A-40218, FEBRUARY 12, 1932, 11 COMP. GEN. 306

A-40218: Feb 12, 1932

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THERE IS NO AUTHORITY TO GRANT RELIEF TO POSTMASTERS IN CASES WHERE A DRAFT IS DRAWN UPON A BANK. DUE TO THE FAILURE OF THE BANK THE DRAFT IS NOT PAID. FOR THE REASON THAT IN THOSE CASES THERE IS NEITHER A LOSS OF FUNDS RESULTING FROM BURGLARY. OR CREDIT THEM WITH THE AMOUNT SO ASCERTAINED TO HAVE BEEN LOST OR DESTROYED. WHICH SHALL HAVE BEEN LOST OR STOLEN WHILE IN TRANSIT BY MAIL FROM THE OFFICE OF THE REMITTING POSTMASTER. 000 SHALL BE PAID OR CREDITED UNTIL AFTER THE FACTS SHALL HAVE BEEN ASCERTAINED BY THE POSTMASTER GENERAL AND REPORTED TO CONGRESS. IT WILL BE NOTED THAT THIS LAW AUTHORIZES THE POSTMASTER GENERAL TO ALLOW CLAIMS OF OR CREDITS TO POSTMASTERS. (2) IN CASES OF REMITTANCES MADE IN COMPLIANCE WITH INSTRUCTIONS OF THE POSTMASTER GENERAL WHICH SHALL HAVE BEEN LOST OR STOLEN WHILE IN TRANSIT.

A-40218, FEBRUARY 12, 1932, 11 COMP. GEN. 306

RELIEF OF POSTMASTERS-LOSSES OCCASIONED THROUGH BANK FAILURES UNDER THE PROVISIONS OF THE ACT OF JANUARY 21, 1914, 38 STAT. 279, AS AMENDED, PROVIDING FOR THE ALLOWANCE BY THE POSTMASTER GENERAL OF CLAIMS OF OR CREDITS TO POSTMASTERS IN CASES OF LOSSES OF FUNDS RESULTING FROM BURGLARY, FIRE OR OTHER UNAVOIDABLE CASUALTY, AND IN CASES OF REMITTANCES LOST OR STOLEN WHILE IN TRANSIT, THERE IS NO AUTHORITY TO GRANT RELIEF TO POSTMASTERS IN CASES WHERE A DRAFT IS DRAWN UPON A BANK, AND DUE TO THE FAILURE OF THE BANK THE DRAFT IS NOT PAID, FOR THE REASON THAT IN THOSE CASES THERE IS NEITHER A LOSS OF FUNDS RESULTING FROM BURGLARY, FIRE OR OTHER UNAVOIDABLE CASUALTY, NOR A LOSS OR THEFT OF FUNDS WHILE IN TRANSIT, THE LOSS BEING ATTRIBUTABLE DIRECTLY TO THE DEPOSIT OF FUNDS WITH THE BANK TO COVER THE DRAFT, AND THE FAILURE OF THE BANK.

COMPTROLLER GENERAL MCCARL TO THE POSTMASTER GENERAL, FEBRUARY 12, 1932:

THERE HAS BEEN BROUGHT TO MY ATTENTION THE ORDER OF THE POSTMASTER GENERAL, DATED NOVEMBER 30, 1931, ALLOWING, UNDER THE ACT OF JANUARY 21, 1914, 38 STAT. 279, AS AMENDED, A CLAIM FOR $101.28 LOSS IN TRANSIT APRIL 23, 1931, IN FAVOR OF DELLA N. HAWTHORNE, FORMER POSTMASTER, MILLSBORO, PA. IT APPEARS THAT THE AMOUNT IN QUESTION REPRESENTED A DRAFT DRAWN FOR THE TRANSMISSION OF POSTAL FUNDS IN THE HANDS OF THE POSTMASTER AT MILLSBORO BY THE FIRST NATIONAL BANK AT THAT PLACE, WHICH CLOSED ITS DOORS BEFORE PAYMENT OF THE SAME.

