B-144838, MAR. 3, 1961

B-144838, MAR. 3, 1961

TO THE SECRETARY OF THE AIR FORCE:

BY LETTER DATED JANUARY 12, 1961, THE DEPUTY FOR PROCUREMENT AND PRODUCTION REQUESTED OUR DECISION AS TO THE DISPOSITION OF APPROXIMATELY $16,000 ON DEPOSIT WITH THE LAMESA NATIONAL BANK, LAMESA, TEXAS, TO THE CREDIT OF JOHN H. WILSON, WHICH AMOUNT APPARENTLY REPRESENTS THE BALANCE OF ADVANCE PAYMENTS MADE AVAILABLE TO WILSON UNDER CONTRACT NO. W-535-AC- 28989, DATED MAY 9, 1942. UNDER THE CONTRACT, WILSON WAS TO FURNISH GLIDER PILOT TRAINING TO AIR CORPS PERSONNEL.

THE FILES SUBMITTED WITH THE JANUARY 12 LETTER SHOW THAT THE CONTRACT WAS TERMINATED FOR CONVENIENCE OF THE GOVERNMENT BY SUPPLEMENTAL AGREEMENT NO. 12 DATED APRIL 6, 1943, ARTICLE III OF WHICH PROVIDED:

"ON PAYMENT TO THE CONTRACTOR BY THE GOVERNMENT OF THE SUM TO BE DETERMINED AS PROVIDED IN THE CONTRACT, THE CONTRACTOR AND THE GOVERNMENT, EACH FOR ITSELF, ITS SUCCESSORS, AND ASSIGNS, SHALL AND DO HEREBY REMISE, RELEASE AND FOREVER DISCHARGE EACH OTHER OF AND FROM ANY AND ALL DEBTS, DUES, ACCOUNTS, CLAIMS AND DEMANDS OF EVERY KIND OR NATURE DUE OR TO BECOME DUE IN LAW OR EQUITY UNDER OR BY REASON OF OR GROWING OUT OF CONTRACT W 535 AC-28989 AND ANY AND ALL MODIFICATIONS THEREOF AND ORDERS AND ACTS DONE THEREUNDER.'

IT ALSO APPEARS THAT $250,000 IN GOVERNMENT FUNDS WERE ADVANCED TO WILSON TO FINANCE THE OPERATION OF THE SCHOOL AND THAT, AT TIME OF CONTRACT TERMINATION $71,845.70 OF THE ADVANCE PAYMENTS WERE LIQUIDATED BY WITHHOLDINGS FROM TUITION PAYMENTS DUE UNDER THE CONTRACT, LEAVING AN OUTSTANDING BALANCE OF UNLIQUIDATED ADVANCE PAYMENTS OF $178,154.30. AUDIT WAS CONDUCTED OF THE ADVANCE PAYMENT FUND, AND BY REPORT DATED JANUARY 3, 1944, THE DISPOSITION OF THE UNLIQUIDATED BALANCE OF THE ADVANCE PAYMENTS WAS REPORTED AS:

CHART.

CONTRACT LOSSES $133,947.38

WITHDRAWALS BY WILSON 24,922.13

NET ASSETS AVAILABLE 19,284.79

TOTAL $178,154.30

HOWEVER, ON MAY 6, 1952, ATTORNEYS FOR THE LAMESA NATIONAL BANK ADVISED THE DEPARTMENT THAT THE BANK HAD ON DEPOSIT THE FOLLOWING ACCOUNTS TO THE CREDIT OF WILSON:

CHART. JOHN H. WILSON, SPECIAL $10,883.53 JOHN H. WILSON, ADVANCE PAYMENT 50.50 JOHN H. WILSON, GENERAL

1,664.11 JOHN H. WILSON, EMPLOYEES' WAR BOND ACCOUNT

5.00 JOHN H. WILSON, SOCIAL SECURITY ACCOUNT

4.04 JOHN H.

WILSON, EMPLOYEES' GROUP INSURANCE 198.24 JOHN H. WILSON, HOUSING AND FEEDING ACCOUNT 2,310.72

TOTAL $15,116.14

THE BANK HAS RECEIVED DEMANDS FROM BOTH THE GOVERNMENT AND WILSON FOR PAYMENT OF THE DEPOSITS BUT HAS REFUSED TO PAY OVER ANY AMOUNTS TO EITHER PARTY IN THE ABSENCE OF A RELEASE FROM THE OTHER.

