A-1641, AUGUST 19, 1924, 4 COMP. GEN. 189

A-1641: Aug 19, 1924

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ACCOUNTING - SET-OFF - ASSIGNMENT OF A SYNDICATE'S INTERESTS WHERE A SYNDICATE WAS FORMED FOR THE PURCHASE OF AN ARMY CAMP AND AN ERRONEOUS PAYMENT HAD BEEN MADE TO THE MANAGER OF THE SYNDICATE AND THEREAFTER THE SYNDICATE HAD BOUGHT OUT THE INTEREST OF THE MANAGER AND ASSUMED ALL OF THE DEBTS AND LIABILITIES WHICH MIGHT HAVE BEEN CHARGEABLE EITHER IN WHOLE OR IN PART TO THE FORMER MANAGER OF THE SYNDICATE. WERE INDEBTED TO THE UNITED STATES IN THE SUM OF $600 BY REASON OF AN ERRONEOUS REFUND MADE BY AN ARMY DISBURSING OFFICER ON APRIL 12. OF A PART OF THE PURCHASE PRICE OF CERTAIN COTS PURCHASED "AS IS" AND "WHERE IS" AT CAMP GORDON. A SYNDICATE WAS FORMED WITH CAPITAL OF APPROXIMATELY $223.

A-1641, AUGUST 19, 1924, 4 COMP. GEN. 189

ACCOUNTING - SET-OFF - ASSIGNMENT OF A SYNDICATE'S INTERESTS WHERE A SYNDICATE WAS FORMED FOR THE PURCHASE OF AN ARMY CAMP AND AN ERRONEOUS PAYMENT HAD BEEN MADE TO THE MANAGER OF THE SYNDICATE AND THEREAFTER THE SYNDICATE HAD BOUGHT OUT THE INTEREST OF THE MANAGER AND ASSUMED ALL OF THE DEBTS AND LIABILITIES WHICH MIGHT HAVE BEEN CHARGEABLE EITHER IN WHOLE OR IN PART TO THE FORMER MANAGER OF THE SYNDICATE, THE AMOUNT ERRONEOUSLY PAID CAN NOT BE SET OFF AGAINST ANY SUMS SUBSEQUENTLY ACCRUING TO A CORPORATION ORGANIZED BY THE FORMER MANAGER OF THE SYNDICATE AND OTHERS FOR THE PURCHASE OF ANOTHER ARMY CAMP.

DECISION BY COMPTROLLER GENERAL MCCARL, AUGUST 19, 1924:

ROSE BROS. CO. (INC.) REQUESTED JUNE 16, 1924, ALLOWANCE OF $490 AS THE BALANCE OF AN ADVANCE PAYMENT OF $600 MADE TO BE APPLIED AT THE RATE OF $10 A DAY FOR EACH DAY OF DELAY BEYOND A STIPULATED DATE IN REMOVING CERTAIN BUILDINGS PURCHASED FROM THE UNITED STATES AND LOCATED AT CAMP HUMPHREYS, VA. REPAYMENT OF THE UNUSED BALANCE OF $490 HAS BEEN WITHHELD ON THE GROUND THAT ROSE BROS. AND CO. WERE INDEBTED TO THE UNITED STATES IN THE SUM OF $600 BY REASON OF AN ERRONEOUS REFUND MADE BY AN ARMY DISBURSING OFFICER ON APRIL 12, 1922, OF A PART OF THE PURCHASE PRICE OF CERTAIN COTS PURCHASED "AS IS" AND "WHERE IS" AT CAMP GORDON, GA.

IT NOW APPEARS THAT, PURSUANT TO AN AGREEMENT DATED OCTOBER 26, 1921, A SYNDICATE WAS FORMED WITH CAPITAL OF APPROXIMATELY $223,500, OF WHICH LOUIS S. ROSE SUBSCRIBED $5,000, FOR THE FINANCING, ETC., OF THE PURCHASE FROM THE WAR DEPARTMENT OF CAMP GORDON, GA. THE RUEL WRECKING CO. (INC.) AND THE CLEVELAND WRECKING AND CONTRACTING CO., A COPARTNERSHIP OWNED BY LOUIS S. ROSE AND OTHERS, WERE EMPLOYED TO WRECK THE CAMP AND SELL THE MATERIAL, EACH RECEIVING 25 PERCENT OF THE NET PROFITS. THE BALANCE OF THE PROFITS WAS TO BE DIVIDED AMONG THE SUBSCRIBERS IN PROPORTION TO THEIR SUBSCRIPTIONS. SUBSEQUENTLY, UNDER AN AGREEMENT DATED APRIL 28, 1922, BETWEEN OTHER MEMBERS OF THE SYNDICATE AND LOUIS S. ROSE AND THE CLEVELAND WRECKING AND CONTRACTING CO., LOUIS S. ROSE WAS PAID HIS SUBSCRIPTION OF $5,000 TO THE SYNDICATE AND HIS COPARTNERSHIP, THE CLEVELAND WRECKING AND CONTRACTING CO. RECEIVED $10,000 AS ESTIMATED 25 PERCENT OF THE PROFITS AND WITHDREW FROM FURTHER ACTIVITIES IN THE WRECKING AND SALE OF CAMP GORDON. IN THE WITHDRAWAL AGREEMENT IT WAS STIPULATED THAT THE:

FIRST PARTIES HEREBY AGREE TO INDEMNIFY AND HOLD HARMLESS SAID CLEVELAND WRECKING AND CONTRACTING COMPANY, AND SAID LOUIS S. ROSE, PERSONALLY, AGAINST ANY CLAIMS, DAMAGES, OR COSTS, HEREAFTER SUFFERED BY SAID CLEVELAND WRECKING AND CONTRACTING COMPANY, OR SAID ROSE, BY REASON OF ANY JOINT LIABILITY THAT MAY BE ESTABLISHED AGAINST SAID CONTRIBUTORS AND PERSONS INTERESTED IN THE PROFITS OF SAID JOINT VENTURE, UNDER SAID CONTRACT DATED OCTOBER 26TH, 1921.

THE AGREEMENT WAS EXPRESSLY RATIFIED MAY, 1922, BY AN AGREEMENT BETWEEN CERTAIN OTHER MEMBERS OF THE SYNDICATE AND THE MEMBERS WHO SIGNED THE AGREEMENT OF APRIL 28, 1922, AND IN SAID AGREEMENT BISMARCK FEILCHENFELD WAS APPOINTED AS THEIR "TRUE AND LAWFUL AGENT FOR US, AND IN OUR NAME, PLACE, AND STEAD TO NEGOTIATE ALL MATTERS APPERTAINING TO THE BUSINESS CONDUCTED BY US INDIVIDUALLY AND AS MANAGERS OF THE ENTERPRISE KNOWN AS ROSE BROS. AND CO., NOT INCORPORATED, AT CAMP GORDON, GEORGIA.'

ON OR ABOUT JANUARY 1, 1923, LOUIS S. ROSE AND OTHERS NOT MEMBERS OF THE SYNDICATE FORMED A CORPORATION UNDER THE NAME OF ROSE BROS. CO. AND ON SEPTEMBER 5, 1923, SAID CORPORATION PURCHASED CAMP HUMPHREYS, VA., AND AGREED TO REMOVE THE BUILDINGS, ETC., WITHIN A CERTAIN PERIOD. THE BUILDINGS WERE NOT ALL REMOVED AS AGREED, AND UNDER A SUPPLEMENTAL AGREEMENT DATED DECEMBER 10, 1923, THE CORPORATION POSTED $600, FROM WHICH THE UNITED STATES WAS TO DEDUCT $10 A DAY FOR EACH AND EVERY DAY OF DELAY IN THE REMOVAL. THERE WAS A DELAY OF 11 DAYS IN REMOVAL, BUT THE BALANCE OF $490 WAS WITHHELD TO APPLY ON THE ERRONEOUS REFUND OF $600 MADE ON APRIL 12, 1922, TO ROSE BROS. AND CO. AT CAMP GORDON, GA.

IT IS NOW CLEAR THAT ROSE BROS. CO. (INC.) IS NOT CHARGEABLE WITH THE ERRONEOUS REFUND MADE TO ROSE BROS. AND CO., THE SYNDICATE IN WHICH ONE OF THE ROSE BROTHERS OWNED A COMPARATIVELY SMALL SHARE AND WHICH RELEASED THE CLEVELAND WRECKING AND CONTRACTING CO. AND LOUIS S. ROSE OF ALL CLAIMS, DAMAGES, OR COSTS BY REASON OF THE JOINT ADVENTURE SUBSEQUENT TO THE DATE OF THE ERRONEOUS REFUND. IN OTHER WORDS, IT NOW APPEARS, AS IT DID NOT APPEAR AT THE TIME OF THE DECISON OF JUNE 2, 1924, THAT ROSE BROS. CO. WAS NOT INCORPORATED BY THE SAME OR SIMILAR PARTIES DOING BUSINESS AS ROSE BROS. AND CO., AND THAT THE SYNDICATE ASSUMED ALL CLAIMS, ETC., GROWING OUT OF THE WRECKING, ETC., OF CAMP GORDON.

A SETTLEMENT WILL BE STATED ADDRESSED TO THE DISBURSING OFFICER UNDER SECTION 307 OF THE ACT OF JUNE 10, 1921, 42 STAT. 25, DIRECTING THE DISBURSING OFFICER TO PAY TO ROSE BROS. CO. (INC.), THE SUM OF $490 NOW HELD IN HIS SPECIAL DEPOSIT ACCOUNT. COLLECTION OF THE $600 ERRONEOUSLY REFUNDED WILL BE PROCEEDED WITH AGAINST THE MEMBERS OF THE SYNDICATE AS APPEARS UNDER THE AGREEMENT OF OCTOBER 26, 1921.