B-146224, SEPTEMBER 5, 1961, 41 COMP. GEN. 178

B-146224, SEPTEMBER 5, 1961, 41 COMP. GEN. 178

SET-OFF - COMPENSATION, ETC., DUE CIVILIAN EMPLOYEES - AVAILABILITY THE INHERENT RIGHT OF THE GOVERNMENT TO SET OFF MONEYS IN ITS POSSESSION DUE A PERSON WHO IS INDEBTED TO THE UNITED STATES, WHEN A DEBTOR-CREDITOR RELATIONSHIP EXISTS BETWEEN THE UNITED STATES AND THE PERSON, IS NOT AFFECTED BY STATUTES UNLESS THE LANGUAGE OR THE CONGRESSIONAL INTENT IS CLEARLY EXPRESSED; THEREFORE, IN THE ABSENCE OF AN EXPRESS OR NECESSARILY IMPLIED PROVISION IN THE FEDERAL EMPLOYEES' COMPENSATION ACT, 5 U.S.C. 751, ET SEQ., PRECLUDING THE UNITED STATES FROM EXERCISING ITS RIGHT OF SET-OFF, AND NOTWITHSTANDING THE PROVISIONS OF SECTION 25 OF THE ACT, 5 U.S.C. 775, EXEMPTING AWARDS UNDER THE ACT FROM CLAIMS OF CREDITORS, WHICH ARE SIMILAR TO THOSE IN RETIREMENT AND OTHER BENEFIT ACTS, PAYMENTS UNDER THE ACT, MAY BE SET OFF IN LIQUIDATION OF AN INDEPENDENTLY ESTABLISHED DEBT TO THE UNITED STATES, AND SUCH SET-OFF MAY BE APPLIED TO EITHER MONTHLY PAYMENTS OR LUMP-SUM AWARDS.

TO THE ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY, SEPTEMBER 5, 1961:

REFERENCE IS MADE TO YOUR LETTER DATED JUNE 22, 1961, REQUESTING OUR DECISION AS TO WHETHER PAYMENTS UNDER AN AWARD BY THE BUREAU OF EMPLOYEES' COMPENSATION, DEPARTMENT OF LABOR, TO AN EMPLOYEE OF THE POST OFFICE DEPARTMENT MAY BE SET OFF IN LIQUIDATION OF AN INDEBTEDNESS TO THE UNITED STATES, AND IF THE ANSWER IS IN THE AFFIRMATIVE, FOR FURTHER DECISION AS TO WHETHER SET-OFF MAY BE APPLIED WITH EQUAL PROPRIETY TO MONTHLY PAYMENTS AND TO LUMP-SUM AWARD.

YOU SAY THAT MR. ELLIS L. LARSUEL CLAIMED INJURY AS A RESULT OF EMPLOYMENT IN THE POST OFFICE AT PASADENA, CALIFORNIA, AND HAVING FILED HIS CLAIM NO. A-13-92-476 IS RECEIVING MONTHLY PAYMENTS OF $68, WITH THE EXTENT TO WHICH HE MAY BE ENTITLED TO FURTHER COMPENSATION NOT YET FULLY DETERMINED.

YOU FURTHER SAY THAT MR. LARSUEL IS INDEBTED TO THE UNITED STATES IN THE SUM OF $257.34 WITH INTEREST FROM JANUARY 10, 1961, ACCRUING AT THE RATE OF $0.0381 PER DAY AND THAT THE INDEBTEDNESS AROSE FROM THE PAYMENT BY THE FEDERAL HOUSING ADMINISTRATION OF CLAIMS FILED BY UNITED STATES NATIONAL BANK OF PASADENA, CALIFORNIA, AND BANK OF PICO RIVERA, PICO, CALIFORNIA, ON DEFAULTED NOTES WHICH HAD BEEN EXECUTED BY MR. LARSUEL AND REPORTED FOR INSURANCE UNDER THE PROVISIONS OF TITLE I OF THE NATIONAL HOUSING ACT.

YOUR DOUBT IN THE MATTER ARISES BECAUSE OF THE VIEW OF THE BUREAU OF EMPLOYEES' COMPENSATION THAT SECTION 25 OF THE FEDERAL EMPLOYEES' COMPENSATION ACT, 5 U.S.C. 775, PRECLUDES SET-OFF WITHOUT THE DEBTOR'S WRITTEN AUTHORIZATION.

THE POSITION OF THE BUREAU OF EMPLOYEES' COMPENSATION IN THIS MATTER WAS SET FORTH IN THEIR LETTER TO US DATED JULY 19, 1961, AS FOLLOWS:

SECTION 25 OF THE FEDERAL EMPLOYEES' COMPENSATION ACT OF SEPTEMBER 7, 1916 AS AMENDED, PROVIDES " THAT ANY ASSIGNMENT OF A CLAIM FOR COMPENSATION UNDER THIS ACT SHALL BE VOID AND ALL COMPENSATION AND CLAIMS THEREFOR SHALL BE EXEMPT FROM ALL CLAIMS OF CREDITORS.'

