A-90923, DECEMBER 15, 1937, 17 COMP. GEN. 510

A-90923: Dec 15, 1937

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

VETERANS' ADMINISTRATION - ADJUSTED SERVICE CERTIFICATES - INDEMNITY BOND AND CERTIFYING OFFICER LIABILITY - LOSS ON DUPLICATE CERTIFICATE WHERE THE TERMS AND CONDITIONS OF THE STANDARD INDEMNITY BOND REQUIRED BY THE VETERANS' ADMINISTRATION IN CONNECTION WITH THE ISSUANCE OF A DUPLICATE ADJUSTED-SERVICE CERTIFICATE ARE SUCH AS TO PROVIDE AGAINST GOVERNMENT LOSS ON THE ORIGINAL CERTIFICATE ONLY. THE SURETIES ARE NOT LIABLE FOR LOSS ON A DUPLICATE CERTIFICATE ERRONEOUSLY ISSUED TO A VETERAN OTHER THAN THE VETERAN TO WHOM THE ORIGINAL WAS ISSUED. 1937: I HAVE YOUR LETTER OF DECEMBER 2. AS FOLLOWS: THE FOLLOWING FACTS ARE PRESENTED FOR YOUR CONSIDERATION AND ADVICE AS TO WHETHER. THE SURETIES ON THE BOND OF INDEMNITY ARE LIABLE FOR THE LOSS SUSTAINED BY THE UNITED STATES IN THE CASE OF WILLIAM LILLY.

A-90923, DECEMBER 15, 1937, 17 COMP. GEN. 510

VETERANS' ADMINISTRATION - ADJUSTED SERVICE CERTIFICATES - INDEMNITY BOND AND CERTIFYING OFFICER LIABILITY - LOSS ON DUPLICATE CERTIFICATE WHERE THE TERMS AND CONDITIONS OF THE STANDARD INDEMNITY BOND REQUIRED BY THE VETERANS' ADMINISTRATION IN CONNECTION WITH THE ISSUANCE OF A DUPLICATE ADJUSTED-SERVICE CERTIFICATE ARE SUCH AS TO PROVIDE AGAINST GOVERNMENT LOSS ON THE ORIGINAL CERTIFICATE ONLY, THE SURETIES ARE NOT LIABLE FOR LOSS ON A DUPLICATE CERTIFICATE ERRONEOUSLY ISSUED TO A VETERAN OTHER THAN THE VETERAN TO WHOM THE ORIGINAL WAS ISSUED, BUT ADMINISTRATIVE CONSIDERATION SHOULD BE GIVEN TO THE FIXING OF RESPONSIBILITY UPON THE CERTIFYING OFFICER RESPONSIBLE FOR THE ERRONEOUS CERTIFICATION RESULTING IN THE GOVERNMENT'S LOSS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, DECEMBER 15, 1937:

I HAVE YOUR LETTER OF DECEMBER 2, 1937, AS FOLLOWS:

THE FOLLOWING FACTS ARE PRESENTED FOR YOUR CONSIDERATION AND ADVICE AS TO WHETHER, UNDER THE CIRCUMSTANCES OUTLINED, THE SURETIES ON THE BOND OF INDEMNITY ARE LIABLE FOR THE LOSS SUSTAINED BY THE UNITED STATES IN THE CASE OF WILLIAM LILLY, JR., A-4470439.

IN A LETTER DATED APRIL 5, 1928, WHICH WAS REFERRED TO THE VETERANS' ADMINISTRATION BY THE OFFICE OF THE ADJUTANT GENERAL, WAR DEPARTMENT,WILLIAM LILLY, JR., OF 928 RUSSELL STREET, JACKSON, MICHIGAN, SIGNING HIS NAME AS "WILL LILLY," ADVISED THAT HIS ADJUSTED SERVICE CERTIFICATE HAD BEEN DESTROYED AND REQUESTED THAT A DUPLICATE CERTIFICATE BE ISSUED TO HIM. THE LETTER WAS BELIEVED TO REFER TO THE CASE OF WILL LILLY, A-3167529, CERTIFICATE NO. 1863912, AND A FORM 6920, AFFIDAVIT--- SUBMITTED AS EVIDENCE OF LOSS, DESTRUCTION, OR DEFACEMENT OF ADJUSTED SERVICE CERTIFICATE, ON WHICH THE APPLICATION AND CERTIFICATE NUMBERS OF THAT VETERAN HAD BEEN INSERTED, WAS MAILED TO THE VETERAN ON APRIL 16, 1928, TO BE EXECUTED AND RETURNED TO THE VETERANS' ADMINISTRATION. THE AFFIDAVIT, IN WHICH HE STATED THAT HIS CERTIFICATE HAD BEEN DESTROYED IN MARCH OR APRIL 1920, WAS EXECUTED IN THE NAME OF "WILL LILLY" ON FEBRUARY 6, 1929, AND RETURNED TO THIS ADMINISTRATION. UPON SUBMISSION OF A BOND OF INDEMNITY (U.S. VETERANS' BUREAU FORM 764), ON WHICH THE VETERAN WAS NAMED AS PRINCIPAL AND PERCY L. TAYLOR, 606 FIFTH STREET, JACKSON, MICHIGAN, AND COREY J. SPENCER, 315 NORTH EAST AVENUE, JACKSON, MICHIGAN, AS SURETIES, DUPLICATE CERTIFICATE NO. 3566684, IN THE AMOUNT OF $768.00, WAS ISSUED AND MAILED TO THE VETERAN ON MAY 14, 1930.

