A-86603, JUNE 26, 1937, 16 COMP. GEN. 1115

A-86603: Jun 26, 1937

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THERE IS NO LEGAL BASIS FOR RECOGNIZING BONDS OF THAT ISSUE AS AN OBLIGATION OF THE UNITED STATES. THE SAID BONDS RECITE THAT THEY WERE ISSUED UNDER AUTHORITY OF THE ACT APPROVED AUGUST 5. ARE NEGOTIABLE ONLY UPON THE ENDORSEMENT OF THE POSTMASTER GENERAL AND THE MINISTER OF THE INTERIOR WITH THE CONSENT OF THE CABINET.'. THE FIRST LEGISLATION IN RELATION TO THE ANNEXATION OF HAWAII TO THE UNITED STATES WAS THE JOINT RESOLUTION OF JULY 7. IS HEREBY ASSUMED BY THE GOVERNMENT OF THE UNITED STATES. AS THE EXISTING GOVERNMENT AND THE PRESENT COMMERCIAL RELATIONS OF THE HAWAIIAN ISLANDS ARE CONTINUED AS HEREINBEFORE PROVIDED SAID GOVERNMENT SHALL CONTINUE TO PAY THE INTEREST ON SAID DEBT.'.

A-86603, JUNE 26, 1937, 16 COMP. GEN. 1115

HAWAII - PUBLIC DEBT - CLAIMS UNDER ASSUMPTION THEREOF BY THE UNITED STATES HAWAIIAN GOVERNMENT STOCK "A" BONDS ISSUED UNDER AUTHORITY OF AN ACT APPROVED AUGUST 5, 1882, NOT BELONGING TO AN ISSUE RECOGNIZED AS FORMING A PART OF THAT PORTION OF THE PUBLIC DEBT OF HAWAII ASSUMED BY THE UNITED STATES, AND SUCH PORTION OF THE BONDED DEBT AS SO ASSUMED HAVING BEEN FULLY PAID, THERE IS NO LEGAL BASIS FOR RECOGNIZING BONDS OF THAT ISSUE AS AN OBLIGATION OF THE UNITED STATES.

DECISION BY ACTING COMPTROLLER GENERAL ELLIOTT, JUNE 26, 1937:

THERE HAS BEEN CONSIDERED THE CLAIM OF ARTHUR C. HILLIGER CO., OF HONOLULU, TERRITORY OF HAWAII, FOR $4,340, REPRESENTING PRINCIPAL AND INTEREST ALLEGED TO BE DUE ON TWO HAWAIIAN GOVERNMENT STOCK "A" BONDS, "PAYABLE AT ANY TIME NOT LESS THAN 5 YEARS NOR MORE THAN 25 (ALTERED BY PEN AND INK TO READ 20) YEARS FROM THIS DATE"--- DATE OF ISSUANCE, JANUARY 1, 1890.

THE SAID BONDS RECITE THAT THEY WERE ISSUED UNDER AUTHORITY OF THE ACT APPROVED AUGUST 5, 1882 (ALTERED BY PEN AND INK TO READ AUGUST 15, 1888) AND "AS SECURITY FOR THE POSTAL SAVINGS BANK DEPOSITS, AND ARE NEGOTIABLE ONLY UPON THE ENDORSEMENT OF THE POSTMASTER GENERAL AND THE MINISTER OF THE INTERIOR WITH THE CONSENT OF THE CABINET.'

THE FIRST LEGISLATION IN RELATION TO THE ANNEXATION OF HAWAII TO THE UNITED STATES WAS THE JOINT RESOLUTION OF JULY 7, 1898, 30 STAT. 750, WHICH PROVIDES WITH RESPECT TO THE ASSUMPTION BY THE UNITED STATES OF THE PUBLIC DEBT OF THE REPUBLIC OF HAWAII AS FOLLOWS:

THE PUBLIC DEBT OF THE REPUBLIC OF HAWAII, LAWFULLY EXISTING AT THE DATE OF THE PASSAGE OF THIS JOINT RESOLUTION, INCLUDING THE AMOUNTS DUE TO DEPOSITORS IN THE HAWAIIAN POSTAL SAVINGS BANK, IS HEREBY ASSUMED BY THE GOVERNMENT OF THE UNITED STATES; BUT THE LIABILITY OF THE UNITED STATES IN THIS REGARD SHALL IN NO CASE EXCEED FOUR MILLION DOLLARS. SO LONG, HOWEVER, AS THE EXISTING GOVERNMENT AND THE PRESENT COMMERCIAL RELATIONS OF THE HAWAIIAN ISLANDS ARE CONTINUED AS HEREINBEFORE PROVIDED SAID GOVERNMENT SHALL CONTINUE TO PAY THE INTEREST ON SAID DEBT.'

THE ACT OF APRIL 30, 1900, 31 STAT. 161, PROVIDING A GOVERNMENT FOR THE TERRITORY OF HAWAII IS, IN PART, AS FOLLOWS:

SEC. 102. --- THAT THE LAWS OF HAWAII RELATING TO THE ESTABLISHMENT AND CONDUCT OF ANY POSTAL SAVINGS BANK OR INSTITUTION ARE HEREBY ABOLISHED. AND THE SECRETARY OF THE TREASURY, IN THE EXECUTION OF THE AGREEMENT OF THE UNITED STATES AS EXPRESSED IN AN ACT ENTITLED "JOINT RESOLUTION TO PROVIDE FOR ANNEXING THE HAWAIIAN ISLANDS TO THE UNITED STATES," APPROVED JULY SEVENTH, EIGHTEEN HUNDRED AND NINETY EIGHT, SHALL PAY THE AMOUNTS ON DEPOSIT IN THE HAWAIIAN POSTAL SAVINGS BANK TO THE PERSONS ENTITLED THERETO, ACCORDING TO THEIR RESPECTIVE RIGHTS, AND HE SHALL MAKE ALL NEEDFUL ORDERS, RULES, AND REGULATIONS FOR PAYING SUCH PERSONS AND FOR NOTIFYING SUCH PERSONS TO PRESENT THEIR DEMANDS FOR PAYMENT. SO MUCH MONEY AS IS NECESSARY TO PAY SAID DEMANDS IS HEREBY APPROPRIATED OUT OF ANY MONEY IN THE TREASURY NOT OTHERWISE APPROPRIATED, TO BE AVAILABLE ON AND AFTER THE FIRST DAY OF JULY, NINETEEN HUNDRED, WHEN SUCH PAYMENTS SHALL BEGIN, AND NONE OF SAID DEMANDS SHALL BEAR INTEREST AFTER SAID DATE, AND NO DEPOSIT SHALL BE MADE IN SAID BANK AFTER SAID DATE. SAID DEMANDS OF SUCH PERSONS SHALL BE CERTIFIED TO BY THE CHIEF EXECUTIVE OF HAWAII AS BEING GENUINE AND DUE TO THE PERSONS PRESENTING THE SAME, AND HIS CERTIFICATE SHALL BE SEALED WITH THE OFFICIAL SEAL OF THE TERRITORY, AND COUNTERSIGNED BY ITS SECRETARY, AND SHALL BE APPROVED BY THE SECRETARY OF THE INTERIOR, WHO SHALL DRAW HIS WARRANT FOR THE AMOUNT DUE UPON THE TREASURER OF THE UNITED STATES, AND WHEN THE SAME ARE SO PAID NO FURTHER LIABILITIES SHALL EXIST IN RESPECT OF THE SAME AGAINST THE GOVERNMENTS OF THE UNITED STATES OR OF HAWAII.

SEC. 103.--- THAT ANY MONEY OF THE HAWAIIAN POSTAL SAVINGS BANK THAT SHALL REMAIN UNPAID TO THE PERSONS ENTITLED THERETO ON THE FIRST DAY OF JULY, NINETEEN HUNDRED AND ONE, AND ANY ASSETS OF SAID BANK SHALL BE TURNED OVER BY THE GOVERNMENT OF HAWAII TO THE TREASURER OF THE UNITED STATES, AND THE SECRETARY OF THE TREASURY SHALL CAUSE AN ACCOUNT TO BE STATED, AS OF SAID DATE, BETWEEN SUCH GOVERNMENT OF HAWAII AND THE UNITED STATES IN RESPECT TO SAID HAWAIIAN POSTAL SAVINGS BANK.

