A-39215, NOVEMBER 6, 1931, 11 COMP. GEN. 170

A-39215: Nov 6, 1931

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THERE IS NO AUTHORITY TO INVEST SUCH PERSONAL FUNDS ON DEPOSIT TO THE CREDIT OF THE PATIENT IN GOVERNMENT INTEREST-BEARING SECURITIES. THE LETTER FROM THE PATIENT REFERRED TO ABOVE WAS TRANSMITTED TO YOUR OFFICE FROM THE ASSISTANT SUPERINTENDENT OF ST. SUCH LIBERTY BONDS COULD BE CASHED IN AND THE FUNDS PUT TO THE BENEFIT OF THE PATIENTS WHO WERE THE OWNERS OF SAID BONDS. THIS WAS REFERRED TO THE TREASURY DEPARTMENT FOR ACTION. AS THE SECURITIES HAD MATURED AND WERE NO LONGER DRAWING INTEREST AND IN ORDER TO AVOID UNNECESSARY LOSS OF INCOME. THE TREASURY DEPARTMENT WOULD CONSIDER THE REDEMPTION OF THE BONDS PROVIDED THEY WERE AUTHORIZED TO BE REGISTERED IN THE NAME OF JOHN CANNY. IN ORDER TO PROTECT THE INTEREST OF THE PATIENT THIS COURSE WAS PURSUED AND AN INVESTMENT MADE OF AS MUCH AS COULD BE POSSIBLE.

A-39215, NOVEMBER 6, 1931, 11 COMP. GEN. 170

ST. ELIZABETHS HOSPITAL - PERSONAL FUNDS OF PATIENTS A PATIENT OF ST. ELIZABETHS HOSPITAL, FOR WHOM NO GUARDIAN OR COMMITTEE HAS BEEN APPOINTED, MAY NOT BE PERMITTED TO WITHDRAW HIS PERSONAL FUNDS ON DEPOSIT IN THE TREASURY TO HIS CREDIT FOR THE PURPOSE OF PRIVATE INVESTMENT, AND THERE IS NO AUTHORITY TO INVEST SUCH PERSONAL FUNDS ON DEPOSIT TO THE CREDIT OF THE PATIENT IN GOVERNMENT INTEREST-BEARING SECURITIES, OR OTHERWISE, SO AS TO EARN INTEREST FOR THE BENEFIT OF THE PATIENT WHILE HE REMAINS IN THE INSTITUTION.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE INTERIOR, NOVEMBER 6, 1931:

THERE HAS BEEN RECEIVED YOUR LETTER OF OCTOBER 22, 1931, REQUESTING DECISION WHETHER ARTHUR WILHELM HELLMAN, A PATIENT AT ST. ELIZABETHS HOSPITAL, PRESUMABLY WITHOUT GUARDIAN OR COMMITTEE APPOINTED FOR HIM, MAY BE PERMITTED, AS REQUESTED BY HIM IN LETTER OF OCTOBER 15, 1931, TO THE SUPERINTENDENT OF THE HOSPITAL, TO WITHDRAW FOR PRIVATE INVESTMENT PERSONAL FUNDS DEPOSITED IN THE TREASURY TO HIS CREDIT.

THE LETTER FROM THE PATIENT REFERRED TO ABOVE WAS TRANSMITTED TO YOUR OFFICE FROM THE ASSISTANT SUPERINTENDENT OF ST. ELIZABETHS HOSPITAL BY LETTER OF OCTOBER 17, 1931, WHICH READS IN PART AS FOLLOWS:

THE COMPTROLLER GENERAL HAS HELD, UPON DIRECT REQUEST, DURING THE PERIOD OF THE LAST WAR, THAT THE FUNDS ON DEPOSIT IN THE TREASURY ON THE HOSPITAL BOOKS, TO THE CREDIT OF PATIENTS, UNDER TITLE OF TRUST FUNDS, COULD NOT BE USED FOR THE PURPOSE OF BUYING LIBERTY BONDS IN ORDER TO DRAW INTEREST FOR THE BENEFIT OF THE PATIENTS. UNDER DATE OF OCTOBER 14, 1930, A-33445, AND MARCH 31, 1931, A-35828, COMPTROLLER GENERAL DECIDED THAT WHERE PATIENTS IN THE HOSPITAL OWNED LIBERTY BONDS IN THE POSSESSION OF THE HOSPITAL, SUCH LIBERTY BONDS COULD BE CASHED IN AND THE FUNDS PUT TO THE BENEFIT OF THE PATIENTS WHO WERE THE OWNERS OF SAID BONDS. THIS WAS REFERRED TO THE TREASURY DEPARTMENT FOR ACTION. THE SECRETARY OF TREASURY, IN CASES WHERE BONDS OWNED BY PATIENTS HAD MATURED, SUCH BONDS HAVING BEEN REGISTERED IN THE NAME OF THE OWNER, AND NOT HAVING BEEN ASSIGNED, REFERRED TO THE SOLICITOR OF THE TREASURY FOR ADVICE AS TO WHETHER OR NOT THE REDEMPTION COULD BE MADE IN ACCORDANCE WITH THE COMPTROLLER GENERAL'S OPINION.