THE DUPLICATE CERTIFICATE WAS PLEDGED WITH THE VETERANS' ADMINISTRATION, DETROIT, MICHIGAN, AS SECURITY FOR LOANS IN THE AMOUNTS OF $144.00 AND $240.00 GRANTED ON MAY 20, 1930, AND APRIL 3, 1931, RESPECTIVELY. FOR THE PURPOSE OF IDENTIFYING HIS ACCOUNT IN ORDER TO OBTAIN AN ADDITIONAL LOAN, THE VETERAN ON MAY 15, 1934, SUBMITTED HIS CERTIFICATE OF DISCHARGE BEARING HIS NAME AS WILLIAM LILLY, JR., AND HIS ARMY SERIAL NO. 3848634. AN EXAMINATION OF THE RECORDS DISCLOSED THAT NO CERTIFICATION OF SERVICE CREDIT HAD BEEN ADJUSTED SERVICE CERTIFICATE NO. 3566684 ISSUED TO HIM HAD BEEN BASED ON THE RECORDS OF ANOTHER VETERAN, WILL LILLY, A-3167529, WHOSE ARMY SERIAL NUMBER WAS 4630532.

AS IT WAS DETERMINED IN THE EXAMINATION OF THE SERVICE RECORD OF THE VETERAN THAT HE WAS ENTITLED TO SERVICE CREDIT WHICH IF AVAILABLE COULD BE APPLIED TO HIS INDEBTEDNESS ON THE LOANS HE RECEIVED ON THE SECURITY OF THE ADJUSTED SERVICE CERTIFICATE NO. 3566684, A FIELD EXAMINER OF THE VETERANS' ADMINISTRATION CONTACTED THE VETERAN AND ASSISTED HIM IN EXECUTING AN APPLICATION FOR ADJUSTED COMPENSATION (WWC FORM NO. 1). THE APPLICATION WAS APPROVED BY THE ADJUTANT GENERAL'S OFFICE ON MAY 9, 1935, THE VETERAN HAVING BEEN ASSIGNED A 4470439, AND AWARDED AN ADJUSTED SERVICE CREDIT IN THE AMOUNT OF $38.00. AS THIS CREDIT DID NOT ENTITLE THE VETERAN TO AN ADJUSTED SERVICE CERTIFICATE, A CASH AWARD WAS MADE AND THE AMOUNT OF $38.00 WAS CREDITED TO THE VETERAN'S INDEBTEDNESS ON THE LOANS OBTAINED ON THE SECURITY OF CERTIFICATE NO. 3566684.

THE ADJUSTED SERVICE CERTIFICATE WAS CANCELLED AND THE VETERANS' ADMINISTRATION, DETROIT, MICHIGAN, WHERE THE LOANS WERE GRANTED, WAS SO NOTIFIED ON OCTOBER 16, 1935. ON OCTOBER 26, 1935, THE FIELD STATION ACKNOWLEDGED RECEIPT OF THIS INFORMATION. HOWEVER, UPON RECEIPT OF AN APPLICATION (FORM 1701) EXECUTED BY WILLIAM LILLY, JR., FOR SETTLEMENT OF THIS ADJUSTED SERVICE CERTIFICATE, THE FIELD STATION AT DETROIT MADE CERTIFICATION FOR SETTLEMENT. THIS CERTIFICATION WAS MADE TO THE TREASURY FISCAL OFFICE, CHICAGO, ILLINOIS, ON JUNE 15, 1936, IN THE AMOUNT OF $383.03 UNDER ADMINISTRATIVE NO. 57457, DISBURSING OFFICE VOUCHER NO. 97- 2551. NOTICE OF ITEMS TO BE VOIDED (FORM 1711) WAS SENT TO THE FEDERAL RESERVE BANK OF CHICAGO BY THE DETROIT FIELD STATION, BUT THE TREASURY DEPARTMENT HAS REPORTED THAT THE BONDS AND CHECK ISSUED UNDER THE ABOVE DESCRIBED CERTIFICATION HAVE BEEN PAID. ALL EFFORTS BY THIS ADMINISTRATION TO COLLECT FROM THE VETERAN HAVE BEEN UNSUCCESSFUL. THE TOTAL AMOUNT DUE THE UNITED STATES AS A RESULT OF THE LOANS GRANTED ON, AND FINAL SETTLEMENT MADE OF, THIS CERTIFICATE WAS $882.38 ON OCTOBER 30, 1937.

