A-82416, MARCH 17, 1937, 16 COMP. GEN. 867

A-82416: Mar 17, 1937

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POST OFFICE DEPARTMENT - MONEY-ORDER CONVENTIONS - PAYMENTS TO DOMESTIC BANKS FOR THE ACCOUNT OF FOREIGN CREDITORS THERE IS NO PRESENT OBJECTION TO THE CONTINUANCE OF THE ESTABLISHED PRACTICE OF THE POST OFFICE DEPARTMENT OF MAKING POSTAL MONEY-ORDER PAYMENTS TO BANKS IN THE UNITED STATES DESIGNATED BY FOREIGN COUNTRIES PURSUANT TO THE PROVISIONS OF MONEY-ORDER CONVENTIONS CONCLUDED UNDER AUTHORITY OF SECTION 4028. PROVIDED THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE EVIDENCE OF THE AUTHORITY FOR THE DESIGNATION. THE CHECKS ARE DRAWN TO THE ORDER OF THE DESIGNATED BANK FOR THE ACCOUNT OF THE PARTICULAR GOVERNMENT OR FOREIGN POSTAL ADMINISTRATION TO WHICH THE PAYMENT IS CREDITED. AMONG THE METHODS THUS IN USE IS ONE BY WHICH THE FUNDS ARE DEPOSITED TO THE CREDIT OF THE FOREIGN POSTAL AUTHORITIES IN A DESIGNATED BANK IN NEW YORK CITY.

A-82416, MARCH 17, 1937, 16 COMP. GEN. 867

POST OFFICE DEPARTMENT - MONEY-ORDER CONVENTIONS - PAYMENTS TO DOMESTIC BANKS FOR THE ACCOUNT OF FOREIGN CREDITORS THERE IS NO PRESENT OBJECTION TO THE CONTINUANCE OF THE ESTABLISHED PRACTICE OF THE POST OFFICE DEPARTMENT OF MAKING POSTAL MONEY-ORDER PAYMENTS TO BANKS IN THE UNITED STATES DESIGNATED BY FOREIGN COUNTRIES PURSUANT TO THE PROVISIONS OF MONEY-ORDER CONVENTIONS CONCLUDED UNDER AUTHORITY OF SECTION 4028, REVISED STATUTES, AS AMENDED, OR AGREEMENTS SUPPLEMENTAL THERETO, PROVIDED THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE EVIDENCE OF THE AUTHORITY FOR THE DESIGNATION, AND OF THE DESIGNATION ITSELF, AND THE CHECKS ARE DRAWN TO THE ORDER OF THE DESIGNATED BANK FOR THE ACCOUNT OF THE PARTICULAR GOVERNMENT OR FOREIGN POSTAL ADMINISTRATION TO WHICH THE PAYMENT IS CREDITED, RECEIPTS TO BE REQUIRED FROM THE BANKS IN THE SUGGESTED FORM.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE POSTMASTER GENERAL, MARCH 17, 1937:

THERE HAS BEEN CONSIDERED YOUR LETTER OF DECEMBER 16, 1936, AS FOLLOWS:

IN DISCHARGING INDEBTEDNESS TO FOREIGN POSTAL ADMINISTRATIONS WHICH ACCRUES BY REASON OF THE EXCHANGE OF POSTAL MONEY ORDERS, THIS DEPARTMENT, ACTING UNDER THE PROVISIONS OF THE AGREEMENTS KNOWN AS MONEY-ORDER CONVENTIONS, MAKES PAYMENTS IN THE MANNER REQUESTED BY THE POSTAL OFFICIALS OF THE OTHER COUNTRIES. AMONG THE METHODS THUS IN USE IS ONE BY WHICH THE FUNDS ARE DEPOSITED TO THE CREDIT OF THE FOREIGN POSTAL AUTHORITIES IN A DESIGNATED BANK IN NEW YORK CITY. THIS PROCEDURE IS NATURALLY FAVORED BY THIS DEPARTMENT SINCE IT RETAINS THE MONEY IN THE UNITED STATES WHERE IT IS AVAILABLE AND IS GENERALLY USED TO PAY FOR GOODS OR SERVICES OBTAINED FROM CITIZENS OF THIS COUNTRY.

