A-19287, AUGUST 26, 1927, 7 COMP. GEN. 148

A-19287: Aug 26, 1927

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WHEREBY A LOAN WAS NEGOTIATED PRIOR TO THE EXPIRATION OF TWO YEARS AFTER THE DATE OF CERTIFICATE. WHICH IS THE EARLIEST DATE AUTHORIZED UNDER THE TERMS OF THE CONTROLLING STATUTE. WILL NOT DEFEAT THE CLAIM OF THE BANK UNDER THE CERTIFICATE AND NOTE UPON THE DEATH OF THE VETERAN WITHOUT HAVING PAID THE LOAN. SUCH APPLICATION WAS APPROVED AND AN ADJUSTED-SERVICE CERTIFICATE. CERTIFICATE NO. 2685433 WAS ISSUED TO HIM IN THE AMOUNT OF $1. UPON RECEIPT OF SUCH DOCUMENTS IN THE BUREAU IT WAS DISCOVERED THAT THE VETERAN HAD ALTERED HIS CERTIFICATE BY CHANGING THE DATE THEREOF FROM MAY 1. SINCE THE CERTIFICATE HAD NO LOAN VALUE AT THE TIME THE LOAN WAS ACTUALLY MADE BY THE ABOVE BANK. THE VOIDING OF THE LOAN IS NOT SO CLEAR.

A-19287, AUGUST 26, 1927, 7 COMP. GEN. 148

VETERANS' BUREAU - ADJUSTED COMPENSATION - LOANS TO VETERANS THE FRAUDULENT ALTERATION OF AN ADJUSTED SERVICE CERTIFICATE BY A VETERAN, OF WHICH THE LOANING BANK HAD NO NOTICE, WHEREBY A LOAN WAS NEGOTIATED PRIOR TO THE EXPIRATION OF TWO YEARS AFTER THE DATE OF CERTIFICATE, WHICH IS THE EARLIEST DATE AUTHORIZED UNDER THE TERMS OF THE CONTROLLING STATUTE, WILL NOT DEFEAT THE CLAIM OF THE BANK UNDER THE CERTIFICATE AND NOTE UPON THE DEATH OF THE VETERAN WITHOUT HAVING PAID THE LOAN, BUT THE AMOUNT OF THE LOAN WITH INTEREST SHOULD BE PAID TO THE BANK AND CHARGED AGAINST THE CERTIFICATE.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, AUGUST 26, 1927:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF JULY 20, 1927, REQUESTING DECISION WHETHER, UNDER THE CIRCUMSTANCES HEREINAFTER DESCRIBED, THE VETERANS' BUREAU SHOULD REDEEM A PROMISSORY NOTE MADE BY JULES M. BLAINE BY PAYING THE BANK MAKING THE LOAN THE AMOUNT OF THE NOTE, WITH INTEREST, AND THE BALANCE DUE UNDER THE ADJUSTED-SERVICE CERTIFICATE TO THE BENEFICIARY BY REASON OF THE MATURITY OF THE CERTIFICATE ON ACCOUNT OF THE DEATH OF THE VETERAN; OR WHETHER THE CLAIM FOR REDEMPTION OF THE NOTE SHOULD BE DISALLOWED AND THE FULL AMOUNT DUE UNDER THE CERTIFICATE PAID TO THE BENEFICIARY.

YOU SUBMIT THE FOLLOWING STATEMENT OF FACTS AND CIRCUMSTANCES:

UNDER DATE OF MAY 21, 1925, JULES M. BLAINE (DECEASED), A VETERAN OF THE WORLD WAR, FILED APPLICATION FOR ADJUSTED-COMPENSATION BENEFITS. SUCH APPLICATION WAS APPROVED AND AN ADJUSTED-SERVICE CERTIFICATE, A-3575746, CERTIFICATE NO. 2685433 WAS ISSUED TO HIM IN THE AMOUNT OF $1,477.00, EFFECTIVE MAY 1, 1925. ON JANUARY 4, 1927, THE BANK OF PITTSBURGH, PA., MADE A LOAN TO THE VETERAN OF $135.53 FOR SIX MONTHS AT 6 PERCENT, ACCEPTING THE ADJUSTED-SERVICE CERTIFICATE AS SECURITY. THE VETERAN DIED MARCH 14, 1927, AND THE BANK PRESENTED THE PROMISSORY NOTE AND THE ADJUSTED-SERVICE CERTIFICATE TO THE BUREAU FOR REDEMPTION. UPON RECEIPT OF SUCH DOCUMENTS IN THE BUREAU IT WAS DISCOVERED THAT THE VETERAN HAD ALTERED HIS CERTIFICATE BY CHANGING THE DATE THEREOF FROM MAY 1, 1925, TO JANUARY 1, 1925, PRESUMABLY FOR THE PURPOSE OF OBTAINING A LOAN IN ADVANCE OF THE DATE ALLOWED BY LAW, SINCE THE CERTIFICATE HAD NO LOAN VALUE AT THE TIME THE LOAN WAS ACTUALLY MADE BY THE ABOVE BANK.

