B-117472, DECEMBER 11, 1953, 33 COMP. GEN. 263

B-117472: Dec 11, 1953

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

INTEREST - DELAYED PAYMENTS - DISTRICT OF COLUMBIA CONTRACTS THE UNITED STATES AS A SOVEREIGN IS NOT LIABLE. WHICH IS A MUNICIPAL CORPORATION AND NOT A SOVEREIGN. IS SUBJECT TO THE SAME LIABILITIES AS A PRIVATE CORPORATION AND IS LIABLE FOR INTEREST BEGINNING WITH THE DATE A LIQUIDATED CONTRACT OBLIGATION IS DUE. THEREFORE PAYMENT OF INTEREST ON MONEY IMPROPERLY WITHHELD FROM A CONTRACTOR BY THE DISTRICT OF COLUMBIA FOR WORK PERFORMED UNDER THE DUPONT CIRCLE UNDERPASS CONSTRUCTION CONTRACT IS AUTHORIZED EVEN THOUGH THE CONTRACT CONTAINS NO PROVISION FOR THE PAYMENT OF INTEREST. SAID APPROPRIATION IS AVAILABLE FOR PAYMENT OF THE CLAIM. THE SETTLEMENT ACTION IS STILL SUBJECT TO REVISION AS IF NO DEFICIENCY APPROPRIATION HAD BEEN NECESSARY.

B-117472, DECEMBER 11, 1953, 33 COMP. GEN. 263

INTEREST - DELAYED PAYMENTS - DISTRICT OF COLUMBIA CONTRACTS THE UNITED STATES AS A SOVEREIGN IS NOT LIABLE, IN ABSENCE OF AN EXPRESS AGREEMENT, FOR INTEREST ON DELAYED CONTRACT OBLIGATION PAYMENTS BUT THE DISTRICT OF COLUMBIA GOVERNMENT, WHICH IS A MUNICIPAL CORPORATION AND NOT A SOVEREIGN, IS SUBJECT TO THE SAME LIABILITIES AS A PRIVATE CORPORATION AND IS LIABLE FOR INTEREST BEGINNING WITH THE DATE A LIQUIDATED CONTRACT OBLIGATION IS DUE, AND THEREFORE PAYMENT OF INTEREST ON MONEY IMPROPERLY WITHHELD FROM A CONTRACTOR BY THE DISTRICT OF COLUMBIA FOR WORK PERFORMED UNDER THE DUPONT CIRCLE UNDERPASS CONSTRUCTION CONTRACT IS AUTHORIZED EVEN THOUGH THE CONTRACT CONTAINS NO PROVISION FOR THE PAYMENT OF INTEREST. WHERE CONGRESS HAS PROVIDED BY A DEFICIENCY APPROPRIATION FOR THE PAYMENT OF AN AMOUNT CERTIFIED TO BE DUE A CLAIMANT BY THE ACCOUNTING OFFICERS AND REPORTED FOR APPROPRIATION, SAID APPROPRIATION IS AVAILABLE FOR PAYMENT OF THE CLAIM, BUT THE SETTLEMENT ACTION IS STILL SUBJECT TO REVISION AS IF NO DEFICIENCY APPROPRIATION HAD BEEN NECESSARY.

COMPTROLLER GENERAL WARREN TO A. R. PILKERTON, GOVERNMENT OF THE DISTRICT OF COLUMBIA, DECEMBER 11, 1953:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 22, 1953, ENCLOSING A VOUCHER STATED IN FAVOR OF THE EXECUTRIX OF THE ESTATE OF JOSEPH A. LAPORT IN THE AMOUNT OF $7,049.29. THIS AMOUNT WAS APPROVED BY THE COMMISSIONERS AS DUE UNDER A CONTRACT FOR WORK ON SEWERS AND WATER MAINS IN CONNECTION WITH THE DUPONT CIRCLE UNDERPASS, CHARGEABLE TO THE APPROPRIATION "997/89722.001 CAPITAL OUTLAY, STREET AND BRIDGE DIVISIONS, HIGHWAY FUND, DISTRICT OF COLUMBIA, 1947-1948.' WHEN FINAL PAYMENT UNDER THE CONTRACT WAS MADE IN 1947, THE SUM OF $5,291.13 WAS DEDUCTED FOR ALLEGED FAULTY WORK. THE COMMISSIONERS DETERMINED IN 1953 THAT THIS DEDUCTION WAS IMPROPER, AND ALSO THAT THE CONTRACTOR WAS ENTITLED TO $465 FOR CERTAIN EXTRA WORK. THE REMAINING AMOUNT OF THE VOUCHER, $1,293.16, REPRESENTS INTEREST AT FOUR PERCENT ON THE FIRST TWO AMOUNTS FROM NOVEMBER 17, 1947 (DATE FINAL PAYMENT CHECK WAS ISSUED), TO JUNE 30, 1953. IN VIEW OF THE FACT THAT THE CONTRACT CONTAINS NO PROVISION FOR THE PAYMENT OF INTEREST, YOU ASK WHETHER THE VOUCHER PROPERLY MAY BE CERTIFIED FOR PAYMENT IN THE FULL AMOUNT.

