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or inaptitude is hereby increased to $25, including the cost of an overcoat when necessary;

In accordance with the provisions of section 125 of the National Defense Act approved June 3, 1916 (39 Stat. 216), as amended (10 U. S. C. 1393), enlisted men of the U. S. Coast Guard heretofore discharged otherwise than honorably have been required to surrender all outer uniform clothing and have been issued citizen's outer clothing at a cost to the Government of $15 or less.

By Executive Order No. 8929, dated November 1, 1941, the President directed that the U. S. Coast Guard should from said date, until further orders, "operate as a part of the Navy subject to the orders of the Secretary of the Navy."

Your decision is requested as to whether the increase from $15 to $25 in the amount which may be expended for civilian clothing furnished enlisted men of the Navy given discharges for undesirability, bad conduct, or inaptitude, as provided in the above quoted statutory provision, applies to expenditures for civilian clothing which may be made by the U. S. Coast Guard for enlisted men discharged under similar conditions.

Executive Order No. 8929, dated November 1, 1941, was issued pursuant to authority vested in the President by section 1 of the act of January 28, 1915, 38 Stat. 800, as amended by sections 5 and 6 of the act of July 11, 1941, Public Law 166, Seventy-seventh Congress, 55 Stat. 585. The amended act insofar as here material provides:

Whenever the Coast Guard or any units thereof are transferred to the Navy Department, applicable appropriations of the Navy Department shall be available for the expenses thereof: Provided, That the applicable appropriations of the Coast Guard shall be available for transfer to the Navy Department for such expenses in such amount or amounts as the Director of the Bureau of the Budget shall determine

The authority for furnishing civilian clothing to enlisted men discharged otherwise than honorably is contained in section 125 of the act of June 3, 1916, 39 Stat. 216, and the several amendments thereof (10 U. S. C. 1393). The original act was made applicable to the Coast Guard by the act of August 29, 1916, 39 Stat. 649, which provides:

That section one hundred and twenty-five of the Act entitled "An Act for further and more effectual provision for the national defense, and for other purposes," approved June 3, nineteen hundred and sixteen, shall apply to the Coast Guard in the same manner as to the Army, Navy, and Marine Corps.

The appropriation for the Coast Guard included in title II, section 201, Naval Appropriation Act, 1943, Public Law 441, 77th Congress, approved February 7, 1942, 56 Stat. 78, does not provide, specifically, for the amount that may be expended for civilian clothing furnished enlisted men of the Coast Guard discharged otherwise than honorably, nor does the Treasury Department Appropriation Act, 1942, approved May 31, 1941, 55 Stat. 221, contain a specific provision as to the amount authorized to be so expended. However, under Coast Guard Regulations, 1940, article 596, the amount expendable for each enlisted man so discharged is limited to $15, in accordance with the provisions of section 125 of the National Defense Act, as amended, 40 Stat. 891, 892. The Coast Guard appropriations in the act here under consideration are separate and distinct from the appropriations for the naval service,

and although operating as a part of the Navy, subject to the orders of the Secretary of the Navy, the appropriations for the Coast Guard, insofar as here involved, are substantially the same as the appropriations therefor prior to its transfer to the Navy Department, the only material difference in this respect being that whereas the appropriations for the Coast Guard were prior to the Executive order of November 1, 1941, included in appropriations for the Treasury Department, they have been since the date of said Executive order included in the appropriations for the Navy Department. The provisions of an appropriation act for one of the services is not applicable to another service unless the language in the act is clear to that effect. The provision of the act of February 7, 1942, quoted in your letter is contained in the appropriation made for the Navy Department and the naval service. The appropriation for the Coast Guard does not include a similar provision, nor does the context of the act include any language which could be construed as including enlisted men of the Coast Guard within the meaning of such provision.

In view of the foregoing, the provision quoted in your letter from section 201 of the act of February 7, 1942, Public Law 441, is not applicable to expenditures for civilian clothing furnished enlisted men of the Coast Guard discharged otherwise than honorably.

(B-24752)

GOVERNMENT CORPORATIONS-EXPENSES INCIDENT TO
INCORPORATION

The express authority granted the Office of the Coordinator of Inter-American Affairs by the act of December 17, 1941, to create corporations for the effective and efficient carrying out of the program of said Office includes the authority, within available appropriations, to employ such means and to make such expenditures as may be necessary to accomplish that end, and, therefore, the funds appropriated for carrying on the authorized activities of the Office are available for the payment of organizational expenses incident to incorporation, including the expense of services of resident agents where required.

