A-28551, OCTOBER 2, 1929, 9 COMP. GEN. 149

A-28551: Oct 2, 1929

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1929: THERE IS BEFORE THIS OFFICE FOR PREAUDIT ADMINISTRATIVELY APPROVED VOUCHER IN FAVOR OF THE PEOPLES BANK AND TRUST CO. ADJUSTED SERVICE CERTIFICATE NO. 1627288 WAS ISSUED TO THE SAID VETERAN. AT THE TIME THE LOAN WAS GRANTED THE CERTIFICATE HAD A LOAN VALUE OF ONLY $94.87. AT THE TIME OF PRESENTATION BY THE BANK FOR REDEMPTION THE LOAN VALUE (BUT FOR THE FACT THAT THE CERTIFICATE HAD MATURED ON ACCOUNT OF THE DEATH OF THE VETERAN) WOULD HAVE BEEN ONLY $120.58. RETURNED THE NOTE AND CERTIFICATE TO THE BANK REQUESTING IT TO FURNISH AN AFFIDAVIT AS TO THE REASON A LOAN WAS GRANTED IN AN AMOUNT IN EXCESS OF THE LOAN VALUE. WHICH IS IN EXCESS OF THE LOAN VALUE OF THE ADJUSTED-SERVICE CERTIFICATE.

A-28551, OCTOBER 2, 1929, 9 COMP. GEN. 149

VETERANS' BUREAU - ADJUSTED COMPENSATION - LOANS TO VETERANS WHERE A BANK MAKES A LOAN TO A VETERAN IN AN AMOUNT GREATER THAN THE THEN LOAN VALUE OF HIS ADJUSTED SERVICE CERTIFICATE WITH FULL KNOWLEDGE THEREOF AND ON THE BASIS OF OTHER SECURITY THAN THE CERTIFICATE, AND THE NOTE REMAINS UNPAID BY THE VETERAN AT MATURITY, THE VETERANS' BUREAU MAY PAY TO THE BANK, UPON PROPER PRESENTATION OF THE NOTE AND CERTIFICATE, ONLY AN AMOUNT EQUAL TO THE LOAN VALUE OF THE CERTIFICATE AT THE TIME OF MATURITY. 7 COMP. GEN. 253 DISTINGUISHED.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, OCTOBER 2, 1929:

THERE IS BEFORE THIS OFFICE FOR PREAUDIT ADMINISTRATIVELY APPROVED VOUCHER IN FAVOR OF THE PEOPLES BANK AND TRUST CO., NASHVILLE, TENN., FOR $190.15, REPRESENTING $187, AMOUNT OF LOAN MADE TO WILLIAM T. AMIGER, XC- 744266, A-1071964, ON THE BASIS OF HIS WORLD WAR ADJUSTED SERVICE CERTIFICATE, PLUS $3.15 INTEREST.

ADJUSTED SERVICE CERTIFICATE NO. 1627288 WAS ISSUED TO THE SAID VETERAN, EFFECTIVE JANUARY 1, 1925. ON AUGUST 8, 1928, THE VETERAN NEGOTIATED A LOAN FOR $187 WITH THE PEOPLES BANK AND TRUST CO., NASHVILLE, TENN., GIVING THEREFOR A 90-DAY NOTE, INDORSED BY ONE A. N. TOWNSEND, AND HIS ADJUSTED SERVICE CERTIFICATE. THE VETERAN DIED ON MAY 26, 1929, WITHOUT HAVING REPAID THE LOAN, AND THE BANK HAS SUBMITTED THE NOTE AND CERTIFICATE TO THE BUREAU FOR REDEMPTION. AT THE TIME THE LOAN WAS GRANTED THE CERTIFICATE HAD A LOAN VALUE OF ONLY $94.87, AND AT THE TIME OF PRESENTATION BY THE BANK FOR REDEMPTION THE LOAN VALUE (BUT FOR THE FACT THAT THE CERTIFICATE HAD MATURED ON ACCOUNT OF THE DEATH OF THE VETERAN) WOULD HAVE BEEN ONLY $120.58.

THE VETERANS' BUREAU, ON AUGUST 8, 1929, RETURNED THE NOTE AND CERTIFICATE TO THE BANK REQUESTING IT TO FURNISH AN AFFIDAVIT AS TO THE REASON A LOAN WAS GRANTED IN AN AMOUNT IN EXCESS OF THE LOAN VALUE, AND UNDER DATE OF AUGUST 14, 1929, THE BANK RETURNED THE NOTE AND CERTIFICATE WITH AN AFFIDAVIT WHICH READS IN PART AS FOLLOWS:

* * * IN REGARD TO WILLIAM T. AMIGER, DECEASED, WE LOANED ONE HUNDRED AND EIGHTY-SEVEN ($187.00) DOLLARS, WHICH IS IN EXCESS OF THE LOAN VALUE OF THE ADJUSTED-SERVICE CERTIFICATE, BUT IT WAS BECAUSE OF OUR CONFIDENCE IN THE HONESTY AND INTEGRITY OF THE MAN, WE FELT THAT UNDER NORMAL CONDITIONS WE WOULD HAVE PAID HIS NOTE WHETHER WE HAD THE CERTIFICATE OR NOT. ALSO HAD FAITH IN HIS INDORSER AND IT WAS ON HIS INDORSER AS MUCH AS ANYTHING ELSE THAT WE RELIED. * * *

SECTION 502 (B) OF THE WORLD WAR ADJUSTED COMPENSATION ACT OF MAY 19, 1924, 43 STAT. 126, PROVIDES, IN PART, AS FOLLOWS:

