A-82377, JANUARY 5, 1937, 16 COMP. GEN. 632

A-82377: Jan 5, 1937

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CHECKS - LOST - CANCELLATION OF CONTRACTS AND DISPOSITION OF PROCEEDS THE CANCELLATION BY THE DEPARTMENT OF AGRICULTURE OF A COMMODITY CONTRACT IS NOT DEPENDENT UPON THE RETURN AND CANCELLATION OF A CHECK ISSUED THEREUNDER TO A PARTY OR PARTIES NOT ENTITLED TO THE PROCEEDS. WHERE A GOVERNMENT CHECK IS REPORTED LOST BY THE PAYEE AND A DUPLICATE THEREOF WILL NOT ISSUE BECAUSE OF REFUSAL OF PAYEE TO FURNISH AN INDEMNITY BOND AS REQUIRED BY LAW AND REGULATION. SHALL HAVE EXPIRED. WHERE A GOVERNMENT CHECK IS REPORTED TO HAVE BEEN LOST BY THE PAYEE THE QUESTION OF WHETHER THE PROCEEDS OF SUCH CHECK MAY BE RESTORED TO THE APPROPRIATION UNDER WHICH DRAWN IS FOR DETERMINATION IN EACH INSTANCE BY THE GENERAL ACCOUNTING OFFICE.

A-82377, JANUARY 5, 1937, 16 COMP. GEN. 632

CHECKS - LOST - CANCELLATION OF CONTRACTS AND DISPOSITION OF PROCEEDS THE CANCELLATION BY THE DEPARTMENT OF AGRICULTURE OF A COMMODITY CONTRACT IS NOT DEPENDENT UPON THE RETURN AND CANCELLATION OF A CHECK ISSUED THEREUNDER TO A PARTY OR PARTIES NOT ENTITLED TO THE PROCEEDS. WHERE A GOVERNMENT CHECK IS REPORTED LOST BY THE PAYEE AND A DUPLICATE THEREOF WILL NOT ISSUE BECAUSE OF REFUSAL OF PAYEE TO FURNISH AN INDEMNITY BOND AS REQUIRED BY LAW AND REGULATION, THE PROCEEDS OF SUCH CHECK, IF RESTORABLE AT ALL, MAY NOT BE RESTORED TO THE APPROPRIATION UNTIL THE PERIOD OF NEGOTIABILITY PRESCRIBED BY SECTION 21 OF THE ACT OF JUNE 26, 1934, 48 STAT. 1235, SHALL HAVE EXPIRED. WHERE A GOVERNMENT CHECK IS REPORTED TO HAVE BEEN LOST BY THE PAYEE THE QUESTION OF WHETHER THE PROCEEDS OF SUCH CHECK MAY BE RESTORED TO THE APPROPRIATION UNDER WHICH DRAWN IS FOR DETERMINATION IN EACH INSTANCE BY THE GENERAL ACCOUNTING OFFICE, IRRESPECTIVE OF WHETHER THE CHECK BE CURRENT, OR OUTLAWED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE, JANUARY 5, 1937:

REFERENCE IS HAD TO YOUR LETTER OF DECEMBER 14, 1936, AS FOLLOWS:

THE FOLLOWING STATEMENT IS SUBMITTED FOR YOUR CONSIDERATION AND ADVICE AS TO THE NATURE OF THE PROCEDURE THAT SHOULD BE ADOPTED IN THE DISPOSITION OF CASES COMING WITHIN THE CLASSIFICATION HEREINAFTER DESCRIBED.

YOU ARE ADVISED THAT IN SOME INSTANCES IT HAS BEEN DETERMINED PRIOR TO THE NEGOTIATION OF A CHECK, REPRESENTING THE FIRST PAYMENT UNDER THE TERMS OF A COMMODITY CONTRACT, THAT THE PARTY OR PARTIES THERETO WERE NOT ENTITLED TO THE PROCEEDS OF SAME, AND THAT IN FACT THE CONTRACT SHOULD BE CANCELLED. ACCORDINGLY, IMMEDIATE STEPS WERE TAKEN TO HAVE THE CHECK RETURNED TO THE ASSISTANT DISBURSING OFFICER, DIVISION OF DISBURSEMENT, AGRICULTURAL ADJUSTMENT SECTION, TREASURY DEPARTMENT.

