B-136946, APR. 8, 1960

B-136946, APR. 8, 1960

TO LAVERN R. DILWEG, ESQUIRE:

REFERENCE IS MADE TO OUR LETTER OF FEBRUARY 10, 1960, AND SUBSEQUENT CONVERSATIONS BETWEEN YOURSELF AND REPRESENTATIVES OF THIS OFFICE CONCERNING THE ACTION TAKEN BY US IN DIRECTING THE WITHHOLDING OF PAYMENT THROUGH YOU OF CERTAIN CLAIMS PAYABLE TO FILIPINOS. THIS LETTER IS TO ADVISE YOU OF THE SPECIFIC BASIS FOR OUR ACTION AND OF OUR INTENTIONS WITH RESPECT TO DISPOSITION OF THE MONIES BEING WITHHELD.

IT APPEARS THAT YOU OBTAINED POWERS OF ATTORNEY AND EMPLOYMENT CONTRACTS IN 1949 FROM SOME 1,740 FILIPINOS AUTHORIZING YOU TO SUE FOR BACK PAY AND ALLOWANCES UNDER THE MISSING PERSONS ACT, 50 APP.U.S.C. 1001 ET SEQ., AND TO COLLECT FEES FOR YOUR SERVICES. YOU CARRIED THE CASE TO THE UNITED STATES SUPREME COURT AND LOST. IN 1957 CONGRESS ENACTED PUBLIC LAW 85-217 AUTHORIZING PAYMENT OF BACK PAY AND ALLOWANCES TO THE FILIPINOS INVOLVED; AND ON THE BASIS OF POWERS OF ATTORNEY ON FILE IN THE FINANCE CENTER, U.S. ARMY, INDIANAPOLIS 49, INDIANA, CHECKS WERE DRAWN BY THE FINANCE CENTER MADE PAYABLE TO THE CLAIMANTS AND DELIVERED TO YOU.

IN THE CASE OF PHILIPPINE SCOUTS WHO CAME UNDER PUBLIC LAW 85-217, AND FROM WHOM YOU RECEIVED POWERS OF ATTORNEY, TWO CHECKS WERE DRAWN, BOTH PAYABLE TO THE CLAIMANT. ONE CHECK IN THE AMOUNT OF THE MAXIMUM FEE ALLOWABLE UNDER SECTION 2 (C) OF THE ACT, AS AMENDED, WAS MAILED TO THE CLAIMANT IN YOUR CARE; THE OTHER, CONSTITUTING THE BALANCE DUE, WAS MAILED DIRECTLY TO THE CLAIMANT. THE MAXIMUM FEE WAS ALLOWED ON THE BASIS OF THE EMPLOYMENT CONTRACTS, EACH OF WHICH PROVIDED FOR A FEE IN EXCESS OF THE MAXIMUM.

SUBSEQUENT TO THE ENACTMENT OF PUBLIC LAW 85-217, THE CASES OF SOME 400 FILIPINOS WHO WERE NOT SCOUTS WERE REVIEWED AND ALLOWED UNDER THE NEW CRITERIA ESTABLISHED. IT WAS CONCLUDED THAT THE MAXIMUM FEE LIMITATION DID NOT APPLY IN THOSE CASES; AND, THEREFORE, ONLY ONE CHECK PAYABLE TO EACH CLAIMANT WAS DRAWN AND FORWARDED TO HIM IN YOUR CARE PURSUANT TO YOUR POWER OF ATTORNEY.

ON JANUARY 7, 1960, WE RECEIVED A REPORT PREPARED BY THE UNITED STATES SECRET SERVICE WHICH INDICATED THAT YOU MIGHT BE CASHING WITHOUT AUTHORITY THE CHECKS MAILED TO CLAIMANTS IN YOUR CARE. ALSO, THE REPORT QUESTIONED WHETHER YOU HAD EARNED ANY FEE WITH RESPECT TO THE CLAIMS THAT WERE BEING PAID UNDER PUBLIC LAW 85-217, IT APPEARING THAT UNDER THE EMPLOYMENT CONTRACTS IN QUESTION, YOU WERE ENGAGED TO SETTLE OR PROSECUTE CLAIMS IN COURT ON A CONTINGENT FEE BASIS; AND HAVING FAILED IN THE SETTLEMENT OR PROSECUTION OF THESE CLAIMS IT MIGHT BE THAT NO FEE HAS BEEN EARNED. ANY EVENT, SEVERAL CLAIMANTS HAVE ASSERTED THAT YOU ARE NOT ENTITLED TO THE FEES CLAIMED. AND WHILE THE POWERS OF ATTORNEY HELD BY YOU ARE BROAD, WE DO NOT CONSIDER, IN VIEW OF THE PROVISIONS OF SECTION 203 OF TITLE 31, U.S.C. THAT YOU HAVE A LIEN ON THE FUNDS PAYABLE TO THESE CLAIMANTS OR ARE OTHERWISE ENTITLED AS A MATTER OF RIGHT TO HAVE PAYMENT MADE TO OR THROUGH YOU. SECTION 203 PROVIDES, IN PART, THAT:

"ALL TRANSFERS AND ASSIGNMENTS MADE OF ANY CLAIM UPON THE UNITED STATES, OR OF ANY PART OR SHARE THEREOF, OR INTEREST THEREIN, WHETHER ABSOLUTE OR CONDITIONAL, AND WHATEVER MAY BE THE CONSIDERATION THEREFOR, AND ALL POWERS OF ATTORNEY, ORDERS, OR OTHER AUTHORITIES FOR RECEIVING PAYMENT OF ANY SUCH CLAIM, OR OF ANY PART OR SHARE THEREOF, EXCEPT AS HEREINAFTER PROVIDED, SHALL BE ABSOLUTELY NULL AND VOID, UNLESS THEY ARE FREELY MADE AND EXECUTED IN THE PRESENCE OF AT LEAST TWO ATTESTING WITNESSES, AFTER THE ALLOWANCE OF SUCH A CLAIM, THE ASCERTAINMENT OF THE AMOUNT DUE, AND THE ISSUING OF A WARRANT FOR THE PAYMENT THEREOF. SUCH TRANSFERS, ASSIGNMENTS, AND POWERS OF ATTORNEY, MUST RECITE THE WARRANT FOR PAYMENT, AND MUST BE ACKNOWLEDGED BY THE PERSON MAKING THEM, BEFORE AN OFFICER HAVING AUTHORITY TO TAKE ACKNOWLEDGMENTS OF DEEDS, AND SHALL BE CERTIFIED BY THE OFFICER; AND IT MUST APPEAR BY THE CERTIFICATE THAT THE OFFICER, AT THE TIME OF THE ACKNOWLEDGMENT, READ AND FULLY EXPLAINED THE TRANSFER, ASSIGNMENT, OR WARRANT OF ATTORNEY TO THE PERSON ACKNOWLEDGING THE SAME. THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO PAYMENTS FOR RENT OF POST OFFICE QUARTERS MADE BY POSTMASTERS TO DULY AUTHORIZED AGENTS OF THE LESSORS.'

ACCORDINGLY, IT IS CONCLUDED THAT THE POWERS OF ATTORNEY HELD BY YOU MAY NOT BE RELIED UPON TO REQUIRE CONTINUANCE OF THE PAST PAYMENT PROCEDURES. SUCH RECOGNITION AS HAS BEEN GIVEN THEM IN THE PAST, WAS IN OUR VIEW MERELY COMPLIANCE WITH THE CLAIMANT'S DIRECTION THAT THE CHECKS BE DELIVERED IN YOUR CARE. MOREOVER, THE RECORD SHOWS THAT SOME OF THESE POWERS OF ATTORNEY MAY HAVE BEEN EFFECTIVELY REVOKED BY THE CLAIMANTS, IN VIEW OF LATER POWERS GRANTED BY THEM IN FAVOR OF THE AMERICAN ARMED FORCES ASSOCIATION.

