A-4557, OCTOBER 3, 1924, 4 COMP. GEN. 349

A-4557: Oct 3, 1924

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SET-OFF - DISBURSING OFFICERS A DISBURSING OFFICER WHO DEPOSITED A CERTIFIED CHECK UPON WHICH PAYMENT WAS REFUSED ON ACCOUNT OF THE FAILURE OF THE BANK UPON WHICH DRAWN. WHICH REQUEST WAS INADVERTENTLY IGNORED. IS CHARGEABLE WITH THE AMOUNT OF SUCH UNPAID CERTIFIED CHECK. THE QUESTION OF WHETHER SUCH DISBURSING OFFICER MAY OFFSET THE SAID AMOUNT AGAINST OTHER MONEYS OF THE PAYEE PLACED WITH HIM FOR A SPECIFIC PURPOSE IS ONE BETWEEN THE OFFICER AND THE PAYEE. IN WHICH THE OFFICER IS RESPONSIBLE FOR ANY ACTION HE MAY TAKE WITH RESPECT THERETO. 1924: REFERENCE IS MADE TO YOUR LETTER OF AUGUST 8. THE BRANCH FEDERAL RESERVE BANK ADVISED THE DEPOSITOR THAT IT WAS UNABLE TO COLLECT THE AMOUNT OF THE CHECK BY REASON OF THE FAILURE OF THE DRAWEE BANK.

A-4557, OCTOBER 3, 1924, 4 COMP. GEN. 349

ACCOUNTING, SET-OFF - DISBURSING OFFICERS A DISBURSING OFFICER WHO DEPOSITED A CERTIFIED CHECK UPON WHICH PAYMENT WAS REFUSED ON ACCOUNT OF THE FAILURE OF THE BANK UPON WHICH DRAWN, AND WHO UPON LEARNING OF SUCH REFUSAL REQUESTED THE TREASURER OF THE UNITED STATES TO STOP PAYMENT UPON HIS OWN CHECK ISSUED IN REFUND THEREOF, WHICH REQUEST WAS INADVERTENTLY IGNORED, IS CHARGEABLE WITH THE AMOUNT OF SUCH UNPAID CERTIFIED CHECK; AND THE QUESTION OF WHETHER SUCH DISBURSING OFFICER MAY OFFSET THE SAID AMOUNT AGAINST OTHER MONEYS OF THE PAYEE PLACED WITH HIM FOR A SPECIFIC PURPOSE IS ONE BETWEEN THE OFFICER AND THE PAYEE, IN WHICH THE OFFICER IS RESPONSIBLE FOR ANY ACTION HE MAY TAKE WITH RESPECT THERETO, THERE BEING NO DIRECT CLAIM OF THE UNITED STATES AGAINST SUCH MONEYS.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, OCTOBER 3, 1924:

REFERENCE IS MADE TO YOUR LETTER OF AUGUST 8, 1924, IN WHICH YOU STATE:

HARRY CADEN, SPECIAL FISCAL AGENT OF THE BUREAU OF RECLAMATION, DEPARTMENT OF THE INTERIOR, RECEIVED FROM THE GERING FOUNDRY AND MACHINE CO. A CHECK FOR $200, DRAWN ON THE FIRST NATIONAL BANK OF GERING, NEBRASKA, AND DEPOSITED IT ON DECEMBER 21, 1923, WITH THE DENVER BRANCH OF THE FEDERAL RESERVE BANK OF KANSAS CITY, WHICH LATTER BANK ISSUED THE USUAL CERTIFICATE OF DEPOSIT FOR CREDIT IN MR. CADEN'S SPECIAL DEPOSIT ACCOUNT ON THE BOOKS OF THE TREASURER. ON JANUARY 11, 1924, THE BRANCH FEDERAL RESERVE BANK ADVISED THE DEPOSITOR THAT IT WAS UNABLE TO COLLECT THE AMOUNT OF THE CHECK BY REASON OF THE FAILURE OF THE DRAWEE BANK. THE MEANTIME, ON JANUARY 3, 1924, MR. CADEN ISSUED A CHECK ON HIS SPECIAL DEPOSIT ACCOUNT WITH THE TREASURER OF THE UNITED STATES IN FAVOR OF THE GERING FOUNDRY AND MACHINE CO. TO REFUND THE PROCEEDS OF THE $200 CHECK, AND WHEN HE RECEIVED NOTICE ON JANUARY 11 THAT THE CHECK DEPOSITED BY HIM HAD BEEN DISHONORED HE REQUESTED THE TREASURER OF THE UNITED STATES TO STOP PAYMENT ON HIS CHECK DATED JANUARY 3. THE TREASURER, HOWEVER, INADVERTENTLY PAID THE CHECK ON JANUARY 21, 1924. MR. CADEN SUBSEQUENTLY RECEIVED FROM THE GERING FOUNDRY AND MACHINE COMPANY ANOTHER CHECK FOR $300, WHICH HE IS UNDERSTOOD TO HOLD FOR DETERMINATION OF THE QUESTION AS TO WHETHER HE MAY DEDUCT FROM THE AMOUNT OF THIS CHECK THE $200 IMPROPERLY RETURNED TO THE GERING FOUNDRY AND MACHINE COMPANY BY CHECK DATED JANUARY 3.