IT WAS FURTHER PROVIDED BY THE ACT OF MARCH 3, 1901, 31 STAT. 1133, 1152:

PAYMENT OF DEBT OF HAWAII: TO CARRY INTO EFFECT THE AGREEMENT EMBODIED IN JOINT RESOLUTION "TO PROVIDE FOR ANNEXING THE HAWAIIAN ISLANDS," APPROVED JULY SEVENTH, EIGHTEEN HUNDRED AND NINETY-EIGHT, AS FOLLOWS:

FOR PAYMENT OF THE PUBLIC DEBT OF THE REPUBLIC OF HAWAII LAWFULLY EXISTING AT THE DATE OF THE PASSAGE OF SAID RESOLUTION, THREE MILLION TWO HUNDRED AND THIRTY-FIVE THOUSAND FOUR HUNDRED AND TWENTY-NINE DOLLARS AND SIXTY-NINE CENTS; FOR PAYMENT OF INTEREST ACCRUING THEREON AFTER JUNE FIFTEENTH, NINETEEN HUNDRED, THE DATE ON WHICH THE ACT TO PROVIDE A GOVERNMENT FOR THE TERRITORY OF HAWAII WENT INTO EFFECT, UNTIL PAID, OR SO MUCH THEREOF AS MAY BE NECESSARY, TWO HUNDRED AND TWENTY-THREE THOUSAND NINE HUNDRED AND FIFTY-FIVE DOLLARS AND FORTY EIGHT CENTS; FOR PAYMENT OF COMMISSIONS AND ALL OTHER EXPENSES INCURRED IN CARRYING INTO EFFECT THE TERMS OF SAID RESOLUTION, OR SO MUCH THEREOF AS MAY BE NECESSARY, TWENTY THOUSAND DOLLARS; IN ALL, THREE MILLION FOUR HUNDRED AND SEVENTY-EIGHT THOUSAND THREE HUNDRED AND EIGHTY-FIVE DOLLARS AND SEVENTEEN CENTS, THE SAME TO BE IMMEDIATELY AVAILABLE.

THE RECORD SHOWS THAT ON OR ABOUT MARCH 27, 1901, THE SECRETARY OF THE TREASURY, ACTING PURSUANT TO THE ACT OF APRIL 30, 1900, SUPRA, AND IN CONFORMITY WITH SECTION 3614, REVISED STATUTES, APPOINTED W. F. MACLENNAN AND W. W. LUDLOW, SPECIAL DISBURSING AGENTS, TREASURY DEPARTMENT,"FOR THE DISBURSEMENT OF THE APPROPRIATION: "PAYMENT OF DEBT OF HAWAII," TO CARRY INTO EFFECT THE AGREEMENT EMBODIED IN THE JOINT RESOLUTION OF CONGRESS APPROVED JULY 7, 1898,"TO PROVIDE FOR ANNEXING THE HAWAIIAN ISLANDS.'"

THE RECORD FURTHER SHOWS THAT BY ORDER DATED APRIL 4, 1901, THE SECRETARY OF THE TREASURY PRESCRIBED THE FOLLOWING "RULES AND REGULATIONS" GOVERNING THE REDEMPTION OF THE BONDED DEBT OF HAWAII:

YOU ARE HEREBY DIRECTED, AS SPECIAL DISBURSING AGENTS ON BEHALF OF THE TREASURY DEPARTMENT, TO PROCEED TO HONOLULU FOR THE PURPOSE OF THERE DISCHARGING AND PAYING SUCH PORTIONS OF THE BONDED DEBT OF THE REPUBLIC OF HAWAII AS WAS ASSUMED AND AGREED TO BE PAID UNDER THE TREATY BETWEEN THE UNITED STATES GOVERNMENT AND THE SAID REPUBLIC UNDER DATE OF JULY 7, 1898, AND IN CONFORMITY WITH THE APPROPRIATION MADE FOR THAT PURPOSE AT THE LAST SESSION OF THE 56TH CONGRESS BY THE SUNDRY CIVIL ACT OF MARCH 3, 1901.

