A-2485, OCTOBER 23, 1924, 4 COMP. GEN. 398

A-2485: Oct 23, 1924

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ARE SUBJECT TO THE GENERAL PROCEDURE AUTHORIZED BY SECTION 409. SUCH ACTION IS EFFECTIVE FOR ACCOUNTING PURPOSES. 1924: I HAVE YOUR LETTER OF JULY 29. THE SUBMISSION OUTLINES CONDITIONS UNDER WHICH IT IS STATED THE DECISION OF JULY 16. WHEN SUCH FINES OR DEDUCTIONS ARE IMPOSED UNDER THE PROVISIONS OF R.S. 3962. IN EXPLANATION OF THE REQUEST IT IS STATED. THERE IS A SHARP DISTINCTION BETWEEN FINES. THE FINES WE HAVE IN MIND ARE REALLY DEDUCTIONS BEING IMPOSED FOR MINOR FAILURES TO PERFORM SERVICE ACCORDING TO CONTRACT. WHERE IT IS NOT PRACTICABLE TO MAKE A DEDUCTION ON A PRO RATA BASIS. THIS IS BROUGHT OUT IN THE DECISION OF THE ATTORNEY GENERAL OF DECEMBER 31. IN WHICH HE STATES THAT THESE DEDUCTIONS ARE NOT IN THE TECHNICAL SENSE A PENALTY OR FORFEITURE.

A-2485, OCTOBER 23, 1924, 4 COMP. GEN. 398

POSTAL FINES AND DEDUCTIONS UNDER SECTION 3962, REVISED STATUTES - APPLICATION TO OF JOINT PROCEDURE AUTHORIZED BY SECTION 409, REVISED STATUTES, AS AMENDED THE FINES OR DEDUCTIONS IMPOSED OR MADE BY THE POSTMASTER GENERAL PURSUANT TO SECTION 3962, REVISED STATUTES, ARE SUBJECT TO THE GENERAL PROCEDURE AUTHORIZED BY SECTION 409, REVISED STATUTES, AS AMENDED BY SECTION 304 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24, AND THEREFORE MAY OR MAY NOT BE REMITTED, ETC., THROUGH JOINT ACTION BY THE POSTMASTER GENERAL AND THE COMPTROLLER GENERAL; WHEN SO REMITTED, ETC., SUCH ACTION IS EFFECTIVE FOR ACCOUNTING PURPOSES, AND IN THE ABSENCE OF SUCH JOINT PROCEDURE FINES AND DEDUCTIONS IMPOSED OR MADE WITHIN THE SCOPE OF AND AS CONTEMPLATED BY SECTION 3962, REVISED STATUTES, REMAIN UNCHANGED FOR ACCOUNTING PURPOSES.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, OCTOBER 23, 1924:

I HAVE YOUR LETTER OF JULY 29, 1924, REQUESTING A RECONSIDERATION OF A DECISION OF JULY 16, 1924, WHICH HELD THAT WHEN A DEDUCTION HAS BEEN MADE FROM THE COMPENSATION OF A STAR ROUTE MAIL CONTRACTOR IN ACCORDANCE WITH ORDERS OF THE POSTMASTER GENERAL, THE TERMS OF THE CONTRACT, AND EXISTING LAWS, AND IT HAS BEEN CERTIFIED TO THIS OFFICE AS A CHARGE AGAINST THE CONTRACTOR AND ENTERED AS SUCH BY THIS OFFICE, THE CHARGE MAY NOT BE REMOVED WITHOUT THE CONCURRENCE OF THIS OFFICE.

FOR PRECEDING COMMUNICATIONS RELATIVE TO MATTER SEE LETTERS OF YOUR OFFICE OF APRIL 6, 1923, AND JUNE 23, 1924, AND DECISIONS OF THIS OFFICE OF DECEMBER 20, 1922, 16 MS. COMP. GEN. 928, AND JANUARY 30, 1923, 1 D.M. MS. COMP. GEN. 501; 2 COMP. GEN. 727; 3 ID. 474; DECISION OF JUNE 9, 1924, 34 MS. COMP. GEN. 301; AND LETTER OF THIS OFFICE OF JUNE 19, 1924.

