A-69913, MARCH 24, 1936, 15 COMP. GEN. 841

A-69913: Mar 24, 1936

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VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - SET-OFF THE LOAN VALUE OF A VETERAN'S ADJUSTED SERVICE CERTIFICATE IS AVAILABLE TOWARD LIQUIDATION OF HIS INDEBTEDNESS TO THE UNITED STATES ARISING BY REASON OF HIS HYPOTHECATION OF ANOTHER VETERAN'S ADJUSTED SERVICE CERTIFICATE FOR THE SECURING OF A LOAN. AS FOLLOWS: REFERENCE IS MADE TO THE FOLLOWING CHECK IN FAVOR OF HENRY M. HEREWITH ARE RETURNED THE CHECK DESCRIBED ABOVE AND THE FILE RECEIVED WITH YOUR LETTER OF AUGUST 17. ATTENTION IS INVITED TO THE LETTER OF THE DIRECTOR OF FINANCE. WILL BE CHARGED AGAINST IT. IT IS REQUESTED THAT YOU ADVISE THIS OFFICE WHETHER THE TREASURER MAY ABANDON RECLAMATION PROCEEDINGS ON THE SUBJECT CHECK IN THE AMOUNT OF $161.00.

A-69913, MARCH 24, 1936, 15 COMP. GEN. 841

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION - SET-OFF THE LOAN VALUE OF A VETERAN'S ADJUSTED SERVICE CERTIFICATE IS AVAILABLE TOWARD LIQUIDATION OF HIS INDEBTEDNESS TO THE UNITED STATES ARISING BY REASON OF HIS HYPOTHECATION OF ANOTHER VETERAN'S ADJUSTED SERVICE CERTIFICATE FOR THE SECURING OF A LOAN, NOTWITHSTANDING THE PROVISIONS OF SECTION 308 (A) OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, 44 STAT. 827, AND SECTION 7 OF THE ACT OF JANUARY 27, 1936, 49 STAT. 1101.

COMPTROLLER GENERAL MCCARL TO THE TREASURER OF THE UNITED STATES, MARCH 24, 1936:

THERE HAS BEEN RECEIVED YOUR LETTER OF DECEMBER 30, 1935, AS FOLLOWS:

REFERENCE IS MADE TO THE FOLLOWING CHECK IN FAVOR OF HENRY M. RUCKER:

NO. 82-737, DATED, JULY 29, 1932; AMOUNT, $232.50; DRAWER, L. GREEN; SYMBOL, 99-127; DATE PAID AUGUST 8, 1932.

HEREWITH ARE RETURNED THE CHECK DESCRIBED ABOVE AND THE FILE RECEIVED WITH YOUR LETTER OF AUGUST 17, 1935. ATTENTION IS INVITED TO THE LETTER OF THE DIRECTOR OF FINANCE, DATED DECEMBER 4, 1935, TO THE DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT, STATING THAT HENRY WILLIAM RUCKER HAS BEEN ISSUED ADJUSTED SERVICE CERTIFICATE NO. 3933576, AND $161.00, THE 50 PERCENT LOAN VALUE, WILL BE CHARGED AGAINST IT, IN CONNECTION WITH THE NEGOTIATION BY HIM OF THE ADJUSTED SERVICE CERTIFICATE BELONGING TO HENRY M. RUCKER.

IT IS REQUESTED THAT YOU ADVISE THIS OFFICE WHETHER THE TREASURER MAY ABANDON RECLAMATION PROCEEDINGS ON THE SUBJECT CHECK IN THE AMOUNT OF $161.00, AND ENDEAVOR TO RECOVER THE BALANCE, $71.50, FROM THE ENDORSERS.

