B-40225, MARCH 10, 1944, 23 COMP. GEN. 662

B-40225: Mar 10, 1944

Additional Materials:

Contact:

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

 

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

- WHICH PROVIDES THAT THE SURETY ON A DISBURSING OFFICER'S BOND SHALL NOT BE LIABLE FOR THE OFFICER'S INDEBTEDNESS UNLESS SUIT IS FILED WITHIN FIVE YEARS AFTER SETTLEMENT OF THE OFFICER'S ACCOUNT. - HAVE STRONGLY SUGGESTED THAT THE SAID SECTION IS JURISDICTIONAL AND BARS AN ACTION AFTER THE FIVE YEAR PERIOD HAS RUN EVEN THOUGH THE SURETY DOES NOT PLEAD THE LIMITATION. THE PURPORTED WAIVER BY THE SURETY OF THE STATUTE WOULD NOT WARRANT THIS OFFICE IN DELAYING ACTION IN A CASE WHERE THE DISBURSING OFFICER IS INTERNED BY THE ENEMY. CROOK IS NOW INTERNED BY THE ENEMY IN EUROPE AND COMMUNICATION WITH HIM IS IMPOSSIBLE AT THIS TIME. CROOK HAS BEEN INTERNED SINCE FRANCE WAS OCCUPIED BY THE GERMANS IN 1940.

B-40225, MARCH 10, 1944, 23 COMP. GEN. 662

DISBURSING OFFICERS' BONDS - EFFECT OF WAIVER BY SURETY OF STATUTE OF LIMITATIONS INASMUCH AS THE COURTS IN CONSTRUING SECTION 2 OF THE ACT OF AUGUST 8, 1888--- WHICH PROVIDES THAT THE SURETY ON A DISBURSING OFFICER'S BOND SHALL NOT BE LIABLE FOR THE OFFICER'S INDEBTEDNESS UNLESS SUIT IS FILED WITHIN FIVE YEARS AFTER SETTLEMENT OF THE OFFICER'S ACCOUNT--- HAVE STRONGLY SUGGESTED THAT THE SAID SECTION IS JURISDICTIONAL AND BARS AN ACTION AFTER THE FIVE YEAR PERIOD HAS RUN EVEN THOUGH THE SURETY DOES NOT PLEAD THE LIMITATION, THE PURPORTED WAIVER BY THE SURETY OF THE STATUTE WOULD NOT WARRANT THIS OFFICE IN DELAYING ACTION IN A CASE WHERE THE DISBURSING OFFICER IS INTERNED BY THE ENEMY--- OR ANY OTHER CASE--- BEYOND A POINT WHERE THE GOVERNMENT'S INTERESTS WOULD BE JEOPARDIZED.

COMPTROLLER GENERAL WARREN TO THE SECRETARY OF STATE, MARCH 10, 1944:

THERE HAS BEEN CONSIDERED YOUR LETTER DATED JANUARY 20, 1944 ( BF A:KJW 123 C8815/193 (, AS FOLLOWS:

WITH REFERENCE TO YOUR LETTER OF NOVEMBER 16, 1943, IN CONNECTION WITH THE SETTLEMENT OF THE ACCOUNTS OF LINTON CROOK, FOREIGN SERVICE OFFICER, RENDERED FROM PALERMO, WHICH SHOWS A BALANCE OF $39.70 DUE THE UNITED STATES PER CERTIFICATE OF SETTLEMENT K-46499-3 DATED AUGUST 25, 1943, IT MAY BE STATED MR. CROOK IS NOW INTERNED BY THE ENEMY IN EUROPE AND COMMUNICATION WITH HIM IS IMPOSSIBLE AT THIS TIME.

