A-28637, SEPTEMBER 27, 1929, 9 COMP. GEN. 144

A-28637: Sep 27, 1929

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CHECKS - VETERANS' BUREAU INSURANCE - UNNEGOTIATED UNDER THE WELL-SETTLED PRINCIPLE THAT GOVERNMENT CHECKS ARE NOT CONSIDERED PAID UNTIL NEGOTIATED. 1929: THERE IS BEFORE THIS OFFICE FOR CONSIDERATION IN THE PREAUDIT THE WAR RISK INSURANCE CASE OF CHARLES NICHOLLS WEBB. AWARD WAS APPROVED IN FAVOR OF THE FATHER AND CHECKS COVERING 32 MONTHLY INSTALLMENTS WERE MAILED AND RECEIVED BY HIM PRIOR TO JANUARY 19. SUBSEQUENT TO HIS DEATH THE 15 OTHER CHECKS WHICH WERE NOT CASHED WERE FORWARDED TO THE BUREAU BY THE ADMINISTRATOR OF HIS ESTATE AND WERE CANCELED. THERE HAVE BEEN SUBMITTED TO THIS OFFICE FOR PREAUDIT TWO VOUCHERS BY WHICH IT IS PROPOSED TO PAY THE AMOUNT OF SAID CANCELED CHECKS. THIS ACTION APPARENTLY IS ON THE BASIS THAT THE INSTALLMENTS REPRESENTED BY THE DELIVERED UNNEGOTIATED CHECKS SHOULD BE CONSIDERED AS PAID.

A-28637, SEPTEMBER 27, 1929, 9 COMP. GEN. 144

CHECKS - VETERANS' BUREAU INSURANCE - UNNEGOTIATED UNDER THE WELL-SETTLED PRINCIPLE THAT GOVERNMENT CHECKS ARE NOT CONSIDERED PAID UNTIL NEGOTIATED, IN THE ABSENCE OF A STATUTE OR REGULATION OTHERWISE PROVIDING, CHECKS COVERING MONTHLY INSTALLMENTS OF INSURANCE RECEIVED BUT NOT NEGOTIATED BY A BENEFICIARY UNDER A CONVERTED POLICY DURING HIS LIFETIME, SHOULD BE CANCELED, AND THE INSTALLMENTS REPRESENTED THEREBY INCLUDED IN THE COMPUTATION OF THE "PRESENT VALUE OF THE REMAINING UNPAID MONTHLY INSTALLMENTS" PAYABLE TO THE ESTATE OF THE BENEFICIARY, IN ACCORDANCE WITH SECTION 301 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1309.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, SEPTEMBER 27, 1929:

THERE IS BEFORE THIS OFFICE FOR CONSIDERATION IN THE PREAUDIT THE WAR RISK INSURANCE CASE OF CHARLES NICHOLLS WEBB, C-660614, K-422410, INVOLVING THE QUESTION WHETHER UNDER THE PROVISIONS OF SECTION 301, WORLD WAR VETERANS' ACT, AS AMENDED, MONTHLY INSTALLMENTS OF INSURANCE REPRESENTED BY CHECKS ISSUED UNDER A CONVERTIBLE POLICY AND DELIVERED TO THE DESIGNATED BENEFICIARY DURING HIS LIFETIME BUT NOT NEGOTIATED, SHOULD BE CONSIDERED AS "PAID" INSTALLMENTS AND THE FULL AMOUNT THEREOF INCLUDED IN THE SETTLEMENT WITH THE ESTATE, OR AS "UNPAID MONTHLY INSTALLMENTS" AND ONLY ,THE PRESENT VALUE" THEREOF INCLUDED IN THE SETTLEMENT WITH THE ESTATE OF THE BENEFICIARY.

THE VETERAN DIED MAY 23, 1926, AT WHICH TIME HE HAD IN FORCE AN $8,000 30 -YEAR ENDOWMENT POLICY ISSUED AS OF OCTOBER 1, 1923, PAYABLE TO HIS FATHER, WILLIAM E. WEBB, IN 36 MONTHLY INSTALLMENTS OF $227.76 EACH. AWARD WAS APPROVED IN FAVOR OF THE FATHER AND CHECKS COVERING 32 MONTHLY INSTALLMENTS WERE MAILED AND RECEIVED BY HIM PRIOR TO JANUARY 19, 1929, THE DATE OF HIS DEATH. AT THE TIME OF HIS DEATH HE HAD CASHED ONLY 17 OF THE 32 CHECKS RECEIVED BY HIM DURING HIS LIFETIME. SUBSEQUENT TO HIS DEATH THE 15 OTHER CHECKS WHICH WERE NOT CASHED WERE FORWARDED TO THE BUREAU BY THE ADMINISTRATOR OF HIS ESTATE AND WERE CANCELED.

