B-121910, NOV 29, 1954

B-121910: Nov 29, 1954

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PRECIS-UNAVAILABLE SECRETARY OF THE INTERIOR: REFERENCE IS MADE TO LETTERS OF MAY 21 AND NOVEMBER 3. BELLIEU IS AN UNRESTRICTED MEMBER OF THE OSAGE TRIBE OF INDIANS AND OWNS 1.37037 SHARES OF HEADRIGHTS AND THAT THERE IS PRESENTLY BEING WITHHELD THE SUM OF $100 PER QUARTER OF SUCH HEADRIGHT PAYMENTS TO LIQUIDATE AN AMOUNT OWED BY HIM TO THE COMMISSIONER OF INTERNAL REVENUE REPRESENTING AN ASSESSMENT OF DISTILLED SPIRITS TAXES. MCCOY'S LETTER THAT HE UNDERSTANDS THE WITHHOLDINGS CURRENTLY BEING MADE ARE TO LIQUIDATE THE INDEBTEDNESS ARISING BY REASON OF THE FINES AND PENALTIES RATHER THAN THE AMOUNT REPRESENTING DISTILLED SPIRITS TAXES AND HE QUESTIONS THE AUTHORITY OF THIS OFFICE TO DIRECT THAT ANY AMOUNTS BE WITHHELD TO LIQUIDATE SUCH FINES AND PENALTIES.

B-121910, NOV 29, 1954

PRECIS-UNAVAILABLE

SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO LETTERS OF MAY 21 AND NOVEMBER 3, 1954, FROM THE ASSISTANT COMMISSIONER, BUREAU OF INDIAN AFFAIRS, FORWARDING FOR CONSIDERATION BY THIS OFFICE, COPIES OF LETTERS ADDRESSED TO HIM BY FRANK T. MCCOY, PROTESTING THE ACTION OF THE BUREAU OF INDIAN AFFAIRS IN WITHHOLDING A PORTION OF OSAGE HEADRIGHT PAYMENTS DUE HIS CLIENT, MR. THOMAS A. BELLIEU.

THE RECORDS OF THIS OFFICE INDICATE THAT MR. BELLIEU IS AN UNRESTRICTED MEMBER OF THE OSAGE TRIBE OF INDIANS AND OWNS 1.37037 SHARES OF HEADRIGHTS AND THAT THERE IS PRESENTLY BEING WITHHELD THE SUM OF $100 PER QUARTER OF SUCH HEADRIGHT PAYMENTS TO LIQUIDATE AN AMOUNT OWED BY HIM TO THE COMMISSIONER OF INTERNAL REVENUE REPRESENTING AN ASSESSMENT OF DISTILLED SPIRITS TAXES. THE RECORDS ALSO SHOW THAT MR. BELLIEU OWES THE UNITED STATES $1,500 REPRESENTING FINES AND PENALTIES IMPOSED BY THE DISTRICT COURT OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF OKLAHOMA IN THE CASES UNITED STATES V. THOMAS A. BELLIEU, CRIMINAL NOS. 11,074 AND 11,202, EACH DATED OCTOBER 4, 1946.

IT APPEARS FROM MR. MCCOY'S LETTER THAT HE UNDERSTANDS THE WITHHOLDINGS CURRENTLY BEING MADE ARE TO LIQUIDATE THE INDEBTEDNESS ARISING BY REASON OF THE FINES AND PENALTIES RATHER THAN THE AMOUNT REPRESENTING DISTILLED SPIRITS TAXES AND HE QUESTIONS THE AUTHORITY OF THIS OFFICE TO DIRECT THAT ANY AMOUNTS BE WITHHELD TO LIQUIDATE SUCH FINES AND PENALTIES.

IN VIEW THEREOF AND SINCE THE UNITED STATES ATTORNEY FOR THE NORTHERN DISTRICT OF OKLAHOMA HAS, BY LETTER OF APRIL 26, 1954, REQUESTED THIS OFFICE TO AUTHORIZE THE WITHHOLDING FROM HEADRIGHT PAYMENTS OTHERWISE DUE MR. BELLIEU OF AMOUNTS WITH WHICH TO LIQUIDATE THE FINES AND PENALTIES LEVIED BY THE COURT IN THE ABOVE MENTIONED ACTIONS, THERE APPEARS FOR CONSIDERATION THE QUESTION WHETHER SUCH WITHHOLDING PROPERLY MAY BE MADE.

IN URGING THAT THE UNITED STATES HAS NO AUTHORITY TO WITHHOLD PAYMENTS FROM SUCH FUNDS TO LIQUIDATE THE FINES AND PENALTIES, MR. MCCOY REFERS TO THE GENERAL RULE THAT A FIDUCIARY MAY NOT SET OFF CLAIMS OWED TO HIM IN HIS PERSONAL CAPACITY AGAINST OBLIGATIONS WHICH HE HAS ASSUMED AS A TRUSTEE AND CITES SEVERAL COURT CASES IN WHICH THE COURTS HELD THAT SUCH HEADRIGHT PAYMENTS CANNOT BE ASSIGNED OR REACHED BY JUDICIAL PROCESS. SUCH CASES, HOWEVER, INVOLVED A CREDITOR-DEBTOR RELATIONSHIP BETWEEN THE TRUST BENEFICIARY AND A THIRD PARTY AND ARE NOT FOR APPLICATION HERE.

