A-87219, JULY 10, 1937, 17 COMP. GEN. 15

A-87219: Jul 10, 1937

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NOTWITHSTANDING SAID BENEFICIARY WAS DESIGNATED AS TRUSTEE FOR DECEDENT'S MINOR DAUGHTER. PARTICULARLY AS THE DECEDENT WAS FULLY AWARE OF HIS RIGHTS IN THE MATTER AND FULLY UNDERSTOOD THAT THE CIVIL SERVICE COMMISSION HAD NO AUTHORITY TO ENFORCE THE TRUST. 1937: REFERENCE IS MADE TO YOUR LETTER OF JUNE 21. AS FOLLOWS: THE COMMISSION HAS PENDING FOR CONSIDERATION CLAIMS WHICH HAVE BEEN MADE FOR THE PAYMENT OF CERTAIN MONEYS IN ITS HANDS AS A RESULT OF RETIREMENT DEDUCTIONS MADE FROM THE SALARY OF MR. THE MATTER IS ONE WHICH SHOULD BE SUBMITTED TO YOU FOR DECISION BEFORE PAYMENT OF THE MONEYS IN QUESTION IS AUTHORIZED. THIS FORM WAS PROPERLY CERTIFIED IN ACCORDANCE WITH THE REGULATIONS PRESCRIBED BY THIS COMMISSION.

A-87219, JULY 10, 1937, 17 COMP. GEN. 15

RETIREMENT FUND DEDUCTIONS - DECEASED EMPLOYEES - BENEFICIARY AS TRUSTEE - CONFLICTING CLAIM OF LEGAL GUARDIAN PAYMENT OF THE AMOUNT HELD IN THE CIVIL SERVICE RETIREMENT FUND TO THE CREDIT OF A DECEASED EMPLOYEE SHOULD BE MADE TO THE DESIGNATED BENEFICIARY, NOTWITHSTANDING SAID BENEFICIARY WAS DESIGNATED AS TRUSTEE FOR DECEDENT'S MINOR DAUGHTER, AND THAT CLAIM HAS BEEN FILED THEREFOR BY THE DECEDENT'S WIDOW AS LEGALLY APPOINTED AND QUALIFIED GUARDIAN OF THE PERSON AND ESTATE OF SAID DAUGHTER, PARTICULARLY AS THE DECEDENT WAS FULLY AWARE OF HIS RIGHTS IN THE MATTER AND FULLY UNDERSTOOD THAT THE CIVIL SERVICE COMMISSION HAD NO AUTHORITY TO ENFORCE THE TRUST.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE PRESIDENT, UNITED STATES CIVIL SERVICE COMMISSION, JULY 10, 1937:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 21, 1937, AS FOLLOWS:

THE COMMISSION HAS PENDING FOR CONSIDERATION CLAIMS WHICH HAVE BEEN MADE FOR THE PAYMENT OF CERTAIN MONEYS IN ITS HANDS AS A RESULT OF RETIREMENT DEDUCTIONS MADE FROM THE SALARY OF MR. JUDSON SYDNOR BOHANNAN, DECEASED, FORMERLY EMPLOYED IN THE DEPARTMENT OF AGRICULTURE. THIS OFFICE FEELS THAT, IN VIEW OF THE CHARACTER OF THE ADVERSE CLAIMS MADE UPON THE FUNDS IN ITS POSSESSION, THE MATTER IS ONE WHICH SHOULD BE SUBMITTED TO YOU FOR DECISION BEFORE PAYMENT OF THE MONEYS IN QUESTION IS AUTHORIZED.

