A-66347, DECEMBER 12, 1935, 15 COMP. GEN. 489

A-66347: Dec 12, 1935

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ARE FOR TRANSMISSION TO THE GENERAL ACCOUNTING OFFICE IN ACCORDANCE WITH THE PROVISIONS OF BULLETIN NO. 3. ARE BEING RETURNED TO THE ASSISTANT DISBURSING OFFICER. THE CONVENTIONAL REASONS GIVEN FOR THE RETURN OF THESE CHECKS ARE AS FOLLOWS: (1) PAYEE CANNOT BE LOCATED. (2) PAYEE REFUSES TO ACCEPT CHECK. (3) CHECK CANNOT BE DELIVERED TO PAYEE FOR THE REASON HE IS NOT IN THE UNITED STATES. IN EACH OF THE ABOVE INSTANCES THE PAYEE NAMED ON THE CHECK IS THE PROPER PARTY. THE AMOUNT INDICATED THEREON IS PROPERLY DUE AND PAYABLE TO THE PAYEE UNDER THE TERMS OF HIS CONTRACT. THEREBY PLACING THE MONEY REPRESENTED BY THE CHECKS BACK INTO THE APPROPRIATION FROM WHICH IT WAS DRAWN. WHICH READS IN PART AS FOLLOWS: "WHERE THE AMOUNT OF A WARRANT OR CHECK IS NOT DUE THE PAYEE OR HIS ESTATE.

A-66347, DECEMBER 12, 1935, 15 COMP. GEN. 489

CHECKS - UNDELIVERED - TRANSMISSION TO GENERAL ACCOUNTING OFFICE CHECKS ISSUED TO PROPER PAYEES AND IN AMOUNTS PROPERLY DUE AND PAYABLE IN CONNECTION WITH COMMODITY CONTRACTS UNDER THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933, 48 STAT. 31, AS AMENDED, AND TRUST AGREEMENTS UNDER THE BANKHEAD COTTON ACT OF APRIL 21, 1934, 48 STAT. 598, AS AMENDED, AND RETURNED BECAUSE DELIVERY TO THE PAYEE CANNOT BE MADE MAY NOT BE CANCELED AND THE AMOUNTS THEREOF RESTORED TO THE APPLICABLE APPROPRIATIONS, BUT ARE FOR TRANSMISSION TO THE GENERAL ACCOUNTING OFFICE IN ACCORDANCE WITH THE PROVISIONS OF BULLETIN NO. 3, DATED MAY 19, 1923, 2 COMP. GEN. 829, AS REVISED BY SUPPLEMENT 1, DATED AUGUST 16, 1927, 7 COMP. GEN. 846.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF AGRICULTURE, DECEMBER 12, 1935:

THERE HAS BEEN SUBMITTED FOR MY CONSIDERATION THE MATTER PRESENTED IN THE MEMORANDUM DATED OCTOBER 7, 1935, FROM THE COMPTROLLER, AGRICULTURAL ADJUSTMENT ADMINISTRATION, OF YOUR DEPARTMENT, AS FOLLOWS:

A LARGE NUMBER OF CHECKS ISSUED IN ACCORDANCE WITH THE PROVISIONS OF THE COMMODITY CONTRACTS UNDER THE AGRICULTURAL ADJUSTMENT ACT OF MAY 12, 1933, AS AMENDED, AND IN ACCORDANCE WITH THE TERMS OF TRUST AGREEMENTS UNDER THE BANKHEAD COTTON ACT OF APRIL 21, 1934, AS AMENDED, ARE BEING RETURNED TO THE ASSISTANT DISBURSING OFFICER, DIVISION OF DISBURSEMENTS, AGRICULTURAL ADJUSTMENT SECTION, TREASURY DEPARTMENT.

THE CONVENTIONAL REASONS GIVEN FOR THE RETURN OF THESE CHECKS ARE AS FOLLOWS:

(1) PAYEE CANNOT BE LOCATED.

(2) PAYEE REFUSES TO ACCEPT CHECK.

(3) CHECK CANNOT BE DELIVERED TO PAYEE FOR THE REASON HE IS NOT IN THE UNITED STATES, AND HIS ADDRESS CANNOT BE DEFINITELY DETERMINED.

IN EACH OF THE ABOVE INSTANCES THE PAYEE NAMED ON THE CHECK IS THE PROPER PARTY, AND THE AMOUNT INDICATED THEREON IS PROPERLY DUE AND PAYABLE TO THE PAYEE UNDER THE TERMS OF HIS CONTRACT.

