A-68820, FEBRUARY 10, 1936, 15 COMP. GEN. 692

A-68820: Feb 10, 1936

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VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION DEATH AWARD - REDUCTION ACCOUNT FORGED LOAN THE NONAUTHORIZATION BY THE GENERAL ACCOUNTING OFFICE OF RECLAMATION PROCEEDINGS IN CONNECTION WITH A FORGED LOAN ON A VETERAN'S ADJUSTED COMPENSATION CERTIFICATE IS NOT TO BE CONSTRUED AS CONCLUDING ANY RIGHTS WHICH THE GOVERNMENT MAY HAVE AGAINST THE VETERAN IN RESPECT OF THE FRAUDULENT HYPOTHECATION OF THE CERTIFICATE. AT HIS DEATH THE LOSS OCCASIONED THEREBY THROUGH HIS FAULT OR NEGLIGENCE IS FOR DEDUCTION IN ARRIVING AT THE AWARD TO THE DESIGNATED BENEFICIARY. 1936: THERE IS BEFORE THIS OFFICE FOR CONSIDERATION THE WORLD WAR ADJUSTED COMPENSATION CASE OF HARRY ALLEN. WAS ISSUED AN ADJUSTED SERVICE CERTIFICATE IN THE AMOUNT OF $761.

A-68820, FEBRUARY 10, 1936, 15 COMP. GEN. 692

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION DEATH AWARD - REDUCTION ACCOUNT FORGED LOAN THE NONAUTHORIZATION BY THE GENERAL ACCOUNTING OFFICE OF RECLAMATION PROCEEDINGS IN CONNECTION WITH A FORGED LOAN ON A VETERAN'S ADJUSTED COMPENSATION CERTIFICATE IS NOT TO BE CONSTRUED AS CONCLUDING ANY RIGHTS WHICH THE GOVERNMENT MAY HAVE AGAINST THE VETERAN IN RESPECT OF THE FRAUDULENT HYPOTHECATION OF THE CERTIFICATE, AND AT HIS DEATH THE LOSS OCCASIONED THEREBY THROUGH HIS FAULT OR NEGLIGENCE IS FOR DEDUCTION IN ARRIVING AT THE AWARD TO THE DESIGNATED BENEFICIARY.

COMPTROLLER GENERAL MCCARL TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, FEBRUARY 10, 1936:

THERE IS BEFORE THIS OFFICE FOR CONSIDERATION THE WORLD WAR ADJUSTED COMPENSATION CASE OF HARRY ALLEN, A-3928952, XC-1502-960, INVOLVING AN ADMINISTRATIVELY APPROVED AWARD OF THE PROCEEDS OF HIS ADJUSTED SERVICE CERTIFICATE--- WITH ADJUSTMENT FOR OUTSTANDING LOAN OF 50 PERCENT--- IN FAVOR OF ETHEL WILLIAMS (FRIEND), THE DESIGNATED BENEFICIARY OF SAID CERTIFICATE.

THE VETERAN FILED AN APPLICATION FOR ADJUSTED COMPENSATION ON JANUARY 7, 1927, AND WAS ISSUED AN ADJUSTED SERVICE CERTIFICATE IN THE AMOUNT OF $761, WHICH WAS MAILED TO HIM AT 2201 CLARKWOOD ROAD, STE. NO. 2, CLEVELAND, OHIO, THE ADDRESS SHOWN IN THE APPLICATION. ON MAY 5, 1930, A LOAN IN THE AMOUNT OF $92 WAS PROCURED ON THE CERTIFICATE THROUGH THE REGIONAL OFFICE OF THE VETERANS' ADMINISTRATION AT CLEVELAND, OHIO. THEREAFTER, THE VETERANS' ADMINISTRATION RECEIVED A LETTER DATED JUNE 23, 1930, FROM THE VETERAN AT LOUISVILLE, KY., REPORTING THE LOSS OF HIS CERTIFICATE AND REQUESTING INFORMATION AS TO HOW HE COULD OBTAIN A DUPLICATE THEREOF. THE VETERANS' ADMINISTRATION INFORMED HIM THAT HIS CERTIFICATE HAD BEEN PLEDGED FOR A LOAN AT THE REGIONAL OFFICE OF THE VETERANS' ADMINISTRATION IN CLEVELAND, OHIO, AND IF HE DID NOT PROCURE THE LOAN IN QUESTION HE SHOULD EXECUTE AN AFFIDAVIT EXPLAINING THE LOSS OF THE CERTIFICATE. THEREAFTER, HE EXECUTED AFFIDAVITS IN WHICH HE STATED THAT HE LEFT HIS ADJUSTED SERVICE CERTIFICATE WITH HIS LANDLADY AT 2314 FOURTEENTH STREET, CLEVELAND, OHIO, FOR SAFEKEEPING; THAT HE HAD WRITTEN TO HER REGARDING IT AND ALSO INVOKED THE ASSISTANCE OF THE POLICE, BUT HE HAD NEITHER HEARD FROM HER NOR BEEN ABLE TO ASCERTAIN HER WHEREABOUTS AND THAT HE HAD NEVER APPLIED FOR OR BEEN GRANTED A LOAN BY ANY REGIONAL OFFICE OF THE VETERANS' ADMINISTRATION. THE CASE WAS LATER INVESTIGATED BY THE UNITED STATES SECRET SERVICE AND REPORT ON FILE, DATED MARCH 3, 1931, FROM THAT SERVICE, DISCLOSES THAT THERE HAS NEVER BEEN A PLACE IN CLEVELAND, OHIO, KNOWN AS 2314 FOURTEENTH STREET, THE PLACE AT WHICH THE VETERAN ALLEGED HE LEFT HIS CERTIFICATE, NOR HAD THE IDENTITY OF THE PERSON WHO PROCURED THE LOAN FOR $92 BEEN ASCERTAINED.

