A-60260, MARCH 5, 1935, 14 COMP. GEN. 683

A-60260: Mar 5, 1935

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CHECKS - MUTILATED - ISSUANCE OF SUBSTITUTE CHECKS WHEN THE TREASURER OF THE UNITED STATES DECLINES PAYMENT ON A CHECK ON THE BASIS OF ADVICE RECEIVED FROM THE PAYEE THAT THE CHECK WAS STOLEN FROM HIM AND NEGOTIATED WITHOUT HIS GENUINE INDORSEMENT. AS THE IRREGULARITY SURROUNDING THE NEGOTIATION OF A CHECK PRESENTS A SITUATION WHEREIN THE CLAIM OF THE PAYEE IN RESPECT OF THE PARTICULAR CHECK IS ONE AGAINST THE UNITED STATES FOR CONSIDERATION BY THE GENERAL ACCOUNTING OFFICE UNDER SECTION 305 OF THE ACT OF JUNE 10. WHERE IT IS DETERMINED BY THE GENERAL ACCOUNTING OFFICE THAT A SUBSTITUTE CHECK IS PROPERLY FOR ISSUANCE TO THE PAYEE. THE TREASURER OF THE UNITED STATES IS AUTHORIZED TO CHARGE THE DISBURSING OFFICER'S ACCOUNT WITH THE AMOUNT OF THE MUTILATED CHECK AND TO ISSUE HIS CHECK IN FAVOR OF THE PAYEE FOR THE AMOUNT OF SAID MUTILATED CHECK AND TO TRANSMIT SAME TO HIM AT HIS LAST KNOWN ADDRESS. 22 COMP.

A-60260, MARCH 5, 1935, 14 COMP. GEN. 683

CHECKS - MUTILATED - ISSUANCE OF SUBSTITUTE CHECKS WHEN THE TREASURER OF THE UNITED STATES DECLINES PAYMENT ON A CHECK ON THE BASIS OF ADVICE RECEIVED FROM THE PAYEE THAT THE CHECK WAS STOLEN FROM HIM AND NEGOTIATED WITHOUT HIS GENUINE INDORSEMENT--- THE CHECK OTHERWISE HAVING BECOME MUTILATED AND UNFIT FOR FURTHER NEGOTIATION--- A SUBSTITUTE CHECK TO THE CORRECT PAYEE SHOULD NOT BE ISSUED EXCEPT UPON AUTHORITY OR DIRECTION OF THE GENERAL ACCOUNTING OFFICE, AS THE IRREGULARITY SURROUNDING THE NEGOTIATION OF A CHECK PRESENTS A SITUATION WHEREIN THE CLAIM OF THE PAYEE IN RESPECT OF THE PARTICULAR CHECK IS ONE AGAINST THE UNITED STATES FOR CONSIDERATION BY THE GENERAL ACCOUNTING OFFICE UNDER SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24. THE NONPAYMENT OF A CHECK BY THE TREASURER DUE TO A STOP-ORDER PLACED AGAINST IT PRESENTS A SITUATION WHEREIN THE ACCOUNT OF THE DRAWER OF THE CHECK HAS NOT BEEN CHARGED WITH THE AMOUNT OF THE CHECK. THEREFORE, WHERE IT IS DETERMINED BY THE GENERAL ACCOUNTING OFFICE THAT A SUBSTITUTE CHECK IS PROPERLY FOR ISSUANCE TO THE PAYEE, THE TREASURER OF THE UNITED STATES IS AUTHORIZED TO CHARGE THE DISBURSING OFFICER'S ACCOUNT WITH THE AMOUNT OF THE MUTILATED CHECK AND TO ISSUE HIS CHECK IN FAVOR OF THE PAYEE FOR THE AMOUNT OF SAID MUTILATED CHECK AND TO TRANSMIT SAME TO HIM AT HIS LAST KNOWN ADDRESS. 22 COMP. DEC. 440, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF THE TREASURY, MARCH 5, 1935:

CONSIDERATION HAS BEEN GIVEN TO THE TREASURER'S LETTER OF JANUARY 4, 1935, AWS-C, AS FOLLOWS:

REFERENCE IS MADE TO THE FOLLOWING CHECK IN FAVOR OF PETER SZEZEPANIAK:

NUMBER, 45,442; DATE, 4-1-34; AMOUNT, $180.00; DRAWER, C. E. GRAY; SYMBOL, 890-255; DATE PAID, 4-26-34.

TRANSMITTED HEREWITH ARE THE ABOVE-DESCRIBED CHECK AND THE TREASURER'S FILE RELATING THERETO. PAYMENT OF THIS CHECK WAS DECLINED WHEN IT WAS PRESENTED ON APRIL 26 PURSUANT TO THE RECEIPT OF ADVICE FROM THE PAYEE THAT THE CHECK HAD BEEN STOLEN FROM HIM. THE INVESTIGATION CONDUCTED BY THE TREASURY SHOWED THAT THE ENDORSEMENT OF THE PAYEE'S NAME ON THE CHECK WAS FORGED.