SOME OF THE MONEY-ORDER CONVENTIONS CONTAIN DEFINITE AGREEMENTS THAT SUMS DUE THE FOREIGN POSTAL ADMINISTRATIONS MAY BE DEPOSITED IN BANKS IN NEW YORK OR WASHINGTON TO BE DESIGNATED BY THE CREDITOR. WHERE THE CONVENTION DOES NOT CONTAIN SUCH A CLAUSE THE ARRANGEMENT IS MADE ONLY AFTER SPECIFIC REQUEST BY THE FOREIGN POSTAL SERVICE. FOR YOUR INFORMATION EXCERPTS FROM THE CORRESPONDENCE EMBODYING SUCH A REQUEST ARE ENCLOSED (EXHIBIT A) AND THE REQUESTS OF OTHER COUNTRIES IN THE FILE ARE EQUALLY DEFINITE. SHOULD PERHAPS BE STATED HERE THAT THE DEPOSITS FOR GREAT BRITAIN HAVE NOW BEEN SUPERSEDED BY REMITTANCES TO LONDON OF BILLS OF EXCHANGE IN STERLING, THIS CHANGE ALSO HAVING BEEN MADE AT THE REQUEST OF THE LONDON OFFICIALS. AT THE PRESENT TIME DEPOSITS ARE MADE IN NEW YORK ON MONEY-ORDER ACCOUNT FOR THE FOLLOWING POSTAL ADMINISTRATIONS: AUSTRIA, BARBADOS, CZECHOSLOVAKIA, GERMANY, HUNGARY, ITALY, JAMAICA, LITHUANIA, NEWFOUNDLAND, PALESTINE, PHILIPPINE ISLANDS, AND POLAND. WHILE THE REQUESTS ARE NOT FORMAL POWERS OF ATTORNEY AND DO NOT TRANSFER TITLE TO THE FUNDS THEY HAVE NEVERTHELESS BEEN CONSIDERED AS JUSTIFYING DEPOSITS WITH THE BANKING INSTITUTIONS FOR THE USE OF THE FOREIGN POSTAL ADMINISTRATIONS.

PAYMENTS OF MONEY-ORDER BALANCES TO FISCAL AGENTS APPEAR TO DATE BACK ALMOST TO THE BEGINNING OF THE INTERNATIONAL MONEY-ORDER SERVICE, SINCE A RECEIPT IN THE FILES OF THIS BUREAU EVIDENCES A PAYMENT TO THE SWISS CONSUL GENERAL ON DECEMBER 20, 1871. DURING THE WORLD WAR A PAYMENT DUE HUNGARY WAS DELIVERED TO THE MINISTER FROM SWEDEN AND PAYMENTS TO BANKS AS FINANCIAL AGENTS HAVE BEEN MADE WITH INCREASING FREQUENCY SINCE 1915. ALTHOUGH THESE DISBURSEMENTS HAVE BEEN MADE ALMOST INVARIABLY BY CHECKS DRAWN IN FAVOR OF THE AGENT (BANK OR OTHERWISE), UNTIL RECENTLY NO ACCOUNTING OFFICER HAD QUESTIONED THE PROCEDURE.

ON THE 16TH ULTIMO, HOWEVER, A LETTER WAS RECEIVED FROM THE POST OFFICE DEPARTMENT DIVISION OF YOUR OFFICE READING AS FOLLOWS:

"IT IS THE PRACTICE OF YOUR OFFICE IN MAKING REMITTANCES IN DOLLARS ON MONEY-ORDER ACCOUNTS WITH CERTAIN COUNTRIES TO DRAW POSTMASTER GENERAL'S CHECKS IN FAVOR OF SOME BANK IN NEW YORK; FOR INSTANCE, FOR ITALY,YOU DRAW CHECK IN FAVOR OF THE GUARANTY TRUST CO.; FOR POLAND, FEDERAL RESERVE BANK OF NEW YORK; FOR AUSTRIA, FEDERAL RESERVE BANK OF NEW YORK; FOR GERMANY, FEDERAL RESERVE BANK; FOR CZECHOSLOVAKIA, NATIONAL CITY BANK OF NEW YORK AND FOR LITHUANIA, IRVING TRUST CO.