THE VETERANS' ADMINISTRATION ON APRIL 13, 1937, MADE DEMAND UPON THE SURETIES ON THE BOND OF INDEMNITY, COREY J. SPENCER AND PERCY L. TAYLOR, FOR REIMBURSEMENT OF THE LOSS SUSTAINED BY THE UNITED STATES. THE SURETIES HAVE PROTESTED THIS DEMAND ON THE GROUND THAT ADJUSTED SERVICE CERTIFICATE NO. 1863912, REFERRED TO IN THE BOND AS THE ORIGINAL CERTIFICATE, HAD NOT BEEN ISSUED TO THIS VETERAN AND THAT NO CERTIFICATE HAD IN FACT BEEN ISSUED TO HIM, AND UPON THE FURTHER GROUND THAT THE VETERANS' ADMINISTRATION ACTUALLY TYPED UPON THE AFFIDAVIT OF LOSS AND UPON THE BOND OF INDEMNITY THE APPLICATION NUMBER AND THE CERTIFICATE NUMBER OF ANOTHER VETERAN. A COPY OF LETTER, DATED JUNE 7, 1937, FROM MESSRS. SPENCER AND TAYLOR IS ENCLOSED FOR YOUR INFORMATION.

IT IS REQUESTED THAT YOU ADVISE THIS ADMINISTRATION WHETHER THE SURETIES, UNDER THE CONDITIONS STATED, MAY BE HELD LIABLE UNDER THE TERMS OF THE BOND FOR THE AMOUNT OF THE LOSS SUSTAINED BY THE GOVERNMENT.

U.S. VETERANS' BUREAU FORM 764, REFERRED TO IN YOUR LETTER IS UNDERSTOOD TO BE ENTITLED "BOND OF INDEMNITY TO THE UNITED STATES," AND TO CONTAIN PROVISIONS AS FOLLOWS:

WHEREAS AN ADJUSTED SERVICE CERTIFICATE, NUMBER -----, FURTHER IDENTIFIED BY NUMBER A- --------, DATED ------------, 19 -----------, WAS ISSUED PURSUANT TO THE WORLD WAR ADJUSTED COMPENSATION ACT, TO --- -------------- ----- A VETERAN OF THE WORLD WAR;

WHEREAS EVIDENCE OF THE LOSS, THEFT, DEFACING, MUTILATION, OR DESTRUCTION OF SAID CERTIFICATE, TOGETHER WITH REQUEST FOR A DUPLICATE OF SAID CERTIFICATE BY THE LAWFUL HOLDER, HAS BEEN SUBMITTED TO THE ADMINISTRATOR OF VETERANS' AFFAIRS; AND

WHEREAS THE ADMINISTRATOR OF VETERANS' AFFAIRS, BY VIRTUE OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, REQUIRES THE PARTY THUS SITUATED TO GIVE A BOND OF INDEMNITY WITH SATISFACTORY SURETY TO THE UNITED STATES BEFORE THE RELIEF DESIRED WILL BE GRANTED, AND THE ADMINISTRATOR OF VETERANS' AFFAIRS HAVING ACCEPTED THE EVIDENCE SUBMITTED BY THE APPLICANT AS SUFFICIENT TO WARRANT ISSUANCE OF A DUPLICATE OF SAID CERTIFICATE UPON SAID APPLICANT GIVING A PROPER BOND OF INDEMNITY;