Assistant Comptroller General Elliott to the Coordinator of Inter-American Affairs, March 24, 1942:

I have your letter of March 23, 1942, as follows:

* *

By Public Law 353, Chapter 591, 77th Congress, First Session, approved December 17, 1941, provision is made that money shall be available to the Coordinator for the purpose of strengthening the bonds between the United States and the other American Republics by “* causing corporations to be created under the laws of the District of Columbia, any State of the United States, or any of the other American Republics to assist in carrying out the Coordinator's program and capitalizing such corporations." To carry out the program of this office, as directed by the President, we find it advisable, in certain instances, to operate

through the medium of a corporation. In deciding upon the kind of corporation we have further concluded that it is better to organize a non-stock or membership corporation. Such a corporation, as distinguished from a regular business or stock corporation, would in our opinion meet with wider approval among the people of the American Republics in which the corporation is expected to transact its business.

In choosing the state of incorporation for such a non-stock corporation, we have also reached the conclusion that the powers conferred under the laws of the District of Columbia upon non-stock corporations are not broad enough to carry out the activities we contemplate. The sections of the Code dealing with charitable and philanthropic organizations, i. e. Title 5, Chapter 5, of the Code of the District of Columbia as amended, is short (being only six sections) and very general, and it is therefore doubtful that the corporation could operate with the freedom of a business corporation which we believe it should have. As a typical example, we doubt whether a District of Columbia non-stock corporation can hold stocks in other companies formed under the laws of the other American Republics to carry out the same objectives. This is likewise true with respect to the New York membership corporation law.

Under these circumstances we have chosen the State of Delaware as the proper place in which to incorporate because there it is possible to organize a nonprofit, or membership, company under the general corporation laws of the state, thus giving a membership corporation all the freedom to which a stock corporation is entitled.

In incorporating in any state outside the District of Columbia it will be necessary to have a resident agent, and we deem it both expedient and most economical to have this service performed by The Corporation Trust Company, which has its office at 100 West Tenth Street, Wilmington, Delaware. I understand their charge is $100.00 for the first year and $50.00 for each of the following years. There will also be additional expenses normally incident to the organization of corporations in any state or district, i. e. a filing fee, indexing fee, certifying and recording fees, etc. The Corporation Trust Company has expressed its willingness to act as resident agent in this situation, but only in the event that we receive an opinion from your office stating that its charges will be approved by you. We would appreciate your opinion on this question at your earliest convenience.

Section 3678, Revised Statutes, provides that

All sums appropriated for the various branches of expenditure in the public service shall be applied solely to the objects for which they are respectively made, and for no others.

By virtue thereof, this office, in the performance of the duties imposed upon it by law, has refused to allow credit for expenditures incident. to the creation of corporations by Government agencies in the absence of express statutory authority therefor or authority necessarily implied when the creation of corporations is the only possible means of carrying out a statutory duty. In the present case, however, the appropriation made by Public Law 353, approved December 17, 1941, 55 Stat. 818, under the heading "Office for Emergency Management," by reference is expressly made available for all necessary expenses to enable the Office for Emergency Management, of which the Office of the Coordinator of Inter-American Affairs is a part, to carry out authorized activities, and the funds made available from the said appropriation to your office specifically are stated to be available for "strengthening the bonds between the United States and the other American republics by causing corporations to be created under the laws

*

of the District of Columbia, any State of the United States, or any of the other American republics, to assist in carrying out the Coordinator's program, and capitalizing such corporations."

Thus, the creation of corporations for carrying out the program of the Office of the Coordinator of Inter-American Affairs expressly is authorized by statute and since the authorization extends to the creation of corporations in any State of the United States the creation of a corporation in the State of Delaware is, of course, authorized. And the statutory authority to create corporations necessarily includes the authority, within available appropriations, to employ such means and make such expenditures as may be necessary to accomplish that end and carry out the authorized activities. Since incorporation necessarily requires a resident agent and organizational expenses such as a filing fee, indexing fee, certifying and recording fees, etc., the statutory authority to create corporations therefor includes the authority, within the limits of available appropriations, to pay such expenses.

Under the circumstances, if it be deemed expedient, economical, and necessary to the effective and efficient carrying out of the program of the Office of the Coordinator of Inter-American Affairs to create a corporation or corporations in the State of Delaware, as outlined in your letter, and to have the services of a resident agent performed by The Corporation Trust Company, the appropriation made by Public Law 353, supra, is available for payment for the services of such resident agent, as contemplated, and for fees and expenses necessarily incident to incorporation.