ON FEBRUARY 27, 1935, MR. JUDSON S. BOHANNAN, THEN EMPLOYED AS A PRINCIPAL ATTORNEY IN THE FOREST SERVICE, DEPARTMENT OF AGRICULTURE, EXECUTED, IN PURSUANCE OF THE PRIVILEGE CONFERRED BY THE ACT OF JUNE 22, 1934, AMENDING THE CIVIL SERVICE RETIREMENT ACT OF MAY 29, 1930, CIVIL SERVICE FORM 2806-1, KNOWN AS A DESIGNATION OF BENEFICIARY. THIS FORM WAS PROPERLY CERTIFIED IN ACCORDANCE WITH THE REGULATIONS PRESCRIBED BY THIS COMMISSION, AND IT WAS RECEIVED IN THE OFFICE OF THE COMMISSION ON MARCH 20, 1935. IN EXAMINING THE STATEMENTS APPEARING IN THE FORM, IT WAS NOTED THAT THE DECEASED HAD DESIGNATED THE BENEFICIARY OF THE MONEYS TO HIS CREDIT IN THE RETIREMENT FUND AT THE TIME OF HIS DEATH AS "C. M. BOHANNAN, TRUSTEE, FOR ELIZABETHLAFOND BOHANNAN, DAUGHTER.' THE DESIGNATOR WAS INFORMED BY THE COMMISSION THAT IT COULD NOT ENFORCE THE TRUST, AND REQUESTED HIM TO STATE WHETHER SAID C. M. BOHANNAN HAD BEEN, OR WAS TO BE, APPOINTED BY THE COURT AS GUARDIAN OR TRUSTEE FOR HIS DAUGHTER, ELIZABETH BOHANNAN. IN REPLY THE DESIGNATOR, J. S. BOHANNAN, STATED IN SUBSTANCE THAT HE WAS AWARE THAT THE COMMISSION COULD NOT ENFORCE THE TERMS OF THE PROPOSED TRUST AND WOULD HAVE NO JURISDICTION OVER THE EXPENDITURE OF THE AMOUNT SO PAID TO THE PERSON DESIGNATED BY HIM AS TRUSTEE. HE FURTHER INDICATED THAT SAID C. M. BOHANNAN WAS HIS BROTHER AND THAT HE HAD NOT BEEN, NOR WAS IT CONTEMPLATED THAT HE WOULD BE, APPOINTED BY THE COURT AS GUARDIAN OR TRUSTEE FOR THE DESIGNATOR'S MINOR DAUGHTER. HE INDICATED HIS DESIRE THAT THE AMOUNT OF MONEYS TO HIS CREDIT IN THE RETIREMENT FUND BE USED FOR THE EDUCATION OF HIS DAUGHTER IN THE EVENT OF HIS DEATH BEFORE THE COMPLETION OF HER EDUCATION. THE DECEDENT FURTHER INFORMED THE COMMISSION THAT, INASMUCH AS HIS DAUGHTER WAS A MINOR, HE COULD NOT DESIGNATE HER AS BENEFICIARY WITHOUT INVOLVING THE APPOINTMENT OF A GUARDIAN, WITH ATTENDANT COURT COSTS, FOR WHICH REASON HE DESIRED THE MONEY PAID TO HIS BROTHER AS A TRUSTEE UNDER AN INSTRUMENT OF TRUST AGREED UPON BETWEEN J. S. BOHANNAN AND C. M. BOHANNAN. THE AFOREMENTIONED DESIGNATION OF BENEFICIARY WAS ACCEPTED BY THE COMMISSION, AND ON AUGUST 12, 1935, MR. J. S. BOHANNAN DIED, LEAVING IN HIS RETIREMENT FUND, AFTER ALL VALID CLAIMS AGAINST IT HAD BEEN DEDUCTED, THE SUM OF $2,215.47.

DUE CLAIM WAS MADE UPON THE COMMISSION BY C. M. BOHANNAN FOR THE PAYMENT TO HIM OF THE ABOVE SUM AS TRUSTEE FOR THE DECEDENT'S MINOR DAUGHTER, ELIZABETH. BEFORE PAYMENT OF THESE MONEYS, HOWEVER, A CLAIM WAS MADE UPON THE COMMISSION FOR THE MONEY BY MRS. ELVA S. BOHANNAN, THE DECEDENT'S WIDOW. MRS. BOHANNAN HAS PRESENTED TO THE COMMISSION EVIDENCE OF HER APPOINTMENT BY THE SUPREME COURT OF THE DISTRICT OF COLUMBIA, AND QUALIFICATION AS GUARDIAN OF THE PERSON AND ESTATE OF THE MINOR CHILD, ELIZABETH BOHANNAN, AND HAS FILED CLAIM FOR THE PAYMENT OF THE FUND IN QUESTION TO HER AS GUARDIAN OF THE CHILD, ON THE THEORY THAT THE MINOR CHILD IS THE DULY DESIGNATED BENEFICIARY AND THAT THE TRUST INDICATED BY THE ORIGINAL DESIGNATION OF BENEFICIARY IS WITHOUT LEGAL SUFFICIENCY.