THE ACT OF JANUARY 21, 1914, AS AMENDED, AND AS NOW APPEARS IN THE U.S.C. AS SECTION 49, TITLE 39, PROVIDES:

ADJUSTMENT OF CLAIMS OF POSTMASTERS AND NAVY MAIL CLERKS FOR LOSSES BY BURGLARY AND FIRE. THE POSTMASTER GENERAL MAY INVESTIGATE ALL CLAIMS OF POSTMASTERS, NAVY MAIL CLERKS, AND ASSISTANT NAVY MAIL CLERKS, FOR THE LOSS OF MONEY-ORDER FUNDS, POSTAL FUNDS, POSTAL-SAVING FUNDS, POSTAGE STAMPS, STAMPED ENVELOPES, NEWSPAPER WRAPPERS, POSTAL CARDS, POSTAL- SAVINGS CARDS, POSTAL-SAVINGS STAMPS, POSTAL-SAVINGS CERTIFICATES, UNITED STATES WAR SAVINGS CERTIFICATE STAMPS, UNITED STATES GOVERNMENT THRIFT STAMPS, WAR-TAX REVENUE STAMPS, AND FUNDS RECEIVED FROM THE SALE OF SUCH STAMPS BELONGING TO THE UNITED STATES IN THE HANDS OF SUCH POSTMASTERS, NAVY MAIL CLERKS, OR ASSISTANT NAVY MAIL CLERKS, AND FOR THE LOSS OF KEY- DEPOSIT FUNDS, FUNDS DEPOSITED TO COVER POSTAGE ON MAILINGS, AND FUNDS RECEIVED AS DEPOSITS TO COVER ORDERS FOR STAMPED ENVELOPES, IN THE HANDS OF SUCH POSTMASTERS, NAVY MAIL CLERKS, OR ASSISTANT NAVY MAIL CLERKS, RESULTING FROM BURGLARY, FIRE, OR OTHER UNAVOIDABLE CASUALTY, AND IF HE SHALL DETERMINE THAT SUCH LOSS RESULTED FROM NO FAULT OR NEGLIGENCE ON THE PART OF SUCH POSTMASTERS, NAVY MAIL CLERKS, OR ASSISTANT NAVY MAIL CLERKS, MAY PAY TO SUCH POSTMASTERS, NAVY MAIL CLERKS, OR ASSISTANT NAVY MAIL CLERKS, OR CREDIT THEM WITH THE AMOUNT SO ASCERTAINED TO HAVE BEEN LOST OR DESTROYED, AND MAY ALSO CREDIT POSTMASTERS, NAVY MAIL CLERKS, OR ASSISTANT NAVY MAIL CLERKS WITH THE AMOUNT OF ANY REMITTANCE OF MONEY ORDER FUNDS, POSTAL FUNDS, POSTAL-SAVINGS FUNDS OR FUNDS RECEIVED FROM THE SALE OF UNITED STATES WAR-SAVINGS CERTIFICATES STAMPS, UNITED STATES GOVERNMENT THRIFT STAMPS, AND WAR TAX REVENUE STAMPS, MADE BY THEM IN COMPLIANCE WITH THE INSTRUCTIONS OF THE POSTMASTER GENERAL, WHICH SHALL HAVE BEEN LOST OR STOLEN WHILE IN TRANSIT BY MAIL FROM THE OFFICE OF THE REMITTING POSTMASTER, NAVY MAIL CLERK, OR ASSISTANT NAVY MAIL CLERK TO THE OFFICE DESIGNATED AS HIS DEPOSITORY, OR AFTER ARRIVAL AT SUCH DEPOSITORY OFFICE AND BEFORE THE POSTMASTER AT SUCH DEPOSITORY OFFICE HAS BECOME RESPONSIBLE THEREFOR. NO CLAIM EXCEEDING THE SUM OF $10,000 SHALL BE PAID OR CREDITED UNTIL AFTER THE FACTS SHALL HAVE BEEN ASCERTAINED BY THE POSTMASTER GENERAL AND REPORTED TO CONGRESS, TOGETHER WITH HIS RECOMMENDATION THEREON, AND AN APPROPRIATION MADE THEREFOR. ALL SUCH CLAIMS MUST BE PRESENTED WITHIN SIX MONTHS FROM THE TIME THE LOSS OCCURRED. THE POSTMASTER GENERAL SHALL REPORT HIS ACTION HEREIN TO CONGRESS ANNUALLY WITH HIS REASONS THEREFOR IN EACH PARTICULAR CASE.

IT WILL BE NOTED THAT THIS LAW AUTHORIZES THE POSTMASTER GENERAL TO ALLOW CLAIMS OF OR CREDITS TO POSTMASTERS, ETC., IN TWO CLASSES OF CASES, VIZ (1) IN CASES OF LOSSES RESULTING FROM BURGLARY, FIRE, OR OTHER UNAVOIDABLE CASUALTY, AND (2) IN CASES OF REMITTANCES MADE IN COMPLIANCE WITH INSTRUCTIONS OF THE POSTMASTER GENERAL WHICH SHALL HAVE BEEN LOST OR STOLEN WHILE IN TRANSIT.

