A-84565, JULY 23, 1937, 17 COMP. GEN. 50

A-84565, JULY 23, 1937, 17 COMP. GEN. 50

FEDERAL SURPLUS COMMODITIES CORPORATION FUNDS - AVAILABILITY FOR TRAVELING EXPENSES, ETC., IN FOREIGN COUNTRIES FOR MARKET STUDIES FUNDS DERIVED FROM RELIEF APPROPRIATIONS GRANTED TO THE SEVERAL STATES AND TRANSFERRED TO THE FEDERAL SURPLUS COMMODITIES CORPORATION FOR RELIEF PURPOSES ARE FUNDS OF THE UNITED STATES IMPRESSED WITH A DEFINITE TRUST AND ARE NOT AVAILABLE FOR FOREIGN TRAVEL FOR COOPERATIVE MARKET STUDIES, NOTWITHSTANDING THE OBLIGATIONS IN FAVOR OF THE STATES WERE DISCHARGED PARTIALLY BY DONATIONS OF SURPLUS COMMODITIES RECEIVED FROM THE DEPARTMENT OF AGRICULTURE, THUS LEAVING A SURPLUS OF FUNDS AVAILABLE FOR EXPENDITURE OTHERWISE. 16 COMP. GEN. 1072, AMPLIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, FEDERAL SURPLUS COMMODITIES CORPORATION, JULY 23, 1937:

THERE HAS BEEN EXAMINED THE MEMORANDUM OF JUNE 25, 1937, BY YOUR FISCAL OFFICER, TRANSMITTED TO THIS OFFICE WITH YOUR LETTER OF THE SAME DATE, CONCERNING THE STATUS OF FUNDS OF THE FEDERAL SURPLUS COMMODITIES CORPORATION, AND I HAVE TO ADVISE YOU THAT NOTHING CONTAINED IN THE SAID MEMORANDUM APPEARS TO REQUIRE ANY CHANGE IN THE CONCLUSIONS OF MY DECISION OF JUNE 14, 1937, A-84565, TO THE EFFECT THAT SUCH FUNDS HAVING BEEN DERIVED FROM EMERGENCY RELIEF APPROPRIATIONS WERE NOT AVAILABLE FOR EXPENDITURE BY THE CORPORATION FOR PURPOSES CONTRARY TO THE PROVISIONS OF SUCH APPROPRIATIONS.

THE GIST OF THE FISCAL OFFICER'S MEMORANDUM IS THAT ALTHOUGH THE FUNDS WERE DERIVED FROM RELIEF APPROPRIATIONS THROUGH GRANTS TO THE SEVERAL STATES AND TRANSFER BY THE STATES TO THE CORPORATION FOR RELIEF PURPOSES, THE OBLIGATIONS IN FAVOR OF THE STATES ARISING THEREFROM WERE DISCHARGED PARTIALLY BY DONATIONS OF SURPLUS COMMODITIES RECEIVED FROM THE DEPARTMENT OF AGRICULTURE, AND IT IS CONTENDED THAT TO THE EXTENT SUCH OBLIGATIONS WERE SO DISCHARGED THE FUNDS DERIVED FROM THE RELIEF APPROPRIATIONS BECAME THE PROPERTY OF THE CORPORATION AVAILABLE FOR ANY PURPOSE AUTHORIZED UNDER ITS CHARTER.

