A-19813, SEPTEMBER 19, 1927, 7 COMP. GEN. 225

A-19813: Sep 19, 1927

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VETERANS' BUREAU - ADJUSTED COMPENSATION - LOANS TO VETERANS WHERE AN ERROR IS MADE BY THE VETERANS' BUREAU UPON THE ISSUANCE OF AN ADJUSTED-SERVICE CERTIFICATE. A LOAN IS MADE BY A BANK TO THE VETERAN ON HIS CERTIFICATE AS SECURITY. THE CORRECT DATE IS SUCH AS WOULD NOT RENDER THE CERTIFICATE ACCEPTABLE AS SECURITY FOR A LOAN. THE EFFECTIVE DATE OF THE CERTIFICATE WAS SHOWN IN ONE PLACE AS THE FIRST DAY OF JANUARY. THE BOTTOM PORTION OF THE CERTIFICATE HAVING BEEN COMPLETED AS FOLLOWS: ALL RIGHTS UNDER THIS CERTIFICATE ARE EFFECTIVE FROM THE FIRST DAY OF JANUARY. IN VIEW OF THE FACT THAT APPLICATION FOR ADJUSTED COMPENSATION BENEFITS WAS MADE IN JANUARY. IT IS REQUESTED THAT THE COMPTROLLER GENERAL'S DECISION BE RENDERED ON THE FOLLOWING QUESTION FOR THE GUIDANCE OF THE BUREAU IN SETTLEMENT OF THIS AND SIMILAR CASES ARISING: IF AN ERROR IS MADE BY THE BUREAU UPON THE ISSUANCE OF AN ADJUSTED SERVICE CERTIFICATE SHOWING THE EFFECTIVE DATE OR DATE OF ISSUANCE OR BOTH ERRONEOUSLY.

A-19813, SEPTEMBER 19, 1927, 7 COMP. GEN. 225

VETERANS' BUREAU - ADJUSTED COMPENSATION - LOANS TO VETERANS WHERE AN ERROR IS MADE BY THE VETERANS' BUREAU UPON THE ISSUANCE OF AN ADJUSTED-SERVICE CERTIFICATE, SHOWING THE EFFECTIVE DATE OR DATE OF ISSUANCE, OR BOTH, ERRONEOUSLY, AND A LOAN IS MADE BY A BANK TO THE VETERAN ON HIS CERTIFICATE AS SECURITY, AND THE CORRECT DATE IS SUCH AS WOULD NOT RENDER THE CERTIFICATE ACCEPTABLE AS SECURITY FOR A LOAN, THE BANK WHICH ACCEPTED THE DATE OR DATES ON THE CERTIFICATE IN GOOD FAITH MAY BE PAID BY THE VETERANS' BUREAU UPON DEFAULT OF THE VETERAN, AND THE CERTIFICATE ACCOUNT OF THE VETERAN CHARGED WITH THE PAYMENT AND INTEREST.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, SEPTEMBER 19, 1927:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF SEPTEMBER 7, 1927, AS FOLLOWS:

UNDER DATE OF JANUARY 2, 1926, HARRY JOSEPH EVANS, A-3766316, MADE APPLICATION FOR ADJUSTED-COMPENSATION BENEFITS. UPON THE ISSUANCE OF THE ADJUSTED SERVICE CERTIFICATE, THE EFFECTIVE DATE OF THE CERTIFICATE WAS SHOWN IN ONE PLACE AS THE FIRST DAY OF JANUARY, 1926, AND IN ANOTHER JANUARY 1, 1925. THE BOTTOM PORTION OF THE CERTIFICATE HAVING BEEN COMPLETED AS FOLLOWS: ALL RIGHTS UNDER THIS CERTIFICATE ARE EFFECTIVE FROM THE FIRST DAY OF JANUARY, 1926. GIVEN AT THE CENTRAL OFFICE OF THE UNITED STATES VETERANS' BUREAU, IN THE CITY OF WASHINGTON, DISTRICT OF COLUMBIA, THIS FIRST DAY OF JANUARY ONE THOUSAND NINE HUNDRED AND TWENTY-FIVE.

THE VETERAN MADE APPLICATION AND OBTAINED A LOAN IN THE AMOUNT OF $100 ON JANUARY 19, 1927, FROM THE GLOUCESTER CITY TRUST COMPANY, GLOUCESTER CITY, NEW JERSEY, FOR A PERIOD OF THREE MONTHS, AND HE HAVING FAILED TO PAY THE NOTE UPON MATURITY, THE BANK FORWARDED THE NOTE AND ADJUSTED SERVICE CERTIFICATE TO THE BUREAU FOR REDEMPTION.