"IT IS NOTED THAT THE MONEY-ORDER CONVENTION IN SOME CASES PROVIDES THAT DEPOSITS BE MADE TO THE CREDIT OF THE FOREIGN COUNTRY * * * "IN ANY DESIGNATED BANK IN NEW YORK * * *," AND IT IS UNDERSTOOD THAT THESE BANKS ACT AS FISCAL AGENT FOR THE RESPECTIVE COUNTRIES.

"THERE APPEARS TO BE NO AUTHORITY OF LAW FOR DRAWING POSTMASTER GENERAL'S CHECKS IN FAVOR OF AN AGENT INSTEAD OF THE FOREIGN COUNTRY INVOLVED, AND SUCH PROCEDURE SEEMS TO BE IN CONFLICT WITH SECTIONS 3477 AND 3737, REVISED STATUTES, PROHIBITING THE ASSIGNMENT OF CLAIMS, AND WITH SECTION 3620, REVISED STATUTES, RELATIVE TO THE MANNER OF MAKING PAYMENTS BY A DISBURSING OFFICER. IN THE LATTER CONNECTION, SEE 12 C.D. 267.

"THIS MATTER IS BROUGHT TO YOUR ATTENTION FOR APPROPRIATE ACTION.'

UPON RECEIPT OF THIS COMMUNICATION THE POSTMASTER AT NEW YORK WAS ASKED TO CONSULT THE OFFICERS OF THE BANKS CONCERNED TO DETERMINE WHETHER CHECKS DRAWN IN FAVOR OF THE FOREIGN POSTAL ADMINISTRATIONS COULD BE RECEIPTED AT THE BANK AND CREDITED TO THE FOREIGN DEPOSITOR. REPLIES JUST RECEIVED INDICATE THAT DUE TO THE REQUIREMENTS FOR EXACT ENDORSEMENT PRESCRIBED BY THE TREASURY DEPARTMENT, THE BANKS FEEL THAT THE CHECKS WOULD IN EVERY INSTANCE HAVE TO BE SENT ABROAD FOR ENDORSEMENT, THUS DEFEATING THE OBJECT OF HAVING THE DEPOSITS MADE IN THE UNITED STATES, VIZ, THAT OF MAKING THE MONEY IMMEDIATELY AVAILABLE IN NEW YORK.

THE SECTIONS OF THE REVISED STATUTES AND THE DECISION OF THE COMPTROLLER OF THE TREASURY CITED IN THE LETTER QUOTED ABOVE ARE CONCERNED ENTIRELY WITH ASSIGNMENTS OF TITLE IN CLAIMS AGAINST THE UNITED STATES. THE STATUTES EVIDENTLY WERE INTENDED TO PREVENT AN ABUSE QUITE COMMON AT THE TIME THEY WERE ENACTED BY WHICH CLAIMANTS UNABLE TO OBTAIN IMMEDIATE PAYMENT OF THE AMOUNTS DUE THEM WERE INDUCED TO PART WITH THEIR RIGHT TO PAYMENT FOR A CONSIDERATION MUCH LESS THAN THE AMOUNT OF THE CLAIM. THE CONDITIONS WHICH MADE POSSIBLE SUCH HARD BARGAINS HAVE PRACTICALLY CEASED TO EXIST IN THESE LATER YEARS WHEN CLAIMS AGAINST THE FEDERAL GOVERNMENT ARE PROMPTLY SETTLED, BUT THE LAWS STILL REMAIN IN EFFECT.

