A-81609, DECEMBER 3, 1936, 16 COMP. GEN. 547

A-81609: Dec 3, 1936

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IS AVAILABLE TO THE GENERAL ACCOUNTING OFFICE AS A SET-OFF TO LIQUIDATE ANY INDEBTEDNESS OF SUCH PERSON AND THE CLAIM THEREFOR SHOULD BE REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR SETTLEMENT. REGARDLESS OF WHETHER OR NOT THE PARTIES IN INTEREST HAVE AGREED TO A SET-OFF. 1936: I HAVE YOUR LETTER OF NOVEMBER 9. AS FOLLOWS: SITUATIONS ARISE WITHIN THIS ADMINISTRATION WHERE A DEBT IS DUE THE UNITED STATES FROM AN EMPLOYEE WHO LEAVES OUR EMPLOY THROUGH RESIGNATION. OR WHERE HE IS GRANTED A FURLOUGH OR DIES WHILE IN THE SERVICE OF THIS ADMINISTRATION. THAT "THERE ARE PARTICULARLY FOR NOTING THE RECENT ACTS OF FEBRUARY 24. THAT IF AT THE TIME OF SUCH REMOVAL THE EMPLOYEE IS INDEBTED TO THE UNITED STATES.

A-81609, DECEMBER 3, 1936, 16 COMP. GEN. 547

COMPENSATION - WITHHOLDING - OFFICERS AND EMPLOYEES INDEBTED TO THE UNITED STATES - WHILE IN, AND AFTER SEPARATION FROM, SERVICE THE ACT OF MAY 26, 1936, 49 STAT. 1374, MODIFIES THE RULE FORMERLY STATED BY THE COURTS SO AS TO VEST A DISCRETION IN ADMINISTRATIVE OFFICERS TO WITHHOLD CURRENT SALARY OF A PERSON IN THE EXECUTIVE BRANCH OF THE GOVERNMENT IN SET-OFF OF AN INDEBTEDNESS ESTABLISHED UPON THE STATEMENT OF THE ACCOUNT OF ANY DISBURSING OFFICER, BUT SALARY OR COMPENSATION DUE SUCH PERSON UPON SEPARATION FROM THE SERVICE, OR FURLOUGH, IS AVAILABLE TO THE GENERAL ACCOUNTING OFFICE AS A SET-OFF TO LIQUIDATE ANY INDEBTEDNESS OF SUCH PERSON AND THE CLAIM THEREFOR SHOULD BE REFERRED TO THE GENERAL ACCOUNTING OFFICE FOR SETTLEMENT, REGARDLESS OF WHETHER OR NOT THE PARTIES IN INTEREST HAVE AGREED TO A SET-OFF, OR WHETHER THE INDEBTEDNESS REPRESENTS AN ITEM FOR WHICH CREDIT HAS BEEN DISALLOWED IN A DISPERSING OFFICER'S ACCOUNT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR, RESETTLEMENT ADMINISTRATION, DECEMBER 3, 1936:

I HAVE YOUR LETTER OF NOVEMBER 9, 1936, AS FOLLOWS:

SITUATIONS ARISE WITHIN THIS ADMINISTRATION WHERE A DEBT IS DUE THE UNITED STATES FROM AN EMPLOYEE WHO LEAVES OUR EMPLOY THROUGH RESIGNATION, TERMINATION OR TRANSFER, OR WHERE HE IS GRANTED A FURLOUGH OR DIES WHILE IN THE SERVICE OF THIS ADMINISTRATION, AND CONSENT TO A SET-OFF AGAINST HIS SALARY HAS NOT BEEN GRANTED BY THE EMPLOYEE OR LEGAL REPRESENTATIVES OF THE DECEASED EMPLOYEE.