UNDER 21 COMP. DEC. 668 AND 22 COMP. DEC. 440, IT HAS BEEN THE PRACTICE OF THE TREASURER TO ADVISE THE DRAWER OF SUCH A CHECK THAT PAYMENT THEREOF HAD BEEN DECLINED; THAT THE INVESTIGATION CONDUCTED BY THE TREASURY SHOWED THAT THE ENDORSEMENT OF THE PAYEE HAD BEEN FORGED; THAT THE ORIGINAL CHECK WHICH WAS ON FILE IN THE TREASURER'S OFFICE WOULD BE RETAINED AND, WHEN IT HAD SERVED ITS PURPOSE, IT WOULD BE FORWARDED TO YOU FOR FILING. THE DRAWER WAS REQUESTED, ON THE STATEMENT OF FACTS, TO ISSUE A CHECK OF THE SAME DESCRIPTION AS THE ORIGINAL, WHICH CHECK WAS TERMED A SUBSTITUTE CHECK. 21 COMP. DEC. 668 STATES IN PART,"A DISBURSING CLERK WILL ACT UNDER DIRECTION OF THE AUDITOR.' FROM THE FOREGOING IT WOULD APPEAR THAT THE ISSUANCE OF A SUBSTITUTE SHOULD BE AUTHORIZED BY THE AUDITING OFFICER.

THE MATTER IS REFERRED TO YOU FOR ADVICE AS TO WHETHER THE TREASURER SHOULD FOLLOW THE PRESENT PROCEDURE, AND, IF NOT, HOW SETTLEMENT SHOULD BE MADE IN CASES WHERE PAYMENT OF CHECKS HAS BEEN DECLINED. KINDLY RETURN THE FILE WITH YOUR REPLY.

THE SUBJECT CHECK WAS ISSUED TO THE PAYEE TO COVER EIGHT MONTHLY DEPOSITS OF $22.50 EACH OF HIS CIVILIAN CONSERVATION CORPS PAY--- THE DEPOSITS HAVING BEEN MADE WITH CAPTAIN C. E. GRAY, FINANCE OFFICER, UNITED STATES ARMY, ST. LOUIS, MO., OVER THE PERIOD JULY 1933, TO FEBRUARY 1934, BOTH DATES INCLUSIVE, PURSUANT TO EXISTING REGULATIONS APPLICABLE TO THE CIVILIAN CONSERVATION CORPS. THE PAYEE ALLEGES, IN AFFIDAVIT FORM, THAT THE CHECK WAS STOLEN FROM HIS PERSON; THAT HIS PURPORTED INDORSEMENT ON THE CHECK IS A FORGERY; AND THAT HE DID NOT PARTICIPATE DIRECTLY OR INDIRECTLY, IN THE PROCEEDS OF SAID CHECK. THESE FACTS APPEAR CORROBORATED BY THE SECRET SERVICE REPORTS AND OTHER PAPERS IN THE RECORD.

IN THE LETTER, SUPRA, THE TREASURER STATES THAT PAYMENT OF THE CHECK WAS DECLINED BY HIM ON THE BASIS OF ADVICE RECEIVED FROM THE PAYEE THAT THE CHECK HAD BEEN STOLEN FROM HIM, AND THAT IN VIEW OF THE ESTABLISHED FORGERY OF THE PAYEE'S INDORSEMENT ON THE CHECK AND OF THE MUTILATED CONDITION THEREOF--- THUS MAKING IT UNDESIRABLE TO HAVE IT NEGOTIATED FURTHER--- AND IT FURTHER APPEARING FROM THE FACTS OF RECORD THAT THE PAYEE IS ENTITLED TO THE FULL AMOUNT OF SAID CHECK, HE REQUESTED THE DRAWER OF THE CHECK TO ISSUE A SUBSTITUTE CHECK--- CITING AS HIS AUTHORITY FOR SUCH ACTION THE PROCEDURE OF YOUR DEPARTMENT SAID TO HAVE BEEN BASED ON THE DECISION OF THE FORMER COMPTROLLER OF THE TREASURY REPORTED IN 22 COMP. DEC. 440.

HOWEVER, WITH RESPECT TO THE DISPOSITION OF SIMILAR CASES HEREAFTER ARISING REQUEST IS NOW MADE FOR "ADVICE AS TO WHETHER THE TREASURER SHOULD FOLLOW THE PRESENT PROCEDURE AND, IF NOT, HOW SETTLEMENT SHOULD BE MADE IN CASES WHERE PAYMENT OF CHECKS HAS BEEN DECLINED.'