I FIND NO LEGAL SUPPORT FOR SUCH CONTENTION. WHILE THE CREATION OF THE FEDERAL SURPLUS COMMODITIES CORPORATION, A DELAWARE CORPORATION, WAS NOT AUTHORIZED UNDER ANY FEDERAL STATUTE, ITS INCORPORATORS WERE OFFICIALS OF THE FEDERAL GOVERNMENT AND THE PRIMARY PURPOSE OF ITS CREATION WAS TO AID OR FACILITATE THE ADMINISTRATION OF RELIEF AUTHORIZED UNDER THE ACT OF MAY 12, 1933, 48 STAT. 55, AND AMENDMENTS THERETO. IT IS TO BE NOTED IN THIS CONNECTION THAT THE CONGRESS IN THE ACT OF APRIL 7, 1934, 48 STAT. 428, AUTHORIZED THE SECRETARY OF AGRICULTURE TO MAKE ADVANCES TO THE CORPORATION FOR THE PURCHASE OF DAIRY AND BEEF PRODUCTS FOR DISTRIBUTION FOR RELIEF PURPOSES AND IN THE ACT OF FEBRUARY 11, 1936, 49 STAT. 1117- 1118, FURTHER AUTHORIZED THE SECRETARY OF AGRICULTURE TO PURCHASE AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF FOR DONATION TO THE CORPORATION. SAID ACTS CERTAINLY DID NOT CONTEMPLATE THE CORPORATION MAKING A PROFIT FROM THE DISTRIBUTION OF SUCH COMMODITIES FOR RELIEF OR OBTAINING THEREFROM A CAPITAL TO BE USED IN ITS DISCRETION WITHIN THE PURVIEW OF ITS CHARTER. THE UNITED STATES AND NOT THE CORPORATION WAS THE DONOR OF THE COMMODITIES FOR RELIEF PURPOSES AND THE CORPORATION WAS MERELY THE AGENCY OR CONDUIT THROUGH WHICH THE COMMODITIES WERE DISTRIBUTED TO OR WITHIN THE STATES. RELIEF APPROPRIATION FUNDS IN THE HANDS OF THE CORPORATION WERE AVAILABLE, OF COURSE, FOR THE COSTS OF HANDLING, PROCESSING, AND DISTRIBUTING SUCH COMMODITIES FOR RELIEF, INCLUDING ADMINISTRATIVE EXPENSES PROPERLY INCIDENTAL THERETO, BUT IT IS ELEMENTARY THAT A FIDUCIARY MAY NOT TAKE AN UNAUTHORIZED PROFIT FROM TRANSACTIONS CONDUCTED FOR ITS PRINCIPALS; AND TO THE EXTENT THAT RELIEF OBLIGATIONS TO THE STATES WERE DISCHARGED BY COMMODITIES RECEIVED BY THE CORPORATION PURSUANT TO THE ACTS OF APRIL 7, 1934, AND FEBRUARY 11, 1936, HEREINBEFORE REFERRED TO, THE UNITED STATES, AND NOT THE CORPORATION, FURNISHED THE MEANS FOR DISCHARGING THE OBLIGATIONS, AND THE UNITED STATES, AND NOT THE CORPORATION, WAS ENTITLED TO THE CREDIT AND THE BENEFIT. SIMPLY STATED, THE CORPORATION COULD NOT, EITHER LEGALLY OR EQUITABLY, ACCUMULATE CORPORATION CAPITAL OR--- AS AGAINST THE STATES AND THE UNITED STATES-- TAKE TITLE TO RELIEF APPROPRIATION FUNDS PLACED IN ITS HANDS FOR A FIDUCIARY PURPOSE, BY DISTRIBUTING TO THE STATES COMMODITIES WHICH HAD BEEN FURNISHED BY THE UNITED STATES FOR THAT PURPOSE. WHEN THE OBLIGATIONS TO THE STATES WERE DISCHARGED BY THE DISTRIBUTION BY THE CORPORATION OF THE COMMODITIES, THE RELIEF FUNDS REMAINING IN THE CUSTODY OF THE CORPORATION REVERTED TO THE USE OF THE UNITED STATES, WHICH HAD TRANSFERRED THEM TO THE CORPORATION IN THE FIRST INSTANCE UPON THE APPLICATIONS OF THE STATES FOR "SUPPLEMENTAL GRANTS IN COMMODITIES.' THE UNITED STATES FURNISHED BOTH THE FUNDS AND THE COMMODITIES AND TO THE EXTENT THE CORPORATION USED THE COMMODITIES IN LIEU OF THE FUNDS TO DISCHARGE RELIEF OBLIGATIONS TO THE STATES, THE REMAINING FUNDS BELONGED TO THE UNITED STATES AND NOT TO THE CORPORATION. CONSEQUENTLY, IN THE ABSENCE OF APPROPRIATION OTHERWISE BY THE CONGRESS, SUCH FUNDS WERE NOT AVAILABLE FOR EXPENDITURE BY THE CORPORATION FOR PURPOSES CONTRARY TO THE PROVISIONS OF THE RELIEF APPROPRIATIONS FROM WHICH THEY WERE DERIVED, AND WERE NOT AVAILABLE TO AUGMENT, DIRECTLY OR INDIRECTLY, APPROPRIATIONS OTHERWISE MADE FOR THE DEPARTMENT OF AGRICULTURE OR THE AGRICULTURAL ADJUSTMENT ADMINISTRATION. SEE ARTICLE 1, SECTION 9, CLAUSE 7, OF THE CONSTITUTION, THAT "NO MONEY SHALL BE DRAWN FROM THE TREASURY, BUT IN CONSEQUENCE OF APPROPRIATIONS MADE BY LAW," AND SECTION 3678, REVISED STATUTES, THAT "ALL SUMS APPROPRIATED FOR THE VARIOUS BRANCHES OF EXPENDITURE IN THE PUBLIC SERVICE SHALL BE APPLIED SOLELY TO THE OBJECTS FOR WHICH THEY ARE RESPECTIVELY MADE, AND FOR NO OTHERS.'