OUR ACTION IN DIRECTING THE WITHHOLDING OF PAYMENTS THROUGH YOU WAS NOT PREDICATED UPON A RESOLUTION OF THE ISSUES RAISED. NOR DO WE BELIEVE THAT THIS OFFICE NEED CONCERN ITSELF OVER WHETHER YOU EARNED A FEE OR WHETHER SOME OF THE POWERS OF ATTORNEY YOU HOLD WERE REVOKED, QUESTIONS WHICH INVOLVE YOUR RELATIONSHIP WITH YOUR CLIENTS. BUT TO THE EXTENT THAT THE GOVERNMENT MAY NOT BE ACQUIRING A GOOD ACQUITTANCE OF THE CLAIMS AGAINST IT, THIS OFFICE DOES HAVE AN INTEREST IN DETERMINING HOW PAYMENT SHOULD BE EFFECTED. THE GOVERNMENT HAS ALREADY BEEN PUT TO THE EXPENSE OF INVESTIGATING COMPLAINTS BY CLAIMANTS WHO CHARGED THAT YOU WERE NOT AUTHORIZED TO CASH CHECKS DELIVERED TO THEM IN YOUR CARE, AND IT HAS BEEN NECESSARY TO RECOVER FROM BANKS THE AMOUNTS OF CLAIMANTS' CHECKS NEGOTIATED BY YOU. WHILE WE RECOGNISE THAT YOU MAY HAVE CERTAIN RIGHTS WITH RESPECT TO THE PAYMENTS INVOLVED AS BETWEEN YOURSELF AND YOUR CLIENTS AND THAT THE CONGRESS IN AUTHORIZING A LIMITED PAYMENT OF ATTORNEYS' FEES WAS AWARE OF YOUR CONCERN WITH THE SUBJECT MATTER OF THE LEGISLATION, NEVERTHELESS, BEING ON NOTICE OF THE ABOVE AND IN VIEW OF THE QUESTION RELATED TO THE ACQUITTANCE RECEIVED, WE CANNOT ALLOW THE PAST PAYMENT PROCEDURE TO CONTINUE. WE DO NOT CONSTRUE PUBLIC LAW 85-217 AS DIRECTING PAYMENT OF A FEE TO YOU BUT, RATHER, MERELY AS AUTHORIZING YOU TO COLLECT SUCH FEES AS MAY HAVE BEEN EARNED PRIOR TO PASSAGE OF THE ACT.

IN VIEW OF THE ABOVE, WE ADVISED YOU ON FEBRUARY 10, 1960, THAT WE WERE ISSUING INSTRUCTION THAT FURTHER PAYMENTS TO CLAIMANTS THROUGH YOU WERE TO BE SUSPENDED. AND IN ORDER TO PROTECT SUCH INTEREST AS YOU MIGHT HAVE IN THE FUNDS INVOLVED, YOU WERE ADVISED THAT THE AMOUNTS OF SUCH POSSIBLE INTEREST WOULD NOT BE PAID TO THE CLAIMANTS, BUT WOULD BE WITHHOLD IN SUSPENSE PENDING RESOLUTION OF THE QUESTIONS INVOLVED. SUBSEQUENT TO OUR LETTER OF FEBRUARY 10, WE REVIEWED THE MATTER IN ITS RELATION TO CIVIL ACTION NO. 444-59, BROUGHT BY YOU IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA AGAINST THE COMPTROLLER GENERAL OF THE UNITED STATES, ET AL., IN CONNECTION WITH CLAIMS PAYABLE WHICH ARE IDENTICAL TO THOSE HERE INVOLVED, EXCEPT THAT THE BENEFICIARIES ARE NOW DECEASED. THE ISSUES IN THAT CASE ARE RELATED TO THE MATTERS INVOLVED IN CONNECTION WITH PAYMENTS TO LIVE BENEFICIARIES IN THAT THERE YOU ARE ASSERTING A RIGHT TO RECEIVE PAYMENT ON THE BASIS OF AN ATTORNEY'S LIEN ARISING OUT OF CIRCUMSTANCES APPLICABLE TO BOTH CATEGORIES OF CLAIMS.

THIS IS TO ADVISE THAT, SINCE THE PROVISIONS OF 31 U.S.C. 203 RENDER YOUR POWERS OF ATTORNEY NULL AND VOID SO FAR AS THE GOVERNMENT IS CONCERNED, WE, IN ORDER TO ASSURE A FINAL ACQUITTANCE, SHALL NOT DISTURB OUT INSTRUCTIONS TO WITHHOLD IN SUSPENSE THE AMOUNTS POSSIBLY DUE YOU, PENDING THE OUTCOME OF YOUR ACTION WITH RESPECT TO DECEASED BENEFICIARIES. IF YOU SHOULD PREVAIL, PAYMENT OF THE AMOUNTS WITHHELD MAY BE MADE, IN THE ABSENCE OF ANY NEW FACTORS, IN ACCORDANCE WITH THE FINAL RULING IN THAT ACTION. IF THE GOVERNMENT SHOULD PREVAIL, WE PROPOSE TO DIRECT DELIVERY OF CHECKS FOR THE AMOUNTS WITHHELD DIRECTLY TO THE CLAIMANTS INVOLVED.