B-163377, NOV. 4, 1968

B-163377: Nov 4, 1968

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TO COOPER AND NELSEN: THIS IS IN REPLY TO YOUR LETTER OF OCTOBER 9. 000 WAS WITHHELD INITIALLY FROM AMOUNTS DUE YOUR CLIENT UNDER CERTAIN GOVERNMENT CONTRACTS. THE DEPARTMENT'S CLAIM AS STIPULATED IN THE PROCEEDINGS WAS LIMITED TO $10. IN RESPONSE TO YOUR CLAIM TO THE REMAINING FUNDS YOU WERE ADVISED BY LETTER OF SEPTEMBER 18. THAT PURSUANT TO ESTABLISHED PROCEDURES THE FUNDS WERE BEING APPLIED TO SATISFY AN INTERNAL REVENUE SERVICE (IRS) LIEN DATED JULY 30. YOU HAVE TAKEN THE POSITION THAT THE IRS LIEN SHOULD NOT TAKE PRECEDENCE OVER YOUR CLAIM FOR THE BALANCE SINCE IN THE ADMINISTRATIVE PROCEEDINGS HELD ON JULY 17. WE HAVE REVIEWED THE WRITTEN TRANSCRIPT OF THE ABOVE REFERENCED PROCEEDINGS BUT WE ARE UNABLE TO CONCLUDE.

B-163377, NOV. 4, 1968

TO COOPER AND NELSEN:

THIS IS IN REPLY TO YOUR LETTER OF OCTOBER 9, 1968, RELATIVE TO THE FAILURE OF THE DEPARTMENT OF LABOR TO RELEASE THE BALANCE OF CERTAIN FUNDS TO YOUR OFFICE OR TO THE S AND M LAMP COMPANY, DBA NORTHWEST LAND AND TIMBER, INC., SUBSEQUENT TO THE FINAL RESOLUTION IN THE PROCEEDINGS CONDUCTED UNDER DOCKET NO. PC 1067 WITH THE DEPARTMENT.

THE ABOVE REFERENCED PROCEEDINGS INVOLVED QUESTIONS REGARDING VIOLATIONS OF THE LABOR STANDARDS REPRESENTATIONS AND STIPULATIONS OF CERTAIN CONTRACTS AND FOR VIOLATIONS OF THE WALSH-HEALEY PUBLIC CONTRACTS ACT, 49 STAT. 2036, AND THE REGULATIONS ISSUED THEREUNDER. WHILE THE SUM OF $18,000 WAS WITHHELD INITIALLY FROM AMOUNTS DUE YOUR CLIENT UNDER CERTAIN GOVERNMENT CONTRACTS, THE DEPARTMENT'S CLAIM AS STIPULATED IN THE PROCEEDINGS WAS LIMITED TO $10,500. IN RESPONSE TO YOUR CLAIM TO THE REMAINING FUNDS YOU WERE ADVISED BY LETTER OF SEPTEMBER 18, 1968, FROM THE ASSISTANT ADMINISTRATOR, DEPARTMENT OF LABOR, THAT PURSUANT TO ESTABLISHED PROCEDURES THE FUNDS WERE BEING APPLIED TO SATISFY AN INTERNAL REVENUE SERVICE (IRS) LIEN DATED JULY 30, 1968, AGAINST YOUR CLIENT.

YOU HAVE TAKEN THE POSITION THAT THE IRS LIEN SHOULD NOT TAKE PRECEDENCE OVER YOUR CLAIM FOR THE BALANCE SINCE IN THE ADMINISTRATIVE PROCEEDINGS HELD ON JULY 17, 1968, UNDER THE ABOVE REFERENCED DOCKET NUMBER, THE GOVERNMENT AGREED THAT THE REMAINING FUNDS WOULD BE RELEASED ,FORTHWITH" TO THE RESPONDENTS IN THE PROCEEDINGS.

WE HAVE REVIEWED THE WRITTEN TRANSCRIPT OF THE ABOVE REFERENCED PROCEEDINGS BUT WE ARE UNABLE TO CONCLUDE, AS YOU SUGGEST, THAT THE GOVERNMENT AGREED TO DISBURSE THE BALANCE OF THE FUNDS TO THE RESPONDENTS. WE NOTE THAT PAGE FIVE OF THE TRANSCRIPT FOR THE MORNING SESSION OF WEDNESDAY, JULY 17, 1968, EVIDENCES THAT ONE OF THE REPRESENTATIVES OF THE DEPARTMENT OF LABOR ACQUIESCED IN THE STIPULATION THAT "THE BALANCE WILL BE RELEASED FORTHWITH SO FAR AS THIS DEPARTMENT IS CONCERNED.' WHILE YOU MAY HAVE UNDERSTOOD THIS TO MEAN THAT THE BALANCE WOULD BE RELEASED TO THE RESPONDENTS, ANY MISUNDERSTANDING IN THIS REGARD SHOULD HAVE BEEN DISPELLED BY THE LABOR DEPARTMENT REPRESENTATIVE'S SUBSEQUENT EXPRESS DISCLAIMER OF CUTTING OFF CLAIMS HELD BY ANY OTHER AGENCIES OF THE GOVERNMENT. IN THIS REGARD SEE PAGES 77 THROUGH 79 IN THE TRANSCRIPT OF THE PROCEEDINGS FOR THE AFTERNOON SESSION, THURSDAY, JULY 18, 1968.

IT IS WELL ESTABLISHED THAT THE UNITED STATES HAS THE SAME RIGHT OF SET- OFF, INDEPENDENT OF STATUTORY AUTHORIZATION,"WHICH BELONGS TO EVERY CREDITOR, TO APPLY THE UNAPPROPRIATED MONEYS OF HIS DEBTOR, IN HIS HANDS, IN EXTINGUISHMENT OF THE DEBTS DUE TO HIM.' UNITED STATES V MUNSEY TRUST CO., 332 U.S. 234 (1947); GRATIOT V UNITED STATES, 40 U.S. 336 (1841); MCKNIGHT V UNITED STATES, 98 U.S. 179 (1878). IN VIEW THEREOF, WE FIND NO LEGAL BASIS FOR QUESTIONING THE PROPRIETY OF THE TRANSFER OF THE BALANCE OF THE FUNDS TO THE INTERNAL REVENUE SERVICE, AND YOUR CLAIM IS THEREFORE DENIED.