UNDER DATE OF AUGUST 5, 1931, THE ASSISTANT SECRETARY OF THE TREASURY ADVISED THE SECRETARY OF THE INTERIOR THAT THE SOLICITOR OF THE TREASURY HAD GIVEN AN OPINION THAT PAYMENT WOULD NOT BE MADE TO THE DISBURSING AGENT OF ST. ELIZABETHS HOSPITAL FOR THE REASON THAT THE STATUTE RELIED UPON DOES NOT CONFER AUTHORITY TO CONVERT SECURITIES INTO "FUNDS" TO BE DEPOSITED. FURTHER, THAT THE TREASURY DEPARTMENT WOULD NOT MAKE PAYMENT TO THE DISBURSING AGENT FOR THE PURPOSES OF DEPOSIT, AND UNDER ORDINARY CONDITIONS WOULD MAKE PAYMENT ONLY UPON ASSIGNMENT BY A LEGALLY APPOINTED GUARDIAN, OR UPON ASSIGNMENT BY THE REGISTERED HOLDER HIMSELF IN A LUCID INTERVAL, OR UPON RECOVERY FROM HIS ILLNESS. HE FURTHER STATED, HOWEVER, AS THE SECURITIES HAD MATURED AND WERE NO LONGER DRAWING INTEREST AND IN ORDER TO AVOID UNNECESSARY LOSS OF INCOME, THE TREASURY DEPARTMENT WOULD CONSIDER THE REDEMPTION OF THE BONDS PROVIDED THEY WERE AUTHORIZED TO BE REGISTERED IN THE NAME OF JOHN CANNY. IN ORDER TO PROTECT THE INTEREST OF THE PATIENT THIS COURSE WAS PURSUED AND AN INVESTMENT MADE OF AS MUCH AS COULD BE POSSIBLE, AND THE BALANCE REMITTED IN CASE TO THE HOSPITAL TO BE PLACED TO THE CREDIT OF JOHN CANNY.

INASMUCH AS IT WAS RECOGNIZED THAT THE PATIENT DID HAVE SECURITIES AND CONVERSION WAS AUTHORIZED, IT IS THOUGHT THAT THE COMPTROLLER GENERAL MAY CHANGE HIS DECISION, AND FOR THIS REASON THE CASE IS AGAIN PRESENTED, IN ACCORDANCE WITH THE REQUEST OF THE PATIENT, AND THE COMPTROLLER ASKED IF THE HOSPITAL IS AUTHORIZED TO PERMIT THE INVESTMENT AS REQUESTED BY ARTHUR WILHELM HELLMAN.

SECTION 4839, REVISED STATUTES, AS AMENDED, NOW TITLE 24, U.S.C., SECTION 165, PROVIDES IN PART AS FOLLOWS:

* * * THE SUPERINTENDENT * * *, SHALL SUBJECT TO THE APPROVAL OF THE BOARD OF VISITORS, APPOINT A RESPONSIBLE DISBURSING AGENT FOR THE INSTITUTION, WHO SHALL GIVE A BOND SATISFACTORY TO THE SECRETARY OF THE INTERIOR. * * * THE SAID DISBURSING AGENT, UNDER THE DIRECTION OF THE SUPERINTENDENT, SHALL HAVE THE CUSTODY OF AND PAY OUT ALL MONEYS APPROPRIATED BY CONGRESS FOR SAINT ELIZABETHS HOSPITAL, OR OTHERWISE RECEIVED FOR THE PURPOSES OF THE HOSPITAL, AND ALL MONEYS RECEIVED BY THE SUPERINTENDENT IN BEHALF OF THE HOSPITAL OR ITS PATIENTS, AND KEEP AN ACCURATE ACCOUNT OR ACCOUNTS THEREOF. THE SAID DISBURSING AGENT SHALL DEPOSIT IN THE TREASURY OF THE UNITED STATES, UNDER THE DIRECTION OF THE SUPERINTENDENT, ALL FUNDS WHICH MAY BE INTRUSTED TO THE LATTER BY OR FOR THE USE OF THE PATIENTS, WHICH SHALL BE KEPT IN A SEPARATE ACCOUNT; AND THE SAID DISBURSING AGENT IS AUTHORIZED TO DRAW THEREFROM, UNDER THE DIRECTION OF THE SAID SUPERINTENDENT, FROM TIME TO TIME, UNDER SUCH REGULATIONS AS THE SECRETARY OF THE INTERIOR MAY PRESCRIBE, FOR THE USE OF SUCH PATIENTS, BUT NOT TO EXCEED FOR ANY ONE PATIENT THE AMOUNT INTRUSTED TO THE SUPERINTENDENT ON ACCOUNT OF SUCH PATIENT. * * *

