A-30152, FEBRUARY 1, 1930, 9 COMP. GEN. 329

A-30152: Feb 1, 1930

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THE PROCEEDS OF THE CHECK ISSUED IN PAYMENT OF THE CERTIFICATE ARE DEPOSITED TO THE CREDIT OF THE APPROPRIATION "OUTSTANDING LIABILITIES. " THE TRUST WILL NOT BE ALLOWED TO FAIL AND THE ADMINISTRATOR OF THE ESTATE OF THE DECEASED VETERAN DOES NOT SUCCEED TO THE OFFICE OF THE TRUSTEE AND IS NOT ENTITLED. 1930: THERE IS BEFORE THIS OFFICE FOR SETTLEMENT THE CLAIM OF MARION W. WHICH PROVIDES AS FOLLOWS: AT THE TERMINATION OF EACH FISCAL YEAR ALL AMOUNTS OF MONEYS THAT ARE REPRESENTED BY CERTIFICATES. WHICH WERE ISSUED TO FACILITATE THE PAYMENT OF WARRANTS. WHICH HAVE FOR THREE YEARS OR MORE REMAINED OUTSTANDING. OR CHECKS WERE RESPECTIVELY ISSUED. OR TO THE PERSONS WHO ARE ENTITLED TO RECEIVE PAY THEREFOR.

A-30152, FEBRUARY 1, 1930, 9 COMP. GEN. 329

VETERANS' BUREAU - ADJUSTED COMPENSATION - ADMINISTRATOR VERSUS TRUSTEE WHERE A PERSON DESIGNATED BY A VETERAN AS TRUSTEE FOR HIS THREE MINOR CHILDREN UPON A REGULAR APPROVED CHANGE OF BENEFICIARY FOR AN ADJUSTED- SERVICE CERTIFICATE, REFUSES TO SERVE AS TRUSTEE, AND THE PROCEEDS OF THE CHECK ISSUED IN PAYMENT OF THE CERTIFICATE ARE DEPOSITED TO THE CREDIT OF THE APPROPRIATION "OUTSTANDING LIABILITIES," THE TRUST WILL NOT BE ALLOWED TO FAIL AND THE ADMINISTRATOR OF THE ESTATE OF THE DECEASED VETERAN DOES NOT SUCCEED TO THE OFFICE OF THE TRUSTEE AND IS NOT ENTITLED, UNDER THE PROVISIONS OF SECTIONS 306 AND 308 OF THE REVISED STATUTES, TO THE PROCEEDS OF THE CHECK.

DECISION BY COMPTROLLER GENERAL MCCARL, FEBRUARY 1, 1930:

THERE IS BEFORE THIS OFFICE FOR SETTLEMENT THE CLAIM OF MARION W. BACOME, AS ADMINISTRATOR OF THE ESTATE OF JAMES THOMAS GILLILAND, DECEASED, FOR THE PROCEEDS OF CHECK NO. 18629, DATED MAY 14, 1926, FOR $1,183, DRAWN TO THE ORDER OF RUBY ROYAL TINSLEY, TRUSTEE, BY JOHN I. SPRECKELMYER, SYMBOL NO. 11360, DISBURSING CLERK UNDER THE VETERANS' BUREAU, COVERING THE FACE VALUE OF THE ADJUSTED SERVICE CERTIFICATE ISSUED TO THE DECEDENT, A- 1295926, UNDER THE TERMS OF THE WORLD WAR ADJUSTED COMPENSATION ACT.

UNDER DATE OF JULY 31, 1929, THE TREASURY DEPARTMENT NOTIFIED THIS OFFICE THAT THE PROCEEDS OF THIS CHECK HAD BEEN CREDITED TO "OUTSTANDING LIABILITIES" AS REQUIRED BY SECTION 306, REVISED STATUTES, WHICH PROVIDES AS FOLLOWS:

