A-11362, NOVEMBER 4, 1925, 5 COMP. GEN. 322

A-11362: Nov 4, 1925

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

POSTAL FUNDS DEPOSITED BY POSTMASTERS IN INSOLVENT BANKS THE RELATIONSHIP BETWEEN A POSTMASTER AND AN INSOLVENT BANK IN CONNECTION WITH POSTAL FUNDS DEPOSITED WITH THE BANK IS THAT OF DEBTOR AND CREDITOR. ALTHOUGH THE MONEY THUS DEPOSITED IS PUBLIC MONEY OF THE UNITED STATES IT IS DEPOSITED AT THE RISK OF THE POSTMASTER. MONEYS ACCRUING AS RENT FOR POST OFFICE QUARTERS OWNED BY THE BANK SUBSEQUENT TO THE DATE IT WAS PLACED IN THE HANDS OF A RECEIVER. THE UNITED STATES IS MERELY THE ASSIGNEE OF THE POSTMASTER'S CLAIM AND DOES NOT ACQUIRE A GREATER RIGHT THAN THE POSTMASTER HAD. 1925: I HAVE YOUR LETTER OF SEPTEMBER 26. AT WHICH TIME THERE WERE OUTSTANDING AND UNPAID DRAFTS PURCHASED BY THE POSTMASTER AT THAT PLACE FOR THE PURPOSE OF REMITTING FUNDS TO HIS STATE DEPOSITORY AT OKLAHOMA CITY AS FOLLOWS: TABLE MONEY-ORDER FUNDS .

A-11362, NOVEMBER 4, 1925, 5 COMP. GEN. 322

POSTAL FUNDS DEPOSITED BY POSTMASTERS IN INSOLVENT BANKS THE RELATIONSHIP BETWEEN A POSTMASTER AND AN INSOLVENT BANK IN CONNECTION WITH POSTAL FUNDS DEPOSITED WITH THE BANK IS THAT OF DEBTOR AND CREDITOR, AND ALTHOUGH THE MONEY THUS DEPOSITED IS PUBLIC MONEY OF THE UNITED STATES IT IS DEPOSITED AT THE RISK OF THE POSTMASTER. THE UNITED STATES MAY NOT WITHHOLD AND APPLY AS A SET-OFF AGAINST THE AMOUNT DUE FROM THE INSOLVENT BANK, MONEYS ACCRUING AS RENT FOR POST OFFICE QUARTERS OWNED BY THE BANK SUBSEQUENT TO THE DATE IT WAS PLACED IN THE HANDS OF A RECEIVER, NOR HAS THE POSTMASTER THE RIGHT AS AN INDIVIDUAL DEPOSITOR TO A PREFERRED CLAIM AGAINST THE ASSETS OF THE BANK AS REGARDS OTHER CREDITORS AND DEPOSITORS. THE UNITED STATES IS MERELY THE ASSIGNEE OF THE POSTMASTER'S CLAIM AND DOES NOT ACQUIRE A GREATER RIGHT THAN THE POSTMASTER HAD.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, NOVEMBER 4, 1925:

I HAVE YOUR LETTER OF SEPTEMBER 26, 1925, SUBMITTING FOR DECISION A QUESTION STATED THEREIN AS FOLLOWS:

ON JANUARY 8, 1924, THE FIRST NATIONAL BANK OF COALGATE, OKLAHOMA, CLOSED ITS DOORS, AT WHICH TIME THERE WERE OUTSTANDING AND UNPAID DRAFTS PURCHASED BY THE POSTMASTER AT THAT PLACE FOR THE PURPOSE OF REMITTING FUNDS TO HIS STATE DEPOSITORY AT OKLAHOMA CITY AS FOLLOWS:

TABLE

MONEY-ORDER FUNDS --------------------------------------- $100.00

POSTAL-SAVINGS FUNDS ------------------------------------ 2,996.00

TREASURY-SAVINGS FUNDS ---------------------------------- 3,770.00

TOTAL ---------------------------------------------- 6,866.00

THE POSTMASTER ALSO HAD ON DEPOSIT IN THE BANK POSTAL FUNDS AMOUNTING TO $309.18, MAKING A TOTAL OF $7,175.18 TIED UP THROUGH THE FAILURE OF THE BANK. THE QUARTERS OCCUPIED BY THE POST OFFICE ARE LEASED FROM THE BANK AT AN ANNUAL RENTAL OF $1,300, AND AT THE TIME OF CLOSING THIS DEPARTMENT WAS INDEBTED TO THE BANK FOR THE RENT OF THE QUARTERS UP TO DECEMBER 31, 1923 IN THE SUM OF $379.16. $309.18 WAS SET OFF AGAINST THE FUNDS ON DEPOSIT AND $69.98 AGAINST THE MONEY ORDER DRAFT FOR $100, LEAVING THE INDEBTEDNESS OF THE BANK AS FOLLOWS:

TABLE

MONEY-ORDER FUNDS -------------------------------------- $30.02

POSTAL-SAVINGS FUNDS ----------------------------------- 2,996.00

TREASURY-SAVINGS FUNDS --------------------------------- 3,770.00

TOTAL --------------------------------------------- 6,796.02

THE RECEIVER HAS FURNISHED CERTIFICATES OF PROOF OF CLAIM FOR THESE AMOUNTS WHICH HAVE BEEN ASSIGNED TO THE POSTMASTER GENERAL AND ARE IN THE POSSESSION OF THIS OFFICE. THE POSTMASTER HAS REQUESTED THE RECEIVER TO SET OFF THE ACCRUED RENT SINCE JANUARY 1, 1924, AGAINST THE INDEBTEDNESS OF THE BANK, AND NO PAYMENT HAS BEEN MADE FOR THE RENTAL SINCE THAT DATE.

THIS OFFICE IS NOW IN RECEIPT OF A LETTER FROM THE COMPTROLLER OF THE CURRENCY, A COPY OF WHICH IS INCLOSED, IN WHICH HE DENIES THE RIGHT OF SET -OFF IN THIS CASE AND REQUESTS THAT THE POSTMASTER BE DIRECTED TO SETTLE WITH THE RECEIVER FOR THE RENTAL OF THE POST-OFFICE QUARTERS SINCE JANUARY 1, 1924. IN VIEW OF YOUR OPINION SET FORTH IN YOUR LETTER DATED NOVEMBER 8, 1924, TO THE RECEIVER OF THE ATLANTA, BIRMINGHAM AND ATLANTIC RAILWAY COMPANY, FILE NO. A-129 AND YOUR LETTER TO THE POSTMASTER GENERAL, DATED NOVEMBER 18, 1924, FILE NO. A 5764, IT IS REQUESTED THAT YOU ADVISE THIS DEPARTMENT WHETHER THE POSTMASTER IS WARRANTED UNDER THE LAW IN WITHHOLDING THE ACCRUED AND ACCRUING RENTAL FOR THE POST-OFFICE QUARTERS AS A SET-OFF AGAINST THE INDEBTEDNESS OF THE BANK, AND IF SO, THAT PAYMENT OF THE RENTAL FOR THE FISCAL YEARS 1924 AND 1925 BE AUTHORIZED FROM THE APPROPRIATIONS FOR RENT, LIGHT, AND FUEL FOR THE RESPECTIVE YEARS, AND THE AMOUNT APPLIED PRO RATA IN THE POSTMASTER'S MONEY ORDER, POSTAL SAVINGS, AND TREASURY SAVINGS ACCOUNTS.