THE CITED LETTER FROM THE VETERANS' ADMINISTRATION DATED DECEMBER 4, 1935, IS AS FOLLOWS:

THIS IS IN REFERENCE TO THE LETTER FROM THIS ADMINISTRATION DATED APRIL 24, 1935, WHEREIN YOU WERE REQUESTED TO SECURE RECLAMATION FROM THE ENDORSERS OF CHECK NO. 82,737 DRAWN ON JULY 29, 1932, FOR $232.50 BY L. GREEN, DISBURSING OFFICER, SYMBOL 99127 ISSUED IN PAYMENT OF A LOAN TO THE ABOVE NAMED VETERAN ON THE SECURITY OF THE ADJUSTED SERVICE CERTIFICATE OF HENRY M. RUCKER.

HENRY WILLIAM RUCKER HAS NOW BEEN ISSUED ADJUSTED-SERVICE CERTIFICATE NO. 3,933,576 AND $161.00 COVERING THE 50 PERCENT LOAN VALUE WILL BE CHARGED AGAINST HIS CERTIFICATE. HE WILL BE REQUESTED TO REFUND THE DIFFERENCE BETWEEN THE LOAN VALUE OF HIS CERTIFICATE AND THE AMOUNT HE BORROWED ON THE CERTIFICATE OF HENRY M. RUCKER, PLUS ACCRUED INTEREST THEREON. IT IS, THEREFORE, REQUESTED THAT RECLAMATION BE OBTAINED FROM THE ENDORSERS IN THE AMOUNT OF THE DIFFERENCE BETWEEN $232.50 AND $161.00 OR $71.50.

IT APPEARS THAT IN APRIL 1931, HENRY MARVIN RUCKER, A VETERAN OF THE WORLD WAR, SERIAL NO. 1134334, FILED AN APPLICATION FOR AN ADJUSTED SERVICE CERTIFICATE, GIVING HIS ADDRESS ON THE APPLICATION AS 304 HALL BUILDING, KANSAS CITY, MO., WHICH, IT NOW APPEARS, WAS THE OFFICE ADDRESS OF THE ACTORS EQUITY ASSOCIATION OF WHICH HE WAS A MEMBER. HIS RESIDENCE ADDRESS AT THAT TIME WAS 815 EAST NINTH STREET, APARTMENT 106. INFORMATION ON THE APPLICATION SHOWS THAT IT WAS PASSED (APPROVED) ON SEPTEMBER 18, 1931, AND THEREAFTER THE CERTIFICATE WAS MAILED TO THE VETERAN AT THE ADDRESS GIVEN. PRIOR TO THAT TIME, HOWEVER, THE ACTORS EQUITY ASSOCIATION HAD CLOSED ITS OFFICE AT 304 HALL BUILDING AND IT DOES NOT APPEAR THAT THE CERTIFICATE WAS DELIVERED THERE. IT DOES APPEAR, HOWEVER, THAT THE CERTIFICATE WAS DELIVERED TO HENRY WILLIAM RUCKER,818 EAST TENTH STREET, KANSAS CITY, MO., WHO STATES HE THOUGHT IT WAS INTENDED FOR HIM ALTHOUGH HE HAD FILED NO APPLICATION FOR AN ADJUSTED-SERVICE CERTIFICATE AND THE ONE HE THUS RECEIVED DID NOT BEAR HIS CORRECT FULL NAME, SERIAL NUMBER, OR ADDRESS.