IT HAS BEEN THE POLICY OF THE DISBURSING OFFICE IN THE PAST TO CANCEL THIS TYPE OF CHECK, THEREBY PLACING THE MONEY REPRESENTED BY THE CHECKS BACK INTO THE APPROPRIATION FROM WHICH IT WAS DRAWN. UPON THE WRITTEN REQUEST OF THE PAYEE FOR THE AMOUNT DUE HIM UNDER HIS CONTRACT A NEW CHECK WOULD BE DRAWN TO HIS ORDER AND FORWARDED THROUGH THE REGULAR CHANNELS FOR DELIVERY.

THE ASSISTANT DISBURSING OFFICER, DIVISION OF DISBURSEMENTS, AGRICULTURAL ADJUSTMENT SECTION, TREASURY DEPARTMENT, HAS CALLED THE ATTENTION OF THIS OFFICE TO A PORTION OF GENERAL REGULATION NO. 35, ISSUED JUNE 18, 1934, BY THE COMPTROLLER GENERAL OF THE UNITED STATES, WHICH READS IN PART AS FOLLOWS:

"WHERE THE AMOUNT OF A WARRANT OR CHECK IS NOT DUE THE PAYEE OR HIS ESTATE, OR SUCH WARRANT OR CHECK HAS OTHERWISE BEEN ERRONEOUSLY ISSUED AND IS NOT PROPERLY PAYABLE, SUCH WARRANT OR CHECK SHOULD BE MARKED "CANCELED" --- FORWARDING SUCH CHECKS TO THE CHECK ACCOUNTING DIVISION, GENERAL ACCOUNTING OFFICE, AND GIVING THE REASONS WHY THE AMOUNTS OF THE CHECKS CANCELED WERE NOT DUE AS DRAWN.'

IT IS APPARENT THE REASONS GIVEN FOR THE RETURN OF THE CHECKS IN QUESTION DO NOT FALL WITHIN THAT CLASS OF CHECKS CONTEMPLATED FOR CANCELLATION IN GENERAL REGULATION NO. 35 QUOTED IN PART, SUPRA. HOWEVER, IT IS POINTED OUT THAT IF THE CHECKS IN QUESTION ARE NOT CANCELED, IT IS PROBABLE THAT THE AMOUNTS OF SUCH CHECKS WILL, BY REASON OF THE PROVISIONS OF SECTION 21 OF PUBLIC, NO. 473, APPROVED JUNE 26, 1934, BE DEPOSITED INTO THE TREASURY TO THE CREDIT OF A TRUST FUND ACCOUNT ENTITLED "OUTSTANDING LIABILITIES.'

SEVERAL REASONS ARE SET FORTH IN MY MEMORANDUM OF APRIL 1, 1935 (SEE A- 58462, MAY 7, 1935), AS TO WHY IT IS IMPRACTICABLE, FROM THE STANDPOINT OF THIS OFFICE, TO SUBMIT A COMMODITY CONTRACT TO THE GENERAL ACCOUNTING OFFICE PROPER. THE REASONS MENTIONED THEREIN ARE EQUALLY APPLICABLE TO THE SITUATION IN QUESTION.

ACCORDINGLY, A DECISION IS DESIRED AS TO WHETHER THE CHECKS RETURNED FOR THE REASONS NOTED SHOULD BE CONSIDERED AS PROPER FOR CANCELLATION OR WHETHER THESE CHECKS SHOULD BE KEPT AND IF NOT CALLED FOR UNTIL THE END OF THE FISCAL YEAR, THE AMOUNTS THEREOF BE CREDITED TO A TRUST FUND ACCOUNT ENTITLED "OUTSTANDING LIABILITIES.'

AS STATED IN THE ABOVE-QUOTED MEMORANDUM, THE MATTER HERE DOES NOT FALL WITHIN THE PROVINCE OF GENERAL REGULATIONS NO. 35. HOWEVER, THERE ARE FOR APPLICATION HERE THE PROVISIONS OF BULLETIN NO. 3, DATED MAY 19, 1923, 2 COMP. GEN. 829, AS REVISED BY SUPPLEMENT 1, DATED AUGUST 16, 1927, 7 COMP. GEN. 846, WHICH, AS AMENDED, ARE AS FOLLOWS:

LACK OF UNIFORMITY IN THE VARIOUS SERVICES IN THE PROCEDURE FOLLOWED IN CONNECTION WITH UNDELIVERED CHECKS AND THE UNSATISFACTORY SITUATION WHICH HAS FOLLOWED THE RETENTION BY DISBURSING OFFICERS OF CHECKS ISSUED BY THEM WHICH CANNOT BE DISPOSED OF UNTIL SUCH TIME AS THEY MAY BE REPORTED AS PERTAINING TO "OUTSTANDING LIABILITIES" AND THE NUMBER OF CHANGES IN HEADQUARTERS OF DISBURSING OFFICERS, AND THE DISBURSING OFFICERS THEMSELVES, HAS CAUSED THIS OFFICE TO ESTABLISH A CENTRAL PLACE FOR SAFEKEEPING OF ALL SUCH CHECKS.