A PROPER SCHEDULE OF THE BONDS IN QUESTION WILL BE FURNISHED YOU, WHICH WILL BE YOUR GUIDE AS TO PAYMENT.

YOU SHOULD PROMPTLY GIVE NOTICE, ON ARRIVAL IN HONOLULU, BY PUBLIC ADVERTISEMENT, OF THE TIME AND PLACE WHERE THE BONDS IN QUESTION MAY BE PRESENTED FOR PAYMENT. * * *

IN CONFORMITY WITH THE ABOVE-QUOTED ORDER IT APPEARS THERE WAS INSERTED ON OR ABOUT APRIL 26, 1901, IN THE "HAWAIIAN GAZETTE," THE "HAWAIIAN STAR" AND THE "REPUBLICAN," THE FOLLOWING NOTICE TO HOLDERS OF HAWAIIAN BONDS:

IN THE EXECUTION OF THE AGREEMENT OF THE UNITED STATES AS EXPRESSED IN THE JOINT RESOLUTION OF CONGRESS TO PROVIDE FOR ANNEXING THE HAWAIIAN ISLANDS TO THE UNITED STATES, APPROVED JULY 7, 1898, WHEREBY A PART OF THE PUBLIC DEBT OF THE REPUBLIC OF HAWAII LAWFULLY EXISTING AT THAT DATE WAS ASSUMED BY THE UNITED STATES, NOTICE IS HEREBY GIVEN THAT, PAYMENT OF THE INDEBTEDNESS SO ASSUMED WILL BE MADE AT HONOLULU THROUGH THE FIRST NATIONAL BANK BY DULY AUTHORIZED AGENTS OF THE UNITED STATES TREASURY DEPARTMENT UPON PRESENTATION OF THE SAME TO THE TREASURER OF THE TERRITORY OF HAWAII ON OR BEFORE MAY 1ST, 1901, FROM AND AFTER WHICH DATE INTEREST THEREON SHALL CEASE. THE SEVERAL ACTS AUTHORIZING THE ISSUES OF BONDS EMBRACED IN THIS NOTICE, ARE AS FOLLOWS: ACT OCTOBER 15, 1886, ACT AUGUST 15, 1888, ACT SEPTEMBER 7, 1892, ACTS JANUARY 11 AND FEBRUARY 18, 1893, AND ACT JUNE 13, 1896, BONDS STOCK U NUMBERS, ONE TO THIRTY, INCLUSIVE, AND STOCK A, ONE TO ONE HUNDRED AND FIFTEEN, INCLUSIVE.

L. J. GAGE,

SECRETARY OF THE TREASURY.

THE JOINT RESOLUTION OF JULY 7, 1898, SUPRA, LIMITED THE LIABILITY OF THE UNITED STATES WITH RESPECT TO THE PUBLIC DEBT OF HAWAII TO 4 MILLION DOLLARS. ACCORDING TO THE ANNUAL REPORT OF THE SECRETARY OF THE TREASURY FOR 1902, THE DEBT AS ASSUMED CONSISTED OF $3,235,400 IN INTEREST-BEARING BONDS AND $764,570.31 IN POSTAL SAVINGS DEPOSITS, MAKING A TOTAL OF $3,999,970.31, OR A TOTAL OF DEBTS ASSUMED AMOUNTING TO WITHIN $29.69 OF THE LAWFULLY PRESCRIBED LIMIT. OF THE BONDED INDEBTEDNESS THUS ASSUMED, IT IS TO BE OBSERVED THAT THE ISSUE, AS AUTHORIZED BY THE ACT OF AUGUST 5, 1882, TO WHICH THE TWO BONDS UNDER CONSIDERATION APPARENTLY BELONG, WAS NOT INCLUDED, AS IS EVIDENCED BY THE DULY ADVERTISED LIST, SUPRA. ACCORDINGLY, THOSE BONDS DO NOT REPRESENT OBLIGATIONS RECOGNIZED BY THE UNITED STATES. THIS CONCLUSION IS, OF COURSE, NOT AFFECTED BY THE ATTEMPT TO ALTER, WITH PEN AND INK, THE DATE OF THE ACT UNDER WHICH THEY WERE ISSUED TO CORRESPOND WITH THE DATE OF ONE OF THE SEVERAL ACTS AUTHORIZING ISSUES OF BONDS THAT WERE RECOGNIZED AS FORMING A PART OF THE PUBLIC DEBT OF THE REPUBLIC OF HAWAII ASSUMED BY THE UNITED STATES.

