B-149710, AUG. 27, 1962

B-149710: Aug 27, 1962

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IN WHICH WE SAID: "THE ACTION OF THIS OFFICE IN WITHHOLDING THE AMOUNTS OTHERWISE DUE UNDER THE CONTRACTS WITH THE POST OFFICE DEPARTMENT WAS IN STRICT ACCORDANCE WITH THE STATUTORY DUTY OF THE GENERAL ACCOUNTING OFFICE UNDER THE PROVISIONS OF SECTION 236. ALL ACCOUNTS WHATEVER IN WHICH THE GOVERNMENT OF THE UNITED STATES IS CONCERNED. WHENEVER THERE IS INVOLVED ANY CLAIM OR DEMAND WHATEVER BY THE UNITED STATES AGAINST ANY PERSON WHO HAS A CLAIM OR DEMAND AGAINST THE GOVERNMENT. IS REQUIRED. AS WAS STATED BY THE SUPREME COURT OF THE UNITED STATES IN THE RECENT CASE OF THE UNITED STATES V.

B-149710, AUG. 27, 1962

TO PUGET DIE CASTING COMPANY:

IN YOUR LETTER OF AUGUST 2, 1962, YOU QUESTION THE AUTHORITY OF THIS OFFICE TO OFFSET A CLAIM OF THE UNITED STATES FOR LIQUIDATED DAMAGES AGAINST AN ALLOWANCE DUE YOU FROM THE UNITED STATES AS A RESULT OF A TAX CARRY-BACK ADJUSTMENT. YOU PROTEST THIS ACTION ON THE GROUNDS THAT THERE HAS BEEN NO JUDICIAL DETERMINATION OF THE EXISTENCE OF A DEBT FOR LIQUIDATED DAMAGES.

WE DIRECT YOUR ATTENTION TO OUR DECISION AT 28 COMP. GEN. 543, 545 546, IN WHICH WE SAID:

"THE ACTION OF THIS OFFICE IN WITHHOLDING THE AMOUNTS OTHERWISE DUE UNDER THE CONTRACTS WITH THE POST OFFICE DEPARTMENT WAS IN STRICT ACCORDANCE WITH THE STATUTORY DUTY OF THE GENERAL ACCOUNTING OFFICE UNDER THE PROVISIONS OF SECTION 236, REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24, 31 U.S.C. 71, WHICH 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.'

"BY NECESSARY IMPLICATION, WHENEVER 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 NET BALANCE. AS WAS STATED BY THE SUPREME COURT OF THE UNITED STATES IN THE RECENT CASE OF THE 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 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, COUNTER-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 SUBSECTION 145, 28 U.S.C. SUBSECTION 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 * * *.'"

SEE, ALSO, CHERRY COTTON MILLS, INC. V. UNITED STATES, 103 CT.CL. 243 WHEREIN THE COURT RECOGNIZED THE AUTHORITY OF THIS OFFICE TO EXERCISE THE RIGHT OF SETOFF IN A SITUATION SIMILAR TO THAT HERE INVOLVED.

IN VIEW OF THE ABOVE-STATED RULE, WE CANNOT AGREE THAT THIS MATTER SHOULD BE NEGOTIATED DIRECTLY WITH YOUR CLIENT.