THE ACT OF JUNE 22, 1934, AMENDING THE CIVIL SERVICE RETIREMENT ACT OF MAY 29, 1930, AND PROVIDING FOR THE DESIGNATION OF A BENEFICIARY TO WHOM MAY BE PAID, UPON THE DEATH OF AN EMPLOYEE OR AN ANNUITANT, ANY SUM REMAINING TO HIS CREDIT UNDER THE PROVISION OF THE RETIREMENT ACT, IS SILENT AS TO THE CREATION OF TRUST RELATIONSHIPS. SPECIFICALLY, SUBSECTION (F) OF SECTION 12 OF THE CIVIL SERVICE RETIREMENT ACT OF MAY 29, 1930, AS AMENDED (U.S.C., SUPP. VII, TITLE 5, SEC. 702A (F) (, WAS AMENDED ON JUNE 22, 1934, AS FOLLOWS:

"/F) EACH EMPLOYEE OR ANNUITANT TO WHOM THIS ACT APPLIES MAY, UNDER REGULATIONS PRESCRIBED BY THE CIVIL SERVICE COMMISSION, DESIGNATE A BENEFICIARY OR BENEFICIARIES TO WHOM SHALL BE PAID, UPON THE DEATH OF THE EMPLOYEE OR ANNUITANT, ANY SUM REMAINING TO HIS CREDIT (INCLUDING ANY ACCRUED ANNUITY) UNDER THE PROVISIONS OF THIS ACT.'

UNDER AUTHORITY OF THE LAW JUST QUOTED, THE CIVIL SERVICE COMMISSION HAS PRESCRIBED REGULATIONS GOVERNING THE DESIGNATION OF BENEFICIARIES. PARAGRAPH 3 OF THESE REGULATIONS PROVIDES AS FOLLOWS:

"ANY PERSON, FIRM, CORPORATION, OR A LEGAL ENTITY MAY BE NAMED AS BENEFICIARY.'

THE QUESTION, THEREFORE, IS WHETHER THE COMMISSION MAY PROPERLY REGARD C. M. BOHANNAN, NAMED AS TRUSTEE, AS THE PROPER RECIPIENT OF THE FUNDS IN QUESTION, OR WHETHER THE SILENCE OF THE ACT OF JUNE 22, 1934, SUPRA, IN THE MATTER OF THE CREATION OF TRUSTS, PRECLUDES THE RECOGNITION OF THE TRUST AS ESTABLISHED BY THE DECEDENT, AND REQUIRES THE PAYMENT OF THE FUNDS TO THE LEGALLY APPOINTED AND QUALIFIED GUARDIAN OF SAID ELIZABETH LAFOND BOHANNAN. THE COMMISSION IS DESIROUS OF SECURING A DETERMINATION AS TO THE RIGHTS OF THE CLAIMANTS OF THE MONEYS IN ITS CUSTODY, AND IS RELUCTANT TO INCUR OR CAUSE TO BE INCURRED ON THE PART OF ITS CERTIFYING OFFICER, ANY FINANCIAL RESPONSIBILITY BY PAYMENT OF THE FUNDS TO ONE OF THE CLAIMANTS WHOSE RIGHTS MIGHT LATER, IN THE CASE OF POSSIBLE LITIGATION, BE FOUND INFERIOR TO THOSE OF THE OTHER CLAIMANTS.

THESE CLAIMS HAVE BEEN PENDING BEFORE THE COMMISSION FOR SOME TIME AND IT IS RESPECTFULLY REQUESTED, THEREFORE, THAT YOU SUBMIT YOUR OPINION IN THE PREMISES AS SOON AS IS CONVENIENTLY POSSIBLE.

FROM THE FACTS THUS PRESENTED IT IS CLEAR THAT JUDSON S. BOHANNAN HAVING A CLEAR CONCEPTION OF HIS RIGHTS AND FULLY UNDERSTANDING THAT THE CIVIL SERVICE COMMISSION HAD NO AUTHORITY TO ENFORCE A TRUST, DESIGNATED C. M. BOHANNAN, HIS BROTHER, AS BENEFICIARY TO RECEIVE ANY AMOUNTS TO HIS CREDIT IN THE RETIREMENT FUND AT THE TIME OF HIS DEATH, EXPRESSING IN THE DESIGNATION HIS DESIRE AS TO THE PURPOSE FOR WHICH THE AMOUNT PAID TO THE DESIGNATED BENEFICIARY WOULD BE USED AFTER RECEIVED BY HIM. THE QUESTION FOR CONSIDERATION, THEREFORE, IS WHETHER THE DESIGNATION IN THE MANNER MADE IS A PROPER DESIGNATION OF A BENEFICIARY AND BINDING ON ALL CONCERNED.