IT IS ASSUMED FOR THE PURPOSE OF THIS DECISION THAT THE FUNDS IN QUESTION WERE DEPOSITED IN THE BANK BY THE POSTMASTER UNDER THE AUTHORITY OF SECTION 3847, REVISED STATUTES, AS AMENDED BY THE ACT OF MAY 27, 1908, 35 STAT. 415, AND REGULATIONS MADE IN PURSUANCE THEREOF, WHICH PROVIDE THAT ANY POSTMASTER HAVING PUBLIC MONEY BELONGING TO THE GOVERNMENT MAY DEPOSIT SAME AT HIS OWN RISK IN A NATIONAL OR STATE BANK WHERE HIS POST OFFICE IS LOCATED. THE WORDS "AT HIS OWN RISK" IMPLY THAT THE GOVERNMENT WILL LOOK TO HIM AND HIS OFFICIAL BOND FOR THE PAYMENT OF THE MONEY IN CASE THE BANK FAILS. WHILE APPARENTLY THE POSTMASTER HAS DONE ALL POSSIBLE TO KEEP THE MONEY SAFELY, YET WHEN A DEPOSIT IS MADE THE POSTMASTER ASSUMES ALL THE RISK IN THE MATTER. UNITED STATES V. FORDYCE ET AL., 122 FED.REP. 963; AND DECISIONS A 2329, MAY 24, 1924, AND A-2267, MAY 27, 1924.

IN A DEPOSIT SUCH AS INVOLVED HERE THE RELATIONSHIP BETWEEN THE BANK AND POSTMASTER IS THAT OF DEBTOR AND CREDITOR AND THE LIABILITY OF THE BANK TO THE POSTMASTER IS THAT WHICH GENERALLY EXISTS AS BETWEEN THE BANK AND ITS DEPOSITORS.

THE CASES MENTIONED IN YOUR LETTER, TO WIT, A-129, NOVEMBER 8, 1924, AND A-5764, NOVEMBER 18, 1924, INVOLVED MONEYS DUE DIRECTLY FROM THE INSOLVENT COMPANIES TO THE UNITED STATES AND IN THOSE CASES IT WAS HELD THAT EARNINGS OF RAILROADS OPERATED BY RECEIVERS COULD BE APPLIED AGAINST THE INDEBTEDNESS OF THE COMPANY, REGARDLESS OF THE RECEIVER'S AUTHORITY TO CONSENT TO SUCH APPLICATION, SUCH PRACTICE BEING FULLY WARRANTED AND NECESSARY TO PROTECT THE INTERESTS OF THE UNITED STATES. IN A CASE SUCH AS HERE IN QUESTION WHERE THE MONEY WAS PLACED IN THE BANK BY A POSTMASTER AT HIS OWN RISK THERE APPEARS TO BE NO SUCH PRIVITY BETWEEN THE BANK AND THE GOVERNMENT AS WOULD AUTHORIZE APPLYING MONEYS TO BECOME DUE ON RENTAL OF THE POST OFFICE AGAINST THE AMOUNT DUE THE POSTMASTER FROM THE INSOLVENT BANK.

THE POSTMASTER BEING A MERE DEPOSITOR IN THE BANK AS AN INDIVIDUAL HAS NO RIGHT TO ASSERT AS AGAINST OTHER CREDITORS AND DEPOSITORS A PREFERRED CLAIM FOR THE AMOUNTS OF POSTAL FUNDS PLACED BY HIM IN SUCH BANK AND THE GOVERNMENT BEING THE ASSIGNEE OF THE CLAIM OF THE POSTMASTER CAN NOT ACQUIRE BY VIRTUE OF SUCH ASSIGNMENT A GREATER RIGHT TO THE ASSETS OF THE INSOLVENT BANK THAN THE POSTMASTER HIMSELF HAS.

ANSWERING YOUR QUESTION SPECIFICALLY, YOU ARE ADVISED THAT THE POSTMASTER IS NOT AUTHORIZED UNDER THE LAW TO WITHHOLD THE ACCRUED AND ACCRUING RENTAL FOR THE POST OFFICE QUARTERS FROM THE TIME THE RECEIVER WAS APPOINTED AS A SET-OFF AGAINST THE INDEBTEDNESS OF THE INSOLVENT BANK TO HIM.