THAT THE CONGRESS CONSIDERED THESE REMAINING FUNDS IN THE HANDS OF THE CORPORATION AS BELONGING TO THE UNITED STATES IS EVIDENT FROM THE PROVISIONS OF THE ACT OF JUNE 28, 1937, PUBLIC NO. 165 (APPROVED SINCE THE SUBMISSION OF YOUR LETTER AND THE FISCAL OFFICER'S MEMORANDUM), CONTINUING THE CORPORATION UNTIL JUNE 30, 1939,"AS AN AGENCY OF THE UNITED STATES UNDER THE DIRECTION OF THE SECRETARY OF AGRICULTURE" AND, IN EFFECT, APPROPRIATING SUCH FUNDS AND AUTHORIZING THEIR USE BY THE CORPORATION FOR THE PARTICULAR PURPOSES SPECIFIED IN THAT ACT. IF SUCH FUNDS BELONGED BENEFICIALLY TO THE CORPORATION AND NOT TO THE UNITED STATES, MANIFESTLY THERE WOULD BE NO BASIS FOR THE EXERCISE OF SUCH AUTHORITY BY THE CONGRESS OVER THE USE OF THE FUNDS. IT IS ASSUMED THAT THIS STATUTE SUFFICIENTLY CLARIFIES FOR THE CORPORATION THE STATUS OF THE FUNDS IN QUESTION INSOFAR AS THEIR FUTURE USE IS CONCERNED. THE ACT DOES NOT VALIDATE PRIOR UNAUTHORIZED EXPENDITURES OF SUCH FUNDS OR AUTHORIZE THEIR USE FOR THE PAYMENT OF PURPORTED OBLIGATIONS THERETOFORE INCURRED FOR WHICH SUCH RELIEF FUNDS WERE NOT OTHERWISE LEGALLY AVAILABLE.

ACCORDINGLY, THE CONCLUSIONS OF THE DECISION OF JUNE 14, 1937, RELATIVE TO THE EXPENSES INCURRED BY 10 INDIVIDUALS DURING THE PERIOD FROM JUNE 30 TO SEPTEMBER 22, 1936, INCIDENT TO A TRIP TO GREAT BRITAIN AND CONTINENTAL EUROPE FOR THE ALLEGED PURPOSE OF MAKING STUDIES OF COOPERATIVE ENTERPRISES MUST BE AND ARE AFFIRMED.