B-147747, APR. 26, 1963

B-147747, APR. 26, 1963

TO THE SECRETARY OF STATE:

REFERENCE IS MADE TO THE GOVERNMENT'S CLAIM FOR $588.71 AGAINST CLAYTON J. MCCULLARS, DECEASED, FORMER AUTHORIZED CERTIFYING OFFICER FOR THE DEPARTMENT OF STATE, REPRESENTING AN UNAUTHORIZED PAYMENT OF DEPENDENT'S TRAVEL EXPENSES CERTIFIED BY MR. MCCULLARS FOR PAYMENT TO ONE DAVID A. MUNRO.

SINCE THE GOVERNMENT COULD NOT COLLECT THE IMPROPER PAYMENT FROM MR. MUNRO--- THE INDEBTEDNESS WAS PROSECUTED TO JUDGEMENT, BUT NO COLLECTION HAS BEEN POSSIBLE ON THE JUDGMENT--- COLLECTION ACTION WAS INSTITUTED AGAINST MR. MCCULLARS. THE MATTER WAS REFERRED TO THE DEPARTMENT OF JUSTICE AND IS BEING HANDLED BY THE UNITED STATES ATTORNEY IN BALTIMORE,MARYLAND. BY LETTER OF FEBRUARY 6, 1963, THE UNITED STATES ATTORNEY ADVISED US OF THE RECEIPT OF AN OFFER FROM MR. MCCULLARS' SURETY TO COMPROMISE THE INDEBTEDNESS FOR 50 PERCENT OF THE STATED AMOUNT DUE AND REQUESTED OUR VIEWS AS TO ITS ACCEPTANCE. IN THE COURSE OF OUR EXAMINATION OF THE CASE PREPARATORY TO ANSWERING THE UNITED STATES ATTORNEY'S LETTER, WE ASCERTAINED THAT YOUR DEPARTMENT IS HOLDING IN A SUSPENSE ACCOUNT $800 DUE THE ESTATE OF MR MCCULLARS PENDING THE SETTLEMENT OF THIS CLAIM--- DESPITE THE FACT THAT THE SURETY, THE UNITED STATES FIDELITY AND GUARANTY COMPANY, APPARENTLY HAD BEEN ADVISED THAT ALL AMOUNTS DUE TO MR. MCCULLARS HAD BEEN DISPENSED. A COPY OF THE SURETY'S LETTER OF OCTOBER 8, 1962, TO THE UNITED STATES ATTORNEY IN THIS CONNECTION IS ENCLOSED FOR YOUR INFORMATION.

WE DO NOT KNOW WHO WAS RESPONSIBLE FOR FAILING TO DISCLOSE THE FACT THAT FUNDS DUE MR. MCCULLARS WERE STILL AVAILABLE. SUCH ACTION CLEARLY PREJUDICES THE SURETY AND PLACES THE GOVERNMENT IN AN EXCEEDINGLY EMBARRASSING POSITION.

IT IS THE LONG-ESTABLISHED PRACTICE OF THE GOVERNMENT TO FIRST APPLY ALL AVAILABLE ASSETS IN ITS POSSESSION BELONGING TO AN INDEBTED OFFICER OR EMPLOYEE TOWARD LIQUIDATION OF THE INDEBTEDNESS BEFORE RESORTING TO ITS REMEDY UNDER THE BOND OF THE OFFICER OR EMPLOYEE. WE SPECIFICALLY HELD IN 39 COMP. GEN. 203 THAT AN AGENCY MAY NOT PLACE AMOUNTS DUE AN INDEBTED EMPLOYEE IN A SUSPENSE ACCOUNT UNTIL CONCLUSION OF NEGOTIATIONS WITH THE EMPLOYEE'S SURETY BUT MUST IMMEDIATELY SET OFF AGAINST THE DEBT ANY AMOUNTS DUE THE EMPLOYEE. WE STATED IN THAT DECISION:

"AS STATED IN 27 COMP. GEN. 703, IT IS LEGAL AND PROPER FOR THE GOVERNMENT, THROUGH ADMINISTRATIVE OFFICERS, TO FIRST APPLY ALL AVAILABLE ASSETS IN ITS POSSESSION, INCLUDING BOTH UNPAID SALARY AND AMOUNT IN THE RETIREMENT FUND, BELONGING TO A DEFAULTING OFFICER OR EMPLOYEE, TOWARD LIQUIDATION OF THE INDEBTEDNESS, BEFORE RESORTING TO ITS REMEDY UNDER THE BOND OF THE OFFICER OF EMPLOYEE. THIS IS NECESSARY TO PROTECT THE GOVERNMENT'S INTEREST, LIST BY FAILURE TO DO SO, RECOURSE AGAINST THE SURETY MAY, TO THAT EXTENT, BE LOST. IN THIS CONNECTION SEE UNITED STATES V. UNITED STATES FIDELITY AND GUARANTY CO., 35 F.SUPP. 959, WHERE THE COURT HELD THAT A SURETY WAS DISCHARGED FROM LIABILITY TO THE EXTENT OF THE AMOUNT OF MONEY TO THE CREDIT OF A GOVERNMENT EMPLOYEE IN THE CIVIL SERVICE RETIREMENT FUND WHICH THE UNITED STATES HELD ON THE DATE OF THE EMPLOYEE'S DISMISSAL AND SUBSEQUENTLY PAID TO HIM.'

YOU ARE REQUESTED TO TAKE IMMEDIATE ACTION TO SET OFF AGAINST THE $800 DUE MR. MCCULLARS THE $588.71 OWED BY HIM TO THE GOVERNMENT AND TO ADVISE THIS OFFICE OF THE ACTION TAKEN. BY LETTER OF TODAY WE ARE REQUESTING THE UNITED STATES ATTORNEY IN BALTIMORE TO HOLD THE COLLECTION ACTION IN ABEYANCE PENDING OUR RECEIPT FROM YOU OF NOTIFICATION THAT THE DEBT HAS BEEN LIQUIDATED.