A-92727, MARCH 28, 1939, 18 COMP. GEN. 749

A-92727: Mar 28, 1939

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VETERANS' ADMINISTRATION - ADJUSTED SERVICE CERTIFICATES - ISSUANCE OF DUPLICATE CERTIFICATE TO AN IMPOSTOR - INDEMNITY BOND LIABILITY WHEN A CASE ARISES WITH RESPECT TO WHICH THERE IS NO CONTROLLING JUDICIAL PRECEDENT. IT IS THE DUTY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO RESOLVE THE DOUBT IN FAVOR OF THE INTERPRETATION WHICH WILL BEST SERVE THE INTERESTS OF THE UNITED STATES. IS TO BE REGARDED AS LIABLE FOR LOSS OCCASIONED THE UNITED STATES BECAUSE OF PAYMENT ON BOTH THE ORIGINAL AND DUPLICATE CERTIFICATES. NOTWITHSTANDING THE DUPLICATE CERTIFICATE WAS INADVERTENTLY ISSUED TO AN IMPOSTOR. THAT THE BOND WAS FURNISHED BY THE IMPOSTOR: THAT THE STATUTE MAKES PROVISION ONLY FOR ISSUANCE OF A DUPLICATE AND FURNISHING OF A BOND BY THE .

A-92727, MARCH 28, 1939, 18 COMP. GEN. 749

VETERANS' ADMINISTRATION - ADJUSTED SERVICE CERTIFICATES - ISSUANCE OF DUPLICATE CERTIFICATE TO AN IMPOSTOR - INDEMNITY BOND LIABILITY WHEN A CASE ARISES WITH RESPECT TO WHICH THERE IS NO CONTROLLING JUDICIAL PRECEDENT, AND SUBSTANTIAL DOUBT EXISTS AS TO THE ACTION WHICH A COURT OF COMPETENT JURISDICTION MIGHT TAKE, IT IS THE DUTY OF THE ACCOUNTING OFFICERS OF THE GOVERNMENT TO RESOLVE THE DOUBT IN FAVOR OF THE INTERPRETATION WHICH WILL BEST SERVE THE INTERESTS OF THE UNITED STATES. IN THE ABSENCE OF A JUDICIAL DETERMINATION TO THE CONTRARY, A SURETY ON AN INDEMNITY BOND REQUIRED BY THE VETERANS' ADMINISTRATION IN CONNECTION WITH THE ISSUANCE OF A DUPLICATE ADJUSTED-SERVICE CERTIFICATE UNDER SECTION 705 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED, 38 U.S.C. 649, IS TO BE REGARDED AS LIABLE FOR LOSS OCCASIONED THE UNITED STATES BECAUSE OF PAYMENT ON BOTH THE ORIGINAL AND DUPLICATE CERTIFICATES, NOTWITHSTANDING THE DUPLICATE CERTIFICATE WAS INADVERTENTLY ISSUED TO AN IMPOSTOR; THAT THE BOND WAS FURNISHED BY THE IMPOSTOR: THAT THE STATUTE MAKES PROVISION ONLY FOR ISSUANCE OF A DUPLICATE AND FURNISHING OF A BOND BY THE ,LAWFUL HOLDER" OF THE ORIGINAL; AND THAT THE "WHEREAS" CLAUSES OF THE BOND ARE TO THE GENERAL EFFECT THAT IT IS BEING ISSUED TO SATISFY THE REQUIREMENTS OF THE SAID STATUTE. 17 COMP. GEN. 510, MODIFIED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, MARCH 28, 1939:

YOUR LETTER OF FEBRUARY 16, 1938, IS AS FOLLOWS:

THE FOLLOWING FACTS ARE FURNISHED FOR YOUR CONSIDERATION AND ADVICE AS TO WHETHER THE SURETY ON THE BOND OF INDEMNITY, UNDER THE CIRCUMSTANCES OUTLINED, IS LIABLE FOR THE LOSS SUSTAINED BY THE UNITED STATES IN THE CASE OF WILLIAM TAPLEY, JR., A-138535.