A COPY OF A LETTER FROM THE ACTING COMMISSIONER OF THE BUREAU OF RECLAMATION, DATED JULY 29, 1924, TO THE TREASURER OF THE UNITED STATES IS FORWARDED HEREWITH AND YOUR DECISION IS REQUESTED AS TO WHETHER A DEDUCTION OF $200 MAY PROPERLY BE MADE FROM THE SUBSEQUENT DEPOSIT OF $300 UNDER THE CIRCUMSTANCES.

FROM THE FOREGOING IT APPEARS THAT THE CERTIFIED CHECK WHICH SPECIAL DISBURSING OFFICER CADEN RECEIVED FROM THE GERING FOUNDRY AND MACHINE CO. AND DEPOSITED IN THE DENVER BRANCH OF THE FEDERAL RESERVE BANK OF KANSAS CITY ON DECEMBER 21, 1923, FOR CREDIT IN HIS SPECIAL DEPOSIT ACCOUNT, WAS UPON ITS PRESENTATION TO THE FIRST NATIONAL BANK OF GERING, CHARGED IN THE COMPANY'S ACCOUNT ON THE BOOKS OF THE BANK, BUT INSTEAD OF PAYING CASH, THE DRAWEE BANK MADE REMITTANCE BY DRAFT ON THE OMAHA NATIONAL BANK FOR THE AMOUNT, WHICH DRAFT WAS DISHONORED, THE FIRST NATIONAL BANK OF GERING HAVING FAILED.

AS THE FACTS ARE UNDERSTOOD, THERE IS A DEFICIENCY OF $200 IN THE ACCOUNTS OF SPECIAL FISCAL AGENT CADEN. WHAT MAY BE THE LIABILITY AS BETWEEN THE AGENT AND THE TREASURER OF THE UNITED STATES BECAUSE THE CHECK WAS PAID, NOTWITHSTANDING THE STOPPAGE OF PAYMENT, NEED NOT BE DETERMINED. THERE MUST BE A CHARGE FOR THE AMOUNT IN THE ACCOUNTS OF THE AGENT. THE QUESTION OF WHETHER THE AGENT MAY WITHHOLD PAYMENT OF OTHER MONEYS OF THE COMPANY RECEIVING THE $200, SUCH OTHER MONEYS BEING MONEYS OF THE COMPANY PLACED WITH THE AGENT FOR A SPECIFIC PURPOSE, IS A QUESTION BETWEEN THE AGENT AND THE COMPANY IN WHICH THE AGENT MUST BE RESPONSIBLE FOR SUCH ACTION AS HE MAY TAKE WITH RESPECT THERETO. IT IS TO BE UNDERSTOOD THAT THE SITUATION HERE IS DIFFERENT FROM THAT WHERE THE RIGHT OF THE UNITED STATES TO WITHHOLD PAYMENT OF AN INDEBTEDNESS FROM IT TO ANOTHER IS INVOLVED BECAUSE OF THE INDEBTEDNESS OF THE LATTER TO THE UNITED STATES, IN WHICH EVENT WITHHOLDING BY THE UNITED STATES IS PROPER. HERE THE TRANSACTIONS CONCERNED ARE THOSE OF DEPOSITS OF PRIVATE FUNDS FOR PARTICULAR PURPOSES, AND WHILE THERE IS AN OFFICIAL ACCOUNTABILITY THEREFOR OF THE FISCAL AGENT, YET THE MATTER OF WITHHOLDING RETURN OF THOSE MONEYS TO THE PARTY DEPOSITING IS ONE IN WHICH THE RESPONSIBILITY IS NOT TO BE PLACED UPON THE UNITED STATES, THERE APPEARING NO DIRECT CLAIM OF THE UNITED STATES UPON SUCH MONEYS.