B-131865, B-131868 February 18, 1960

B-131865, B-131868 February 18, 1960

The Honorable Joseph Campbell The Attorney General

Attention: Chief, Admiralty & Shipping Section

Re: Judgments in Pacific Far East Line, Inc. v. United States, in the United States District Court for the Northern District of California, Southern Division, Admiralty Nos. 27164 and 27165

Dear Mr. Attorney General:

References is made to your letters of December 18, 1959, and January 22, 1960, file (GCD:LFL 61-11-563, 61-11-564, relative to the judgments in the above-entitled cases.

The views expressed by you as to the application of the 31 U.S.C. 227 which is a modification of the act of March 3, 1875, 18 Stat. 481, as amended, are noted. But the language of that section is so clear and unambiguous that "it shall be the duty of the Comptroller General to withhold" from payment of the amount of a judgment any indebtedness to the United States that we feel the statute generally is received to be considered mandatory rather than permissive. See in this connection 7 Comp. Dec. 585; 23 id. 68; 4 Comp. Gen. 859; 17 id. 503 and 37 Op. Atty. Gen. 215, 217, where the Attorney General stated:

"There is no doubt, therefore, that the right of set-off has always been available to the Federal Government. Until the Act of 1875 was enacted, the exercise of the right was within the discretion of the accounting officers.

"The Act of 1875 took away the discretion which accounting officers previously had in announcing the right, and made it the duty of the Secretary of the Treasury, upon presentation for payment of 'any final judgment recovered against the United States ***' to withhold payment of an amount of such judgment ***equal to any debt due the United States."

Notwithstanding the mandatory nature of 31 U.S.C. 227, we recognize that circumstances of a particular case may be such that it is not within the scope of the statute for reasons which may include the doubtful validity or undetermined nature of the debt, the applicability of other statutes to collection procedures (see for example, 49 U.S.C. 66), the availability of credits otherwise due or to bonus due the the judgment creditor deemed sufficient to liquidate the debt so that no net balance will be owed to the Government. Also, in those cases where, either because the indebtedness is so small or for some other reason, it is not feasible or not possible to cause legal proceedings to be instituted, we do not believe that we are required to withhold the amount of the debt from the judgment, absent the consent of the judgment creditor.

In the instant cases, copies of the pleadings made available to us indicate the loss and damage claims were pleaded in the Court actions as counterclaims or affirmative defenses and were dismissed without consideration of their merits because of the rules of procedure in admiralty cases discussed in United States v. Lsthanian Steamship Co., 359 U.S. 314. While a possibility exists that under the theory of Barrette v. Home Lines, Inc., 168 F. Step. 141, 143, the Government may avoid a defense plea of time-bar as to its loss and damage claims, a court night hold, following the South Star and Grace Line decision that our loss and damage claims are extinguished and that the carrier is not currently indebted on that account. At least it seems clear the debt is not fully determined and the carrier appears to be one regularly doing business with the Government from when collection of any judgment rendered in favor of the Government readily could be affected from credits due or to become due. Accordingly, and considering the procedure urged in your letters, the certified judgements in the above-entitled cases which were forwarded here with your letter of November 24, 1959, have been transmitted to our Transportation Division for payment, if otherwise proper.

The records of our Office on the items setoff and counterclaimed in the above-entitled cases are being reassembled. Upon the completion of such reassembly, the information requested will be furnished to your West Coast office with a copy to you. such information as is desired, and which is not contained in these records, most of necessity be secured from the General Services Administration.

Sincerely yours,

Joseph Campbell Comptroller General of the United States

cc: Admiralty & Shipping Section U.S. Department of Justice P.O. Box 502, San Francisco, CA (Re: REF: FWA 61-11-563 61-11-564)

Director, Transportation Division

Attached is letter dated November 24, 1959, CCC:lFL 61-11-563, 61-11-564, from the Department of Justice, Admiralty & Shipping Section, and the enclosed certified copies of the Final Decrees Pro Confesso entered by the court in the cases of the Pacific Far East Line, Inc. v. United States, in the United States District Court for the Northern District of California, Southern Division, Admiralty Nos. 27164 and 27165, in which judgments were awarded the libelant in the amounts of $7,545.32 and $7,226.84, respectively, plus interest thereon from July 7, 1955, to the date of payment, plus costs of $55 in each suit. The setoffs pleaded by the Government in these cases were dismissed.

If otherwise proper, your Division should comply promptly with the request of the Attorney General that the judgements in the amount awarded, plus proper interest (see 46 U.S.C. 743) and costs, be paid and the check in payment thereof be mailed to the address shown in the letter.

There is enclosed also a letter dated November 23, 1959, files KRF:JWM 61-11-563, 61-11-564, Department of Justice, Admirality & Shipping Section, West Cost Office, San Francisco, California, requesting that it be furnished certain additional information in connection with the items used for set-off purposes. Please let us have a prompt report containing the information containing the information requested, if such information is available from our files. If not so available, notify us so that such information may be obtained by the Attorney General from the General Services Administration. See, in this connection, your reports of September 25, 1957 (SR-131868-180) and November 18, 1957 (SR-131865-180).

There are also forwarded herewith, for your information, copies of two letters dated January 14, 1960, following up the request in the letter of November 23, 1959, and letters of December 16, 1959, and January 22, 1960, in answer to our letter of December 7, 1959, B-131865, B-131863. Also, attached is a copy of our letter of today to the Attorney General responding to his letters of December 18, 1959, and January 22, 1960. B-123811-O.M. January 14, 1959, is modified to the extent that it may be inconsistent with such letter to the Attorney General.

Comptroller General of the United States

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