ADJUSTED SERVICE CERTIFICATE NO. 921998 IN THE AMOUNT OF $1,230.00 WAS ISSUED EFFECTIVE JANUARY 1, 1925, AND MAILED TO WILLIAM TAPLEY, JR., A- 138535, AT 163 LEFFERTS PLACE, BROOKLYN, NEW YORK. SEVERAL LETTERS WERE RECEIVED BY THE VETERANS' ADMINISTRATION IN 1931 FROM THE FIRM OF KUSHNER AND KUSHNER, ATTORNEYS, REPORTING THE LOSS OF THE ADJUSTED-SERVICE CERTIFICATE OF ONE WILLIAM TAPLEY, OF DANVILLE, VIRGINIA, AND REQUESTING THE ISSUANCE OF A DUPLICATE CERTIFICATE. THE CORRESPONDENCE WAS ATTACHED TO THE RECORDS OF WILLIAM TAPLEY, JR., A 138535, AND FORM 6920, AFFIDAVIT- -- SUBMITTED AS EVIDENCE OF LOSS, DESTRUCTION, OR DEFACEMENT OF ADJUSTED SERVICE CERTIFICATE, WAS MAILED TO KUSHNER AND KUSHNER TO BE EXECUTED AND RETURNED TO THE VETERANS' ADMINISTRATION. THE AFFIDAVIT (FORM 6920) WAS EXECUTED JUNE 16, 1931, IN THE NAME OF WILLIAM JEFFERSON TAPLEY, TO THE EFFECT THAT HIS ADJUSTED-SERVICE CERTIFICATE HAD BEEN LOST. UPON THE SUBSEQUENT SUBMISSION OF A BOND OF INDEMNITY (U.S. VETERANS' BUREAU FORM 764) EXECUTED IN THE NAME OF WILLIAM TAPLEY, JR., AS PRINCIPAL, AND THE AMERICAN EMPLOYERS INSURANCE COMPANY, BOSTON, MASSACHUSETTS, AS SURETY, DUPLICATE CERTIFICATE NO. 3707883 WAS ISSUED AND MAILED OCTOBER 6, 1931, TO WILLIAM TAPLEY, JR., CARE OF KUSHNER AND KUSHNER, SUITE 422, MASONIC TEMPLE, DANVILLE, VIRGINIA.

THE DUPLICATE CERTIFICATE WAS PLEDGED WITH THE VETERANS' ADMINISTRATION, RICHMOND, VIRGINIA (NOW ROANOKE, VIRGINIA), FOR A LOAN OF $615.00 COVERED BY CHECK NO. 77814, DATED OCTOBER 13, 1931, DRAWN BY FORMER DISBURSING OFFICER H. F. HEISEY, SYMBOL 90-148. FINAL SETTLEMENT IN THE AMOUNT OF $615.00 WAS CERTIFIED JUNE 15, 1936, BY THE ROANOKE, VIRGINIA, FIELD STATION FOR PAYMENT ON THE DUPLICATE CERTIFICATE, THE BONDS AND CHECK TO BE MAILED TO WILLIAM TAPLEY, JR., 533 MOSELY BOTTOM, DANVILLE, VIRGINIA. ORIGINAL CERTIFICATE NO. 921998 WAS RECEIVED IN THE VETERANS' ADMINISTRATION, NEW YORK, NEW YORK, TOGETHER WITH AN APPLICATION (FORM 1701) FOR FINAL SETTLEMENT, AND THE AMOUNT OF $1,230.00 WAS CERTIFIED BY THAT OFFICE FOR PAYMENT TO WILLIAM TAPLEY, JR., OF 181 MAPLE STREET, BROOKLYN, NEW YORK.