ON JULY 28, 1934, HENRY WILLIAM RUCKER HYPOTHECATED THE CERTIFICATE, UNDER THE PROVISIONS OF THE ACT OF FEBRUARY 7, 1931, FOR A LOAN OF 50 PERCENT OF ITS FACE VALUE, SIGNING THE APPLICATION FOR THE LOAN AS HENRY M. RUCKER, AND GIVING THE ADDRESS 818 EAST TENTH STREET, KANSAS CITY, MO. THE APPLICATION CONTAINED A CERTIFICATE OF IDENTIFICATION EXECUTED BY THE COMMANDER OF THE GAILLARD POST NO. 2069, VETERANS OF FOREIGN WARS. THE APPLICATION ON THE FACTS THEN APPEARING WAS APPROVED AND THE CHECK COVERING THE LOAN WAS MADE PAYABLE TO HENRY M. RUCKER, 818 EAST TENTH STREET, KANSAS CITY, MO., MAILED ACCORDINGLY AND RECEIVED BY HENRY WILLIAM RUCKER, WHO INDORSED IT AS DRAWN, PRESENTED IT TO HIS EMPLOYER, WHO IN TURN INDORSED THE CHECK AND INTRODUCED THE PAYEE TO THE PIONEER TRUST CO. AS HENRY M. RUCKER, WHEREUPON THE BANK CASHED THE CHECK. ON BEING CALLED UPON TO REFUND THE AMOUNT OF THE CHECK THUS ERRONEOUSLY NEGOTIATED ON ITS WARRANTY AS INDORSER, THE BANK DOES NOT DENY LIABILITY ON THE BASIS THAT THERE WAS NO FORGERY, BUT HAS STATED THAT THE ORIGINAL INDORSER (PAYEE) IS NOT FINANCIALLY ABLE TO MAKE RESTITUTION AND THAT ITS IMMEDIATE INDORSER, THE EMPLOYER OF THE PAYEE WHO INTRODUCED THE PAYEE AT THE BANK, IS NOW DECEASED AND HIS ESTATE DISTRIBUTED AND CLOSED.

IT IS A GENERAL RULE THAT WHERE A PAYMENT HAS BEEN MADE BY THE GOVERNMENT OF A CHECK DRAWN ON THE TREASURER OF THE UNITED STATES UNDER A FORGED INDORSEMENT, THE UNITED STATES HAS A RIGHT TO RECOVER BACK THE AMOUNT PAID EITHER FROM THE FORGER OR FROM THE LAST INDORSER AND HAS THE FURTHER RIGHT TO PROCEED AGAINST EACH CONCURRENTLY. IT IS ALSO FUNDAMENTAL THAT THE GOVERNMENT HAS THE INHERENT RIGHT TO SET-OFF AGAINST AN AMOUNT DUE A CLAIMANT ANY SUM THE SAME PERSON OWES THE GOVERNMENT, AND THE GOVERNMENT MAY, THROUGH PROPER ADMINISTRATIVE ACTION, FIRST APPLY ALL AVAILABLE ASSETS IN ITS POSSESSION TOWARDS LIQUIDATION OF THE INDEBTEDNESS BEFORE RESORTING TO OTHER AVAILABLE REMEDIES. 7 COMP. GEN.305; 14 ID. 50.

SECTION 308 (A) OF THE WORLD WAR ADJUSTED COMPENSATION ACT AS AMENDED BY THE ACT OF JULY 3, 1926, 44 STAT. 827, PROVIDES AS FOLLOWS:

NO SUM PAYABLE UNDER THIS ACT TO A VETERAN OR HIS DEPENDENTS, OR TO HIS ESTATE, OR TO ANY BENEFICIARY NAMED UNDER TITLE V, NO ADJUSTED SERVICE CERTIFICATE, AND NO PROCEEDS OF ANY LOAN MADE ON SUCH CERTIFICATE SHALL BE SUBJECT TO ATTACHMENT, LEVY, OR SEIZURE UNDER ANY LEGAL OR EQUITABLE PROCESS, OR TO NATIONAL OR STATE TAXATION, AND NO DEDUCTIONS ON ACCOUNT OF ANY INDEBTEDNESS OF THE VETERAN TO THE UNITED STATES SHALL BE MADE FROM THE ADJUSTED-SERVICE CREDIT OR FROM ANY AMOUNTS DUE UNDER THIS ACT.