(B-23802)

DAMAGE IN TRANSIT TO PRIVATE PROPERTY OF MILITARY PERSONNEL-EFFECT ON PAYMENTS TO CARRIERS

Payments otherwise due a motor carrier under a contract with the United States for the transportation of the personal effects of an Army officer may be made in full without withholding any amount representing alleged damage to the effects in transit, notwithstanding the possibility that the officer may later assert a claim against the United States under the act of March 4, 1921, for the amount of his damage in excess of the amount recoverable from the carrier.

Assistant Comptroller General Elliott to Col. F. J. Keelty, U. S. Army, March 28, 1942:

There has been considered your letter of January 8, 1942, with enclosures, as follows:

1. For reasons hereinafter stated, your advance decision is requested under authority of the Act of July 31, 1894 (28 Stat. 208) of the question whether I am authorized to pay the inclosed voucher, which has been submitted to me as

a disbursing officer of the United States for payment in favor of Greyvan Lines, Inc., of 1338 South Michigan Avenue, Chicago, Illinois, in the net sum of $246.01 covering the transportation by motor van of the household goods and professional books of Master Sergeant (2nd Lieutenant) Clyde B. Hamlin, #6205299, 2nd Transport Squadron, Air Corps, upon retirement from the active list of the Army, as authorized and directed in paragraph 21 of Special Orders 226, War Department, Washington, D. C., September 24, 1940 (copy herewith). The service was rendered to the United States by the transportation company under purchase order QM-1521, issued by the Purchasing and Contracting Officer, Middletown Air Depot, Middletown, Pennsylvania, on February 21, 1941. The relevant facts giving rise to my doubt in the premises may be stated as follows:

2. The papers accompanying the voucher show that the transportation service was rendered as claimed, but that after delivery at the destination, exception was made as to certain damaged articles which became the subject of a claim by the owner, Lieutenant Hamlin, against the contractor as disclosed by these papers, total amount of the claim being shown in these papers as $52.50 (see letter of September 6, 1941, addressed by the Quartermaster, Middletown Air Depot to Greyvan Lines, Inc.)

3. The undersigned has undertaken to procure a settlement between the officer and the shipper to the end that payment in the net sum due the transportation company could be made, but the van company has declined to make settlement, and has suggested in its letter of August 29, 1941 in this file, that I transmit the claim to the General Accounting Office for settlement if I do not feel warranted in making payment thereof.

4. The facts in this case are somewhat similar to those of the case of the J. Norman Van Geipe Lines and Fireproof Storage Warehouses, which was the subject of an advance decision (B-14598) rendered by you to the undersigned, on February 17, 1941, which decision held that payment might be made in that case regardless of the doubts of the undersigned if payment was warranted in other respects. However, I feel that an important question is involved in the present case, and which was not expressly decided in the advance descision above cited, which question grows out of considerations hereinafter stated and gives rise to my doubt as to the proper or lawful justification for full payment of a van contractor who has damaged property of a private owner for which the United States is responsible under the Act of March 4, 1921 (41 Stat. 1436). These considerations may be stated, briefly, as follows:

(a) It is believed to be fundamental, that a contract for services to be rendered to the United States may not, or should not be paid for in full when there is reliable evidence that the service was not completely or properly performed. This principle is expressed in Section 3648 of the Revised Statutes, and while in the present case, there is a certification on the voucher that the services have been performed, other evidence in the case indicates strongly that certain property of Lieutenant Hamlin, while being hauled by the contractor under a contract with the United States, was lost or damaged. Incidentally, these papers show that the pictures as to which the glass was broken were not packed and crated, as stated by the contractor, but were left lying on the top of other articles in a barrel. Also, the evidence indicates strongly that certain other articles were lost by the contractor, because the check list shows that they had been loaded on the van at the point of acceptance.

(b) The United States is liable to the owner of the property here concerned upon the establishment of a claim by him under the Act of March 4, 1921 (41 Stat. 1436) for the loss or damage of his property when changing station, and under such conditions, if such loss or damage was caused by the carrier, it would seem that the van hauler should not be paid in full on its claim for services, notwithstanding the fact that its faulty services will in all probability result in a claim being filed against the United States for loss or damage to the property that was being hauled.

7. Accordingly, solely in the interest of the United States and notwithstanding the provision of paragraph 32 c, AR 30-960, the present case is submitted for decision of the question whether payment should be made in full to the carrier; or whether an amount equal to the approximate or potential claim of the owner should be withheld from the carrier pending settlement of any claim against

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