SECTION 502 (A) OF THE WORLD WAR ADJUSTED COMPENSATION ACT OF MAY 19, 1924, 43 STAT. 126, AUTHORIZES LOANS ON THE BASIS OF ADJUSTED SERVICE CERTIFICATES "AFTER THE EXPIRATION OF TWO YEARS AFTER THE DATE OF THE CERTIFICATE," AND SECTION 503 OF SAID ACT PROVIDES:

NO CERTIFICATE ISSUED OR RIGHT CONFERRED UNDER THE PROVISIONS OF THIS TITLE SHALL, EXCEPT AS PROVIDED IN SECTION 502, BE NEGOTIABLE OR ASSIGNABLE OR SERVE AS SECURITY FOR A LOAN. ANY NEGOTIATION, ASSIGNMENT, OR LOAN MADE IN VIOLATION OF ANY PROVISION OF THIS SECTION SHALL BE HELD VOID.

FACTS BRINGING A LOAN CLEARLY UNDER THESE PROVISIONS OF LAW UNQUESTIONABLY MAKE VOID A LOAN MADE BEFORE THE EXPIRATION OF TWO YEARS AFTER THE DATE OF THE CERTIFICATE AND THE LOAN CAN NOT FORM THE BASIS OF A LEGAL CLAIM DIRECTLY AGAINST THE UNITED STATES INDEPENDENT OF THE CERTIFICATE. THE PROVISIONS MAINLY CONCERN WHERE THE PARTIES--- THE MAKER OF THE LOAN AS WELL AS THE BORROWER--- SEEK TO AVOID THE LIMITATIONS OF THE STATUTES. THE VOIDING OF THE LOAN IS NOT SO CLEAR, WHERE THE BORROWER ALONE IS THE MOVING PARTY AND THE OTHER PARTIES ARE SHOWN BY THE FACTS TO HAVE HAD NO KNOWLEDGE OF THE WRONG BEING COMMITTED BY THE BORROWER. THE PROVISIONS ARE LARGELY A RESTRICTION AND PROTECTION OF THE BORROWER. THE BORROWER COMMITS THE WRONG ALONE HE CAN NOT DIRECTLY OR INDIRECTLY OBTAIN THE BENEFIT OF HIS OWN WRONG. HE CAN NOT, IF ALIVE, ENFORCE THE STATUTORY PROVISIONS FOR HIS ADVANTAGE, NOR, IF HE BE DEAD, CAN OTHERS INVOKE THE PROVISIONS IN QUESTION. IT IS FOR THE UNITED STATES TO DETERMINE WHETHER THE FACTS REQUIRE THE LOAN TO BE CLASSED AS VOID.

THE FACTS HERE SHOW THAT THE ALTERATION WAS MADE BY THE VETERAN AND THAT THE BANK WAS NOT A PARTY THERETO. THERE APPEARS NOTHING TO HAVE REQUIRED THE BANK TO QUESTION THE CERTIFICATE. NO MATERIAL INJURY TO ANYONE WILL RESULT FROM ENFORCING THE LOAN. THE DECLARING THE LOAN VOID WILL PLACE THE LOSS UPON THE BANK, WITH THE POSSIBILITY OF NO MONEY ACCOUNTABILITY FROM THE WRONGDOER UNLESS CLAIM CAN BE SUPPORTED AGAINST HIS ESTATE--- PERSONAL ACCOUNTABILITY BEING IMPOSSIBLE BECAUSE OF HIS DEATH. THE LAW CONTEMPLATED NO SUCH RESULT. IT IS A FUNDAMENTAL LEGAL PRINCIPLE THAT A PERSON CAN NOT BENEFIT BY HIS OWN WRONG, DIRECTLY OR INDIRECTLY. THERE IS SUGGESTED A DOUBT WHETHER ANY RIGHTS OF A DESIGNATED BENEFICIARY WOULD BE AFFECTED, BUT HERE AGAIN THE PRINCIPLE MAINTAINS THAT THE RIGHT IS SECONDARY. THE RIGHT OF THE DESIGNATED BENEFICIARY TO THE PROCEEDS OF THE CERTIFICATE DOES NOT ATTACH UNTIL THE DEATH OF THE VETERAN, AND WHERE AN ACT OF THE VETERAN DURING HIS LIFETIME, RESULTING IN A DECREASE IN THE VALUE OF THE CERTIFICATE MAY BE CLASSED AS VOIDABLE AND NOT NECESSARILY AS VOID, THE CERTIFICATE MAY PROPERLY BE DECREASED IN VALUE.

YOU ARE ADVISED, THEREFORE, THAT THE BANK MAY BE PAID ITS LOAN, WHICH AMOUNT SHOULD BE CHARGED AGAINST THE CERTIFICATE AND THE BALANCE, IF ANY, PAID TO THOSE OTHERWISE ENTITLED.