A-35808, MAY 7, 1931, 10 COMP. GEN. 504

A-35808, MAY 7, 1931, 10 COMP. GEN. 504

CONTRACTS - PENALTIES - EIGHT-HOUR LAW AMOUNTS WITHHELD FROM A CONTRACTOR AS A PENALTY FOR VIOLATION OF THE 8- HOUR LAW OF JUNE 19, 1912, 37 STAT. 137, ARE MONEYS COLLECTED FOR THE USE OF THE UNITED STATES AS SPECIFICALLY PROVIDED IN TERMS IN SAID LAW, AND, ACCORDINGLY, ARE FOR DEPOSITING AND COVERING INTO THE TREASURY AS MISCELLANEOUS RECEIPTS AS PROVIDED BY SECTIONS 3617 AND 3618, REVISED STATUTES. SUCH AMOUNTS, HOWEVER, MAY BE PERMITTED TO REMAIN TO THE CREDIT OF THE APPROPRIATION INVOLVED UNTIL SUCH TIME AS THE RIGHT OF APPEAL TO THE HEAD OF THE DEPARTMENT, AS PROVIDED IN THE ACT OF JUNE 19, 1912, 37 STAT. 137, HAS EXPIRED, OR UNTIL FINAL ACTION ON SUCH APPEAL IN CASE SAME IS DULY FILED.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, MAY 7, 1931:

THERE IS FOR CONSIDERATION BY THIS OFFICE THE ULTIMATE DISPOSITION TO BE MADE OF COLLECTIONS BY THE WAR DEPARTMENT OF PENALTIES UNDER THE 8-HOUR LAW OF JUNE 19, 1912, 37 STAT. 137, SECTION 1 OF WHICH PROVIDES AS FOLLOWS:

THAT EVERY CONTRACT HEREAFTER MADE TO WHICH THE UNITED STATES, ANY TERRITORY, OR THE DISTRICT OF COLUMBIA IS A PARTY, AND EVERY SUCH CONTRACT MADE FOR OR ON BEHALF OF THE UNITED STATES, OR ANY TERRITORY, OR SAID DISTRICT, WHICH MAY REQUIRE OR INVOLVE THE EMPLOYMENT OF LABORERS OR MECHANICS SHALL CONTAIN A PROVISION THAT NO LABORER OR MECHANIC DOING ANY PART OF THE WORK CONTEMPLATED BY THE CONTRACT, IN THE EMPLOY OF THE CONTRACTOR OR ANY SUBCONTRACTOR CONTRACTING FOR ANY PART OF SAID WORK CONTEMPLATED, SHALL BE REQUIRED OR PERMITTED TO WORK MORE THAN EIGHT HOURS IN ANY ONE CALENDAR DAY UPON SUCH WORK; AND EVERY SUCH CONTRACT SHALL STIPULATE A PENALTY FOR EACH VIOLATION OF SUCH PROVISION IN SUCH CONTRACT OF FIVE DOLLARS FOR EACH LABORER OR MECHANIC FOR EVERY CALENDAR DAY IN WHICH HE SHALL BE REQUIRED OR PERMITTED TO LABOR MORE THAN EIGHT HOURS UPON SAID WORK; AND ANY OFFICER OR PERSON DESIGNATED AS INSPECTOR OF THE WORK TO BE PERFORMED UNDER ANY SUCH CONTRACT, OR TO AID IN ENFORCING THE FULFILLMENT THEREOF, SHALL, UPON OBSERVATION OR INVESTIGATION, FORTHWITH REPORT TO THE PROPER OFFICER OF THE UNITED STATES, OR OF ANY TERRITORY, OR OF THE DISTRICT OF COLUMBIA, ALL VIOLATIONS OF THE PROVISIONS OF THIS ACT DIRECTED TO BE MADE IN EVERY SUCH CONTRACT, TOGETHER WITH THE NAME OF EACH LABORER OR MECHANIC WHO HAS BEEN REQUIRED OR PERMITTED TO LABOR IN VIOLATION OF SUCH STIPULATION AND THE DAY OF SUCH VIOLATION, AND THE AMOUNT OF THE PENALTIES IMPOSED ACCORDING TO THE STIPULATION IN ANY SUCH CONTRACT SHALL BE DIRECTED TO BE WITHHELD FOR THE USE AND BENEFIT OF THE UNITED STATES, THE DISTRICT OF COLUMBIA, OR THE TERRITORY CONTRACTING BY THE OFFICER OR PERSON WHOSE DUTY IT SHALL BE TO APPROVE THE PAYMENT OF THE MONEYS DUE UNDER SUCH CONTRACT, WHETHER THE VIOLATION OF THE PROVISIONS OF SUCH CONTRACT IS BY THE CONTRACTOR OR ANY SUBCONTRACTOR. ANY CONTRACTOR OR SUBCONTRACTOR AGGRIEVED BY THE WITHHOLDING OF PAY PENALTY AS HEREINBEFORE PROVIDED SHALL HAVE THE RIGHT WITHIN SIX MONTHS THEREAFTER TO APPEAL TO THE HEAD OF THE DEPARTMENT MAKING THE CONTRACT ON BEHALF OF THE UNITED STATES OR THE TERRITORY, HAD IN THE CASE OF A CONTRACT MADE BY THE DISTRICT OF COLUMBIA TO THE COMMISSIONERS THEREOF, WHO SHALL HAVE POWER TO REVIEW THE ACTION IMPOSING THE PENALTY, AND IN ALL SUCH APPEALS FROM SUCH FINAL ORDER WHEREBY A CONTRACTOR OR SUBCONTRACTOR MAY BE AGGRIEVED BY THE IMPOSITION OF THE PENALTY HEREINBEFORE PROVIDED SUCH CONTRACTOR OR SUBCONTRACTOR MAY WITHIN SIX MONTHS AFTER DECISION BY SUCH HEAD OF A DEPARTMENT OR THE COMMISSIONERS OF THE DISTRICT OF COLUMBIA FILE A CLAIM IN THE COURT OF CLAIMS WHICH SHALL HAVE JURISDICTION TO HEAR AND DECIDE THE MATTER IN LIKE MANNER AS IN OTHER CASES BEFORE SAID COURT.