THE SUBMISSION OUTLINES CONDITIONS UNDER WHICH IT IS STATED THE DECISION OF JULY 16, 1924, WOULD HANDICAP AND RETARD OPERATIONS, AND URGES RECONSIDERATION OF THAT PORTION OF THE DECISION WHICH APPLIES TO THE REMISSION OF---

* * * FINES IMPOSED ENTIRELY AS A DISCIPLINARY MEASURE AND NOT FOR VIOLATION OF LAW, AND DEDUCTIONS MADE FOR MINOR FAILURES TO PERFORM FULL SERVICE UNDER CONTRACT FOR THE TRANSPORTATION OF THE MAILS, WHEN SUCH FINES OR DEDUCTIONS ARE IMPOSED UNDER THE PROVISIONS OF R.S. 3962.

IN EXPLANATION OF THE REQUEST IT IS STATED---

AS WE UNDERSTAND IT, THERE IS A SHARP DISTINCTION BETWEEN FINES, PENALTIES, AND FORFEITURES AS REFERRED TO IN R.S. 409 AND FINES OR DEDUCTIONS IMPOSED AT THE DISCRETION OF THE POSTMASTER GENERAL UNDER R.S. 3962.

THE FINES WE HAVE IN MIND ARE REALLY DEDUCTIONS BEING IMPOSED FOR MINOR FAILURES TO PERFORM SERVICE ACCORDING TO CONTRACT, SUCH AS NONOBSERVANCE OF OFFICIAL SCHEDULE, PERMITTING MAIL TO BECOME WET, ETC., WHERE IT IS NOT PRACTICABLE TO MAKE A DEDUCTION ON A PRO RATA BASIS.

THIS IS BROUGHT OUT IN THE DECISION OF THE ATTORNEY GENERAL OF DECEMBER 31, 1885, AS CITED IN OUR LETTER OF JUNE 23, 1924, IN WHICH HE STATES THAT THESE DEDUCTIONS ARE NOT IN THE TECHNICAL SENSE A PENALTY OR FORFEITURE, BUT IT IS THE WITHHOLDING OF MONEY NOT EARNED.

THERE SEEMS TO BE NO QUESTION AS TO THE PROCEDURE UNDER R.S. 409 IN CASE OF A FAILING BIDDER OR FAILING CONTRACTOR WHERE THE PROPOSAL BOND IS LIABLE TO FORFEITURE OR DAMAGES ARE TO BE COLLECTED, AS IT IS NOT UNDERSTOOD NOR CONTENDED THAT THE POSTMASTER GENERAL HAS ANY DISCRETION AS TO THE COLLECTION OF THE PENALTY BOND OR THE DAMAGES EXCEPT UPON RECOMMENDATION FROM YOUR OFFICE. ON THE OTHER HAND, IT SEEMS UNREASONABLE TO SUPPOSE THAT UNDER THE LAW CONFERRING UPON THE POSTMASTER GENERAL THE RIGHT TO IMPOSE FINES FOR MINOR VIOLATIONS OF CONTRACTS OR TO MAKE DEDUCTIONS FOR MINOR FAILURES TO PERFORM COMPLETE SERVICE AT HIS DISCRETION, HE DOES NOT HAVE THE RIGHT TO MODIFY OR REMIT SUCH FINE OR DEDUCTION AT HIS DISCRETION AND WITHOUT THE FORMALITY OF PROCURING A RECOMMENDATION FROM YOUR OFFICE AS CONTEMPLATED IN SECTION 409, REVISED STATUTES. * * *

THE QUESTION APPEARS TO BE WHETHER CERTAIN FINES AND DEDUCTIONS IMPOSED OR MADE BY THE POSTMASTER GENERAL, UNDER AUTHORITY OF SECTION 3962, REVISED STATUTES, COME WITHIN THE PURVIEW OF SECTION 409, REVISED STATUTES, FOR REMISSION, MODIFICATION, COMPROMISE, OR REMOVAL PURPOSES.

