A-60817, MAY 23, 1935, 14 COMP. GEN. 849

A-60817: May 23, 1935

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THAT IS. IS NOT DEPENDENT ON THE ACT OF MARCH 3. AS FOLLOWS: I HAVE THE HONOR TO ACKNOWLEDGE RECEIPT OF YOUR LETTERS OF APRIL 26. IS INDEBTED TO THE UNITED STATES IN THE SUM OF $46.40 FOR GARBAGE PURCHASED FROM THE UNITED STATES MARINE HOSPITAL AT NORFOLK. THAT THIS SAME INDIVIDUAL IS ENTITLED TO RENTAL AND BENEFIT PAYMENTS UNDER A 1934 CORN-HOG CONTRACT. YOU HAVE SUGGESTED THAT A SET- OFF OF THESE OBLIGATIONS WOULD NOT BE AN ASSIGNMENT OF THE 1934 CORN-HOG CONTRACT IN VIOLATION OF ITS EXPRESS TERMS. THIS DEPARTMENT HAS TAKEN THE POSITION THAT RENTAL OR BENEFIT PAYMENTS DUE UNDER CONTRACTS WITH COOPERATING PRODUCERS ARE PERSONAL TO THE PRODUCERS. THAT PARTICULAR QUESTION WAS REFERRED TO THE ATTORNEY GENERAL ON JULY 26.

A-60817, MAY 23, 1935, 14 COMP. GEN. 849

SET-OFF - JURISDICTION OF THE GENERAL ACCOUNTING OFFICE THE AUTHORITY AND RESPONSIBILITY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO CONSIDER BOTH DEBITS AND CREDITS IN THE SETTLEMENT OF CLAIMS FOR AND AGAINST THE UNITED STATES, THAT IS, TO APPLY AN AMOUNT OTHERWISE FOUND DUE A CLAIMANT ON ONE ACCOUNT IN LIQUIDATION OR REDUCTION OF AN AMOUNT FOUND DUE FROM THE CLAIMANT TO THE UNITED STATES ON SOME OTHER ACCOUNT, IS NOT DEPENDENT ON THE ACT OF MARCH 3, 1875, 18 STAT. 481, AS AMENDED BY THE ACT OF MARCH 3, 1933, 47 STAT. 1516, EXCEPT IN THE CASE OF A JUDGMENT AGAINST THE UNITED STATES, BUT EXISTS BY VIRTUE OF SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24. AN AMOUNT FOUND DUE BY THE DEPARTMENT OF AGRICULTURE FOR RENTAL AND AND BENEFIT PAYMENTS UNDER SECTION 8 (1) OF THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933, 48 STAT. 34, MAY BE APPLIED BY THE GENERAL ACCOUNTING OFFICE TOWARD THE LIQUIDATION OF AN INDEBTEDNESS OF THE BENEFICIARY TO THE UNITED STATES ARISING UNDER A GOVERNMENT CONTRACT.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, MAY 23, 1935:

THERE HAS BEEN RECEIVED YOUR REPORT OF MAY 15, 1935, AS FOLLOWS:

I HAVE THE HONOR TO ACKNOWLEDGE RECEIPT OF YOUR LETTERS OF APRIL 26, 1935, AND MAY 6, 1935, IN WHICH YOU ADVISE THAT ONE Z. T. LAWSON, OF NORFOLK, VIRGINIA, IS INDEBTED TO THE UNITED STATES IN THE SUM OF $46.40 FOR GARBAGE PURCHASED FROM THE UNITED STATES MARINE HOSPITAL AT NORFOLK, VIRGINIA, AND THAT THIS SAME INDIVIDUAL IS ENTITLED TO RENTAL AND BENEFIT PAYMENTS UNDER A 1934 CORN-HOG CONTRACT. YOU HAVE SUGGESTED THAT A SET- OFF OF THESE OBLIGATIONS WOULD NOT BE AN ASSIGNMENT OF THE 1934 CORN-HOG CONTRACT IN VIOLATION OF ITS EXPRESS TERMS, BUT WOULD BE THE COLLECTION OF AN AMOUNT DUE THE GOVERNMENT UNDER THE PRINCIPLE LAID DOWN IN BARRY V. UNITED STATES, 229 U.S. 47.

THIS DEPARTMENT HAS TAKEN THE POSITION THAT RENTAL OR BENEFIT PAYMENTS DUE UNDER CONTRACTS WITH COOPERATING PRODUCERS ARE PERSONAL TO THE PRODUCERS, AND THAT THE DECLARATION OF POLICY AND OTHER PORTIONS OF THE AGRICULTURAL ADJUSTMENT ACT REQUIRE THAT THE SECRETARY OF AGRICULTURE MUST MAKE SUCH PAYMENTS ONLY TO THE PRODUCER IN ORDER TO PROPERLY DISCHARGE THE OBLIGATION OF THE UNITED STATES UNDER THE CONTRACT.