THE ORIGINAL ACT OF MAY 29, 1930, 46 STAT. 476, MENTIONED IN THE FOURTH PARAGRAPH OF THE ABOVE-QUOTED LETTER, PROVIDED THAT THE PAYMENT OF ANY SUMS IN THE RETIREMENT FUND OF A DECEASED EMPLOYEE SHOULD BE MADE TO "HIS LEGAL REPRESENTATIVES; " OR IF THE EMPLOYEE BECAME INCOMPETENT, TO "HIS DULY APPOINTED GUARDIAN OR COMMITTEE; " OR IF NO EXECUTOR, ADMINISTRATOR, GUARDIAN, OR COMMITTEE, AND IF THE AMOUNT WAS LESS THAN $1,000, SUCH PAYMENT COULD BE MADE TO SUCH PERSON OR PERSONS AS MIGHT APPEAR TO BE LEGALLY ENTITLED THERETO. THE LATER ACT OF JUNE 22, 1934, 48 STAT. 1201, FROM WHICH A QUOTATION IS CONTAINED IN THE ABOVE-QUOTED LETTER, GRANTED THE ANNUITANT THE RIGHT, UNDER REGULATIONS PRESCRIBED BY THE CIVIL SERVICE COMMISSION, TO NAME A BENEFICIARY AND SECTION 1 OF SAID ACT, 48 STAT. 1201, PROVIDED, IN PART, THAT:

(C) IN CASE AN ANNUITANT SHALL DIE WITHOUT HAVING RECEIVED IN ANNUITIES PURCHASED BY THE EMPLOYEE'S CONTRIBUTIONS AS PROVIDED IN (2) OF SECTION 4 OF THIS ACT AN AMOUNT EQUAL TO THE TOTAL AMOUNT TO HIS CREDIT AT TIME OF RETIREMENT, THE AMOUNT REMAINING TO HIS CREDIT AND ANY ACCRUED ANNUITY SHALL BE PAID, UPON THE ESTABLISHMENT OF A VALID CLAIM THEREFOR, IN THE FOLLOWING ORDER OF PRECEDENCE:

FIRST, TO THE BENEFICIARY OR BENEFICIARIES DESIGNATED IN WRITING BY SUCH ANNUITANT AND RECORDED ON HIS INDIVIDUAL ACCOUNT.

OTHER PROVISIONS OF THE ACT DESIGNATE THE PERSON TO RECEIVE THE ACCRUED ANNUITY IN CASE THERE IS NO BENEFICIARY NAMED, AND PROVIDE THAT PAYMENTS TO SUCH PERSON "SHALL BE A BAR TO RECOVERY BY ANY OTHER PERSON.' UNDER THE PROVISIONS OF THE STATUTE IT IS CLEAR, THEREFORE, THAT THE HIGHEST RIGHT TO RECEIVE PAYMENT OF ACCRUED ANNUITY OF A DECEASED EMPLOYEE OF THE GOVERNMENT IS VESTED IN THE BENEFICIARY DESIGNATED IN WRITING BY HIM. THE STATEMENT IN THE DESIGNATION OF THE PURPOSES FOR WHICH THE EMPLOYEE DESIRED HIS BENEFICIARY TO USE THE FUND WAS, AND IS, SURPLUSAGE INSOFAR AS THE UNITED STATES IS CONCERNED, AND--- AS SUMMARIZED IN THE ABOVE-QUOTED LETTER--- WAS SO RECOGNIZED BY THE EMPLOYEE IN THIS CASE AT THE TIME THE BENEFICIARY WAS DESIGNATED IN WRITING TO RECEIVE THE PAYMENT. THERE IS NO LEGAL AUTHORITY FOR THE UNITED STATES TO DISREGARD THAT DESIGNATION OF BENEFICIARY.

ACCORDINGLY, PAYMENT OF THE AMOUNT HELD IN THE RETIREMENT FUND TO THE CREDIT OF JUDSON S. BOHANNAN MAY BE PAID TO C. M. BOHANNAN, HIS DULY DESIGNATED BENEFICIARY, SUCH PAYMENT CONSTITUTING A BAR TO THE RECOVERY OF THE SAID AMOUNT BY ANY OTHER PERSON.