B-83880, APRIL 22, 1954, 33 COMP. GEN. 503

B-83880, APRIL 22, 1954, 33 COMP. GEN. 503

MARITIME ADMINISTRATION - SALES OF WAR-BUILT MERCHANT VESSELS - DISPOSITION OF RECEIPTS - EXPENSES PAYABLE FROM PROCEEDS MONEYS HELD IN TRUST ACCOUNT ESTABLISHED TO FACILITATE SALES OF VESSELS UNDER THE MERCHANT SHIP SALES ACT OF 1946 MAY NOT BE USED FOR PAYMENT OF EXPENSES INCIDENT TO LIBEL ACTIONS AGAINST THE VESSELS OR FOR ANY OTHER EXPENSES AS DISTINGUISHED FROM ADJUSTMENTS OR REFUNDS OF "UNEARNED" MONEYS SUCH AS ADVANCE PAYMENTS OF CHARTER HIRE AND DEPOSITS ACCOMPANYING PURCHASE APPLICATIONS NOT CONSUMMATING IN A SALE.

ACTING COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF COMMERCE, APRIL 22, 1954:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 25, 1954, REQUESTING MY OPINION AS TO WHETHER THE MARITIME ADMINISTRATION SHOULD CONTINUE PAYING CERTAIN EXPENSES INCIDENT TO SHIPS LABELED BY THE DEPARTMENT OF JUSTICE OUT OF FUNDS IN THE TRUST ACCOUNT "13X6869 UNEARNED MONEYS, MERCHANT SHIP SALES, WAR-BUILT VESSELS.'

SECTION 12 (D) OF THE MERCHANT SHIP SALES ACT OF 1946, 60 STAT. 50, PROVIDES IN PERTINENT PART THAT:

ALL MONEYS RECEIVED BY THE COMMISSION ( MARITIME ADMINISTRATION) UNDER THIS ACT SHALL BE DEPOSITED IN THE TREASURY TO THE CREDIT OF MISCELLANEOUS RECEIPTS. * * *

INCIDENT TO THE CHARTERING AND SALES OF WAR-BUILT VESSELS PURSUANT TO THAT ACT, THE COMMISSION RECEIVED ADVANCE PAYMENTS ON CHARTER HIRE AND DEPOSITS ACCOMPANYING APPLICATIONS FOR PURCHASE OF THOSE VESSELS. THOSE RECEIPTS DID NOT REPRESENT "EARNED" MONEYS WHEN FIRST RECEIVED AND IN THOSE INSTANCES WHERE CHARTERS WERE TERMINATED PRIOR TO THE EXPIRATION OF THE PERIODS COVERED BY THE ADVANCE PAYMENTS OR WHERE APPLICATIONS FOR THE PURCHASES OF VESSELS DID NOT CONSUMMATE IN SALES, REFUNDS OR ADJUSTMENTS WERE REQUIRED. IN ORDER TO FACILITATE THE PAYMENT OF SUCH REFUNDS OR ADJUSTMENTS, THE SUBJECT TRUST ACCOUNT WAS ESTABLISHED BY ACCOUNTS AND PROCEDURES LETTER NO. 11240, DATED JANUARY 27, 1947, PURSUANT TO OFFICE DECISION OF JANUARY 15, 1947, B-39802, B 62804.

AS STATED IN YOUR LETTER, THE ADDITIONAL COST, IF ANY, TO CHARTERERS RESULTING FROM AN ADDENDUM TO THEIR CHARTERS PROVIDING FOR REDELIVERY OF VESSELS AT RESERVE FLEET SITES ON THE GULF COAST RATHER THAN AT PORTS OF DELIVERY, WAS AUTHORIZED BY OFFICE DECISION OF APRIL 22, 1949, B-83880, TO BE PAID FROM THE SUBJECT TRUST ACCOUNT AS A REDUCTION IN THE ADDITIONAL CHARTER HIRE DUE THE GOVERNMENT OR BY REFUND OF ADDITIONAL CHARTER HIRE PREVIOUSLY PAID BY THE CHARTERERS AND DEPOSITED INTO THAT ACCOUNT.

THE BASIS FOR THOSE AUTHORIZATIONS WAS THAT THE AMOUNTS PAID OUT OF THE TRUST ACCOUNT WERE ADJUSTMENTS OR REFUNDS OF "UNEARNED" MONEYS RECEIVED AND DEPOSITED THEREIN. HOWEVER, WHENEVER MONEYS IN THAT ACCOUNT HAVE BECOME "EARNED; " I.E., EXCEED THE RESERVE DETERMINED TO BE NECESSARY FOR POSSIBLE REFUNDS OR ADJUSTMENTS, THEY MUST BE DEPOSITED IN THE TREASURY TO THE CREDIT OF MISCELLANEOUS RECEIPTS, PURSUANT TO THE ABOVE-QUOTED SECTION 12 (D) AND TO THE ACCOUNTS AND PROCEDURES LETTER OF JANUARY 27, 1947, SUPRA.

THE USE OF THE SUBJECT TRUST FUND ACCOUNT FOR EXPENSES INCIDENT TO LIBEL ACTIONS AGAINST VESSELS, OR FOR ANY OTHER "EXPENSES" (AS DISTINGUISHED FROM THE "REFUNDS" AND "ADJUSTMENTS" AUTHORIZED IN OFFICE DECISIONS OF JANUARY 15, 1947 AND APRIL 22, 1949), IRRESPECTIVE OF WHETHER OR NOT THEY ARE MORTGAGED TO THE GOVERNMENT, IS IMPROPER.

ACCORDINGLY, THE USE OF THE SUBJECT TRUST ACCOUNT FOR ANY PURPOSE NOT HERETOFORE SPECIFICALLY AUTHORIZED BY THE CITED DECISIONS OF THIS OFFICE MUST BE CONSIDERED IN CONTRAVENTION OF THE MERCHANT SHIP SALES ACT OF 1946.