THE SAME QUESTION HAS ARISEN BEFORE IN CONSIDERING THE NECESSITY OF SETTING OFF PAYMENTS DUE UNDER CONTRACTS WITH THE SECRETARY OF AGRICULTURE AGAINST OBLIGATIONS WHICH THE SAME PARTIES OWED THE GOVERNOR OF THE FARM CREDIT ADMINISTRATION, AND THAT PARTICULAR QUESTION WAS REFERRED TO THE ATTORNEY GENERAL ON JULY 26, 1933. THE ATTORNEY GENERAL'S OPINION OF AUGUST 8, 1933, ADDRESSED TO THE SECRETARY OF AGRICULTURE, POINTED OUT THE DISTINCTION BETWEEN THE PHRASEOLOGY OF THE ACT OF MARCH 3, 1875, 18 STAT. 481, WHICH REQUIRED A SET-OFF IN THE CASE OF ANY FINAL JUDGMENT AGAINST THE UNITED STATES "OR OTHER CLAIM DULY ALLOWED BY LEGAL AUTHORITY," AND THE ACT AS AMENDED MARCH 3, 1933, 47 STAT. 1516, WHICH EXCLUDED THE WORDS "OR OTHER CLAIM" FROM THE FIRST SENTENCE. THIS OPINION CONCLUDES AS FOLLOWS:

"AS THE EFFECT OF THE ACT OF 1875 WAS TO TAKE AWAY THE DISCRETION WHICH ACCOUNTING OFFICERS PREVIOUSLY HAD IN EXERCISING THE RIGHT OF SET-OFF AND TO REQUIRE THEM TO MAKE SET-OFFS IN RESPECT TO BOTH JUDGMENTS AND CLAIMS, SO NOW THE EFFECT OF THE AMENDMENT IS TO RESTORE THE DISCRETION OF EXERCISING THE SET-OFF RIGHT WITH RESPECT TO CLAIMS, AND TO LIMIT THE DUTY OF MAKING SET-OFFS TO JUDGMENTS. THE REPORT OF THE COMMITTEE (SENATE REPORT NO. 1021 ON H.R. 13520, 72D CONGRESS, 2D SESSION) WHICH RECOMMENDED THE CHANGE IN THE ACT, CONCLUDES WITH THE STATEMENT THAT:

" "THE AMENDMENTS ELIMINATE FROM THE STATUTE THE LANGUAGE WITH RESPECT TO CLAIMS, LIMITING THE APPLICATION OF THE STATUTE TO JUDGMENT CREDITORS.'

" "SINCE RENTAL OR BENEFIT PAYMENTS TO BE MADE UNDER SECTION 8 (1) OF THE ACT IN QUESTION ARE NOT JUDGMENTS, THE ACT OF 1875, AS AMENDED, IS NOT APPLICABLE TO THEM.'

" "I HAVE TO ADVISE YOU, THEREFORE, THAT THERE IS NOW NO REQUIREMENT OF STATUTE THAT DEBTS DUE THE UNITED STATES BY FARMERS BE SET OFF AGAINST RENTAL OR BENEFIT PAYMENTS TO BE MADE UNDER SECTION 8 (1) OF THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933.'"

UNDER THIS INTERPRETATION, THERE IS NO STATUTORY REQUIREMENT THAT THE SECRETARY OF AGRICULTURE OFFSET CONTRACT PAYMENTS AGAINST DEBTS WHICH THE CONTRACTING PARTY MAY OWE THE UNITED STATES, AND I AM THEREFORE UNABLE TO RECONCILE THE SUGGESTION OF SUCH ACTION WITH OUR PREVIOUS POSITION THAT CONGRESS INTENDED SUCH PAYMENTS TO BE MADE DIRECTLY TO THE PRODUCER IN KEEPING WITH ITS DECLARED POLICY OF INCREASING AGRICULTURAL PURCHASING POWER.