IN VIEW OF THE PROVISIONS OF THIS SECTION OF THE ACT, IT IS THE POLICY OF THIS BUREAU AND WAS THE POLICY OF THE FORMER UNITED STATES EMPLOYEES COMPENSATION COMMISSION TO MAKE PAYMENTS ONLY TO PERSONS AWARDED COMPENSATION AS PROVIDED BY THE ABOVE REFERENCE ACT. WE HAVE HELD THAT SUCH COMPENSATION IS NOT SUBJECT TO CLAIMS OF CREDITORS. THEREFORE SET- OFF MAY NOT BE MADE BECAUSE OF AN INDEBTEDNESS OF A PAYEE TO ANOTHER GOVERNMENT AGENCY, WITHOUT THE WRITTEN REQUEST OF SUCH PAYEE. WE BELIEVE THIS POLICY TO BE IN ACCORDANCE WITH THE PROVISIONS OF LAW AND THE INTENT OF THE UNITED STATES CONGRESS.

THE RIGHT OF SET-OFF IS INHERENT IN THE UNITED STATES GOVERNMENT AND IS GROUNDED IN THE COMMON-LAW RIGHT OF EVERY CREDITOR TO APPLY THE MONEYS OF HIS DEBTOR IN HIS HANDS TO THE EXTINGUISHMENT OF CLAIMS DUE HIM FROM THE DEBTOR. GRATIOT V. UNITED STATES, 40 U.S. 366; MCKNIGHT V. UNITED STATES, 98 U.S. 179; BARRY V. UNITED STATES, 229 U.S. 47.

FURTHERMORE, IT IS A WELL-ESTABLISHED RULE THAT THE SOVEREIGN IS NOT BOUND BY A STATUTE WHICH INTENDS TO RESTRAIN OR DIMINISH ITS POWERS, RIGHTS OR INTERESTS UNLESS IT IS NAMED THEREIN OR THE LEGISLATIVE INTENT TO INCLUDE THE SOVEREIGN IS OTHERWISE CLEARLY EXPRESSED. 82 C.J.S. 554; ID. 36; UNITED STATES V. HERRON, 87 U.S. 251; GUARANTEE TITLE AND TRUST COMPANY V. TITLE GUARANTY AND SURETY COMPANY, 224 U.S. 152; CALIFORNIA IRON YARDS COMPANY V. COMMISSIONER OF INTERNAL REVENUE, 47 F.2D 514.

IT IS IMPORTANT TO NOTE THAT THERE IS NOTHING IN THE FEDERAL EMPLOYEES' COMPENSATION ACT EITHER EXPRESSLY OR BY NECESSARY IMPLICATION PRECLUDING THE UNITED STATES FROM EXERCISING ITS WELL ESTABLISHED RIGHT OF SET-OFF.

THE PROVISIONS OF SECTION 25 OF THE FEDERAL EMPLOYEES' COMPENSATION ACT ARE SIMILAR TO THOSE CONTAINED IN LAWS RELATING TO THE RETIREMENT OF CIVILIAN EMPLOYEES OF THE UNITED STATES, 5 U.S.C. 2265; LAWS RELATING TO THE RETIREMENT OF FOREIGN SERVICE OFFICERS, 22 U.S.C. 1104; LAWS RELATING TO RAILROAD UNEMPLOYMENT INSURANCE BENEFITS, 45 U.S.C. 352 (E); AND LAWS RELATING TO SOCIAL SECURITY BENEFITS, 42 U.S.C. 407. NOTWITHSTANDING SUCH PROVISIONS, PAYMENTS DUE UNDER THE LAWS CITED HAVE BEEN HELD TO BE SUBJECT TO SET-OFF AGAINST DEBTS DUE THE UNITED STATES WHERE A DEBTOR-CREDITOR RELATIONSHIP EXISTS BETWEEN THE UNITED STATES AND THE PARTY OTHERWISE ENTITLED TO RECEIVE PAYMENT, IN THE ABSENCE OF A STATUTE EXPRESSLY PROVIDING OTHERWISE. SEE AS TO CIVIL SERVICE RETIREMENT MONEYS, 3 COMP. GEN. 98; 16 ID. 161; ID. 962; 21 ID. 1000; O LEARY V. UNITED STATES, 82 CT.1CL. 05; AS TO FOREIGN SERVICE RETIREMENT MONEYS, A-54780, FEBRUARY 11, 1935; AS TO RAILROAD UNEMPLOYMENT INSURANCE BENEFITS, B-10614, AUGUST 26, 1940; AND AS TO SOCIAL SECURITY BENEFITS, A-89228, APRIL 29, 1938.

ACCORDINGLY, IT IS OUR VIEW THAT PAYMENTS UNDER AN AWARD BY THE BUREAU OF EMPLOYEES' COMPENSATION MAY PROPERLY BE SET OFF IN LIQUIDATION OF AN INDEPENDENTLY ESTABLISHED DEBT TO THE UNITED STATES, 16 COMP. GEN. 568, AND SUCH SET-OFF MAY BE APPLIED WITH EQUAL PROPRIETY EITHER TO MONTHLY PAYMENTS OR TO LUMP-SUM AWARDS.