ON THE BASIS OF THE ABOVE FACTS, YOUR ADMINISTRATION, BY LETTER DATED SEPTEMBER 15, 1931, DCC-A, REQUESTED THE TREASURER OF THE UNITED STATES TO RECLAIM THE AMOUNT OF THE CHECK, WHICH REQUEST THE TREASURER REFERRED TO THIS OFFICE FOR CONSIDERATION IN HIS LETTER OF SEPTEMBER 24, 1931. APPEARS THAT BY LETTER DATED OCTOBER 21, 1931, YOUR ADMINISTRATION WAS ADVISED IN EFFECT THAT IN ACCORDANCE WITH THE PRINCIPLE ENUNCIATED IN 9 COMP. GEN. 476, NO ACTION WOULD BE TAKEN BY THIS OFFICE WITH A VIEW TO AUTHORIZING RECLAMATION PROCEEDINGS AND FURTHER, THAT NO CHARGE WOULD BE RAISED AT THAT TIME ON THE BOOKS OF THIS OFFICE AGAINST ANY PERSON. THE VETERANS' ADMINISTRATION THEREAFTER RELEASED THE ADJUSTED SERVICE CERTIFICATE TO THE VETERAN WHO SUBSEQUENTLY OBTAINED A 50-PERCENT LOAN THEREUNDER. HE DIED ON AUGUST 12, 1935, AND BECAUSE OF A DISCREPANCY IN THE FILE REGARDING THE VETERAN'S AGE THE ADJUSTED SERVICE CERTIFICATE WAS RECOMPUTED AND THE FACE VALUE THEREOF CHANGED TO $728. AFTER DEDUCTING THE 50 PERCENT LOAN PROCURED BY THE VETERAN, WITH INTEREST, THE BALANCE DUE ON THE CERTIFICATE, $292.07, WAS AWARDED TO ETHEL WILLIAMS, THE BENEFICIARY--- RELATIONSHIP GIVEN AS FRIEND--- AND THE CASE SUBMITTED TO THIS OFFICE FOR PREAUDIT ACTION.

INASMUCH AS THE EVIDENCE IN THE FILE INDICATED THAT THE VETERAN WAS NOT FREE FROM NEGLIGENCE IN LEAVING HIS CERTIFICATE AT CLEVELAND WHEN HE WENT TO KENTUCKY TO LIVE, AND THAT HE THEREBY CREATED THE CONDITION WHICH ENABLED THE FRAUDULENT LOAN TO BE PROCURED ON THE CERTIFICATE, THE CASE WAS RETURNED TO THE VETERANS' ADMINISTRATION BY LETTER OF THIS OFFICE, DATED OCTOBER 7, 1935, FOR RECONSIDERATION OF WHETHER THE LOAN SHOULD NOT BE DEDUCTED FROM THE FACE VALUE OF THE CERTIFICATE UNDER THE PRINCIPLE INVOLVED IN DECISIONS OF THIS OFFICE, A-52979 AND A-53898, DATED JANUARY 17, 1934, AND MARCH 13, 1934, RESPECTIVELY.