ON THE FIRST OF EACH QUARTER DISBURSING OFFICERS HAVING IN THEIR POSSESSION CHECKS ISSUED TO PAY OBLIGATIONS OF THE UNITED STATES, WHICH FOR ANY REASON HAVE REMAINED UNDELIVERED FOR MORE THAN THREE FULL MONTHS FROM THE LAST DAY OF THE MONTH OF ISSUE, SHOULD FORWARD SUCH CHECKS TO THE GENERAL ACCOUNTING OFFICE, CLAIMS DIVISION, LIABILITIES SECTION, FOR SAFE KEEPING AND LAWFUL DISPOSITION.

IN FORWARDING THE CHECKS A STATEMENT SHOULD BE FURNISHED GIVING THE NAME AND SYMBOL NUMBER OF THE DISBURSING OFFICER AND LISTING EACH CHECK BY NUMBER, DATE, AMOUNT, PAYEE, PAYEE'S LAST KNOWN ADDRESS, VOUCHER REFERENCE, AND STATEMENT OF THE NATURE OF THE PAYMENT; THAT IS, WHETHER FOR SALARY, REIMBURSEMENT OF EXPENSES, SUPPLIES FURNISHED, ETC.

ALL APPLICATIONS FOR UNDELIVERED CHECKS SHOULD THEREAFTER BE TRANSMITTED TO SUCH LIABILITIES SECTION, WITH APPROPRIATE ADVICE, FOR ATTENTION.

WHEN A DISBURSING OFFICE IS PERMANENTLY DISCONTINUED ALL CHECKS THAT CANNOT BE DELIVERED SHOULD BE FORWARDED TO THE LIABILITIES SECTION AS PROVIDED IN PARAGRAPH THREE.

THERE IS NO WARRANT OF LAW FOR THE CANCELATION OF CHECKS OF THE CLASS INVOLVED HERE BY THE DISBURSING OFFICER AND THE RESTORATION OF THE AMOUNT THEREOF TO THE APPLICABLE APPROPRIATION. SEE GENERALLY 17 COMP. DEC. 287. IT IS ADMITTED IN THE MEMORANDUM, SUPRA, THAT IN EACH OF THE THREE CLASSES ENUMERATED, THE PAYEE NAMED ON THE CHECK IS THE PROPER PARTY, AND THE AMOUNT INDICATED THEREON IS PROPERLY DUE AND PAYABLE TO THE PAYEE UNDER THE TERMS OF HIS CONTRACT. THE CANCELATION OF SUCH CHECKS, WHICH REPRESENT VALID AND SUBSISTING LEGAL OBLIGATIONS OF THE GOVERNMENT, AND THE RESTORATION OF THE AMOUNTS OF SUCH CHECKS TO THE APPLICABLE APPROPRIATION, PRESENT A SITUATION WHEREBY APPROPRIATION BALANCES WILL NOT REFLECT THE TRUE STATUS OF THE APPROPRIATION ACCOUNT. ALSO, SUCH PRACTICE PERMITS THE FREE USE OF APPROPRIATED FUNDS WHICH, IN FACT, HAVE ALREADY BECOME OBLIGATED, WHICH ACTION, ALSO, MAY RESULT IN CREATING DEFICIENCIES IN THE APPROPRIATION ACCOUNT. SEE SECTION 3679, REVISED STATUTES, AS AMENDED, 31 U.S.C. 665. THE UNLAWFUL FEATURE OF SUCH PRACTICE MUST AT ONCE BE APPARENT.

WHERE THE GOVERNMENT ISSUES A CHECK TO A NAMED PAYEE IN PAYMENT OF A VALID AND SUBSISTING OBLIGATION OF THE UNITED STATES, SUCH OBLIGATION MUST BE CHARGED AGAINST THE APPLICABLE APPROPRIATION AT THE TIME OF THE ISSUANCE OF THE CHECK, AND IF SUCH CHECK FOR THE TIME BEING CANNOT BE DELIVERED TO THE PAYEE FOR REASONS SUCH AS STATED IN THE MEMORANDUM, SUPRA, NEVERTHELESS, THE GOVERNMENT MUST HAVE THE OBLIGATED FUNDS AT ITS DISPOSAL TO MEET PAYMENT OF THE CHECK, IF AND WHEN SAID CHECK BE LATER DEMANDED BY THE PROPER PARTIES AND PRESENTED TO THE TREASURER OF THE UNITED STATES FOR PAYMENT WITHIN THE PERIOD PRESCRIBED BY EXISTING LAW. THE PERIOD IN WHICH A CHECK MAY BE PRESENTED FOR PAYMENT BY THE TREASURER OF THE UNITED STATES IS NOW FIXED BY SECTION 21 OF THE ACT OF JUNE 26, 1934, 48 STAT. 1235, AS ONE FISCAL YEAR BEYOND THE FISCAL YEAR IN WHICH THE CHECK IS ISSUED--- WITH CERTAIN EXCEPTIONS NOT HERE MATERIAL.