WITH RESPECT TO A COLLECTION OF $120, UNDER THIS ACT, BY B. E. SAWYER, DISBURSING OFFICER, IN JUNE, 1930, AS TO WHICH THIS OFFICE REQUESTED TO BE ADVISED AS TO WHAT ACTION WOULD BE TAKEN BY THE WAR DEPARTMENT RELATIVE TO THE DISPOSITION OF THE AMOUNT WHICH REMAINED TO THE CREDIT OF THE APPROPRIATION UNDER WHICH PAYMENTS TO THE CONTRACTOR WERE MADE, THE CHIEF OF FINANCE, WAR DEPARTMENT, ADVISED BY FIFTH INDORSEMENT OF FEBRUARY 27, 1931, AS FOLLOWS:

1. IN ACCORDANCE WITH THE BASIC COMMUNICATION, THERE IS FORWARDED HEREWITH THE 3D INDORSEMENT HEREON OF THE QUARTERMASTER, PANAMA CANAL DEPARTMENT, ADVISING THAT THE AMOUNT OF $120 DEDUCTED FROM A PAYMENT TO R. E. SEXTON UNDER CONTRACT NO. W 61 QM-14 DATED JUNE 25, 1929, ON ACCOUNT OF A VIOLATION OF THE EIGHT-HOUR LAW OF JUNE 19, 1912 (37 STAT. 137; U.S.C. 40:324), HAS BEEN SET ASIDE ANTICIPATING THE CONTINGENCY OF POSSIBLE ACTION TOWARD THE REMOVAL OF THE PENALTY.

2. IN THIS CONNECTION IT WILL BE NOTED, AS STATED IN THE 1ST INDORSEMENT OF THIS OFFICE HEREON, THAT THE ACT IN QUESTION PROVIDES FOR A RIGHT OF APPEAL BY A CONTRACTOR TO THE HEAD OF THE DEPARTMENT CONCERNED FROM THE IMPOSITION OF SUCH A PENALTY AND IT APPEARS THAT, IN VIEW OF THE POSSIBILITY OF SUCH AN APPEAL, AN AMOUNT DEDUCTED UNDER THIS ACT SHOULD BE RETAINED IN THE APPROPRIATION AND NOT CREDITED TO "MISCELLANEOUS RECEIPTS," BEING IN THIS RESPECT ANALOGOUS TO DEDUCTIONS ON ACCOUNT OF LIQUIDATED DAMAGES, IN REGARD TO WHICH THE COMPTROLLER GENERAL OF THE UNITED STATES HELD IN DECISION DATED MARCH 11, 1930, 9 COMP. GEN. 398, THAT, IF, IN THE SETTLEMENT OF A CLAIM PRESENTED BY A CONTRACTOR, IT SHOULD BE FOUND THAT THE CONTRACTOR IS ENTITLED TO BE PAID AN AMOUNT WITHHELD BY THE DISBURSING OFFICER, SAID AMOUNT WOULD BE PAYABLE UNDER THE APPROPRIATION UNDER THE AUTHORITY OF WHICH THE CONTRACT WAS MADE, AND THAT IT IS THEREFORE NECESSARY TO LEAVE IN THE APPROPRIATION THE AMOUNT WITHHELD BY THE DISBURSING OFFICER FROM THE CONTRACTOR.

