A-17169, FEBRUARY 10, 1927, 6 COMP. GEN. 515

A-17169: Feb 10, 1927

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RETIREMENT FUND - SET-OFF TO SATISFY LOSS OF PRIVATE TRUST FUNDS THE AMOUNT TO THE CREDIT OF A FORMER EMPLOYEE IN THE CIVIL RETIREMENT FUND IS AVAILABLE TO REPLACE TRUST FUNDS OF A PRIVATE CHARACTER. WHICH WERE EMBEZZLED BY SUCH EMPLOYEE WHILE IN HIS OFFICIAL CUSTODY AS AN ACCOUNTABLE OFFICER OF THE GOVERNMENT. 1927: I HAVE YOUR LETTER OF JANUARY 24. THE FORMER EMPLOYEE HAS BEEN CONVICTED OF THE EMBEZZLEMENT AND IS NOW SERVING A PRISON SENTENCE. IT IS REPORTED THAT THERE WAS A SHORTAGE IN THE COURT FUNDS OF $2. 540.81 THE ASSISTANT CLERK OF COURT IN WHOSE PLACE HUGHES WAS ACTING AT THE TIME OF EMBEZZLEMENT WAS BONDED FOR $2. 000 AND THERE WAS A BALANCE OF COMPENSATION DUE HUGHES AT TIME OF SEPARATION FROM THE SERVICE OF $394.18.

A-17169, FEBRUARY 10, 1927, 6 COMP. GEN. 515

RETIREMENT FUND - SET-OFF TO SATISFY LOSS OF PRIVATE TRUST FUNDS THE AMOUNT TO THE CREDIT OF A FORMER EMPLOYEE IN THE CIVIL RETIREMENT FUND IS AVAILABLE TO REPLACE TRUST FUNDS OF A PRIVATE CHARACTER, OBTAINED AND HELD FOR SUCH PARTICULAR PURPOSE SANCTIONED BY LAW, WHICH WERE EMBEZZLED BY SUCH EMPLOYEE WHILE IN HIS OFFICIAL CUSTODY AS AN ACCOUNTABLE OFFICER OF THE GOVERNMENT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, FEBRUARY 10, 1927:

I HAVE YOUR LETTER OF JANUARY 24, 1927, REQUESTING DECISION WHETHER THE AMOUNT OF $179.63 IN THE CIVIL RETIREMENT FUND TO THE CREDIT OF PAUL L. HUGHES, FORMER ACTING ASSISTANT CLERK OF THE UNITED STATES COURT IN THE PANAMA CANAL ZONE, MAY BE APPLIED TO REPLACE FUNDS PAID INTO THE COURT BY LITIGANTS AND EMBEZZLED BY THE EMPLOYEE WHILE IN HIS OFFICIAL CUSTODY. THE FORMER EMPLOYEE HAS BEEN CONVICTED OF THE EMBEZZLEMENT AND IS NOW SERVING A PRISON SENTENCE.

IT IS REPORTED THAT THERE WAS A SHORTAGE IN THE COURT FUNDS OF $2,540.81, MADE UP AS FOLLOWS:

TABLE CASH SHORTAGE IN REVENUE FUNDS ------------------------------ $155.81 SHORTAGE IN TRUST FUNDS:

MCGEACHY V. PANAMA RAILROAD --------------------- $10.00

CASH BAIL, W. R. CURRY -------------------------- 25.00

P.R.R. V. CHILIAN LINE -------------------------- 100.00

PACIFIC MAIL S/S LINE V. S/S COLUMBIA ----------- 250.00

WALKER V. WALKER ------------------------------ 2,000.00

TOTAL TRUST FUNDS -------------------------------------- 2,385.00

TOTAL SHORTAGE ----------------------------------------- 2,540.81

THE ASSISTANT CLERK OF COURT IN WHOSE PLACE HUGHES WAS ACTING AT THE TIME OF EMBEZZLEMENT WAS BONDED FOR $2,000 AND THERE WAS A BALANCE OF COMPENSATION DUE HUGHES AT TIME OF SEPARATION FROM THE SERVICE OF $394.18, WHICH WAS VOLUNTARILY APPLIED TO REPLACE THE SHORTAGE IN THE COURT FUNDS IN THE ITEM OF $155.81 REVENUE FUNDS BELONGING TO THE GOVERNMENT, AND THE $10, $25, AND $100 ITEMS IN THE TRUST FUND AND $103.37 AGAINST THE SHORTAGE OF THE $250 ITEM IN THE TRUST FUND.

DECISION IS REQUESTED (1) WHETHER $146.63 OF THE AMOUNT IN THE RETIREMENT FUND MAY BE APPLIED TO COMPLETE THE REPLACEMENT OF THE $250 ITEM; (2) WHETHER THE REMAINING $33 IN THE RETIREMENT FUND MAY BE APPLIED AGAINST THE ITEM OF $2,000 IN THE TRUST FUND, THE SURETY BEING REQUIRED TO PAY THE BALANCE OF SAID ITEM IN THE TRUST FUND, OR WHETHER THE $33 SHOULD BE PAID TO THE FORMER EMPLOYEE.