AS TO CHECKS WHICH ARE NOT SO PRESENTED FOR PAYMENT WITHIN SAID PRESCRIBED PERIOD, THE CITED ACT FURTHER PROVIDES THAT:

* * * THE AMOUNTS OF ALL SUCH CHECKS PROPERLY DUE AND PAYABLE WHICH HAVE NOT BEEN PRESENTED FOR PAYMENT WITHIN SUCH PERIOD SHALL BE DEPOSITED INTO THE TREASURY TO THE CREDIT OF A TRUST FUND ACCOUNT ENTITLED "OUTSTANDING LIABILITIES (FISCAL YEAR)" * * *.

OBVIOUSLY, THE CANCELATION OF CHECKS WHICH ARE PROPERLY DUE AND PAYABLE TO THE NAMED PAYEES--- NOTWITHSTANDING PRESENT INABILITY TO MAKE DELIVERY THEREOF--- WOULD BE CONTRARY TO THE STATUTE ABOVE QUOTED -- THE DEPOSIT TO THE APPROPRIATION OF THE AMOUNT OF THE CANCELED CHECKS NOT BEING A DEPOSIT INTO THE TREASURY WITHIN THE MEANING OF THE SAID ACT.

IN THE MEMORANDUM, SUPRA, IT IS SUGGESTED THAT THE MATTER HERE IS SIMILAR TO THAT COVERED IN MY DECISION TO YOU OF MAY 7, 1935, A-58462. ANALYSIS OF THE MATTER, HOWEVER, WILL READILY DISCLOSE THAT THE TWO SITUATIONS ARE NOT SIMILAR. IN THE CITED DECISION THERE WAS AUTHORIZED THE CANCELATION OF CHECKS IN THOSE CASES WHERE THE NAMED PAYEES HAD DIED BEFORE DELIVERY, AND THE SIMULTANEOUS ADJUSTMENT OF THE CLAIM MADE BY THE PERSON OR PERSONS LAWFULLY ENTITLED TO THE PROCEEDS THEREOF AND THE PAYMENT OF SAID CLAIM AFTER EXAMINATION THEREOF BY DESIGNATED REPRESENTATIVES OF THIS OFFICE. ADMITTEDLY, BY SUCH ACTION THERE WAS NOT INVOLVED ANY VIOLATION OF GOVERNMENTAL ACCOUNTING PRINCIPLES. SUCH PROCEDURE WAS DECIDED UPON BECAUSE OF ALLEGED COMPLICATED MECHANICAL OPERATIONS NECESSITATED IN YOUR DEPARTMENT, AND ALSO, BECAUSE OF THE INABILITY OF YOUR DEPARTMENT TO SUBMIT TO THIS OFFICE THE NECESSARY RECORDS IN EACH OF SUCH CASES. INASMUCH AS THE CHECKS OF THE CLASS IN QUESTION HERE ARE DUE THE PAYEES AS DRAWN--- NOTHING REMAINING TO BE DONE BUT THE DELIVERY THEREOF--- THERE IS NOT SEEN AS BEING INVOLVED HERE ANY OF THE DIFFICULTIES REPRESENTED BY YOUR DEPARTMENT IN THE MATTER COVERED IN MY DECISION OF MAY 7, 1935.

THE SITUATION HERE THEREFORE, FALLS SQUARELY WITHIN THE PROVINCE OF BULLETIN NO. 3, SUPRA, AND THE PROVISIONS THEREOF SHOULD BE COMPLIED WITH. FOR REASONS HEREIN STATED, THE PRACTICE OF CANCELING CHECKS AND RESTORING THE AMOUNTS THEREOF TO THE APPLICABLE APPROPRIATION IN THE CLASS OF CASES IN QUESTION HERE, SHOULD BE DISCONTINUED FORTHWITH. THIS OFFICE SHOULD BE INFORMED OF THE CORRECTIVE MEASURES TAKEN BY YOU IN THIS MATTER.