IT APPEARS THAT THE PRESENT PRACTICE OF ALLOWING CLAIMS OF POSTMASTERS UNDER THE ACT OF 1914, SUPRA, ON ACCOUNT OF LOSSES OCCASIONED BY REASON OF A BANK DRAFT BEING DISHONORED DUE TO THE FAILURE OF THE BANK ISSUING THE SAME, IS BASED UPON AN OPINION OF THE SOLICITOR OF THE POST OFFICE DEPARTMENT, DATED SEPTEMBER 22, 1924, IN WHICH IT WAS HELD IN SUBSTANCE THAT INASMUCH AS SECTION 114, POSTAL LAWS AND REGULATIONS OF 1924, PARAGRAPH 3, CLEARLY AUTHORIZES POSTMASTERS TO MAKE REMITTANCES BY DRAFTS ISSUED BY NATIONAL OR STATE BANKS, IT IS OBVIOUS THAT IN THE ABSENCE OF FRAUD OR NEGLIGENCE ON THE PART OF THE POSTMASTERS THEY SHOULD BE RELIEVED OF RESPONSIBILITY FOR LOSS, EITHER PARTIAL OR ENTIRE, RESULTING FROM INSOLVENCY OF BANKS, SUCH A LOSS BEING CONSIDERED AS IN THE NATURE OF AN UNAVOIDABLE CASUALTY UNDER THE ACT OF 1914.

WHILE THERE MAY BE EQUITY IN THE REASONING OF THE SOLICITOR, SUPRA, THE LETTER OF THE LAW OF 1914 DOES NOT EMBRACE SUCH CASES. THE FIRST CLASS OF CASES COVERED BY THAT LAW AS TO WHICH THERE IS AUTHORIZED THE ALLOWANCE OF CLAIMS OR CREDITS FOR LOSSES RESULTING FROM UNAVOIDABLE CASUALTIES CONTEMPLATES LOSSES OF FUNDS WHILE IN THE POSSESSION OF THE POSTMASTER AND NOT CASES IN WHICH, AS IN THE PRESENT MATTER, THE FUNDS HAVE BEEN TURNED OVER TO A BANK FOR THE PURCHASE OF A DRAFT. IT IS EVIDENT ALSO THAT THERE WAS NOT IN THIS CASE ANY LOSS IN TRANSIT, AS PROVIDED AGAINST UNDER THE SECOND CLASS OF CASES COVERED BY THAT LAW, SINCE THE DRAFT WAS RECEIVED, BUT PAYMENT THEREON WAS REFUSED BY REASON OF THE FAILURE OF THE BANK. THE LOSS, WHILE IT MAY BE SAID TO HAVE RESULTED AS AN INCIDENT TO REMITTING THE FUNDS, IS NOT A LOSS "WHILE IN TRANSIT BY MAIL" AS CONTEMPLATED BY THE ACT OF 1914. THE PROXIMATE AND PRIMARY CAUSE OF THE LOSS IN SUCH CASES IS NOT A LOSS OR THEFT OF THE FUNDS IN TRANSIT BY THE FAILURE OF THE BANK.

SECTION 3847, REVISED STATUTES, AUTHORIZES POSTMASTERS HOLDING PUBLIC FUNDS FOR THE UNITED STATES TO DEPOSIT THE SAME IN NATIONAL OR STATE BANKS, BUT IT PROVIDES THAT SUCH DEPOSIT SHALL BE AT THEIR OWN RISK AND IN THEIR OFFICIAL CAPACITY. THE TRANSACTION OF DEPOSITING FUNDS WITH A BANK FOR THE PURCHASE OF A DRAFT MUST BE CONSIDERED ON THE SAME BASIS, AND THE POSTMASTER HELD RESPONSIBLE AS IN OTHER CASES OF BANK FAILURES WHERE FUNDS ARE HELD ON DEPOSIT FOR THE POSTMASTER IN HIS OFFICIAL CAPACITY.

IN THE CASE OF DELLA N. HAWTHORNE, FORMER POSTMASTER OF MILLSBORO, IT APPEARS THAT THERE HAS BEEN RECEIVED A DIVIDEND OF 30 PERCENT ON THE AMOUNT OF THE DRAFT AMOUNTING TO $30.39, LEAVING A NET LOSS IN THE CASE OF $70.89. THIS AMOUNT WILL BE CARRIED AS A CHARGE IN THE ACCOUNTS OF THE FORMER POSTMASTER AND THE PROPER ACTION TAKEN FOR THE COLLECTION OF THE SAME. MEANWHILE, THE MATTER IS BROUGHT TO YOUR ATTENTION SO THAT THE PROPER ADMINISTRATIVE ACTION MAY BE TAKEN TOWARDS CORRECTION OF THE ERRONEOUS PRACTICE WHICH SEEMS TO BE FOLLOWED IN THIS CONNECTION BY THE POST OFFICE DEPARTMENT.