IT IS SUBMITTED FURTHER THAT IF OUR CONCLUSION AS TO THE CONGRESSIONAL INTENT IS NOT TENABLE, THE CLEAR PURPORT OF THE ACT OF MARCH 3, 1933,SUPRA, AS WELL AS THE PROVISIONS OF SECTION 10 (E) OF THE AGRICULTURAL ADJUSTMENT ACT, AS AMENDED (PUBLIC, NO. 10, 73D CONGRESS), LEAVE THE QUESTION WITHIN THE DISCRETION OF THE SECRETARY OF AGRICULTURE. (SEE YOUR DECISION OF OCTOBER 30, 1033, TO THE SECRETARY OF AGRICULTURE (A -44002).) EVEN UNDER THESE CIRCUMSTANCES, I SHOULD BE UNABLE TO EXERCISE SUCH DISCRETION WITHOUT A MORE COMPREHENSIVE REPORT OF ALL THE FACTS.

THERE WAS NO SUGGESTION IN EITHER THE LETTER OF APRIL 26, OR MAY 6, 1935, OR OTHER COMMUNICATIONS IN THIS OFFICE, THAT THE SECRETARY OF AGRICULTURE HAD EITHER THE RESPONSIBILITY OR THE AUTHORITY TO SETTLE CLAIMS AGAINST THE UNITED STATES AND TO WITHHOLD THEREFROM BALANCES WHICH MAY BE DUE FROM CLAIMANTS TO THE GOVERNMENT. SUCH AUTHORITY AND RESPONSIBILITY HAVE BEEN VESTED BY LAW IN THE ACCOUNTING OFFICERS OF THE UNITED STATES SINCE THE ACT OF MARCH 3, 1817, 3 STAT. 366, WHICH WAS CARRIED FORWARD AS SECTION 236, REVISED STATUTES, AND IS NOW SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24, AND PROVIDES THAT:

ALL CLAIMS AND DEMANDS WHATEVER BY THE GOVERNMENT OF THE UNITED STATES OR AGAINST IT, AND ALL ACCOUNTS WHATEVER IN WHICH THE GOVERNMENT OF THE UNITED STATES IS CONCERNED, EITHER AS DEBTOR OR CREDITOR, SHALL BE SETTLED AND ADJUSTED IN THE GENERAL ACCOUNTING OFFICE.

THAT IS TO SAY, THE AUTHORITY AND RESPONSIBILITY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO CONSIDER BOTH DEBITS AND CREDITS IN THE SETTLEMENT OF CLAIMS FOR AND AGAINST THE UNITED STATES, THAT IS TO APPLY AN AMOUNT OTHERWISE FOUND DUE A CLAIMANT ON ONE ACCOUNT IN LIQUIDATION OR REDUCTION OF AN AMOUNT FOUND DUE FROM THE CLAIMANT TO THE UNITED STATES ON SOME OTHER ACCOUNT, IS NOT DEPENDENT ON THE ACT OF MARCH 3, 1875, 18 STAT. 481, AS AMENDED BY THE ACT OF MARCH 3, 1933, 47 STAT. 1516, REFERRED TO BY YOU, EXCEPT IN THE CASE OF A JUDGMENT AGAINST THE GOVERNMENT. SUCH AUTHORITY AND RESPONSIBILITY EXIST BY VIRTUE OF SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, AS ABOVE QUOTED. SEE TAGGART V. UNITED STATES, 17 CT.CLS. 322, 327. A VOUCHER STATED IN FAVOR OF Z. T. LAWSON FOR ANY BALANCE WHICH MAY BE DUE UNDER HIS CORN-HOG CONTRACT SHOULD BE FORWARDED TO THIS OFFICE FOR DIRECT SETTLEMENT IN ORDER THAT HIS CLAIM AS WELL AS THE GOVERNMENT'S CLAIM AGAINST HIM MAY BE SETTLED AND ADJUSTED IN ACCORDANCE WITH LAW. IN THIS CONNECTION YOUR ATTENTION IS INVITED TO THE REPORT CONTAINED IN LETTER OF MAY 1, 1935, FROM THE DEPARTMENT OF JUSTICE, WHICH WAS QUOTED IN MY LETTER OF MAY 6, 1935, TO YOU, WHEREIN MR. LAWSON HAD INFORMED THE UNITED STATES ATTORNEY FOR THE EASTERN DISTRICT OF VIRGINIA THAT THE ONLY POSSIBILITY OF PAYING THE CLAIM OF THE GOVERNMENT WAS FROM THE PROCEEDS UNDER HIS CORN-HOG CONTRACT WITH THE GOVERNMENT. THE LAW DOES NOT CONTEMPLATE THE CIRCUITY OF MAKING PAYMENT TO LAWSON AND HIS REPAYMENT TO THE UNITED STATES. SEE BARRY V. UNITED STATES, 229 U.S. 47, TO WHICH YOUR ATTENTION WAS INVITED IN MY LETTER OF APRIL 26, 1935.