YOUR DECISION OF AUGUST 20, 1936, A-78521, STATES IN PART WITH REFERENCE TO THE GENERAL PROBLEM OF SET-OFFS, THAT "THERE ARE PARTICULARLY FOR NOTING THE RECENT ACTS OF FEBRUARY 24, 1931, 46 STAT. 1415, AND MAY 26, 1936, 49 STAT. 1374, WHICH AFFECT MATERIALLY THE HOLDING OF THE COURTS IN THE COX AND PENCE CASES.' THE ACT OF FEBRUARY 24, 1931, 46 STAT. 1415, PROVIDES THAT THERE SHALL BE NO WITHHOLDING OR CONFISCATION OF THE PAY, ETC., OF ANY CIVIL EMPLOYEE OF THE UNITED STATES REMOVED FOR CAUSE, PROVIDED, THAT IF AT THE TIME OF SUCH REMOVAL THE EMPLOYEE IS INDEBTED TO THE UNITED STATES, ANY SALARY, ETC., ACCRUING TO SUCH EMPLOYEE SHALL BE APPLIED TO THE SATISFACTION OF ANY CLAIM OR INDEBTEDNESS DUE TO THE UNITED STATES. THE ACT OF MAY 26, 1936, 49 STAT. 1374, PROVIDES THAT WHENEVER UPON THE STATEMENT OF THE ACCOUNT OF ANY DISBURSING OFFICER CREDIT SHALL HAVE BEEN DISALLOWED FOR ANY PAYMENT TO ANY PERSON IN THE EXECUTIVE BRANCH OF THE GOVERNMENT, OTHERWISE ENTITLED TO COMPENSATION FROM THE UNITED STATES, SUCH COMPENSATION MAY BE WITHHELD UNTIL FULL REIMBURSEMENT HAS BEEN ACCOMPLISHED.

MCCARL V. COX, 8 FED. (2ND) 669, CERTIORARI DENIED, 270 U.S. 652, AND MCCARL V. PENCE, 18 FED. (2ND) 809, CITED IN YOUR DECISION, APPEAR TO HOLD THAT SECTIONS 236 AND 1766 OF THE REVISED STATUTES DO NOT AUTHORIZE THE WITHHOLDING OF THE SALARY OF AN EMPLOYEE OF THE GOVERNMENT AS A SET-OFF AGAINST SUMS FOUND TO BE DUE THE GOVERNMENT FROM SUCH EMPLOYEE BECAUSE OF AN ALLEGED OVERPAYMENT, ETC. A SIMILAR RULING IS APPARENTLY MADE IN NUMEROUS DECISIONS, SOME OF WHICH ARE SMITH V. JACKSON, 241 FED. 747, AFFIRMED 246 U.S. 388; LOISEL V. MORTIMER, 277 FED. 882; MARE V. ALEXANDER, 2 FED. (2ND) 895, AFFIRMED 5 FED. (2ND) 964; HOWE V. ELLIOTT, 300 FED. 243; DILLON V. GROOS, 299 FED. 851.

IN VIEW OF THE LANGUAGE CONTAINED IN YOUR DECISION OF AUGUST 20, 1936, A- 78521, YOUR OPINION IS REQUESTED AS TO WHETHER THIS ADMINISTRATION MAY SET OFF AGAINST THE SALARY DUE AN EMPLOYEE AMOUNTS DUE TO THE GOVERNMENT (WHERE CONSENT TO A SET OFF AGAINST HIS SALARY HAS NOT BEEN GRANTED BY THE EMPLOYEE OR LEGAL REPRESENTATIVES OF THE DECEASED EMPLOYEE, AND A DISALLOWANCE HAS NOT BEEN MADE UPON THE DISBURSING OFFICER'S ACCOUNT FOR A PAYMENT TO THE EMPLOYEE) IN THE FOLLOWING SITUATIONS:

(1) WHERE THE EMPLOYEE IS TERMINATED, ALTHOUGH NOT FOR CAUSE, OR RESIGNS.

(2) WHERE THE EMPLOYEE IS GRANTED A FURLOUGH.

(3) WHERE THE EMPLOYEE IS TRANSFERRED TO ANOTHER GOVERNMENT DEPARTMENT OR ESTABLISHMENT.

(4) WHERE THE EMPLOYEE DIES WHILE IN THE SERVICE OF THIS ADMINISTRATION.