SECTION 409, REVISED STATUTES, PROVIDES:

IN ALL CASES OF FINE, PENALTY, FORFEITURE, OR DISABILITY, OR ALLEGED LIABILITY FOR ANY SUM OF MONEY BY WAY OF DAMAGES, OR OTHERWISE, UNDER ANY PROVISION OF LAW IN RELATION TO THE OFFICERS, EMPLOYEES, OPERATIONS, OR BUSINESS OF THE POSTAL SERVICE, THE POSTMASTER-GENERAL MAY PRESCRIBE SUCH GENERAL RULES AND MODES OF PROCEEDING AS SHALL APPEAR TO BE EXPEDIENT, FOR THE GOVERNMENT OF THE SIXTH AUDITOR, IN ASCERTAINING THE FACT IN EACH CASE IN WHICH THE AUDITOR SHALL CERTIFY TO HIM THAT THE INTERESTS OF THE DEPARTMENT PROBABLY REQUIRE THE EXERCISE OF HIS POWER OVER FINES, PENALTIES, FORFEITURES, AND LIABILITIES; AND UPON THE FACT BEING ASCERTAINED, THE AUDITOR MAY, WITH THE WRITTEN CONSENT OF THE POSTMASTER- GENERAL, MITIGATE OR REMIT SUCH FINE, PENALTY, OR FORFEITURE, REMOVE SUCH DISABILITY, OR COMPROMISE, RELEASE, OR DISCHARGE SUCH CLAIMS FOR SUCH SUM OF MONEY AND DAMAGES, AND ON SUCH TERMS AS THE AUDITOR SHALL DEEM JUST AND EXPEDIENT.

IT HAS BEEN HELD THAT SINCE THE ENACTMENT OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, THE TERMS "SIXTH AUDITOR" AND "AUDITOR" APPEARING IN THAT PORTION OF SECTION 409, ABOVE THE SEMICOLON, SHOULD BE READ COMPTROLLER, BUREAU OF ACCOUNTS, POST OFFICE DEPARTMENT, AND THAT THE WORD "AUDITOR" APPEARING BELOW THE SEMICOLON SHOULD BE READ COMPTROLLER GENERAL OF THE UNITED STATES, THE ACT OF JUNE 10, 1921, HAVING TRANSFERRED THE ADMINISTRATIVE DUTIES OF THE FORMER AUDITOR FOR THE POST OFFICE DEPARTMENT (SIXTH AUDITOR) TO THE COMPTROLLER, BUREAU OF ACCOUNTS, POST OFFICE DEPARTMENT, AND THE REMAINING DUTIES OF SAID AUDITOR TO THE COMPTROLLER GENERAL. SECTION 304, BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24; DECISION JANUARY 30, 1923; 1 MS. COMP. GEN. 501; 2 COMP. GEN. 727; 3 ID. 474.

THE SCOPE OF SECTION 409, REVISED STATUTES, EXTENDS TO---

* * * ALL CASES OF FINE, PENALTY, FORFEITURE, OR DISABILITY, OR ALLEGED LIABILITY FOR ANY SUM OF MONEY BY WAY OF DAMAGES OR OTHERWISE, UNDER ANY PROVISION OF LAW IN RELATION TO THE OFFICERS, EMPLOYEES, OPERATIONS, OR BUSINESS OF THE POSTAL SERVICE * * *.

SECTION 3962, REVISED STATUTES, PROVIDES:

THE POSTMASTER-GENERAL MAY MAKE DEDUCTIONS FROM THE PAY OF CONTRACTORS FOR FAILURES TO PERFORM SERVICE ACCORDING TO CONTRACT, AND IMPOSE FINES UPON THEM FOR OTHER DELINQUENCIES. HE MAY DEDUCT THE PRICE OF THE TRIP IN ALL CASES WHERE THE TRIP IS NOT PERFORMED; AND NOT EXCEEDING THREE TIMES THE PRICE IF THE FAILURE BE OCCASIONED BY THE FAULT OF THE CONTRACTOR OR CARRIER.

