENT OF INTEREST ON SUCH CLAIMS.

A-13806, SEPTEMBER 13, 1928, 8 COMP. GEN. 110

SUITS - COMPROMISES - INTEREST ON MONEYS WITHHELD WHERE MONEYS DUE A CLAIMANT UNDER CERTAIN CONTRACTS WERE WITHHELD PENDING THE ADJUSTMENT OF A SUIT BROUGHT AGAINST THE CLAIMANT ON ACCOUNT OF AN INDEBTEDNESS TO THE UNITED STATES, AND SUCH SUIT WAS SETTLED BY THE ACCEPTANCE OF AN OFFER IN COMPROMISE TENDERED BY THE CLAIMANT, THE WITHHOLDING IN QUESTION WAS NOT BE THE SECRETARY OF THE TREASURY PURSUANT TO THE ACT OF MARCH 3, 1875, 18 STAT. 481, BUT WAS BY THE GENERAL ACCOUNTING OFFICE PURSUANT TO SECTION 236 OF THE REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24, AND PAYMENT OF INTEREST ON THE MONEYS WITHHELD, AS CONTEMPLATED BY THE ACT OF MARCH 3, 1875, IS NOT AUTHORIZED, THERE HAVING BEEN NO JUDGMENT RENDERED AGAINST THE UNITED STATES.

DECISION BY COMPTROLLER GENERAL MCCARL, SEPTEMBER 13, 1928:

THE H. K. MULFORD CO. REQUESTS REVIEW OF SETTLEMENT NO. 014605 (1), DATED AUGUST 11, 1928, WHEREIN WAS DISALLOWED ITS CLAIM FOR INTEREST ON CERTAIN CLAIMS AMOUNTING TO $66,360.41. THE CLAIM WAS DISALLOWED FOR THE REASON THAT THERE WAS NO PROVISION IN THE CONTRACTS UNDER WHICH THE MATERIALS OR SUPPLIES WERE FURNISHED STIPULATING FOR THE PAYMENT OF INTEREST AND THAT THERE WAS NO STATUTE AUTHORIZING THE PAYMENT OF INTEREST ON SUCH CLAIMS.

THE FACTS IN THE CASE MAY BE STATED AS FOLLOWS:

ON OR ABOUT AUGUST 24, 1923, THE UNITED STATES FILED AN ACTION AT LAW IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA AGAINST THE H. K. MULFORD CO. IN THE AMOUNT OF APPROXIMATELY $643,542.03, TOGETHER WITH INTEREST, BECAUSE OF ALLEGED OVERPAYMENTS ON ACCOUNT OF CERTAIN CONTRACTS, AND THE DEFENDANT DULY FILED AN ANSWER DENYING THE INDEBTEDNESS. THEREAFTER, TO WIT, ON AUGUST 25, 1926, THIS COMPANY ENTERED INTO AN AGREEMENT WITH THE UNITED STATES, THROUGH THE COMPTROLLER GENERAL OF THE UNITED STATES, WHEREIN IT WAS AGREED THAT WHEREAS IT WAS THE DUTY OF THE COMPTROLLER GENERAL OF THE UNITED STATES TO WITHHOLD PAYMENTS FROM THE H. K. MULFORD CO. FOR ANY AMOUNTS THAT WERE THEN DUE, OR MIGHT THEREAFTER BECOME DUE, UPON CONTRACTS OR OTHER ACCOUNTS WITH THE UNITED STATES, PENDING THE TERMINATION OF THE SAID SUIT, THAT THE SAID COMPANY, IN ORDER THAT SAID PAYMENTS SHOULD NOT BE WITHHELD FROM IT, AGREED AND STIPULATED THAT AS AND WHEN ANY SUM SHOULD BE ASCERTAINED AND ALLOWED AND BECOME PAYABLE TO THE MULFORD CO., THERE SHOULD BE DEPOSITED WITH THE COMPTROLLER GENERAL BY THE MULFORD CO. BONDS AND NOTES OF THE UNITED STATES OR OTHER GOVERNMENT SECURITIES IN THE PRINCIPAL SUM EQUAL TO THE AMOUNT OR AMOUNTS THAT MIGHT BE DUE THE MULFORD CO. IN ACCORDANCE WITH SAID AGREEMENT THERE WAS DEPOSITED BY THE MULFORD CO. IN THE TREASURY OF THE UNITED STATES THROUGH THE COMPTROLLER GENERAL TWO GOVERNMENT BONDS OF THE FACE VALUE OF $10,000 EACH AND THEREAFTER CLAIMS TO THE AMOUNT OF APPROXIMATELY $20,000 WERE ALLOWED AND PAID TO SAID COMPANY. ADDITIONAL BONDS OR OTHER SECURITIES WERE DEPOSITED IN ACCORDANCE WITH THE AGREEMENT, ALTHOUGH IT WAS WELL KNOWN TO THE MULFORD CO. THAT GREATER SUMS WERE DUE IT UNDER CONTRACTS WITH THE UNITED STATES. ON MAY 11, 1928, THIS OFFICE WAS ADVISED BY THE SOLICITOR OF THE TREASURY THAT THE SECRETARY OF THE TREASURY, PURSUANT TO THE PROVISIONS OF SECTION 3469, REVISED STATUTES, HAD ACCEPTED AN OFFER OF THE MULFORD CO. TO PAY THE AMOUNT OF $48,719.12 IN COMPROMISE OF THE CLAIM OF THE UNITED STATES AGAINST MULFORD CO., AND SAID AMOUNT WAS PAID IN FULL AND DEPOSITED IN THE TREASURY OF THE UNITED STATES, AND THEREUPON THE OUTSTANDING CLAIMS OF THE MULFORD CO. AGAINST THE UNITED STATES WERE SETTLED AND PAID WITHOUT UNNECESSARY DELAY.