IN DECISION OF MARCH 4, 1931, A-35386, TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AFTER QUOTING THIS STATUTE, IT WAS HELD AS FOLLOWS:

THIS SECTION WAS NOT INTENDED TO PRECLUDE CHARGING AGAINST THE ADJUSTED- SERVICE CERTIFICATE OF A VETERAN THE AMOUNT OF A LOAN FRAUDULENTLY OBTAINED BY HIM ON THE ADJUSTED-SERVICE CERTIFICATE OF ANOTHER VETERAN. THE DEBT OF A VETERAN TO THE UNITED STATES RESULTING FROM FRAUD PERPETRATED AGAINST THE UNITED STATES UNDER THE TERMS OF THE WORLD WAR ADJUSTED COMPENSATION ACT MAY BE OFFSET AGAINST ANY AMOUNT DUE SAID VETERAN FROM THE UNITED STATES UNDER THAT STATUTE.

SECTION 7 OF THE ACT OF JANUARY 27, 1936, 49 STAT. 1101, PROVIDES AS FOLLOWS:

NOTWITHSTANDING THE PROVISIONS OF PUBLIC LAW NUMBERED 262, SEVENTY FOURTH CONGRESS, APPROVED AUGUST 12, 1935, NO DEDUCTIONS ON ACCOUNT OF ANY INDEBTEDNESS OF THE VETERAN TO THE UNITED STATES, EXCEPTON ACCOUNT OF ANY LIEN AGAINST THE ADJUSTED-SERVICE CERTIFICATE AUTHORIZED BY LAW, SHALL BE MADE FROM THE ADJUSTED-SERVICE CREDIT OR FROM ANY AMOUNTS DUE UNDER THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, OR THIS ACT.

A LOAN CHARGED BY THE VETERANS' ADMINISTRATION AGAINST THE FORGER'S ADJUSTED-SERVICE CERTIFICATE TO OFFSET THE AMOUNT UNLAWFULLY RECEIVED BY HIM THROUGH HIS HYPOTHECATION OF ANOTHER VETERAN'S CERTIFICATE, IS A LIEN AGAINST HIS OWN ADJUSTED-SERVICE CERTIFICATE AUTHORIZED BY LAW WITHIN THE MEANING OF THE QUOTED STATUTE, AND ACCORDINGLY SUCH A CHARGE AGAINST A VETERAN'S CERTIFICATE IS EXEMPTED FROM THE INHIBITION OF THE QUOTED STATUTE.

ACCORDINGLY, NOTWITHSTANDING THE PROVISIONS OF SECTION 308 (A) OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, AND SECTION 7 OF THE ACT OF JANUARY 27, 1936, SUPRA, IT IS CONCLUDED THAT AN ADJUSTED SERVICE CERTIFICATE OF A FORGER IN THE POSSESSION OF THE UNITED STATES IS AN ASSET, THE LOAN VALUE OF WHICH IS AVAILABLE TOWARD LIQUIDATION OF THE FORGER'S INDEBTEDNESS ARISING BY REASON OF HIS HYPOTHECATION OF ANOTHER VETERAN'S ADJUSTED-SERVICE CERTIFICATE FOR THE SECURING OF A LOAN.

YOU ARE ADVISED, THEREFORE, THAT THE PROPOSED ACTION OF THE VETERANS' ADMINISTRATION IN CHARGING $161, REPRESENTING THE AVAILABLE 50 PERCENT LOAN VALUE, AGAINST THE ADJUSTED-SERVICE CERTIFICATE OF HENRY WILLIAM RUCKER, APPEARS PROPER, IN VIEW OF WHICH YOU ARE AUTHORIZED TO ABANDON RECLAMATION PROCEEDINGS ON THE CHECK IN QUESTION IN THE AMOUNT OF $161 AND TO CONTINUE SUCH PROCEEDINGS FOR RECOVERY OF THE BALANCE OF $71.50. THE FILE IS RETURNED FOR YOUR FURTHER ACTION IN THE MATTER AS HEREIN SUGGESTED. THE VETERANS' ADMINISTRATION HAS BEEN ADVISED ACCORDINGLY.