THE IRREGULARITY SURROUNDING THE NEGOTIATION OF THE CHECK IN QUESTION HERE PRESENTS A SITUATION WHEREIN THE CLAIM OF THE PAYEE IN RESPECT OF THE PARTICULAR CHECK IS ONE AGAINST THE UNITED STATES AND AS SUCH IS FOR CONSIDERATION BY THIS OFFICE UNDER SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24. HENCE, IN THE INSTANT CASE, THE MATTER, AFTER A FULL INVESTIGATION THEREOF BY YOUR DEPARTMENT, ACCOMPANIED BY PROPER INVESTIGATIONAL REPORTS, ETC., SHOULD HAVE BEEN SUBMITTED HERE FOR CONSIDERATION BEFORE ANY ACTION WAS TAKEN BY THE TREASURER IN AUTHORIZING THE DRAWER OF THE CHECK IN QUESTION TO ISSUE A SUBSTITUTE THEREFOR. HOWEVER, SINCE IT APPEARS FROM THE LETTER, SUPRA, THAT THE TREASURER HAS ALREADY ADVISED THE DRAWER OF THE MUTILATED CHECK TO ISSUE A SUBSTITUTE CHECK IN THE MATTER UNDER ALLEGED EXISTING PROCEDURE, AND THE AMOUNT OTHERWISE PROPERLY APPEARING TO BE DUE THE PAYEE, NO EXCEPTION WILL NOW BE TAKEN AS TO THE DISPOSITION MADE OF THAT CASE.

THE PROCEDURE FOLLOWED HERE IS SAID TO HAVE BEEN BASED UPON THE HOLDING IN 22 COMP. DEC. 440, WHEREIN THE FOLLOWING WAS SAID AT PAGE 441:

AFTER A CAREFUL CONSIDERATION OF THIS MATTER I AM OF OPINION THAT THE PROCEDURE CAN BE STILL FURTHER SIMPLIFIED, WITHOUT SACRIFICING ANY NECESSARY SAFEGUARDS OR PRINCIPLES OF ACCOUNTING, BY PERMITTING THE DISBURSING CLERK FOR THE PAYMENT OF PENSIONS, IN CASES WHERE THE CANCELLATION OF THE RECLAIMED CHECK BECOMES NECESSARY BECAUSE OF THE ENDORSEMENTS THEREON, TO ISSUE THE SUBSTITUTE AS OF THE SAME NUMBER AND DATE AS THE RECLAIMED AND CANCELED CHECK--- THUS OBVIATING THE NECESSITY OF TAKING THE TRANSACTION UP ON THE ACCOUNT CURRENT.

THE DECISION IN QUESTION IS MODIFIED ACCORDINGLY AS TO CHECKS OF ALL DISBURSING OFFICERS.

THE PROCEDURE HEREIN AUTHORIZED CANNOT, OF COURSE, BE FOLLOWED IF THE DISBURSING OFFICER WHO ISSUED THE RECLAIMED CHECK HAS BEEN SUPERSEDED.

IN THE CLASS OF CASES UNDER CONSIDERATION HERE THERE IS NOT INVOLVED STRICTLY ANY RECLAMATION ON, OR CANCELLATION OF, THE MUTILATED CHECK SO AS TO MAKE THE DECISION, SUPRA, APPLICABLE TO THE DISPOSITION OF THESE CASES.

IN MY DECISION TO THE TREASURER OF THE UNITED STATES, A-52409, DATED DECEMBER 15, 1933, INVOLVING A SITUATION SUBSTANTIALLY IDENTICAL WITH THE ONE INVOLVED HERE, THE FOLLOWING WAS SAID WITH RESPECT TO THE DISPOSITION OF THAT CASE:

THE NONPAYMENT BY YOU OF THE SUBJECT CHECK, DUE TO THE STOP-ORDER PLACED AGAINST IT, PRESENTS A SITUATION WHEREIN THE ACCOUNT OF THE DRAWER OF THE CHECK HAS NOT BEEN CHARGED WITH THE AMOUNT COVERED THEREBY. THEREFORE, UPON A PROPER SHOWING BY THE VETERANS' ADMINISTRATION THAT THE CHECK IN QUESTION WAS PROPERLY ISSUED TO THE PAYEE AND THAT HE STILL IS ENTITLED TO THE PROCEEDS THEREOF, YOU ARE AUTHORIZED TO CHARGE THE SPECIAL DISBURSING AGENT'S ACCOUNT WITH THE AMOUNT INVOLVED AND TO ISSUE YOUR CHECK IN FAVOR OF THE PAYEE FOR THE AMOUNT OF THE MUTILATED CHECK AND TO TRANSMIT SAME TO HIM AT HIS LAST KNOWN ADDRESS. A-59823, AUGUST 15, 1933.

THE ORIGINAL CHECK WILL BE FILED IN THIS OFFICE AS PART OF THE PERMANENT RECORDS.

IN ANSWER TO THE TREASURER'S REQUEST FOR ADVICE IN THE MATTER OF THE PROCEDURE TO BE FOLLOWED IN THIS CLASS OF CASES, YOU ARE ADVISED THAT SUCH CASES ARE HEREAFTER FOR DISPOSITION AS STATED IN THE DECISION JUST QUOTED. HOWEVER, SUCH ACTION SHOULD NOT BE TAKEN EXCEPT UPON DIRECTION BY THIS OFFICE, AS HEREINBEFORE STATED.

THE CHECK HERE IN QUESTION WILL BE FILED IN THIS OFFICE AS PART OF THE PERMANENT RECORDS.