THE CONGRESS OF THE UNITED STATES HAS GRANTED AUTHORITY TO THE GENERAL ACCOUNTING OFFICE TO SETTLE AND ADJUST ALL CLAIMS AND DEMANDS FOR OR AGAINST THE UNITED STATES AND ALL ACCOUNTS WHATEVER IN WHICH THE UNITED STATES IS CONCERNED UNDER THE PROVISIONS OF SECTION 236 OF THE REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24, WHICH PROVIDES AS FOLLOWS:

"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."

WITH RESPECT TO THE GOVERNMENT'S RIGHT OF SET-OFF, IT MAY BE NOTED THAT THE STATUTES AUTHORIZING SUITS AGAINST THE UNITED STATES IN THE COURT OF CLAIMS OR IN THE FEDERAL DISTRICT COURTS PERMIT THE GOVERNMENT TO INTERPOSE AS A DEFENSE "ALL SET-OFFS, COUNTERCLAIMS, CLAIMS FOR DAMAGES, WHETHER LIQUIDATED OR UNLIQUIDATED, OR OTHER DEMANDS WHATSOEVER ON THE PART OF THE GOVERNMENT." THESE STATUTORY PROVISIONS HAVE BEEN ENACTED, WITH CERTAIN MINOR LANGUAGE CHANGES, INTO POSITIVE LAW AS 28 U.S.C. 1503; 28 U.S.C. 1346 (C). IT WAS STATED BY THE SUPREME COURT IN THE CASE OF CHERRY COTTON MILLS V. UNITED STATES, 327 U. S. 536, 539, THAT -

"THE SET-OFF AND COUNTERCLAIM JURISDICTION OF THE COURT OF CLAIMS WAS INTENDED TO PERMIT THE GOVERNMENT TO HAVE ADJUDICATED IN ONE SUIT ALL CONTROVERSIES BETWEEN IT AND THOSE GRANTED PERMISSION TO SUE IT ***."

THE RIGHT OF SET-OFF THUS GRANTED THE GOVERNMENT IS MUCH BROADER THAN THE COMMON-LAW RIGHT OF SET-OFF, AND HAS BEEN ALLOWED IN CASES INVOLVING DAMAGES SUFFERED BY THE GOVERNMENT IN THE WRECKING OF A RAILROAD TRAIN, AND AGAINST MONEYS TAKEN FROM A PRISONER WHILE IN CUSTODY. FLORIDA CENTRAL AND PENINSULA R. R. CO. V. UNITED STATES, 43 C. CLS. 572, 580-582; UNITED STATES V. HARRIS (CCA 7TH), 77 F. 821. SEE ALSO, ALLEN V. UNITED STATES, 17 WALL. 207, 210; ALLEN V. UNITED STATES, 204 U. S. 581, 584.

BY NECESSARY IMPLICATION, WHEREVER THERE IS INVOLVED ANY CLAIM OR DEMAND WHATEVER BY THE UNITED STATES AGAINST ANY PERSON WHO HAS A CLAIM OR DEMAND AGAINST THE GOVERNMENT, THE GENERAL ACCOUNTING OFFICE NOT ONLY HAS THE AUTHORITY BUT IS REQUIRED, IN THE PROPER DISCHARGE OF ITS DUTY, TO SETTLE AND ADJUST SUCH OPPOSING CLAIMS OR DEMANDS, TO SET OFF ONE INDEBTEDNESS AGAINST THE OTHER AND TO CERTIFY FOR PAYMENT OR COLLECTION, AS THE CASE MAY BE, ONLY THE BALANCE DUE. AS WAS STATED BY THE SUPREME COURT IN THE CASE OF UNITED STATES V. MUNSEY TRUST CO., 332 U. S. 234, 239-240:

"THE GOVERNMENT HAS THE SAME RIGHT 'WHICH BELONGS TO EVERY CREDITOR, TO APPLY THE UNAPPROPRIATED MONEYS OF HIS DEBTOR, IN HIS HANDS, IN EXTINGUISHMENT OF THE DEBTS DUE TO HIM.' GRATIOT V. UNITED STATES, 15 PET. 336, 370; MCKNIGHT V. UNITED STATES, 98 U. S. 179, 186. MORE THAN THAT, FEDERAL STATUTE GIVES JURISDICTION TO THE COURT OF CLAIMS TO HEAR AND DETERMINE 'ALL SET-OFFS, COUNTERCLAIMS, CLAIMS FOR DAMAGES, WHETHER LIQUIDATED OR UNLIQUIDATED, OR OTHER DEMANDS WHATSOEVER ON THE PART OF THE GOVERNMENT OF THE UNITED STATES AGAINST ANY CLAIMANT AGAINST THE GOVERNMENT IN SAID COURT ***' JUDICIAL CODE SEC. 145, 28 U.S.C. SEC. 250(2). THIS POWER GIVEN TO THE COURT OF CLAIMS TO STRIKE A BALANCE BETWEEN THE DEBTS AND CREDITS OF THE GOVERNMENT, BY LOGICAL IMPLICATION GIVES POWER TO THE COMPTROLLER GENERAL TO DO THE SAME, SUBJECT TO REVIEW BY THAT COURT. ***"

ACCORDINGLY, IT THUS APPEARS THAT THE INDEBTEDNESS OF MR. BELLIEU PROPERLY MAY BE LIQUIDATED BY WITHHOLDING A PORTION OF THE HEADRIGHT PAYMENTS OTHERWISE DUE HIM AS REQUESTED BY THE UNITED STATES ATTORNEY. SEE B-121365, OCTOBER 4, 1954, 34 COMP. GEN. -.

A COPY OF THIS DECISION IS BEING MAILED TODAY TO FRANK T. MCCOY.