NOW, THEREFORE, THE CONDITION OF THIS OBLIGATION IS SUCH, THAT IF THE ABOVE-BOUNDEN OBLIGORS, THEIR HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS, OR ASSIGNS, OR ANY OF THEM, SHALL PAY OR CAUSE TO BE PAID TO THE UNITED STATES ANY AND ALL SUMS WHATEVER WHICH THE UNITED STATES MAY BE CALLED UPON TO PAY, INCLUDING INTEREST AND COSTS, ON ACCOUNT OF THE ESTABLISHMENT OF ANY VALID ADVERSE CLAIM TO THE PROCEEDS OF THE ABOVE DESCRIBED ADJUSTED SERVICE CERTIFICATE OR ANY PART THEREOF, AND SHALL WELL AND TRULY INDEMNIFY AND SAVE HARMLESS THE UNITED STATES FROM ANY CLAIM ON ACCOUNT OF SAID ADJUSTED SERVICE CERTIFICATE AND FROM ALL DAMAGE, LOSS, COSTS, CHARGES, AND EXPENSES WHICH THE UNITED STATES MAY SUSTAIN, INCUR, OR BE LIABLE FOR IN CONSEQUENCE OF ANY SUCH CLAIM OR OF THE GRANTING OF RELIEF ON ACCOUNT OF SAID ADJUSTED SERVICE CERTIFICATE, WITH INTEREST FROM THE DATE OF SUCH PAYMENT, AND ANY AND ALL COSTS AND EXPENSES INCURRED IN CONNECTION THEREWITH, THEN THIS OBLIGATION TO BE VOID; OTHERWISE TO BE AND REMAIN IN FULL FORCE AND EFFECT.

IN DECISION OF MARCH 9, 1934, TO THE ATTORNEY GENERAL, A-53960, INVOLVING THE ADJUSTED-COMPENSATION CASE OF LEVY CHEATWOOD, A-2180165, THE FOLLOWING WAS SAID WITH RESPECT TO THE OBJECT FOR FURNISHING AN INDEMNITY BOND WHEN A DUPLICATE CERTIFICATE IS FOR ISSUANCE:

THE PRIMARY PURPOSE OF REQUIRING THE EXECUTION OF AN INDEMNITY BOND RUNNING TO THE UNITED STATES IN CASES SUCH AS HERE PRESENTED, IS TO INDEMNIFY THE GOVERNMENT IN THE CASE OF A LOSS SUSTAINED BY IT UPON MAKING LOANS ON THE BASIS OF THE ORIGINAL CERTIFICATE. * * *

ALSO, IN A LATER DECISION TO THE ATTORNEY GENERAL, A-55478, DATED MAY 26, 1934, INVOLVING THE CASE OF CLAY P. KIRKPATRICK, THERE WAS STATED THE FOLLOWING WITH RESPECT TO THE LEGAL STATUS OF A DUPLICATE CERTIFICATE AND THE PURPOSE FOR DEMANDING THE EXECUTION OF AN INDEMNITY BOND IN SUCH CASES:

* * * BONDS OF INDEMNITY, WHEN REQUIRED IN CERTAIN CASES OF LOST OR DESTROYED CERTIFICATES, ARE FURNISHED FOR THE PURPOSE OF INDEMNIFYING THE UNITED STATES FOR ANY LOSS ARISING OUT OF THE ISSUANCE OF THE ORIGINAL CERTIFICATE. * * *

FROM THE FACTS REPORTED IN YOUR LETTER IT IS CLEAR THAT THE GOVERNMENT'S LOSS WAS NOT SUSTAINED UPON THE ORIGINAL ADJUSTED-SERVICE CERTIFICATE DESCRIBED IN THE BOND. ON THE CONTRARY, THE SAID LOSS WAS SUSTAINED UPON THE DUPLICATE CERTIFICATE WHICH WAS IMPROPERLY ISSUED. SUCH BEING THE CASE THE SURETIES MAY NOT BE HELD LIABLE UNDER THE TERMS OF THE BOND FOR THE LOSS SUSTAINED BY THE GOVERNMENT IN THE INSTANT CASE. CF. 14 COMP. GEN. 770.

HOWEVER, FROM THE FACTS STATED IN THE ANTEPENULTIMATE PARAGRAPH OF YOUR LETTER, SUPRA, THERE WOULD APPEAR FOR ADMINISTRATIVE CONSIDERATION THE FIXING OF RESPONSIBILITY UPON THE CERTIFYING OFFICER RESPONSIBLE FOR THE ERRONEOUS CERTIFICATION RESULTING IN THE GOVERNMENT'S LOSS. IT IS REQUESTED THAT A REPORT BE FURNISHED THIS OFFICE CONCERNING YOUR DETERMINATION AND ACTION IN THIS RESPECT.