THERE HAVE BEEN SUBMITTED TO THIS OFFICE FOR PREAUDIT TWO VOUCHERS BY WHICH IT IS PROPOSED TO PAY THE AMOUNT OF SAID CANCELED CHECKS, $3,416.40, TO THE ADMINISTRATOR AS ACCRUED ASSETS OF THE ESTATE OF WILLIAM E. WEBB, AND ALSO TO PAY $907, THE PRESENT VALUE OF THE REMAINING FOUR UNPAID INSTALLMENTS, OR A TOTAL OF $4,323.40. THIS ACTION APPARENTLY IS ON THE BASIS THAT THE INSTALLMENTS REPRESENTED BY THE DELIVERED UNNEGOTIATED CHECKS SHOULD BE CONSIDERED AS PAID.

IF THE INSTALLMENTS REPRESENTED BY THE DELIVERED UNNEGOTIATED CHECKS ARE PROPERLY TO BE CONSIDERED AS "UNPAID" SETTLEMENT WITH THE ESTATE OF THE BENEFICIARY MUST BE ON THE BASIS OF THEIR "PRESENT VALUE.' ON THIS BASIS ONLY $4,218 WOULD BE PAYABLE TO THE ESTATE, OR $105.40 LESS THAN PROPOSED IN THE VOUCHERS SUBMITTED BY THE BUREAU.

SECTION 301 OF THE WORLD WAR VETERANS' ACT, AS AMENDED BY THE ACT OF MARCH 4, 1925, 43 STAT. 1309, PROVIDES IN PART AS FOLLOWS:

* * * IF THE DESIGNATED BENEFICIARY SURVIVES THE INSURED AND DIES BEFORE RECEIVING ALL OF THE INSTALLMENTS OF CONVERTED INSURANCE PAYABLE AND APPLICABLE, THEN THERE SHOULD BE PAID TO THE ESTATE OF SUCH BENEFICIARY THE PRESENT VALUE OF THE REMAINING UNPAID MONTHLY INSTALLMENTS: * * *.

THERE IS FOR CONSTRUCTION THE PHRASE "REMAINING UNPAID MONTHLY INSTALLMENTS," AND IN REACHING THE PROPER CONSTRUCTION THERE MUST BE DETERMINED WHEN A WAR-RISK INSURANCE CHECK IS PAID, WHETHER UPON ISSUANCE, DELIVERY, OR NEGOTIATION.

THE RULE HAS BEEN DEFINITELY STATED TIME AND AGAIN BY THE ACCOUNTING OFFICERS, IN ALL CLASSES OF CASES, THAT A CHECK ISSUED IN PAYMENT OF A GOVERNMENT OBLIGATION PURSUANT TO STATUTE OR CONTRACT DOES NOT CONSTITUTE PAYMENT UNLESS AND UNTIL THE CHECK BE NEGOTIATED, EXCEPT WHEN THE STATUTE OR CONTRACT EXPRESSLY PROVIDES OTHERWISE. 16 COMP. DEC. 151; 24 ID. 521; ID. 733; 26 ID. 855; ID. 1038; 1 COMP. GEN. 146; ID 217; 2 ID. 778; 5 ID. 431, 432. CERTAIN PENSION STATUTES HAVE PROVIDED THAT THE MAILING AND, LATER, THE ISSUANCE OF THE CHECK SHALL CONSTITUTE PAYMENT (SEE ACTS OF MAR. 2, 1895, 28 STAT. 964, AUG. 17, 1912, 37 STAT. 312, AND MAY 1, 1926, 44 STAT. 383), AND, FOR DISCOUNT PURPOSES, GOVERNMENT CONTRACTS OFTEN PROVIDE THAT THE ISSUANCE AND MAILING OF THE CHECK SHALL CONSTITUTE PAYMENT. IN 19 OP.ATTY.GEN. 1, WHEREIN WAS CONSIDERED WHAT CONSTITUTED A PAYMENT OF A PENSION CHECK, THE GENERAL QUESTION IS THOROUGHLY CONSIDERED AND VARIOUS COURT DECISIONS ARE CITED. THE FOLLOWING IS QUOTED FROM SAID OPINION:

THE UNITED STATES, THEN, STANDS UPON THE SAME PLANE AS OTHERS WHO ISSUE NEGOTIABLE PAPER, EXCEPT THAT THE UNITED STATES CAN NOT BE SUED. THE GENERAL RULE IS, IF A DEBTOR GIVE HIS CREDITOR HIS OWN PROMISSORY NOTE OR OBLIGATION OF NO HIGHER ORDER THAN THE ORIGINAL DEBT, THE DEBT IS NOT THEREBY PAID NOR THE DEBTOR DISCHARGED 1 PETER V. BEVERLY, 10 PETERS, 567, JAMES V. HACKLY, 16 JOHNS, 277). IT IS STATED BY KENT, CHIEF JUSTICE, IN THE PEOPLE V. HOWELL (4 JOHNS, 304),"UNLESS A CHECK IS PAID IT IS NO PAYMENT.'

IN THE CASE OF BURNETT V. SMITH (10 FOSTER, 264) IT IS RULED: "UNTIL CASHED, IT (A CHECK) IS NO PAYMENT OF A PREEXISTING DEBT ANY MORE THAN A PROMISSORY NOTE IS PAYMENT OF SUCH DEBT WITHOUT AN AGREEMENT TO RECEIVE IT AS SUCH.'

THIS PRINCIPLE IS SUSTAINED BY ABUNDANT AUTHORITIES AND, EXCEPT IN MAINE AND MASSACHUSETTS, IS THE GENERALLY ACCEPTED RULE BOTH IN THE UNITED STATES AND ENGLAND. * * *

IN THE ABSENCE OF ANY EXPRESS PROVISION IN THE WORLD WAR VETERANS' ACT, THE REGULATIONS ISSUED PURSUANT THERETO, OR THE POLICY IN THIS CASE, AS TO WHAT SHALL CONSTITUTE PAYMENT OF THE INSTALLMENTS OF WAR RISK INSURANCE, IT MUST BE HELD IN ACCORDANCE WITH THE GENERAL RULE APPLICABLE TO PAYMENT BY CHECK, THAT THE TERM "UNPAID MONTHLY INSTALLMENTS" APPEARING IN SECTION 301 OF THE WORLD WAR VETERANS' ACT INCLUDES INSTALLMENTS REPRESENTED BY CHECKS DELIVERED TO THE PAYEE DURING HIS LIFETIME BUT NOT NEGOTIATED PRIOR TO HIS DEATH. ALL SUCH CHECKS SHOULD BE RETURNED TO THE VETERANS' BUREAU AND CANCELED, AS WAS DONE IN THIS CASE.

OF COURSE, IN MAKING PAYMENT OF THE PRESENT VALUE OF UNPAID INSTALLMENTS OF WAR-RISK INSURANCE THERE SHOULD NOT BE INCLUDED CHECKS WHICH ARE OUTSTANDING WHEN IT IS NOT KNOWN THAT SAID CHECKS HAVE NOT BEEN NEGOTIATED.

SECTION 12 OF THE POLICY ISSUED AS OF OCTOBER 1, 1923, IN THIS CASE, PROVIDES FOR PAYMENT TO THE ESTATE OF THE BENEFICIARY, IN EVENT OF HIS DEATH PRIOR TO RECEIVING ALL OF THE INSTALLMENTS, OF THE "REMAINING UNPAID MONTHLY INSTALLMENTS PAYABLE AND APPLICABLE AS THEY BECOME DUE UNLESS OTHERWISE ELECTED.' HOWEVER, THE POLICY IS MADE SUBJECT TO THE AMENDMENTS TO THE CONTROLLING STATUTE (SEE LAST PARAGRAPH OF THE POLICY), AND, ACCORDINGLY, PAYMENT IN THIS CASE IS REQUIRED, UNDER THE ACT AS AMENDED BY THE ACT OF MARCH 4, 1925, ABOVE QUOTED, OF THE "PRESENT VALUE OF THE REMAINING UNPAID MONTHLY INSTALLMENTS.'

SETTLEMENT WITH THE ESTATE OF THE BENEFICIARY SHOULD BE MADE ONLY IN THE AMOUNT OF $4,218, WHICH REPRESENTS THE PRESENT VALUE OF THE 19 UNPAID INSTALLMENTS OF $227.76, INCLUDING THE 15 INSTALLMENTS COVERED BY THE CHECKS DELIVERED TO BUT NOT NEGOTIATED BY THE BENEFICIARY, AS WELL AS THE 4 INSTALLMENTS FOR WHICH CHECKS WERE NOT ISSUED PRIOR TO THE DEATH OF THE BENEFICIARY.

THE VOUCHERS PRESENTED TO THIS OFFICE MAY NOT BE CERTIFIED FOR PAYMENT.