IT IS SUBMITTED, HOWEVER, THAT IN THE PRESENT INSTANCE NEITHER THE SPIRIT NOR THE LETTER OF THESE ANCIENT STATUTES IS VIOLATED, SINCE THERE IS ACTUALLY NO TRANSFER OF TITLE IN THE MANNER IN WHICH THESE PAYMENTS ARE MADE. AS EVIDENCING THIS FACT, THERE IS ENCLOSED A COPY OF A RECEIPT (EXHIBIT B) SIGNED BY RESPONSIBLE OFFICERS OF THE BANK AT THE TIME THE DEPOSIT IS MADE. FROM THIS RECEIPT IT WILL BE OBSERVED THAT REGARDLESS OF THE MANNER IN WHICH THE CHECK IS DRAWN, THE PAYMENT IS TO BE CREDITED TO THE POSTAL ADMINISTRATION OF THE CREDITOR COUNTRY AND THE MONEY IS ACTUALLY THE PROPERTY OF AND SUBJECT TO DISPOSITION BY THE FOREIGN POSTAL ADMINISTRATION TO WHICH THE AMOUNT IS DUE.

ATTENTION IS ALSO INVITED TO THE FACT THAT BANK DEPOSITS FOR THE USE OF CREDITORS HAS BECOME ONE OF THE MOST COMMON METHODS OF SETTLING INDEBTEDNESS AND IT IS THOUGHT THAT UNDOUBTEDLY OTHER BRANCHES OF THE GOVERNMENT PAY CREDITORS THROUGH DEPOSITS IN BANKING INSTITUTIONS, WHICH, IN TURN, PASS THE CREDIT TO THE PERSON OR FIRM WHICH THE GOVERNMENT OWES. IT SHOULD ALSO BE STATED THAT ALTHOUGH THE PRACTICE OF THIS DEPARTMENT IS OF SUCH LONG STANDING, NO ACCOUNTING OFFICER HAS HERETOFORE INTERPRETED THIS METHOD OF PAYMENT AS IN VIOLATION OF THE STATUTES PROHIBITING THE ASSIGNMENT OF CLAIMS.

IN THE CIRCUMSTANCES UNDER WHICH THESE DEPOSITS ARE BEING MADE, IT IS SUBMITTED THAT THIS METHOD OF DISCHARGING OBLIGATIONS OF THE POSTAL SERVICE IS IN ACCORDANCE WITH ESTABLISHED APPROVED BUSINESS PRACTICE AND DOES NOT COME WITHIN THE CLASS OF ASSIGNMENTS PROHIBITED BY THE LAWS TO WHICH REFERENCE IS MADE. SINCE THE BUDGET AND ACCOUNTING ACT (U.S.C. TITLE 31, SEC. 74) PROVIDES THAT THE COMPTROLLER GENERAL MAY BE ASKED FOR A DECISION REGARDING PAYMENTS TO BE MADE BY THE HEAD OF AN EXECUTIVE DEPARTMENT, YOU ARE REQUESTED TO MAKE SUCH A DECISION IN THIS INSTANCE TO GOVERN FUTURE PAYMENTS OF THIS CHARACTER.

WHETHER THE ABOVE-DESCRIBED METHOD OF DISCHARGING OBLIGATIONS OF THE POSTAL SERVICE TO FOREIGN GOVERNMENTS IS IN ACCORDANCE WITH ESTABLISHED BUSINESS PRACTICE IS NOT NECESSARILY CONTROLLING OF THE MATTER, SINCE THE FINANCIAL TRANSACTIONS OF THE GOVERNMENT MUST CONFORM TO CERTAIN STATUTORY REQUIREMENTS WHICH SOMETIMES PRECLUDE THE USE OF FINANCIAL DEVICES COMMON IN THE BUSINESS WORLD.

MONEY-ORDER CONVENTIONS WITH FOREIGN COUNTRIES ARE CONCLUDED UNDER AUTHORITY OF SECTION 4028, REVISED STATUTES, AS AMENDED BY THE ACT OF JANUARY 30, 1889, 25 STAT. 654, WHICH PROVIDES AS FOLLOWS:

THE POSTMASTER GENERAL MAY CONCLUDE ARRANGEMENTS WITH THE POST DEPARTMENTS OF FOREIGN GOVERNMENTS WITH WHICH POSTAL CONVENTIONS HAVE BEEN OR MAY BE CONCLUDED FOR THE EXCHANGE, BY MEANS OF POSTAL ORDERS, OF SMALL SUMS OF MONEY, NOT EXCEEDING $100 IN AMOUNT, AT SUCH RATES OF EXCHANGE AND COMPENSATION TO POSTMASTERS AND UNDER SUCH RULES AND REGULATIONS AS HE MAY DEEM EXPEDIENT; AND THE EXPENSES OF ESTABLISHING AND CONDUCTING SUCH SYSTEMS OF EXCHANGE MAY BE PAID OUT OF THE PROCEEDS OF THE MONEY-ORDER BUSINESS.