THE RULE STATED IN ALL OF THE CITED COURT DECISIONS THAT CURRENT PAYMENTS OF SALARY OF OFFICERS OF THE GOVERNMENT MAY NOT BE WITHHELD TO LIQUIDATE AN INDEBTEDNESS OF THE OFFICERS TO THE GOVERNMENT WAS DIRECTED TO THE ACCOUNTING OFFICERS OF THE GOVERNMENT IN CASES IN WHICH THERE HAD BEEN A DISALLOWANCE UPON THE STATEMENT OF A DISBURSING OFFICER'S ACCOUNTS. THE ACT OF MAY 26, 1936, SUPRA, WAS DIRECTED TO AND MODIFIES THE RULE STATED BY THE COURTS WITH RESPECT TO THE WITHHOLDING OF CURRENT SALARY OF AN OFFICER OR EMPLOYEE WHILE STILL IN THE SERVICE. THERE IS NOTHING IN ANY OF THOSE DECISIONS, NOR IN ANY STATUTE, PROHIBITING THE WITHHOLDING, BECAUSE OF AN INDEBTEDNESS, OF SALARY OR COMPENSATION OTHERWISE DUE AN OFFICER OR AN EMPLOYEE UPON HIS SEPARATION FROM THE SERVICE OF THE PARTICULAR DEPARTMENT OR ESTABLISHMENT. A FURLOUGH WITHOUT PAY MAY BE REGARDED AS A SEPARATION IN THIS CONNECTION.

IN THE DECISION OF THE COURT OF CLAIMS DATED JANUARY 6, 1936, CASE OF JOHN F. L. O-LEARY V. THE UNITED STATES, NO. 41921, RENDERED SUBSEQUENT TO THE COURT DECISIONS CITED IN YOUR LETTER, THE COURT ALLOWED THE COUNTERCLAIM OF THE UNITED STATES OF THE AMOUNT OF AN UNPAID FINE AGAINST THE PLAINTIFF'S CLAIM FOR PAYMENT OF FINAL SALARY AND FOR REFUND OF RETIREMENT DEDUCTIONS. AS STATED IN THE DECISION OF AUGUST 20, 1936, CITED BY YOU, THE COURT EVIDENTLY APPLIED THE GENERAL RULE OF SET-OFF INHERENT IN THE UNITED STATES STATED IN 1 COMP. GEN. 605, 606, AS FOLLOWS:

* * * EVERY CREDITOR HAS THE RIGHT TO APPLY THE MONEYS OF HIS DEBTOR IN HIS HANDS IN THE EXTINGUISHMENT OF CLAIMS DUE HIM FROM THE DEBTOR. THIS IS A COMMON-LAW RIGHT AND MAY BE EXERCISED ON GENERAL PRINCIPLES WITHOUT THE AID OF A STATUTE. SEE BARRY V. UNITED STATES, 229 U.S. 47; 15 PET. 370; 98 U.S. 186; 4 LAWRENCE 1 COMP. DEC. 504.

THE GENERAL ACCOUNTING OFFICE HAS THIS RIGHT IN THE SETTLEMENT OF CLAIMS BY OR AGAINST THE GOVERNMENT UNDER SECTION 236, REVISED STATUTES, AS AMENDED BY SECTION 305, BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24. ACCORDINGLY, IN EACH OF THE FOUR CLASSES OF CASES REFERRED TO IN YOUR LETTER THE RESETTLEMENT ADMINISTRATION, WHEN THE OFFICER OR EMPLOYEE IS INDEBTED TO THE UNITED STATES ON ANY ACCOUNT AT TIME OF SEPARATION, SHOULD NOT PERMIT PAYMENT OF THE AMOUNT OF SALARY OR COMPENSATION OTHERWISE DUE BUT SHOULD REFER THE CLAIM THEREFOR TO THIS OFFICE FOR ADJUSTMENT AND SETTLEMENT. THIS SHOULD BE THE PROCEDURE REGARDLESS OF WHETHER THE PARTIES IN INTEREST HAVE OR HAVE NOT CONSENTED TO A SET-OFF AND REGARDLESS OF WHETHER THE INDEBTEDNESS DOES OR DOES NOT INVOLVE AN ITEM FOR WHICH CREDIT HAS BEEN DISALLOWED IN A DISBURSING OFFICER'S ACCOUNT.