BY DECISIONS OF COURTS RENDERED SINCE THE OPINION OF THE ATTORNEY GENERAL OF DECEMBER 21, 1885, 18 OP.ATTY.GEN. 313, 315, REFERRED TO IN THE SUBMISSION, IT HAS BEEN HELD THAT FINES AND DEDUCTIONS AUTHORIZED TO BE IMPOSED OR MADE BY THE POSTMASTER GENERAL BY AUTHORITY OF SECTION 3962, REVISED STATUTES, ARE A LIQUIDATION OF RECOVERABLE DAMAGES UNDER THE CONTRACT AND NOT A PENALTY. SEE PARKER V. UNITED STATES, 26 CT.CLS. 344, 357, 358, 359; UNITED STATES V. ATLANTIC COAST LINE R.R. CO., 206 FED.REP. 190, 195-8; ID., 215 FED.REP. 56; UNION PACIFIC R.R. CO. V. UNITED STATES, 219 FED.REP. 427; UNITED STATES V. UNITED FRUIT CO., 292 FED.REP. 308.

THE SCOPE OF THE AUTHORITY IN SECTION 409 FOR JOINT ACTION UNDER IT BY THE POSTMASTER GENERAL AND COMPTROLLER GENERAL EXTENDS TO ALL CASES WITHIN THE SCOPE OF SAID STATUTE, BE THEY FINE, PENALTY, FORFEITURE, DISABILITY, OR ALLEGED LIABILITY FOR ANY SUM OF MONEY BY WAY OF DAMAGES OR OTHERWISE, THE ONLY DIFFERENTIATION BEING AS TO THE FORM OF ITS EXERCISE IN THE VARIOUS CLASSES.

IT IS NOT SEEN HOW THIS OFFICE MAY GIVE EFFECT TO SAID STATUTES AND HOLD OTHERWISE THAN THAT THE PROVISIONS OF SECTION 409, COVERING AS THEY DO "ALL CASES OF FINE, PENALTY, FORFEITURE, OR DISABILITY, OR ALLEGED LIABILITY FOR ANY SUM OF MONEY BY WAY OF DAMAGES OR OTHERWISE," "UNDER ANY PROVISION OF LAW," AND IN RELATION TO "OPERATIONS OR BUSINESS OF THE POSTAL SERVICE," APPLY TO THE "FINES" AND "DEDUCTIONS" AUTHORIZED TO BE IMPOSED OR MADE BY SECTION 3962, REVISED STATUTES.

ACCORDINGLY, THE DECISION OF JULY 16, 1924, TO THE EFFECT THAT FINES OR DEDUCTIONS IMPOSED OR MADE AS AUTHORIZED BY SECTION 3962, REVISED STATUTES, ARE WITHIN THE SCOPE AND OPERATION OF THE CONCLUDING PART OF SECTION 409, REVISED STATUTES, MUST BE ADHERED TO. THIS VIEW IS NOT IN CONFLICT WITH THE LEGAL DISCRETION THAT MAY BE EXERCISED BY THE POSTMASTER GENERAL IN THE IMPOSING OF FINES OR MAKING OF DEDUCTIONS UNDER SECTION 3962, REVISED STATUTES. THE ACTION OF THE POSTMASTER GENERAL IN IMPOSING A FINE OR MAKING A DEDUCTION WITHIN THE SCOPE OF SECTION 3962 WILL BE ACCEPTED GENERALLY AS FINAL FOR ACCOUNTING PURPOSES.