MR. CROOK HAS BEEN INTERNED SINCE FRANCE WAS OCCUPIED BY THE GERMANS IN 1940, HIS LAST POST OF ASSIGNMENT BEING MARSEILLES, FRANCE, AND THIS INFORMATION HAS BEEN TRANSMITTED TO THE GENERAL ACCOUNTING OFFICE BY LETTERS DATED JUNE 22, AND AUGUST 21, 1943. THE EXCEPTION UNDER REFERENCE IS ONE THAT ONLY MR. CROOK CAN REPLY TO SINCE IT CONCERNS HIS TRAVEL, AND CONTACT WITH HIM BEING OUT OF THE QUESTION UNTIL THE CESSATION OF HOSTILITIES IN THE EUROPEAN THEATRE, THE DEPARTMENT IS AT A LOSS TO UNDERSTAND WHAT IT CAN DO AT THIS TIME. THE FIDELITY AND CASUALTY COMPANY OF NEW YORK, SURETY FOR MR. CROOK UNDER BOND DATED APRIL 27, 1938, IS AGREEABLE TO WAIVING THE FIVE-YEAR PERIOD OF LIABILITY AS PRESCRIBED BY THE STATUTE OF LIMITATION, AND THE WAIVER EXECUTED BY THAT COMPANY WAS TRANSMITTED TO THE GENERAL ACCOUNTING OFFICE UNDER DATE OF AUGUST 21, 1943. ON SEPTEMBER 9, 1943, A LETTER FROM THE AUDIT DIVISION OF THE GENERAL ACCOUNTING OFFICE, FILE A-EMH-BAR, STATED IN PART AS FOLLOWS:

"THE FIVE YEAR LIMITATION FOR FILING SUIT PRESCRIBED BY THE ACT OF AUGUST 8, 1888, 25 STAT. 387, HAS BEEN HELD TO BE JURISDICTIONAL, NOT ONLY BARRING THE REMEDY, BUT DESTROYING THE LIABILITY AS WELL. IN UNITED STATES V. MARYLAND CASUALTY COMPANY, LAW NO. 3496, UNREPORTED, IN THE DISTRICT COURT OF THE UNITED STATES FOR THE DISTRICT OF MARYLAND, THE COURT IN ITS OPINION STATED THAT IF THE EVIDENCE INDICATED EXPIRATION OF THE STATUTORY PERIOD, DISMISSAL OF A SUIT WOULD BE MANDATORY EVEN IF THE POINT WERE NOT RAISED BY THE DEFENDANT. ACCORDINGLY, SINCE THE QUESTION OF DEFERRING COLLECTION ACTION MUST BE DECIDED WITHOUT REGARD TO ANY AGREEMENT REACHED WITH THE SURETY RELATIVE TO PLEADING THE STATUTE OF LIMITATION, UNDER THE CIRCUMSTANCES THE NECESSARY ACTION INCIDENT TO THE LIMITATION OF COLLECTION PROCEEDINGS MAY NOT BE FURTHER DELAYED.'

IT WILL BE NOTED FROM THE ATTACHED COPY OF NOTICE EXCEPTION THAT SOME OF THE ITEMS WERE SUSPENDED FOR ADDITIONAL INFORMATION OR SUPPORTING PAPERS WHICH IT IS IMPOSSIBLE FOR MR. CROOK TO FURNISH AT THIS TIME, AND THERE IS NO ASSURANCE THAT HE HAS RECEIVED NOTICE OF THE SUSPENSIONS OR THAT HE IS AWARE OF THE OUTSTANDING DIFFERENCES. THE SURETY COMPANY HAS WAIVED THE FIVE YEAR STATUTE OF LIMITATION IN CONNECTION WITH THE DISALLOWANCES; THERE IS ACCRUED SALARY DUE AND OWING MR. CROOK IN AN AMOUNT MORE THAN SUFFICIENT TO COVER THE DISALLOWANCE; HE HAS MORE THAN SUFFICIENT FUNDS TO HIS CREDIT IN THE FOREIGN SERVICE RETIREMENT AND DISABILITY FUND TO OFFSET HIS INDEBTEDNESS AND SUCH FUNDS WILL NOT BE RELEASED UNTIL A STATEMENT IS RECEIVED FROM THE GENERAL ACCOUNTING OFFICE SHOWING THAT ALL OUTSTANDING DIFFERENCES IN HIS ACCOUNTS HAVE BEEN CLEARED; AND THERE IS THE POSSIBILITY THAT THE OFFICER MAY BE ABLE TO FURNISH THE INFORMATION REQUESTED BY THE GENERAL ACCOUNTING OFFICE TO REMOVE SOME OF THE ITEMS MAKING UP THE DISALLOWANCE.