UPON RECEIPT OF NOTICE TO THE EFFECT THAT THE CHECK HAD BEEN RETURNED, THE APPROPRIATE DIVISION OF THE AGRICULTURAL ADJUSTMENT ADMINISTRATION INITIATED SUCH ACTION AS WAS NECESSARY TO HAVE THE SAID CHECK CANCELLED. AFTER THE CANCELLATION OF THE CHECK HAD BEEN ACCOMPLISHED, THE CONTRACT TO WHICH IT PERTAINED WAS ALSO CANCELLED IN ACCORDANCE WITH THE PROCEDURE ESTABLISHED FOR THAT PURPOSE.

HOWEVER, IN SEVERAL INSTANCES THE CHECK COMING WITHIN THE ABOVE MENTIONED CLASSIFICATION COULD NOT BE RETURNED TO THE HERETOFORE MENTIONED ASSISTANT DISBURSING OFFICER AS SAME HAD BEEN LOST. ACCORDINGLY, UPON RECEIPT OF NOTICE TO THAT EFFECT, THE TREASURER OF THE UNITED STATES WAS REQUESTED TO STOP PAYMENT ON SAME AND A BOND OF INDEMNITY WAS FORWARDED FOR EXECUTION TO THE PAYEE NAMED ON THE ORIGINAL CHECK.

THE DEPARTMENT IS NOW IN RECEIPT OF NOTICE TO THE EFFECT THAT IN MORE THAN ONE INSTANCE THE PAYEE NAMED ON THE CHECK WHICH WAS LOST PRIOR TO NEGOTIATION, WAS UNSUCCESSFUL IN AN ENDEAVOR TO SECURE INDIVIDUAL SURETY AND THAT DUE TO THE FACTS HERETOFORE RELATED HE IS UNWILLING TO INCUR ANY EXPENSE THAT IS NECESSARY BEFORE HE CAN OBTAIN CORPORATE SURETY. ACCORDINGLY, THE DEPARTMENT HAS BEEN UNABLE TO CANCEL THE CONTRACT UNDER WHICH THE CHECK IN QUESTION WAS ISSUED, AND, THEREFORE, IT HAS BEEN IMPOSSIBLE TO MAKE THE NECESSARY ADJUSTMENTS IN ITS RECORDS.

THE DEPARTMENT REALIZES THAT THE CONTRACT IN QUESTION SHOULD NOT BE CANCELLED UNLESS THE CHECK, SUPRA, HAS EITHER BEEN RETURNED AND CANCELLED OR UNTIL RECEIPT OF NOTICE TO THE EFFECT THAT ANOTHER CHECK- - ISSUED ON THE BASIS OF A DULY EXECUTED BOND OF INDEMNITY IN FAVOR OF THE TREASURER OF THE UNITED STATES--- HAS BEEN FORWARDED TO THAT OFFICIAL WITH INSTRUCTIONS TO DEPOSIT THE PROCEEDS OF SAME TO THE CREDIT OF THE APPROPRIATION FROM WHICH THE ORIGINAL CHECK WAS DRAWN.

THE FACTS AND CIRCUMSTANCES PREVIOUSLY RECITED APPEAR TO BE UNIQUE, AND THE DEPARTMENT HAS BEEN UNABLE TO FORMULATE A PROCEDURE THAT WILL ACCOMPLISH THE DESIRED PURPOSE, THAT IS, EFFECT THE NECESSARY ADJUSTMENT IN THE APPROPRIATIONS AND THEREBY ADEQUATELY PROTECT THE INTERESTS OF THE UNITED STATES. ACCORDINGLY, IT WILL BE APPRECIATED IF YOU WILL CONSIDER THE CONTENTS OF THIS LETTER AND ADVISE ME IN REGARD TO THE PROCEDURE YOU DETERMINE IS ADAPTABLE TO THE SITUATION IN QUESTION.

IF THE PROCEDURE FOR DISPOSING OF THOSE CASES WHERE THE CHECKS ARE MORE THAN ONE FULL FISCAL YEAR OLD WILL DIFFER FROM THE ONE THAT WILL BE APPLICABLE WHERE THE CHECK HAS NOT PASSED INTO ,OUTSTANDING LIABILITIES," IT IS REQUESTED THAT YOUR REPLY COVER BOTH SITUATIONS.

IF, AS APPEARS FROM YOUR SUBMISSION, A DETERMINATION HAS BEEN MADE THAT THE PARTY OR PARTIES TO THE COMMODITY CONTRACT WERE NOT ENTITLED TO THE PROCEEDS OF THE CLASS OF CHECKS HERE INVOLVED, IT IS NOT UNDERSTOOD WHY THE CANCELATION OF THE INVOLVED CONTRACTS IS MADE DEPENDENT UPON THE RETURN AND CANCELATION OF THE CHECK OR UPON THE RECEIPT OF NOTICE OF THE ISSUANCE OF A DUPLICATE CHECK AS INDICATED IN THE ANTEPENULTIMATE PARAGRAPH OF THE ABOVE-QUOTED LETTER.