AT THE TERMINATION OF EACH FISCAL YEAR ALL AMOUNTS OF MONEYS THAT ARE REPRESENTED BY CERTIFICATES, DRAFTS, OR CHECKS, ISSUED BY THE TREASURER, OR BY ANY DISBURSING OFFICER OF ANY DEPARTMENT OF THE GOVERNMENT, UPON THE TREASURER OR ANY ASSISTANT TREASURER, OR DESIGNATED DEPOSITARY OF THE UNITED STATES, OR UPON ANY NATIONAL BANK DESIGNATED AS A DEPOSITARY OF THE UNITED STATES, AND WHICH SHALL BE REPRESENTED ON THE BOOKS OF EITHER OF SUCH OFFICES AS STANDING TO THE CREDIT OF ANY DISBURSING OFFICER, AND WHICH WERE ISSUED TO FACILITATE THE PAYMENT OF WARRANTS, OR FOR ANY OTHER PURPOSE IN LIQUIDATION OF A DEBT DUE FROM THE UNITED STATES, AND WHICH HAVE FOR THREE YEARS OR MORE REMAINED OUTSTANDING, UNSATISFIED, AND UNPAID, SHALL BE DEPOSITED BY THE TREASURER, TO BE COVERED INTO THE TREASURY BY WARRANT, AND TO BE CARRIED TO THE CREDIT OF THE PARTIES IN WHOSE FAVOR SUCH CERTIFICATES, DRAFTS, OR CHECKS WERE RESPECTIVELY ISSUED, OR TO THE PERSONS WHO ARE ENTITLED TO RECEIVE PAY THEREFOR, AND INTO AN APPROPRIATION ACCOUNT TO BE DENOMINATED "OUTSTANDING LIABILITIES.'

THE FUND "OUTSTANDING LIABILITIES," CREATED BY THIS STATUTE, IS IN THE NATURE OF A TRUST FUND, THE AMOUNTS CREDITED THERETO BEING HELD FOR PAYMENT TO "THE PARTIES IN WHOSE FAVOR SUCH * * * CHECKS WERE RESPECTIVELY ISSUED," OR "THE PERSONS WHO ARE ENTITLED TO RECEIVE PAY THEREFOR.'

THEREFORE, THE QUESTION HERE INVOLVED IS WHETHER THE ADMINISTRATOR OF THE ESTATE OF THE DECEASED VETERAN HAS ANY RIGHT, TITLE OR INTEREST IN THE PROCEEDS OF THIS CHECK, UNDER THE TERMS OF THE ABOVE QUOTED STATUTE.

THE VETERAN, IN HIS APPLICATION FOR AN ADJUSTED SERVICE CERTIFICATE, RECEIVED IN THE VETERANS' BUREAU NOVEMBER 5, 1924, DESIGNATED AS BENEFICIARY HIS WIFE, MRS. ELIZA GILLILAND. BY DECREE DATED JUNE 15, 1925, A DIVORCE WAS GRANTED TO THE WIFE OF THE VETERAN AND SHE WAS MADE THE GUARDIAN OF THE THREE MINOR CHILDREN, NELLIE E., JAMES T., JR., AND MERLE R. JANUARY 11, 1926, THE VETERAN EXECUTED A REGULAR FORM PRESCRIBED BY THE VETERANS' BUREAU FOR A CHANGE OF BENEFICIARY OF HIS ADJUSTED SERVICE CERTIFICATE, WHEREIN HE NAMED "AS BENEFICIARY OF SAID CERTIFICATE," THE FOLLOWING: NAME--- MRS. RUBY ROYAL TINSLEY (AS TRUSTEE TO ESTATE). ADDRESS--- 317 12TH ST., TOLEDO, OHIO. RELATIONSHIP--- DAUGHTER. REASONS FOR CHANGE OF BENEFICIARY--- DESIRE THAT THREE MINOR CHILDREN RECEIVE THE BENEFITS AND BEING DIVORCED FROM FORMER BENEFICIARY.

THE CHANGE OF BENEFICIARY WAS APPROVED BY THE VETERANS' BUREAU JANUARY 11, 1926. THE VETERAN DIED MARCH 20, 1926. ON THE BASIS OF THE CHANGE OF BENEFICIARY, THE CHECK ISSUED FOR THE PROCEEDS OF THE ADJUSTED SERVICE CERTIFICATE AS ABOVE STATED. THE NAMED TRUSTEE, WHO WAS A DAUGHTER OF THE VETERAN BY A PRIOR MARRIAGE, UPON RECEIVING THE CHECK REFUSED TO SERVE AS TRUSTEE, INDORSED THE CHECK IN HER OWN NAME, AND FORWARDED THE SAME TO THE ADMINISTRATOR OF THE ESTATE OF THE VETERAN WHO HAD BEEN APPOINTED MARCH 29, 1926. THE ADMINISTRATOR RETURNED THE CHECK TO THE VETERANS' BUREAU. THE CLAIM FOR THE PROCEEDS IS NOW PROPERLY BEFORE THIS OFFICE FOR SETTLEMENT UNDER SECTION 308, REVISED STATUTES.