WITH RESPECT TO THE BONDED INDEBTEDNESS AS ASSUMED BY THE UNITED STATES THE ANNUAL REPORT OF THE SECRETARY OF THE TREASURY FOR 1902, SHOWS THAT UP TO THAT TIME HAWAIIAN BONDS, HAD BEEN REDEEMED IN THE TOTAL AMOUNT OF $3,223,813.00, LEAVING AN UNREDEEMED BALANCE OF $11,587.00 AND THAT POSTAL -SAVINGS DEPOSITS HAD BEEN PAID IN A TOTAL AMOUNT OF $759,437.20, LEAVING AN UNPAID BALANCE OF $5,133.11. AT THE CLOSE OF THE FISCAL YEAR ENDED JUNE 30, 1907, THE SECRETARY OF THE TREASURY REPORTED THAT THE ASSUMED DEBT OF HAWAII, INCLUDING INTEREST BEARING BONDS AND POSTAL-SAVINGS DEPOSITS,"HAS BEEN FULLY PAID BY THE UNITED STATES, EXCEPT $2,670.05 IN POSTAL-SAVINGS CERTIFICATES NOT YET PRESENTED FOR PAYMENT.' TO SETTLE THIS UNPAID BALANCE IT WAS PROVIDED IN SECTION 2 OF THE ACT OF MAY 19, 1908, 35 STAT. 165:

THAT ALL CLAIMS TO MONEYS DEPOSITED IN THE HAWAIIAN POSTAL SAVINGS BANK NOT PRESENTED FOR CERTIFICATION AS PROVIDED BY LAW WITHIN TWO YEARS AFTER THE PASSAGE OF THIS ACT SHALL BE FOREVER BARRED.

COMMENTING ON THE STATUS OF THE PUBLIC DEBT OF HAWAII, AS ASSUMED BY THE UNITED STATES, THE SECRETARY OF THE TREASURY STATED ON PAGE 69 OF HIS ANNUAL REPORT OF 1911:

THE DEBT OF HAWAII, ASSUMED BY THE TERMS OF THE JOINT RESOLUTION OF JULY 7, 1898, CONSISTED OF $3,235,400 IN INTEREST-BEARING BONDS AND $764,570.31 IN POSTAL SAVINGS DEPOSITS. THIS INDEBTEDNESS HAS BEEN FULLY PAID BY THE UNITED STATES UNDER THE PROVISION OF THE ACT OF MAY 19, 1908 (35 STAT. 165).

THE FOREGOING HISTORY OF THE ASSUMPTION AND PAYMENT BY THE UNITED STATES OF THE PUBLIC DEBT OF THE REPUBLIC OF HAWAII ESTABLISHES THAT THE BONDS IN QUESTION DO NOT BELONG TO AN ISSUE EVER RECOGNIZED AS FORMING A PART OF THAT PORTION OF THE PUBLIC DEBT OF HAWAII ASSUMED BY THE UNITED STATES; AND THAT SUCH PORTION OF THE BONDED DEBT AS WAS ASSUMED AND AGREED TO BE PAID UNDER THE TREATY BETWEEN THE UNITED STATES AND SAID REPUBLIC WAS FULLY PAID. IN THE CIRCUMSTANCES THERE EXISTS NO LEGAL BASIS FOR RECOGNIZING THE SAID BONDS AS OBLIGATIONS OF THE UNITED STATES, AND ACCORDINGLY, THE CLAIM UNDER CONSIDERATION MUST BE AND IS DISALLOWED.