A-21590, FEBRUARY 15, 1928, 7 COMP. GEN. 484

A-21590: Feb 15, 1928

Additional Materials:

Contact:

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

 

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

IS ENTITLED TO INTEREST ACCRUING ON THE LOAN AFTER THE EXPIRATION OF THE SIX MONTHS' PERIOD AND UP TO THE DATE OF THE CHECK ISSUED IN SETTLEMENT OF ITS CLAIM. THE PROVISION FOR PAYMENT CONTAINED IN THIS NOTE STATES THAT IF THE PRINCIPAL AND INTEREST ARE NOT PAID AT ITS MATURITY. NOT BEFORE THE EXPIRATION OF SIX MONTHS AFTER THE LOAN WAS MADE. IT IS NOT ENTIRELY CLEAR WHETHER CONGRESS INTENDED TO RESTRICT THE PAYMENT OF INTEREST ON THE BANK'S LOAN TO A PERIOD NOT EXCEEDING SIX MONTHS AFTER THE LOAN MATURES. AT ANY TIME AFTER MATURITY OF THE LOAN BUT NOT BEFORE THE EXPIRATION OF SIX MONTHS AFTER THE LOAN WAS MADE. THE BANK IS NOTIFIED OF THE DEATH BY THE DIRECTOR AND FAILS TO PRESENT THE CERTIFICATE AND NOTE TO THE DIRECTOR WITHIN 15 DAYS AFTER THE NOTICE.

A-21590, FEBRUARY 15, 1928, 7 COMP. GEN. 484

VETERANS' BUREAU - LOANS TO VETERANS WHERE A VETERAN DIES MORE THAN SIX MONTHS AFTER MATURITY OF A LOAN MADE BY A BANK ON THE BASIS OF HIS ADJUSTED SERVICE CERTIFICATE, WITHOUT HAVING PAID THE LOAN, INTEREST ON THE AMOUNT OF THE LOAN AT THE RATE FIXED IN THE NOTE, NOT IN EXCESS OF THE STATUTORY LIMITATION, SHOULD BE COMPUTED UP TO THE DATE THE CHECK ISSUES TO THE BANK IF THE BANK VOLUNTARILY PRESENTS THE NOTE AND CERTIFICATE TO THE VETERANS' BUREAU FOR REDEMPTION OR WITHIN 15 DAYS AFTER NOTICE OF DEATH OF THE VETERAN BY THE BUREAU, OR UP TO THE END OF 15 DAYS AFTER NOTICE OF DEATH OF THE VETERAN BY THE BUREAU IF THE BANK FAILS OR REFUSES TO PRESENT THE NOTE AND CERTIFICATE WITHIN THAT TIME.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, FEBRUARY 15, 1928:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF FEBRUARY 7, 1928, REQUESTING DECISION OF A QUESTION PRESENTED AS FOLLOWS:

ON MARCH 1, 1927, THOMAS MILITELLO, XC-1 419 346, THE HOLDER OF ADJUSTED SERVICE CERTIFICATE NO. 2175757, OBTAINED A LOAN OF $100 FROM THE CITIZENS NATIONAL BANK AND TRUST COMPANY, MANSFIELD, OHIO, PAYABLE IN NINETY DAYS, AS EVIDENCED BY HIS PROMISSORY NOTE OF THAT DATE. THE MAKER OF THIS NOTE DIED ON DECEMBER 11, 1927, AND THE ADJUSTED SERVICE CERTIFICATE, TOGETHER WITH THE NOTE, HAS BEEN PRESENTED BY THE PAYEE FOR REDEMPTION.

IN THE SETTLEMENT OF THE CLAIM OF THE CITIZENS NATIONAL BANK AND TRUST COMPANY FOR PAYMENT OF THE PRINCIPAL OF THE NOTE AND INTEREST ON THIS LOAN, THE QUESTION HAS ARISEN AS TO WHETHER THE MAKER OF THE NOTE, HAVING DIED MORE THAN SIX MONTHS AFTER ITS MATURITY AND THE BANK HOLDING THE NOTE, NOT HAVING PRESENTED IT FOR REDEMPTION WITHIN SIX MONTHS AFTER THE LOAN MATURED, IS ENTITLED TO INTEREST ACCRUING ON THE LOAN AFTER THE EXPIRATION OF THE SIX MONTHS' PERIOD AND UP TO THE DATE OF THE CHECK ISSUED IN SETTLEMENT OF ITS CLAIM.

THE PROVISION FOR PAYMENT CONTAINED IN THIS NOTE STATES THAT IF THE PRINCIPAL AND INTEREST ARE NOT PAID AT ITS MATURITY, ANY BANK HOLDING THE NOTE AND CERTIFICATE MAY, AT ANY TIME AFTER MATURITY OF THE LOAN, BUT NOT BEFORE THE EXPIRATION OF SIX MONTHS AFTER THE LOAN WAS MADE, PRESENT THE NOTE AND CERTIFICATE TO THE DIRECTOR OF THE U.S. VETERANS' BUREAU IN ORDER TO SECURE PAYMENT OF THE LOAN AS PROVIDED IN THE WORLD WAR ADJUSTED COMPENSATION ACT. SECTION 502 (C).