THERE CAN BE LITTLE DOUBT BUT THAT THE VETERAN INTENDED TO AND DID CREATE A TRUST IN FAVOR OF HIS THREE MINOR CHILDREN. THE REASON STATED FOR THE DESIGNATION, TO WIT,"DESIRE THAT THREE MINOR CHILDREN RECEIVE THE BENEFITS," IS CLEAR AND UNEQUIVOCAL AND EXPLAINS AND QUALIFIES THE WORDS ,/AS TRUSTEE TO ESTATE).' IN OTHER WORDS, THE REAL BENEFICIARIES OF THE ADJUSTED SERVICE CERTIFICATE, AND THE PERSONS ENTITLED TO THE PROCEEDS OF THE CHECK ISSUED IN PAYMENT THEREOF, ARE THE THREE MINOR CHILDREN OF THE DECEASED VETERAN.

IT IS WELL SETTLED THAT, WHILE A DESIGNATED TRUSTEE MAY REFUSE TO SERVE, A TRUST SHALL NOT FAIL BECAUSE OF THE FAILURE OR REFUSAL OF THE TRUSTEE TO ACCEPT. IN THE CASE OF COLTON V. COLTON, 127 U.S. 300, 321, THE SUPREME COURT OF THE UNITED STATES STATED: "PLAINLY, IF THE TRUSTEE REFUSES ALTOGETHER TO EXERCISE THE DISCRETION WITH WHICH HE IS INVESTED, THE TRUST MUST NOT ON THAT ACCOUNT BE DEFEATED, UNLESS BY ITS TERMS IT IS MADE DEPENDENT UPON THE WILL OF THE TRUSTEE SELF.' SEE ALSO CRUIT V. OWEN, 203 U.S. 368, AND IRVINE V. DUNHAM, 111 U.S. 327.

THEREFORE, THE ACTION OF THE TRUSTEE, MRS. RUBY ROYAL TINSLEY, IN PLACING HER PERSONAL INDORSEMENT ON THE CHECK AND FORWARDING SAME TO THE ADMINISTRATOR, DID NOT DEFEAT THE RIGHTS OF THE THREE MINOR CHILDREN OF THE VETERAN TO THE PROCEEDS THEREOF, NOR VEST IN THE ADMINISTRATOR OF THE ESTATE OF THE VETERAN ANY RIGHT, TITLE, OR INTEREST THEREIN. THE DUTIES AND RESPONSIBILITIES OF AN ADMINISTRATOR OF AN ESTATE OF A DECEDENT, AND THE DUTIES AND RESPONSIBILITIES OF A TRUSTEE DESIGNATED TO RECEIVE AND DISTRIBUTE INSURANCE MONEY, OR EVEN A PORTION OF THE ESTATE, ARE SEPARATE AND DISTINCT. THE ONE DOES NOT SUCCEED TO THE OFFICE OF THE OTHER IF FOR ANY REASON THE SAME SHOULD BECOME VACANT. SEE 39 CYC. 24, WHEREIN IT IS STATED THAT AN ADMINISTRATOR IS NOT A TRUSTEE, CITING CORNWALL V. TODD, 38 CONN. 443, 444; IN RE HAWLEY, 104 N.Y. 250, 261; 10 N.E. 52; AND CONWAY V. ARMINGTON, 11 R.I. 116, 117.

IT MUST BE CONCLUDED, THEREFORE, THAT THE ADMINISTRATOR OF THE ESTATE OF THE DECEASED VETERAN IN THIS CASE IS NOT THE PERSON "ENTITLED TO RECEIVE PAY" FOR THE PROCEEDS OF THIS CHECK ISSUED TO THE TRUSTEE, WITHIN THE MEANING OF SECTION 306, REVISED STATUTES, OR THE BONA FIDE HOLDER OF THE CHECK WITHIN THE MEANING OF SECTION 308, REVISED STATUTES.

THE PROCEEDS OF THIS CHECK MUST REMAIN IN THE TREASURY UNDER THE APPROPRIATION "OUTSTANDING LIABILITIES" UNTIL SUCH TIME AS A LEGAL CLAIM MAY BE PRESENTED BY THE THREE CHILDREN THEMSELVES UPON ATTAINING MAJORITY, OR THE PERSON OR PERSONS DULY QUALIFIED TO RECEIVE AND RECEIPT FOR THE SAME AS THE TRUSTEE OR TRUSTEES FOR THE THREE MINOR CHILDREN OF THE DECEASED VETERAN.

THE CLAIM OF THE ADMINISTRATOR OF THE ESTATE OF THE DECEASED VETERAN MUST BE AND IS DISALLOWED.