THE DECISIONS OF OCTOBER 14, 1930, AND MARCH 31, 1931, A-33445 AND A- 35828, REFERRED TO IN THE LETTER OF OCTOBER 17, 1931, FROM THE ASSISTANT SUPERINTENDENT OF ST. ELIZABETHS HOSPITAL, DID NOT AUTHORIZE THE CONVERSION OR REINVESTMENT OF THE BONDS OTHER THAN TO CONVERT THEM INTO CASH AND TO DEPOSIT THE PROCEEDS THEREOF TO THE CREDIT OF THE PATIENT AS A TRUST FUND. IT WOULD APPEAR FROM THE ASSISTANT SUPERINTENDENT'S LETTER OF OCTOBER 17, 1931, THAT, IN THE CASE OF JOHN CANNY, A-35828, THE MATURED BONDS OWNED BY THE PATIENT WERE REDEEMED BY THE TREASURY DEPARTMENT AND THE PROCEEDS THEREOF WERE IN FACT REINVESTED IN GOVERNMENT BONDS, AND IF SO SUCH REINVESTMENT WAS ACCOMPLISHED WITHOUT SANCTION OF THIS OFFICE, AND WOULD APPEAR TO BE IN DIRECT CONTRAVENTION OF SECTION 4839, REVISED STATUTES, AS AMENDED, SUPRA.

IN 4 COMP. GEN. 1062, INVOLVING A SIMILAR QUESTION SUBMITTED BY YOU, IT WAS HELD AS FOLLOWS:

AS TO THE FURTHER QUESTION WHETHER THE FUNDS OF THE PATIENT MAY BE INVESTED IN GOVERNMENT INTEREST-BEARING SECURITIES OR OTHERWISE SO AS TO EARN INTEREST, THERE IS MUCH TO PERSUADE THAT SUCH A PROCEDURE SHOULD BE PERMITTED, BUT IT MUST BE BORNE IN MIND THAT WHILE GOVERNMENT SECURITIES ARE THE IDEAL INVESTMENT YET THEY ARE NOT ALWAYS PURCHASABLE AT PAR BUT USUALLY ABOVE PAR, AND THUS MAY AFFECT THE INTEREST RETURN. BUT HOWEVER THAT MAY BE, THE SPECIFIC DIRECTION OF THE STATUTE IS THAT THE MONEYS BE DEPOSITED IN THE TREASURY, AND THERE BEING NO PROVISION THEREIN EITHER FOR INVESTMENT OR THAT THE FUNDS SHALL BEAR INTEREST WHILE SO DEPOSITED, THERE IS NO AUTHORITY TO PLACE THEM AT INTEREST. IT SEEMS THAT IN EXCEPTIONAL CASES MINOR AMOUNTS ARE LIKELY TO BE INVOLVED, SO THAT THE QUESTION OF INTEREST IS NOT PECUNIARILY MATERIAL. IF, HOWEVER, IT IS THOUGHT ADMINISTRATIVELY THERE SHOULD BE AN INTEREST RETURN, THE QUESTION IS ONE FOR THE CONSIDERATION OF CONGRESS. (SEE ALSO DECISION OF SEPTEMBER 20, 1929, A-28682, TO YOU.)

THE RULE IS WELL ESTABLISHED THAT WHERE NO GUARDIAN OR COMMITTEE HAS BEEN APPOINTED, THE PATIENT MAY NOT BE PERMITTED TO WITHDRAW HIS PERSONAL FUNDS ON DEPOSIT IN THE TREASURY TO HIS CREDIT FOR THE PURPOSE OF PRIVATE INVESTMENT, AND SINCE THERE IS NOTHING PRESENTED IN YOUR LETTER OF TRANSMITTAL NOR IN THE LETTER OF OCTOBER 17, 1931, FROM THE ASSISTANT SUPERINTENDENT OF ST. ELIZABETHS HOSPITAL, WHICH WOULD WARRANT ANY EXCEPTION TO SAID RULE, IT IS FOR APPLICATION IN THE PRESENT CASE.