IN MARCH 1953, THE UNITED STATES BROUGHT SUIT AGAINST WILSON FOR RECOVERY OF THE UNLIQUIDATED BALANCE OF ADVANCE PAYMENTS AMOUNTING TO $178,154.30. HOWEVER, SINCE THE GOVERNMENT WAS NOT IN A POSITION TO PROVE A PRIMA FACIE CASE, DISMISSAL WITHOUT PREJUDICE OF THE SUIT WAS OBTAINED BY THE GOVERNMENT ON MOTION. SUBSEQUENTLY, THE DEPARTMENT OF JUSTICE CLOSED THEIR FILE IN THE MATTER WHEN COMPROMISE EFFORTS TO OBTAIN AN EQUITABLE DIVISION OF THE DEPOSITS BECAME FRUITLESS. AT THE SAME TIME THE DEPARTMENT OF JUSTICE ADVISED YOUR DEPARTMENT THAT IT HAD NO OBJECTION TO YOUR RELEASING THE DEPOSITS.

THE FILE INDICATES THAT WILSON BELIEVED THAT TERMINATION OF THE CONTRACT FOR CONVENIENCE OF THE GOVERNMENT CANCELED ALL OBLIGATIONS HE MAY HAVE HAD THEREUNDER INCLUDING REPAYMENT OF UNLIQUIDATED ADVANCE PAYMENTS. THIS IS SUPPORTED ALSO BY WILSON'S ASSERTION OF A CLAIM FOR $150,206.36 AGAINST THE GOVERNMENT FOR BREACH OF CONTRACT IN NOT PERMITTING HIM TO RECOUP IN FULL ALL OF HIS COSTS INCIDENT TO OPERATION OF THE SCHOOL PRIOR TO TERMINATION OF THE CONTRACT FOR THE CONVENIENCE OF THE GOVERNMENT.

WE RECOGNIZE THAT THE STATE OF THE PRESENT RECORD DOES NOT FORM ANY BASIS FOR FURTHER ACTION LOOKING TOWARD COLLECTION OF THE DEPOSITS EITHER FROM THE BANK OR WILSON, ESPECIALLY SINCE ALL VOUCHERS AND THEIR SUPPORTING DOCUMENTS COVERING PAYMENTS UNDER THE CONTRACT HAVE BEEN DESTROYED. ALSO, IT IS OUR OPINION THAT FURTHER EFFORTS TO EFFECT A COMPROMISE DIVISION OF THE DEPOSITS WITH WILSON WOULD BE USELESS IN VIEW OF THE GOVERNMENT'S INABILITY TO SHOW THAT THE DEPOSITS ARE GOVERNMENT FUNDS.

ACCORDINGLY, AND IN VIEW OF THE FACT THAT ALMOST 20 YEARS HAVE ELAPSED SINCE ANY ACTION UNDER THE CONTRACT COULD HAVE ACCRUED, WE BELIEVE THAT THE GOVERNMENT'S INTEREST IN THE DEPOSITS SHOULD BE TERMINATED. THEREFORE, WE WOULD HAVE NO OBJECTION IF BOTH THE BANK AND WILSON ARE ADVISED THAT THE GOVERNMENT HAS RELEASED ALL CLAIMS IT MAY HAVE HAD WITH RESPECT TO SUCH DEPOSITS. THE FILES TRANSMITTED WITH THE LETTER OF JANUARY 12, 1960, ARE RETURNED.