SECTION 21 OF THE ACT OF JUNE 26, 1934, 48 STAT. 1235, PROVIDES IN PART:

HEREAFTER ALL CHECKS DRAWN ON THE TREASURER OF THE UNITED STATES, EXCEPT THOSE ISSUED ON ACCOUNT OF PUBLIC-DEBT OBLIGATIONS AND TRANSACTIONS REGARDING THE ADMINISTRATION OF BANKING AND CURRENCY LAWS, SHALL BE PAYABLE ONLY UNTIL THE CLOSE OF THE FISCAL YEAR NEXT FOLLOWING THE FISCAL YEAR IN WHICH SUCH CHECKS WERE ISSUED, AND 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)," DESIGNATED BY FISCAL YEARS IN WHICH THE CHECKS WERE ISSUED. * * *

THE PERIOD FOR NEGOTIATIONS OF A GOVERNMENT CHECK IS THUS FIXED BY THE ABOVE-QUOTED STATUTE TO BE 1 FULL FISCAL YEAR BEYOND THE FISCAL YEAR IN WHICH THE CHECK IS DRAWN. WHERE, THEREFORE, A GOVERNMENT CHECK BECOMES LOST AND A DUPLICATE THEREOF WILL NOT ISSUE BECAUSE OF THE REFUSAL OF THE PAYEE TO FURNISH AN INDEMNITY BOND TO SECURE THE ISSUANCE OF A DUPLICATE CHECK AS REQUIRED BY LAW AND REGULATION--- SECTION 3646, REVISED STATUTES- -- NO ACTION MAY BE TAKEN IN RESPECT OF THE DISPOSITION OF THE PROCEEDS OF SUCH A LOST CHECK UNTIL THE PERIOD OF NEGOTIABILITY THEREOF, AS FIXED BY THE STATUTE, SUPRA, SHALL HAVE EXPIRED, AS APPROPRIATED FUNDS MUST REMAIN AVAILABLE TO HONOR A CHECK IN THE EVENT OF ITS PRESENTATION TO THE TREASURER OF THE UNITED STATES BY A BONA-FIDE HOLDER. AFTER THE PERIOD OF NEGOTIABILITY HAS EXPIRED THERE THEN IS FOR CONSIDERATION SECTION 308, REVISED STATUTES, PROVIDING THAT THE PAYEE OR BONA-FIDE HOLDER OF SUCH CHECK "SHALL ON PRESENTING THE SAME TO THE PROPER OFFICER OF THE TREASURY BE ENTITLED TO HAVE IT PAID" THROUGH THE PROCEDURE OF SETTLEMENT OF AN ACCOUNT BY THE GENERAL ACCOUNTING OFFICE AND THE ISSUING OF A WARRANT.

THE QUESTION, THEREFORE, OF WHETHER THE PROCEEDS OF LOST CHECKS OF THE CLASS DESCRIBED IN YOUR SUBMISSION--- WHETHER CURRENT OR OUTSTANDING LIABILITIES CHECKS--- MAY BE RESTORED TO THE APPROPRIATION UNDER WHICH DRAWN IS FOR DETERMINATION IN EACH INSTANCE BY THE GENERAL ACCOUNTING OFFICE. IT IS THEREFORE REQUESTED THAT ALL SUCH CASES BE REFERRED HERE FOR APPROPRIATE ACTION. IN EACH CASE THERE SHOULD BE FURNISHED INFORMATION SHOWING WHETHER THE PARTICULAR CHECK WAS LOST PRIOR TO DELIVERY THEREOF TO THE PAYEE--- I.E., WHILE STILL IN POSSESSION OF THE GOVERNMENT--- OR AFTER DELIVERY THEREOF TO THE PAYEE. THERE SHOULD BE FURNISHED, ALSO, WHEREVER POSSIBLE, A STATEMENT FROM THE PAYEE IN REGARD TO THE PARTICULAR CHECK SHOWING WHETHER HE RECEIVED SUCH CHECK AND, IF SO, WHETHER IT WAS ENDORSED PRIOR TO ITS LOSS BY THE PAYEE, INCLUDING ALL OTHER PERTINENT DATA IN THE MATTER.