IT WOULD APPEAR FROM THE CIRCUMSTANCES ABOUNDING IN THE WORLD TODAY THAT SUCH MATTERS MIGHT BE HELD IN ABEYANCE PENDING THE REESTABLISHMENT OF COMMUNICATIONS WITH PERSONNEL IN THE FOREIGN SERVICE WHO ARE BEING INVOLUNTARILY DETAINED IN ENEMY-OCCUPIED TERRITORY. HOWEVER, IN VIEW OF THE STAND TAKEN BY THE GENERAL ACCOUNTING OFFICE, IT WILL BE APPRECIATED IF INFORMATION IS FURNISHED AS TO THE ACTION NOW EXPECTED OF THE DEPARTMENT IN THE PARTICULAR CASE UNDER REFERENCE, AND WHAT ACTION MAY BE ANTICIPATED WITH REGARD TO SIMILAR CASES.

WHILE THIS OFFICE HAS, IN CERTAIN INSTANCES, COMPLIED WITH REQUESTS FOR DEFERMENT OF COLLECTION ACTION IT HAS DONE SO ONLY IN CASES WHERE IT IS APPARENT THAT THE DELAY WILL NOT PREJUDICE THE RIGHTS OR INTERESTS OF THE UNITED STATES. HERE, IT IS FOR NOTING THAT THE ITEM OF INDEBTEDNESS IN THE OFFICER'S ACCOUNTS IS OF LONG STANDING--- THE NOTICE OF EXCEPTION IN THE INSTANT CASE HAVING BEEN ISSUED APRIL 20, 1939 (ALMOST FIVE YEARS AGO). SECTION 2 OF THE ACT OF AUGUST 8, 1888, 25 STAT. 387, 6 U.S.C. 3, PROVIDES THAT IF SUIT FOR RECOVERY IS NOT INSTITUTED AGAINST THE SURETY WITHIN FIVE YEARS AFTER SETTLEMENT OF THE ACCOUNT OF THE DISBURSING OFFICER, THE SURETIES ON HIS BOND SHALL NOT BE LIABLE FOR HIS INDEBTEDNESS TO THE UNITED STATES. IN PASSING UPON THE PROVISIONS OF SAID STATUTE THE COURTS HAVE USED LANGUAGE STRONGLY SUGGESTING THAT SAID SECTION 2 OF THE ACT IS JURISDICTIONAL. SEE UNITED STATES, V. UNITED STATES FIDELITY AND GUARANTY CO., 25 F.2D 500; UNITED STATES V. GEISE, 56 ID. 583; AND UNREPORTED MEMORANDUM OPINION OF JUDGE COLEMAN, IN UNITED STATES V. MARYLAND CASUALTY CO., LAW 3496, IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND--- SAID MEMORANDUM OPINION BEING TO THE EFFECT THAT THE TERMS OF THE STATUTE REQUIRE A JUDGMENT IN FAVOR OF THE SURETY COMPANY WHERE THE FIVE YEAR PERIOD HAS RUN PRIOR TO THE FILING OF SUIT NOTWITHSTANDING THE DEFENDANT DOES NOT PLEAD THE LIMITATION. OBVIOUSLY, THEREFORE, THE PURPORTED WAIVER BY THE SURETY COMPANY OF THE INVOLVED STATUTE MAY NOT BE ACCEPTED BY THIS OFFICE AS SUFFICIENT TO PROTECT THE INTERESTS OF THE GOVERNMENT.

IN VIEW OF THE CITED COURT DECISIONS, THIS OFFICE WOULD NOT BE WARRANTED IN DELAYING ACTION IN THIS OR ANY OTHER CASE BEYOND A POINT WHERE THE INTERESTS OF THE UNITED STATES WOULD BE JEOPARDIZED. ACCORDINGLY, IT IS REQUIRED THAT THE INSTANT CASE BE REFERRED TO IN THE IMMEDIATE FUTURE TO THE ATTORNEY GENERAL FOR THE INSTITUTION OF SUIT. ANY DELAY TO BE ACCORDED AT THE REQUEST OF THE SURETY SHOULD BE IN RESPECT OF THE PROSECUTION OF THE SUIT, IF INSTITUTED, WITH LEAVE OF COURT.