THE CASE WAS RESUBMITTED TO THIS OFFICE BY LETTER DATED OCTOBER 22, 1935, READING, IN PART, AS FOLLOWS:

IN YOUR LETTER OF OCTOBER 21, 1931, A COPY OF WHICH IS ENCLOSED, YOU INFORMED THIS ADMINISTRATION THAT, IN ACCORDANCE WITH 9 COMP. GEN. 476, NO ACTION WOULD BE TAKEN WITH A VIEW TO AUTHORIZING RECLAMATION PROCEEDINGS, AND, FURTHER, NO CHARGE WOULD BE RAISED AGAINST ANY PERSON ON THE BOOKS OF YOUR OFFICE. BASED ON THIS STATEMENT, THE CERTIFICATE WAS RELEASED TO THE VETERAN, AND THE AMOUNT OF THE INDEBTEDNESS REFERRED TO YOUR OFFICE ON MARCH 14, 1932, AS UNCOLLECTIBLE. THE VETERAN OBTAINED A LOAN OF $380.50, OR 50 PERCENT OF THE FACE VALUE OF THE CERTIFICATE, FROM THE OFFICE OF THIS ADMINISTRATION AT LOUISVILLE, KENTUCKY, ON NOVEMBER 10, 1931. THE TOTAL INDEBTEDNESS BECAUSE OF THIS LOAN AMOUNTED TO $435.93 ON AUGUST 12, 1935, THE DATE OF HIS DEATH.

IN VIEW OF THE FOREGOING, THE AWARD HAS BEEN REVOUCHERED FOR PAYMENT, AND THE CASE IS REFERRED FOR RECONSIDERATION.

THE NONAUTHORIZATION OF RECLAMATION PROCEEDINGS BY THIS OFFICE IN THIS CASE IS NOT TO BE CONSTRUED AS CONCLUDING ANY RIGHTS WHICH THE GOVERNMENT MAY HAVE AGAINST THE VETERAN IN RESPECT OF THE FRAUDULENT HYPOTHECATION OF HIS ADJUSTED SERVICE CERTIFICATE, RESULTING IN A LOSS TO THE GOVERNMENT. THE FACT THAT THE VETERAN REPORTED THE LOSS OF HIS CERTIFICATE WITHIN 6 WEEKS OF THE DATE OF THE FRAUDULENT HYPOTHECATION THEREOF IS NOT TO BE PASSED OVER LIGHTLY WHEN VIEWED IN THE LIGHT OF THE FACT THAT THE ADDRESS, AT WHICH HE ALLEGED TO HAVE LEFT HIS CERTIFICATE WITH HIS FORMER LANDLADY FOR SAFEKEEPING, WAS A FICTITIOUS AND NONEXISTING ADDRESS. THERE IS NOTHING IN THE RECORDS SHOWING WHY THE VETERAN GAVE SUCH FALSE ADDRESS IN HIS AFFIDAVIT REPORTING THE LOSS OF HIS CERTIFICATE.

ASIDE FROM THE TAINT REFERRED TO IN THE PRECEDING PARAGRAPH, THE RECORD ESTABLISHES THE FACT THAT THE VETERAN DID NOT EXERCISE THE PROPER DEGREE OF CARE IN THE SAFEKEEPING OF HIS CERTIFICATE. SUCH LACK OF PROPER CARE ON HIS PART CONTRIBUTED LARGELY, IF NOT WHOLLY, TO THE MATTER OF THE FORGED LOAN HERE. IT IS A SALUTARY PRINCIPLE OF JUDICIAL DECISIONS, LONG EMPHASIZED AND FOLLOWED IN DECISIONS OF THIS OFFICE, THAT, WHERE ONE OF TWO INNOCENT PARTIES SUFFERS BECAUSE OF FRAUD OR FORGERY, JUSTICE IMPOSES THE BURDEN ON HIM WHO WAS FIRST AT FAULT AND PUT INTO OPERATION THE POWER WHICH RESULTED IN THE FRAUD OR FORGERY. THIS PRINCIPLE IS FOR APPLICATION HERE. THE RIGHT OF THE DESIGNATED BENEFICIARY UNDER THE ADJUSTED SERVICE CERTIFICATE MAY NOT INTERVENE TO OBSTRUCT THE CARRYING OUT OF JUSTICE IN CASES SUCH AS HERE INVOLVED--- THE RIGHT OF THE DESIGNATED BENEFICIARY BEING SECONDARY TO THAT OF THE VETERAN, AND THE FACE VALUE OF THE CERTIFICATE BEING PROPERLY FOR REDUCTION ON ACCOUNT OF ANY ACTS OF THE VETERAN DURING HIS LIFETIME INVOLVING IN ANY MANNER HIS ADJUSTED SERVICE CERTIFICATE.

ACCORDINGLY, THERE SHOULD BE DEDUCTED FROM THE AWARD THE AMOUNT OF THE FORGED CHECK IN QUESTION HERE, WITH INTEREST, IN ADDITION TO THE LEGAL LOAN OF 50 PERCENT DEDUCTED ON THE ADMINISTRATIVELY SUBMITTED AWARD. ACTION IN THE PREAUDIT WILL BE ACCORDINGLY.