SINCE THE APPROPRIATION FOR THE FISCAL YEAR 1947-1948, TO WHICH THE AMOUNT OF THE VOUCHER IS PROPOSED TO BE CHARGED, IS NOT NOW AVAILABLE FOR EXPENDITURE THE CLAIM WAS PROCESSED AS AN AUDITED CLAIM, AND SUBMITTED TO THE CONGRESS AS PART OF A PROPOSED SUPPLEMENTAL APPROPRIATION BY HOUSE DOCUMENT NO. 194, 83D CONGRESS, ST SESSION. THE CONGRESS, IN PUBLIC LAW 207 APPROVED AUGUST 7, 1953, 67 STAT. 418, APPROPRIATED THE AMOUNT REQUESTED IN HOUSE DOCUMENT NO. 194 FOR THE PAYMENT OF AUDITED CLAIMS, INCLUDING THE AMOUNT OF $7,049.29 UNDER THE 1947-1948 APPROPRIATION. THIS FACT ALONE, HOWEVER, DOES NOT SETTLE THE PROPRIETY OF THE PAYMENT. "WHERE CONGRESS HAS PROVIDED BY A DEFICIENCY APPROPRIATION FOR THE PAYMENT OF AN AMOUNT CERTIFIED TO BE DUE A CLAIMANT BY THE ACCOUNTING OFFICERS AND REPORTED FOR APPROPRIATION, SAID APPROPRIATION IS AVAILABLE FOR PAYMENT OF THE CLAIM, BUT THE SETTLEMENT ACTION IS STILL SUBJECT TO REVISION AS IF NO DEFICIENCY APPROPRIATION HAD BEEN NECESSARY.' 5 COMP. GEN. 181, 182.

THE BASIC QUESTION IS WHETHER THE DISTRICT OF COLUMBIA IS LIABLE FOR INTEREST ON ITS CONTRACT OBLIGATIONS. SECTIONS 28-2707 AND 28-2701, D.C. CODE, 1951 USED., PROVIDE AS FOLLOWS:

SECTION 28-2717 (17:7). INTEREST ON JUDGMENTS FOR LIQUIDATED DEBT.

IN AN ACTION IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF COLUMBIA TO RECOVER A LIQUIDATED DEBT ON WHICH INTEREST IS PAYABLE BY CONTRACT OR BY LAW OR USAGE THE JUDGMENT FOR THE PLAINTIFF SHALL INCLUDE INTEREST ON THE PRINCIPAL DEBT FROM THE TIME WHEN IT WAS DUE AND PAYABLE, AT THE RATE FIXED BY THE CONTRACT, IF ANY, UNTIL PAID. ( MAR. 3, 1901, 31 STAT. 1378, CH. 854, SECTION 1184.)

SECTION 28-2701 (17:1). RATE OF INTEREST IN ABSENCE OF AGREEMENT--- JUDGMENTS AGAINST THE DISTRICT.

THE RATE OF INTEREST IN THE DISTRICT UPON THE LOAN OR FORBEARANCE OF ANY MONEY, GOODS, OR THINGS IN ACTION, AND THE RATE TO BE ALLOWED IN JUDGMENTS AND DECREES, IN THE ABSENCE OF EXPRESS CONTRACT AS TO SUCH RATE OF INTEREST, SHALL BE SIX DOLLARS UPON ONE HUNDRED DOLLARS FOR ONE YEAR, AND AT THAT RATE FOR A GREATER OR LESS SUM OR FOR A LONGER OR SHORTER TIME: PROVIDED, THAT INTEREST, WHEN AUTHORIZED BY LAW, ON JUDGMENTS AGAINST THE DISTRICT OF COLUMBIA, SHALL BE AT THE RATE OF NOT EXCEEDING 4 PERCENTUM PER ANNUM. (MAR. 3, 1901, 31 STAT. 1377, CH. 854, SECTION 178; JULY 1, 1902, 32 STAT. 610, CH. 1352.)

AT COMMON LAW DELAY IN PAYMENT COULD NOT BE ATTRIBUTED TO THE SOVEREIGN; CONSEQUENTLY, IN THE ABSENCE OF EXPRESS AGREEMENT, THE SOVEREIGN WAS NOT LIABLE FOR INTEREST. THIS PRINCIPLE HAS BEEN APPLIED TO THE UNITED STATES. UNITED STATES V. NORTH AMERICAN TRANSPORTATION AND TRADING CO., 253 U.S. 330, 336. IT APPEARS TO BE SETTLED, HOWEVER, THAT THE MUNICIPAL CORPORATION OF THE DISTRICT OF COLUMBIA IS NOT A SOVEREIGNTY, AND IS SUBJECT GENERALLY TO THE SAME LIABILITIES AS A PRIVATE CORPORATION. BARNES V. DISTRICT OF COLUMBIA, 91 U.S. 540; METROPOLITAN RAILROAD V. DISTRICT OF COLUMBIA, 132 U.S. 1; DISTRICT OF COLUMBIA V. WOODBURY, 136 U.S. 450. AND IT HAS BEEN HELD LIABLE FOR INTEREST FROM THE DATE A LIQUIDATED CONTRACT OBLIGATION WAS DUE. DISTRICT OF COLUMBIA V. CAMDEN IRON WORKS, 181 U.S. 453. SEE ALSO, DISTRICT OF COLUMBIA V. ROBINSON, 180 U.S. 92; WOODBURY V. DISTRICT OF COLUMBIA, 8 MACKEY 157. IN VIEW OF THE FOREGOING, THERE APPEARS TO BE NO LEGAL OBJECTION TO THE ALLOWANCE OF INTEREST BY THE DISTRICT OF COLUMBIA ON THE OBLIGATIONS HERE INVOLVED.

ACCORDINGLY, YOU ARE ADVISED THAT THE VOUCHER, WHICH IS RETURNED HEREWITH, MAY BE CERTIFIED FOR PAYMENT IN THE FULL AMOUNT.