SECTION 502 (C) ALSO PROVIDES THAT THE DIRECTOR MAY, IN HIS DISCRETION, ACCEPT THE CERTIFICATE AND NOTE, CANCEL THE NOTE (BUT NOT THE CERTIFICATE), AND PAY THE BANK IN FULL SATISFACTION OF ITS CLAIM THE AMOUNT OF THE UNPAID PRINCIPAL DUE IT AND THE UNPAID INTEREST ACCRUED, AT THE RATE FIXED IN THE NOTE, UP TO THE DATE OF THE CHECK ISSUED TO THE BANK.

READING TOGETHER SUBSECTIONS (C) AND (E) OF SECTION 502, IT IS NOT ENTIRELY CLEAR WHETHER CONGRESS INTENDED TO RESTRICT THE PAYMENT OF INTEREST ON THE BANK'S LOAN TO A PERIOD NOT EXCEEDING SIX MONTHS AFTER THE LOAN MATURES, WHETHER BY DEATH OF THE VETERAN OR BY LIMITATION OF TIME.

PARAGRAPHS (C), (E), AND (F) OF SECTION 502 OF THE WORLD WAR ADJUSTED COMPENSATION ACT OF MAY 19, 1924, 43 STAT. 126, 127, PROVIDE, IN SO FAR AS HERE MATERIAL, AS FOLLOWS:

(C) IF THE VETERAN DOES NOT PAY THE PRINCIPAL AND INTEREST OF THE LOAN UPON ITS MATURITY, THE BANK HOLDING THE NOTE AND CERTIFICATE MAY, AT ANY TIME AFTER MATURITY OF THE LOAN BUT NOT BEFORE THE EXPIRATION OF SIX MONTHS AFTER THE LOAN WAS MADE, PRESENT THEM TO THE DIRECTOR. THE DIRECTOR MAY, IN HIS DISCRETION, ACCEPT THE CERTIFICATE AND NOTE, CANCEL THE NOTE (BUT NOT THE CERTIFICATE), AND PAY THE BANK, IN FULL SATISFACTION OF ITS CLAIM, THE AMOUNT OF THE UNPAID PRINCIPAL DUE IT, AND THE UNPAID INTEREST ACCRUED, AT THE RATE FIXED IN THE NOTE, UP TO THE DATE OF THE CHECK ISSUED TO THE BANK. * * *

(E) IF THE VETERAN DIES BEFORE THE MATURITY OF THE LOAN, THE AMOUNT OF THE UNPAID PRINCIPAL AND THE UNPAID INTEREST ACCRUED UP TO THE DATE OF HIS DEATH SHALL BE IMMEDIATELY DUE AND PAYABLE. IN SUCH CASE, OR IF THE VETERAN DIES ON THE DAY THE LOAN MATURES OR WITHIN SIX MONTHS THEREAFTER, THE BANK HOLDING THE NOTE AND CERTIFICATE SHALL, UPON NOTICE OF THE DEATH, PRESENT THEM TO THE DIRECTOR, WHO SHALL THEREUPON CANCEL THE NOTE (BUT NOT THE CERTIFICATE) AND PAY TO THE BANK, IN FULL SATISFACTION OF ITS CLAIM, THE AMOUNT OF THE UNPAID PRINCIPAL AND UNPAID INTEREST, AT THE RATE FIXED IN THE NOTE, ACCRUED UP TO THE DATE OF THE CHECK ISSUED TO THE BANK; EXCEPT THAT IF, PRIOR TO THE PAYMENT, THE BANK IS NOTIFIED OF THE DEATH BY THE DIRECTOR AND FAILS TO PRESENT THE CERTIFICATE AND NOTE TO THE DIRECTOR WITHIN 15 DAYS AFTER THE NOTICE, SUCH INTEREST SHALL BE ONLY UP TO THE FIFTEENTH DAY AFTER SUCH NOTICE. THE DIRECTOR SHALL DEDUCT THE AMOUNT SO PAID FROM THE FACE VALUE (AS DETERMINED IN SECTION 501) OF THE CERTIFICATE AND PAY THE REMAINDER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 501.