IN VIEW OF THE FACT THAT APPLICATION FOR ADJUSTED COMPENSATION BENEFITS WAS MADE IN JANUARY, 1926, THE ADJUSTED SERVICE CERTIFICATE CAN NOT BE MADE EFFECTIVE PRIOR TO JANUARY 1, 1926. HOWEVER, THE ERROR IN PREPARATION OF THE CERTIFICATE SHOWING THE EFFECTIVE DATE IN WRITING AS BEING JANUARY 1, 1925, RAISES A QUESTION AS TO WHETHER THE BUREAU SHOULD REDEEM THE NOTE OR WHETHER IT SHOULD BE REJECTED AND RETURNED TO THE BANK BECAUSE OF THE LOAN HAVING BEEN MADE PRIOR TO THE EXPIRATION OF TWO YEARS FROM THE CORRECT EFFECTIVE DATE OF THE CERTIFICATE.

IT IS REQUESTED THAT THE COMPTROLLER GENERAL'S DECISION BE RENDERED ON THE FOLLOWING QUESTION FOR THE GUIDANCE OF THE BUREAU IN SETTLEMENT OF THIS AND SIMILAR CASES ARISING:

IF AN ERROR IS MADE BY THE BUREAU UPON THE ISSUANCE OF AN ADJUSTED SERVICE CERTIFICATE SHOWING THE EFFECTIVE DATE OR DATE OF ISSUANCE OR BOTH ERRONEOUSLY, AND A LOAN IS MADE TO THE VETERAN ON HIS CERTIFICATE AS SECURITY AND THE CORRECT DATE IS SUCH AS WOULD NOT RENDER THE CERTIFICATE ELIGIBLE AS SECURITY FOR A LOAN, CAN A BANK, HAVING ACCEPTED THE DATE OR DATES ON THE CERTIFICATE IN GOOD FAITH, BE PAID AND THE CERTIFICATE ACCOUNT OF THE VETERAN CHARGED WITH THE PAYMENT AND INTEREST?

IT WOULD APPEAR THAT BANKS ARE ENTITLED TO THE GREATEST MEASURE OF PROTECTION AGAINST THE ERRORS OF THE BUREAU CONCERNING WHICH THEY COULD HAVE NO KNOWLEDGE.

IN DECISION OF AUGUST 26, 1927, A-19287, 7 COMP. GEN. 148, IT WAS HELD THAT 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 CORRECT DATE OF THE CERTIFICATE, WILL NOT DEFEAT THE CLAIM OF THE BANK TO REDEMPTION OF THE LOAN MADE ON THE BASIS OF THE CERTIFICATE AS SECURITY. LIKEWISE, WHERE THE PREMATURE NEGOTIATION OF A LOAN IS PRIMARILY THE RESULT OF AN ERROR MADE BY THE ADMINISTRATIVE OFFICE, THE CLAIM OF THE BANK SHOULD BE PROTECTED. THIS OFFICE HAS IN OTHER CONNECTIONS UNDER THE WORLD WAR VETERANS' LAWS HELD THAT THE RIGHTS OF INNOCENT PARTIES WOULD NOT BE DEFEATED BY REASON OF THE ERRORS OR OMISSIONS OF THE ADMINISTRATIVE OFFICE. SEE 3 COMP. GEN. 248, INVOLVING PAYMENTS FOR DENTAL SERVICES FURNISHED A VETERAN WITHOUT NOTICE OF ADMINISTRATIVE IRREGULARITY; 4 COMP. GEN. 656, 658, INVOLVING ADMINISTRATIVE ERROR IN FAILING FORMALLY TO REINSTATE WAR RISK INSURANCE FOR THE PURPOSE OF CONVERSION TO WHICH THE INSURED WAS ENTITLED; AND 5 COMP. GEN. 933, INVOLVING ADMINISTRATIVE DELAY IN PRESENTING A PREMIUM CHECK TO THE BANK FOR PAYMENT. ALSO, IN THIS INSTANCE, WHILE POSSIBLY THE BANK SHOULD HAVE BEEN MORE OBSERVANT AND HAVE DETECTED THE ERROR WHICH APPARENTLY WAS PATENT ON THE FACE OF THE CERTIFICATE, IT WOULD APPEAR THAT, IN VIEW OF ALL THE CIRCUMSTANCES, THE CLAIM OF THE BANK SHOULD BE PAID.