SOME OF THE MONEY-ORDER CONVENTIONS CONCLUDED UNDER THE AUTHORITY THUS GRANTED TO THE POSTMASTER GENERAL CONTAIN SPECIFIC PROVISIONS FOR PAYMENT OF BALANCES AGAINST THE UNITED STATES BY DEPOSITING THE SUM TO THE CREDIT OF THE FOREIGN POSTAL ADMINISTRATION IN ANY DESIGNATED BANK IN NEW YORK. IN OTHER CASES SIMILAR ARRANGEMENTS HAVE BEEN MADE IN SUPPLEMENTAL AGREEMENTS EXECUTED AT THE REQUEST OF THE FOREIGN GOVERNMENTS PARTIES TO THE CONVENTIONS. THE BANKS TO WHICH PAYMENTS HAVE BEEN MADE BY YOUR DEPARTMENT ARE THOSE DESIGNATED BY THE FOREIGN GOVERNMENTS PURSUANT TO THE PROVISIONS OF THE CONVENTIONS, OR OF THE SUPPLEMENTAL AGREEMENTS WHICH MAY BE REGARDED AS AMENDING THE CONVENTIONS INSOFAR AS THE METHOD OF PAYING BALANCES IS CONCERNED.

IN THIS CONNECTION IT HAS BEEN HELD THAT THE INCORPORATION, IN A LEASE OF PROPERTY TO THE UNITED STATES, OF A DIRECTION THAT PAYMENT BE MADE TO A BANK FOR THE ACCOUNT OF THE LESSOR, DOES NOT CONSTITUTE A POWER OF ATTORNEY NOR ASSIGNMENT OF A CLAIM WITHIN THE CONTEMPLATION OF SECTION 3477, REVISED STATUTES, AND THAT IF THE LEASE BE SO DRAWN PAYMENT MAY BE MADE TO THE AGENT SO NAMED. SEE DECISION OF JULY 22, 1930, 10 COMP. GEN. 31, WHERE THERE WAS INVOLVED A FOREIGN LEASE AND A DESIGNATED AGENT BANK IN THIS COUNTRY. THE DESIGNATION BY A FOREIGN COUNTRY, PURSUANT TO THE PROVISIONS OF A MONEY-ORDER CONVENTION, OR SUPPLEMENTAL AGREEMENT, OF A BANK IN THE UNITED STATES TO WHICH PAYMENTS UNDER THE PROVISIONS OF THE CONVENTION ARE TO BE MADE MAY BE CONSIDERED AS IN A SIMILAR CATEGORY. VIEW OF ALL THE CIRCUMSTANCES, AND PARTICULARLY AS PAYMENTS FOR THE ACCOUNT OF FOREIGN CREDITORS ARE INVOLVED, THIS OFFICE WILL NOT BE REQUIRED, AT LEAST FOR THE PRESENT, TO OBJECT TO THE CONTINUANCE OF THE ESTABLISHED PRACTICE OF MAKING SUCH PAYMENTS TO BANKS IN THE UNITED STATES SO DESIGNATED BY THE FOREIGN GOVERNMENTS, PROVIDED EVIDENCE OF THE AUTHORITY FOR THE DESIGNATION AND OF THE DESIGNATION ITSELF SHALL HAVE BEEN PREVIOUSLY FILED IN THIS OFFICE, AND PROVIDED THE CHECKS BE DRAWN TO THE ORDER OF THE DESIGNATED BANK FOR THE ACCOUNT OF THE PARTICULAR GOVERNMENT OR FOREIGN POSTAL ADMINISTRATION TO WHICH THE PAYMENT IS TO BE CREDITED. RECEIPTS FROM THE BANKS IN THE FORM TRANSMITTED WITH YOUR LETTER SHOULD CONTINUE TO BE REQUIRED IN CONNECTION WITH SUCH PAYMENTS.