IT IS WELL SETTLED THAT THE AMOUNT IN THE RETIREMENT FUND TO THE CREDIT OF A FORMER EMPLOYEE MAY BE LAWFULLY APPLIED TO OFFSET AN INDEBTEDNESS OF THE EMPLOYEE TO THE UNITED STATES. 3 COMP. GEN. 99; ID. 826; ID. 878; 4 ID. 112; ID. 521; 5 ID. 932. IT HAS ALSO BEEN HELD THAT THE AMOUNT IN THE RETIREMENT FUND IS NOT AVAILABLE FOR SATISFYING THE LOSS OF ANY THIRD PARTY THROUGH A CRIMINAL ACT OF A GOVERNMENT EMPLOYEE, FOR WHICH LOSS THE UNITED STATES IS NOT LIABLE. 3 COMP. GEN. 984; 5 ID. 6; ID. 638. THE TEST APPLIED HAS BEEN WHETHER THE GOVERNMENT WAS LEGALLY LIABLE FOR THE LOSS TO REPLACE WHICH THE AMOUNT IN THE RETIREMENT FUND WAS SOUGHT TO BE APPLIED.

THE INSTANT CASE PRESENTS THE QUESTION WHETHER THE AMOUNT IN THE RETIREMENT FUND MAY BE APPLIED TO REPLACE TRUST FUNDS OF A PRIVATE CHARACTER IN THE OFFICIAL CUSTODY OF THE GOVERNMENT AS TRUSTEE, WHERE THE LOSS IS CAUSED BY THE CRIMINAL ACTION OF AN ACCOUNTABLE OFFICER OF THE GOVERNMENT. IT IS NOT DEEMED ABSOLUTELY ESSENTIAL TO APPLY THE TEST HERETOFORE APPLIED IN OTHER CASES TO THIS SITUATION; THAT IS, IT IS NOT NECESSARY TO DECIDE WHETHER THE GOVERNMENT WOULD BE DIRECTLY LIABLE AS TRUSTEE FOR THE LOSS OF THE TRUST FUNDS CAUSED BY THE CRIMINAL ACT OF A GOVERNMENT EMPLOYEE. THE SAME PARTICULARITY IN ACCOUNTING AND THE SAME RELATIONSHIP BETWEEN AN ACCOUNTABLE OFFICER AND THE UNITED STATES IS REQUIRED WITH RESPECT TO TRUST FUNDS OF A PRIVATE CHARACTER OBTAINED AND HELD FOR SOME PARTICULAR PURPOSE SANCTIONED BY LAW AS IS REQUIRED WITH RESPECT TO PUBLIC FUNDS. 5 COMP. GEN. 428 AND THE CASES THEREIN CITED. WITH RESPECT TO MONEY IN A COURT REGISTRY, THE SUPREME COURT OF THE UNITED STATES STATED IN THE CASE OF THOMAS A. OSBORN ET AL. V. UNITED STATES, 91 U.S. 474, 479, 23 LAW ED. 388, 390, AS FOLLOWS:

* * * THE POWER OF THE COURT OVER MONEYS BELONGING TO ITS REGISTRY CONTINUES UNTIL THEY ARE DISTRIBUTED PURSUANT TO FINAL DECREES IN THE CASES IN WHICH THE MONEYS ARE PAID. IF FROM ANY CAUSE THEY ARE PREVIOUSLY WITHDRAWN FROM THE REGISTRY WITHOUT AUTHORITY OF LAW, THE COURT CAN, BY SUMMARY PROCEEDINGS, COMPEL THEIR RESTITUTION. IN THE PRESENT CASE IT IS NOT NECESSARY TO THE ORDER FOR RESTITUTION THAT THE APPELLANTS RECEIVED THE MONEYS THEY OBTAINED AS OFFICERS OF THE COURT AND THAT THEY HAVE LONG SINCE CEASED TO BE SUCH OFFICERS. IF THE MONEYS WERE ILLEGALLY TAKEN, THEY MUST BE RESTORED; AND, UNTIL A DECREE OF DISTRIBUTION IS MADE AND ENFORCED, THE SUMMARY POWER OF THE COURT TO COMPEL RESTITUTION REMAINS INTACT. THE POWER COULD BE APPLIED IN NO CASE MORE FITTINGLY THAN TO PREVIOUS OFFICERS OF THE COURT.

THE CONCLUSION MAY REASONABLY BE REACHED THAT THE OBLIGATION OF THE UNITED STATES AS TRUSTEE OF PRIVATE FUNDS IN THE OFFICIAL CUSTODY OF ITS ACCOUNTABLE OFFICERS OR EMPLOYEES IS SUCH AS TO JUSTIFY AND REQUIRE APPLICATION TO REPLACE LOSS IN THE TRUST FUNDS OF PERSONAL FUNDS TO THE CREDIT OF SUCH GOVERNMENT OFFICER OR EMPLOYEE RESPONSIBLE FOR THE LOSS AND IN THE POSSESSION OF THE GOVERNMENT, INCLUDING THE AMOUNT IN THE RETIREMENT FUND.

YOU ARE ADVISED THAT THE ENTIRE AMOUNT IN THE RETIREMENT FUND TO THE CREDIT OF PAUL L. HUGHES MAY BE APPLIED (1) TO REPLACE THE REMAINDER OF THE ITEM OF $250 OF THE TRUST FUNDS; (2) TO APPLY $33 AGAINST THE ITEM OF $2,000 OF THE TRUST FUND. IF THE $2,000 ITEM HAS HERETOFORE BEEN PAID BY THE SURETY, THE SURETY MAY BE REIMBURSED TO THE EXTENT OF $33 ON THE BASIS OF SUBROGATION. SEE 4 COMP. GEN. 10.

THERE WOULD APPEAR TO BE FOR CONSIDERATION WHETHER THE AMOUNT OF THE BOND OF THE ACCOUNTABLE COURT OFFICER SHOULD NOT BE INCREASED TO COVER THE PROBABLE AMOUNT OF PRIVATE FUNDS PAID INTO THE COURT REGISTRY.