SECTION 3962 IS A STATUTE VESTING DISCRETION IN THE POSTMASTER GENERAL TO IMPOSE FINES AND MAKE DEDUCTIONS FROM AMOUNTS OTHERWISE DUE MAIL CONTRACTORS UNDER THEIR CONTRACTS; WHILE SECTION 409 IS AN ACCOMPANYING PROCEDURE STATUTE APPLYING IN COMMON TO SECTION 3962 AND OTHER LAWS UNDER WHICH THE POSTMASTER GENERAL MAY IMPOSE FINES, ETC. SEE ACT OF JUNE 8,1872, SECTIONS 266 AND 316, 17 STAT. 316, 325. THE PROCEDURE STATUTE, AS AMENDED BY THE BUDGET AND ACCOUNTING ACT, PRESCRIBES JOINT ACTION BY THE POSTMASTER GENERAL AND THE COMPTROLLER GENERAL TO REMIT, MODIFY, COMPROMISE, ETC., ANY FINE, LIABILITY, ETC., WHICH THE POSTMASTER GENERAL UNDER THE AUTHORITY OF "ANY PROVISION OF LAW"--- AS SECTION 3962--- HAS IMPOSED OR MADE.

FOR THE PURPOSE OF PARTICIPATION THEREIN ON THE PART OF THE COMPTROLLER GENERAL, JOINT PROCEDURE UNDER SECTION 409 MAY BE INITIATED THROUGH INFORMATION BROUGHT TO HIS ATTENTION BY THE POSTMASTER GENERAL BY A PARTY WHOM THE POSTMASTER GENERAL HAS FINED, ETC., OR OTHERWISE, AND MAY OR MAY NOT BE EMPLOYED IN A GIVEN CASE. IF EMPLOYED IT WILL BE GIVEN EFFECT FOR ACCOUNTING PURPOSES IN ACCORDANCE WITH THE RESULT, BUT IF NOT EMPLOYED ANY FINE OR DEDUCTION IMPOSED OR MADE BY THE POSTMASTER GENERAL WITHIN THE SCOPE OF AND AS CONTEMPLATED BY SECTION 3962, OR OTHER AUTHORITY, REMAINS UNCHANGED FOR ACCOUNTING PURPOSES.

WHILE THERE SEEMS TO EXIST AN IMPRESSION THAT THE ACTION OF THE COMPTROLLER GENERAL IN JOINING WITH THE POSTMASTER GENERAL FOR THE PURPOSES OF REMISSION, ETC., IS A REVIEW OF THE DISCRETIONARY POWER OF THE POSTMASTER GENERAL TO IMPOSE THE FINE, ETC., IN THE FIRST INSTANCE UNDER SECTION 3962, IT SHOULD BE EMPHASIZED THAT IT IS NOT SUCH A REVIEW, BUT IS SIMPLY THAT JOINT PROCEDURE EXPRESSLY PROVIDED BY LAW WITH REFERENCE TO THE REMISSION, COMPROMISE, ETC., OF FINES, ETC., THERETOFORE IMPOSED THROUGH DISCRETIONARY ACTION OF THE POSTMASTER GENERAL, SUCH JOINT POWER VESTED SEPARATELY IN THE POSTMASTER GENERAL AND COMPTROLLER GENERAL BEING IN ENTIRE HARMONY. IN MAKING A DEDUCTION OR IMPOSING A FINE UNDER SECTION 3962 THE RESPONSIBILITY IS THAT OF THE POSTMASTER GENERAL, AND THERE IS NO WISH OR PURPOSE IN THIS OFFICE TO DIMINISH HIS DISCRETION OR TO ACT OTHERWISE THAN IN A SPIRIT OF HELPFULNESS AND COOPERATION. SHOULD IT AT ANY TIME BE DISCOVERED BY THE POSTMASTER GENERAL THAT AN ERROR HAD BEEN MADE OR AN INJUSTICE INFLICTED IN MAKING A DEDUCTION OR IMPOSING A FINE, THE FACTS THAT WOULD MOVE HIM TO SUCH CONCLUSION WOULD DOUBTLESS BE EQUALLY CONVINCING TO THIS OFFICE AND THERE SHOULD BE LITTLE DIFFICULTY OR DELAY IN EFFECTING AN ADJUSTMENT.