IN THE REQUEST FOR REVIEW OF THE SETTLEMENT DISALLOWING INTEREST ON SAID CLAIMS REFERENCE IS MADE TO THE ACT OF MARCH 3, 1875, 18 STAT. 481, WHICH READS AS FOLLOWS:

THAT WHEN ANY FINAL JUDGMENT RECOVERED AGAINST THE UNITED STATES OR OTHER CLAIM DULY ALLOWED BY LEGAL AUTHORITY, SHALL BE PRESENTED TO THE SECRETARY OF THE TREASURY FOR PAYMENT, AND THE PLAINTIFF OR CLAIMANT THEREIN SHALL BE INDEBTED TO THE UNITED STATES IN ANY MANNER, WHETHER AS PRINCIPAL OR SURETY, IT SHALL BE THE DUTY OF THE SECRETARY TO WITHHOLD PAYMENT OF AN AMOUNT OF SUCH JUDGMENT OR CLAIM EQUAL TO THE DEBT THUS DUE TO THE UNITED STATES; AND IF SUCH PLAINTIFF OR CLAIMANT ASSENTS TO SUCH SET OFF, AND DISCHARGES HIS JUDGMENT OR AN AMOUNT THEREOF EQUAL TO SAID DEBT OR CLAIM, THE SECRETARY SHALL EXECUTE A DISCHARGE OF THE DEBT DUE FROM THE PLAINTIFF TO THE UNITED STATES. BUT IF SUCH PLAINTIFF, OR CLAIMANT, DENIES HIS INDEBTEDNESS TO THE UNITED STATES, OR REFUSES TO CONSENT TO THE SET-OFF, THEN THE SECRETARY SHALL WITHHOLD PAYMENT OF SUCH FURTHER AMOUNT OF SUCH JUDGMENT, OR CLAIM, AS IN HIS OPINION WILL BE SUFFICIENT TO COVER ALL LEGAL CHARGES AND COSTS IN PROSECUTING THE DEBT OF THE UNITED STATES TO FINAL JUDGMENT. AND IF SUCH DEBT IS NOT ALREADY IN SUIT, IT SHALL BE THE DUTY OF THE SECRETARY TO CAUSE LEGAL PROCEEDINGS TO BE IMMEDIATELY COMMENCED TO ENFORCE THE SAME, AND TO CAUSE THE SAME TO BE PROSECUTED TO FINAL JUDGMENT WITH ALL REASONABLE DISPATCH. AND IF IN SUCH ACTION JUDGMENT SHALL BE RENDERED AGAINST THE UNITED STATES, OR THE AMOUNT RECOVERED FOR DEBT AND COSTS SHALL BE LESS THAN THE AMOUNT SO WITHHELD AS BEFORE PROVIDED, THE BALANCE SHALL THEN BE PAID OVER TO SUCH PLAINTIFF BY SUCH SECRETARY WITH SIX PER CENT INTEREST, THEREON FOR THE TIME IT HAS BEEN WITHHELD FROM THE PLAINTIFF.

IN THE PRESENT CASE, NO FINAL JUDGMENT WAS RECOVERED AGAINST THE UNITED STATES, THE SUIT BROUGHT BY THE UNITED STATES AGAINST THE MULFORD CO. HAVING BEEN SETTLED BY THE ACCEPTANCE OF AN OFFER IN COMPROMISE TENDERED BY THE MULFORD CO. THEREFORE THE PROVISIONS OF SAID STATUTE RELATIVE TO PAYMENT OF INTEREST WOULD NOT BE FOR APPLICATION. FURTHERMORE, THE WITHHOLDING IN THIS CASE WAS NOT BY THE SECRETARY OF THE TREASURY PURSUANT TO THE SAID ACT OF 1875 BUT BY THIS OFFICE PURSUANT TO THE PROVISIONS OF SECTION 236, REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24. IN THIS CONNECTION SEE DECISION OF JULY 7, 1928, A-16762.

ACCORDINGLY, THE MONEYS DUE THE MULFORD CO. HAVING BEEN PROPERLY HELD UP UNTIL AN ADJUSTMENT OF THE SUIT OF THE UNITED STATES AGAINST THE MULFORD CO., AND THERE BEING NO PROVISION IN THE CONTRACTS UNDER WHICH SAID MONEYS BECAME DUE, THAT PAYMENTS THEREUNDER SHOULD BEAR INTEREST, AND IN THE ABSENCE OF ANY STATUTORY PROVISION FOR THE PAYMENT OF INTEREST IN SUCH CASES THE SETTLEMENT DISALLOWING THE INTEREST CLAIMED MUST BE AND IS SUSTAINED.