(F) IF THE VETERAN HAS NOT DIED BEFORE THE MATURITY OF THE CERTIFICATE, AND HAS FAILED TO PAY HIS NOTE TO THE BANK OR THE FEDERAL RESERVE BANK HOLDING THE NOTE AND CERTIFICATE, SUCH BANK SHALL, AT THE MATURITY OF THE CERTIFICATE, PRESENT THE NOTE AND CERTIFICATE TO THE DIRECTOR, WHO SHALL THEREUPON CANCEL THE NOTE (BUT NOT THE CERTIFICATE) AND PAY TO THE BANK, IN FULL SATISFACTION OF ITS CLAIM, THE AMOUNT OF THE UNPAID PRINCIPAL AND UNPAID INTEREST, AT THE RATE FIXED IN THE NOTE, ACCRUED UP TO THE DATE OF THE MATURITY OF THE CERTIFICATE. THE DIRECTOR SHALL DEDUCT THE AMOUNT SO PAID FROM THE FACE VALUE (AS DETERMINED IN SECTION 501) OF THE CERTIFICATE AND PAY THE REMAINDER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 501.

THE STATUTE DOES NOT SPECIFICALLY FIX THE PERIOD FOR PAYMENT OF INTEREST WHERE A VETERAN DIES MORE THAN SIX MONTHS AFTER MATURITY OF THE LOAN, AS IN THIS CASE. IN PARAGRAPH (C) OF THE SECTION LOANING BANK IS SPECIFICALLY AUTHORIZED TO PRESENT THE NOTE AND CERTIFICATE TO THE DIRECTOR FOR REDEMPTION "AT ANY TIME AFTER MATURITY OF THE LOAN BUT NOT BEFORE THE EXPIRATION OF SIX MONTHS AFTER THE LOAN WAS MADE.' THUS, THERE IS NO LIMIT OF TIME, AFTER THE FIRST SIX MONTHS FROM MATURITY OF THE LOAN THE BANK IS AUTHORIZED TO HOLD THE CERTIFICATE AND NOTE WITHOUT PRESENTING THE SAME FOR REDEMPTION WHILE THE VETERAN IS ALIVE, EXCEPT THE MATURITY OF THE CERTIFICATE BY OPERATION OF TIME AS PROVIDED BY PARAGRAPH (F). SEE 7 COMP. GEN. 250, 252. IT WOULD HAVE BEEN INCONSISTENT IF THE STATUTE HAD SPECIFICALLY FIXED THE PERIOD FOR PAYMENT OF INTEREST, WITH RELATION TO THE DATE OF MATURITY OF THE LOAN, WHERE THE VETERAN DIES MORE THAN SIX MONTHS AFTER MATURITY OF THE LOAN. IT WAS NECESSARY FOR THE STATUTE TO SPECIFICALLY PROVIDE FOR THE PROCEDURE IN PRESENTING THE NOTE AND CERTIFICATE FOR REDEMPTION ONLY IN THE EVENT THE VETERAN DIES DURING THE PERIOD THE BANK MIGHT OTHERWISE HAVE BEEN PRECLUDED FROM PRESENTING THE NOTE FOR REDEMPTION.

THE STATUTE CONTEMPLATES THAT THE VETERANS' BUREAU ISSUE PROMPT NOTICE OF DEATH TO THE LOANING BANK IN ALL CASES WHERE DEATH OF THE VETERAN OCCURS, IRRESPECTIVE OF THE DATE THEREOF WITH RELATION TO THE DATE OF MATURITY OF THE LOAN. WHILE THE SPECIFIC PROVISION LIMITING PAYMENT OF INTEREST TO 15 DAYS AFTER NOTICE OF DEATH IN THE EVENT THE LOANING BANK FAILS TO PRESENT THE NOTE AND CERTIFICATE DURING THAT TIME, APPEARS IN PARAGRAPH (E) GOVERNING CASES WHERE THE VETERAN DIES "BEFORE THE MATURITY OF THE LOAN * * * ON THE DAY THE LOAN MATURES OR WITHIN SIX MONTHS REAFTER," THE GENERAL PURPOSE AND INTENT OF THE STATUTE WOULD APPEAR TO REQUIRE THAT THE SAME LIMITATION BE APPLIED IN THE EVENT DEATH OCCURS MORE THAN SIX MONTHS AFTER THE MATURITY OF THE LOAN. SUCH SHOULD BE THE RULE IN PROPER CASES.

IN THE PRESENT CASE, HOWEVER, IT IS UNDERSTOOD THAT THE BANK VOLUNTARILY PRESENTED THE NOTE AND CERTIFICATE FOR REDEMPTION AFTER THE DEATH OF THE VETERAN WITHOUT RECEIPT OF ANY NOTICE OF DEATH BY THE BUREAU OR WITHIN THE 15 DAYS AFTER NOTICE THEREOF BY THE BUREAU. IN THAT EVENT, PAYMENT OF INTEREST AT THE RATE FIXED IN THE NOTE, NOT IN EXCESS OF THE LEGAL RATE AUTHORIZED BY THE STATUTE, MAY BE PAID UP TO THE DATE THE CHECK ISSUES TO THE BANK.