ANY NATIONAL BANK, OR ANY BANK OR TRUST COMPANY INCORPORATED UNDER THE LAWS OF ANY STATE, TERRITORY, POSSESSION, OR THE DISTRICT OF COLUMBIA (HEREINAFTER IN THIS SECTION CALLED "BANK)," IS AUTHORIZED, AFTER THE EXPIRATION OF TWO YEARS AFTER THE DATE OF THE CERTIFICATE, TO LOAN TO ANY VETERAN UPON HIS PROMISSORY NOTE SECURED BY HIS ADJUSTED SERVICE CERTIFICATE (WITH OR WITHOUT THE CONSENT OF THE BENEFICIARY THEREOF) ANY AMOUNT NOT IN EXCESS OF THE LOAN BASIS (AS DEFINED IN SUBDIVISION (G) OF THIS SECTION) OF THE CERTIFICATE. AND SECTION 503 OF THE SAME ACT PROVIDES, IN PART, AS FOLLOWS:

* * * ANY NEGOTIATION, ASSIGNMENT, OR LOAN MADE IN VIOLATION OF ANY PROVISION OF THIS SECTION SHALL BE HELD VOID.

IN CONSTRUING THE ABOVE PROVISIONS IT WAS HELD IN 7 COMP. GEN. 253 (QUOTING FROM SYLLABUS):

WHERE A BANK MAKES A LOAN TO A VETERAN IN AMOUNT GREATER THAN THE THEN LOAN VALUE OF HIS ADJUSTED SERVICE CERTIFICATE, AND THE NOTE REMAINS UNPAID BY THE VETERAN AT MATURITY, THE VETERANS' BUREAU MAY PAY TO THE BANK UPON PROPER PRESENTATION OF THE NOTE AND CERTIFICATE, AND AN AMOUNT EQUAL TO THE LOAN VALUE OF THE CERTIFICATE AT THE TIME THE LOAN WAS MADE, WITH INTEREST ON THAT AMOUNT. IF THE BANK PREFERS TO HOLD THE NOTE AND CERTIFICATE AFTER MATURITY OF THE NOTE, AND AT THE TIME OF PRESENTATION BY AND PAYMENT TO THE BANK, WHENEVER THAT MAY BE, THE THEN LOAN VALUE OF THE CERTIFICATE EQUALS OR EXCEEDS THE PRINCIPAL OF THE LOAN, ALTHOUGH IN EXCESS OF THE LOAN VALUE WHEN THE LOAN WAS MADE, PLUS ACCRUED INTEREST THEREON, THE BANK MAY BE PAID THE AMOUNT DUE AND THE SAME CHARGED AGAINST THE CERTIFICATE AS PROVIDED FOR UNDER THE STATUTE, UPON A SATISFACTORY SHOWING THAT THE BANK ACTED IN GOOD FAITH AND WAS FREE FROM ANY COLLUSION OR INTENT TO LOAN AN AMOUNT IN EXCESS OF THAT AUTHORIZED UNDER THE LAW AND REGULATIONS APPLICABLE TO LOANS ON SUCH CERTIFICATE.

AS THERE IS DEFINITE EVIDENCE THAT THE BANK IN THE CASE HERE PRESENTED KNOWINGLY AND PURPOSELY LOANED THE VETERAN AN AMOUNT IN EXCESS OF THE LOAN VALUE OF THE ADJUSTED SERVICE CERTIFICATE, THE PRINCIPLE ANNOUNCED IN THE ABOVE-QUOTED DECISION IS NOT APPLICABLE.

AS THE PLAIN TERMS OF THE STATUTE PROHIBIT LOANS IN EXCESS OF THE LOAN VALUE OF THE ADJUSTED SERVICE CERTIFICATE, PAYMENT FROM THE ADJUSTED SERVICE CERTIFICATE FUND UPON MATURITY OF THE CERTIFICATE, OF ANY AMOUNT IN EXCESS OF THE LOAN VALUE IS UNAUTHORIZED WHERE THE EXCESS LOAN WAS MADE ON THE BASIS OF OTHER SECURITIES THAN THE CERTIFICATE--- IN THIS CASE THE PERSONAL HONESTY AND INTEGRITY OF THE BORROWER AND THE INDORSEMENT OF A THIRD PARTY--- AND WHERE THERE ARE INVOLVED THE CONFLICTING RIGHTS OF THE DESIGNATED DEATH BENEFICIARY, IN THIS CASE THE WIDOW OF THE VETERAN, AND THE ESTATE OF THE VETERAN WHICH IS LIABLE FOR HIS DEBTS.

YOU ARE ADVISED, THEREFORE, THAT THE ADMINISTRATIVELY APPROVED VOUCHER IN ITS PRESENT FORM MAY NOT BE CERTIFIED FOR PAYMENT.

AS THERE APPEARS NO EVIDENCE OF FRAUD IN THE CASE, THE LOAN VALUE OF THE CERTIFICATE AT MATURITY, MAY 26, 1929, WHICH IS THE LAST DAY THE CERTIFICATE HAD A LOAN VALUE, MAY BE PAID FROM THE ADJUSTED SERVICE CERTIFICATE FUND AND THAT AMOUNT DEDUCTED FROM THE PAYMENT TO THE WIDOW, THE NOTE, AFTER PROPER NOTATION THEREON OF THE AMOUNT THUS PAID AND APPLIED TO BE RETURNED TO THE BANK IN ORDER THAT IT MAY TAKE SUCH ACTION AS MAY BE PROPER TO COLLECT THE BALANCE OF THE AMOUNT, PLUS INTEREST, FROM THE ESTATE OF THE VETERAN OR THE INDORSER, A. N. TOWNSEND. THERE SHOULD BE RETAINED IN THE GOVERNMENT'S FILE OF THE CASE, A CERTIFIED PHOTOSTAT COPY OF THE NOTE.