3. FOR THE REASONS STATED ABOVE, IT IS BELIEVED THAT IN THE PRESENT INSTANCE THE DISBURSING OFFICER TOOK THE PROPER ACTION IN LEAVING THE AMOUNT OF THE PENALTY IN THE APPROPRIATION INVOLVED. HOWEVER, AS SET FORTH IN PARAGRAPH 6F (2) (A), AR 35-6040, IN REGARD TO AMOUNTS DEDUCTED ON ACCOUNT OF LIQUIDATED DAMAGES, IT IS BELIEVED THAT THE AMOUNT WITHHELD IS NO LONGER AVAILABLE FOR OBLIGATION AND MAY BE USED ONLY FOR PAYMENT OF ANY REFUND WHICH MAY BE ALLOWED IN CONNECTION WITH THE DEDUCTION, AND THIS OFFICE IS ADVISING THE QUARTERMASTER GENERAL TO THIS EFFECT.

SECTIONS 3617 AND 3618, REVISED STATUTES, PROVIDE THAT ANY MONEYS RECEIVED FOR THE USE OF THE UNITED STATES SHALL BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS, AND MONEYS THUS COVERED CAN NOT BE WITHDRAWN THEREFROM EXCEPT IN CONSEQUENCE OF AN APPROPRIATION MADE BY LAW.

IN THE PRACTICAL APPLICATION OF THESE PROVISIONS OF LAW, IT HAS BEEN THE ACCEPTED AND UNIFORM RULE OF THE ACCOUNTING OFFICERS TO HOLD THAT ANY MONEY COLLECTED FOR THE USE OF THE UNITED STATES IS PROPERLY FOR CREDIT AS MISCELLANEOUS RECEIPTS, IF IT IS COLLECTED UNDER SOME GENERAL LAW OR STATUTE AS A PENALTY. 23 COMP. DEC. 352; 5 COMP. GEN. 734; 6 ID. 337; 8 ID. 103.

THERE APPEARS TO BE NO QUESTION THAT THE MONEYS COLLECTED, SUCH AS INVOLVED IN THE CASE HERE IN QUESTION, AND OTHER SIMILAR CASES, ARE COLLECTED UNDER THE GENERAL STATUTE AS A PENALTY AND THAT SUCH COLLECTIONS ARE FOR THE USE OF THE UNITED STATES, IT BEING SPECIFICALLY SO PROVIDED IN TERMS IN THE ACT OF 1912, AND, ACCORDINGLY, IT MUST BE HELD THAT THE COLLECTION INVOLVED IN THE CASE IN QUESTION, AS WELL AS OTHER SIMILAR COLLECTIONS, ULTIMATELY SHOULD BE DEPOSITED AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS AS PROVIDED IN THE SECTIONS OF THE REVISED STATUTES HEREINBEFORE CITED.

THERE IS NO OBJECTION TO LEAVING SUCH COLLECTIONS IN THE APPROPRIATIONS INVOLVED UNTIL ACTION BY THE HEAD OF THE DEPARTMENT--- IN CASE AN APPEAL IS FILED WITHIN SIX MONTHS AFTER DATE OF THE WITHHOLDING--- AS PROVIDED IN THE ACT OF 1912, BUT IN THE EVENT SUCH ACTION AFFIRMS THE PENALTY IMPOSED, THE PROPER ACTION SHOULD BE TAKEN TO CHARGE THE APPROPRIATION AND CARRY THE AMOUNT OR AMOUNTS INVOLVED TO THE GENERAL FUND OF THE TREASURY AS MISCELLANEOUS RECEIPTS. PAYMENT OF JUDGMENTS OF THE COURT OF CLAIMS IN SUITS FOR THE RECOVERY OF THE AMOUNT OF ANY SUCH PENALTIES AS PROVIDED FOR UNDER THE ACT, SHOULD FOLLOW THE USUAL PROCEDURE IN THE MATTER OF PAYMENT OF JUDGMENTS OF SAID COURT.

IN THE CONTRACT OF R. E. SEXTON, INVOLVED IN THE PRESENT CASE, IT WOULD APPEAR THAT THE COLLECTION WAS MADE IN JUNE, 1930, AND UNLESS AN APPEAL TO THE HEAD OF THE DEPARTMENT WAS TAKEN BY THE CONTRACTOR WITHIN THE PERIOD OF SIX MONTHS ALLOWED BY LAW, THE AMOUNT OF $120 WOULD APPEAR TO BE FOR DEPOSITING AND COVERING INTO THE TREASURY AS ABOVE OUTLINED.