AN EXAMINATION OF THE FINGERPRINTS ON THE APPLICATIONS (FORM 1701) WAS MADE, AND IT WAS DETERMINED THAT THE APPLICATION (FORM 1701) FOR FINAL SETTLEMENT OF THE ORIGINAL CERTIFICATE HAD BEEN EXECUTED BY THE VETERAN WHO WAS ENTITLED THERETO. NO RECORD OF SERVICE IN THE MILITARY FORCES OF THE UNITED STATES COULD BE FOUND FOR THE PERSON WHO HAD SUBMITTED THE APPLICATION (FORM 1701) FOR SETTLEMENT OF THE DUPLICATE CERTIFICATE. THE CASE WAS THEREFORE SUBMITTED TO THE SECRET SERVICE DIVISION, TREASURY DEPARTMENT, FOR INVESTIGATION. REPORTS DATED APRIL 10, 1937, APRIL 22, 1937, AND SEPTEMBER 28, 1937, RECEIVED FROM THE SECRET SERVICE DIVISION DISCLOSE THAT THE DUPLICATE CERTIFICATE WAS OBTAINED AND NEGOTIATED BY AN IMPOSTOR, WILLIAM JEFFERSON TAPLEY, ALIAS WILLIAM JUNIOUS TAPLEY, ALIAS WILLIAM TAPLEY, JR., WHO HAD NEVER SERVED IN THE MILITARY FORCES OF THE UNITED STATES AND WAS NOT ENTITLED TO ADJUSTED COMPENSATION. THE IMPOSTOR WAS CONVICTED SEPTEMBER 13, 1937, OF A VIOLATION OF SECTION 80, CHAPTER 4, TITLE 18, U.S. CODE, AND WAS SENTENCED TO SERVE SIX MONTHS AT CAMP LEE, PETERSBURG, VIRGINIA.

THE MANAGER OF THE OFFICE OF THE VETERANS' ADMINISTRATION, ROANOKE,VIRGINIA, WAS INSTRUCTED DECEMBER 29, 1937, TO ASSIGN A REPRESENTATIVE TO CONTACT THE IMPOSTOR IN AN EFFORT TO RECOVER THE AMOUNT OF THE LOSS SUSTAINED BY THE UNITED STATES ON ACCOUNT OF THE FRAUDULENT NEGOTIATION OF THE DUPLICATE CERTIFICATE, BUT IT DOES NOT APPEAR LIKELY THAT RECOVERY WILL BE EFFECTED FROM THAT SOURCE. THE FACTS IN THIS CASE WERE FURNISHED THE DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT, ON MARCH 10, 1937, FOR CONSIDERATION OF RECLAMATION OF THE AMOUNT OF THE CHECK COVERING THE FRAUDULENT LOAN. INFORMATION WAS RECEIVED JANUARY 17, 1938, BY TELEPHONE FROM THE TREASURY DEPARTMENT THAT THE GENERAL ACCOUNTING OFFICE HAD NOT TO DATE AUTHORIZED RECLAMATION.

THE AMERICAN EMPLOYERS INSURANCE COMPANY, 110 MILK STREET, BOSTON, MASSACHUSETTS, WAS REQUESTED IN A LETTER DATED MARCH 10, 1937, AS SURETY ON THE BOND OF INDEMNITY SUBMITTED BY THE IMPOSTOR, TO REIMBURSE THE UNITED STATES FOR THE AMOUNT OF THE LOSS SUSTAINED. THE SURETY HAS ACKNOWLEDGED RECEIPT OF THE LETTER BUT TO DATE HAS NOT REMITTED THE AMOUNT OF THE LOSS. BEFORE PROSECUTING THE DEMAND FURTHER, IT IS DESIRED THAT YOU ADVISE THIS ADMINISTRATION WHETHER THE SURETY ON THE BOND OF INDEMNITY, UNDER THE CONDITIONS STATED, MAY BE HELD LIABLE UNDER THE TERMS OF THE BOND FOR THE AMOUNT OF THE LOAN AND THE AMOUNT PAID IN FINAL SETTLEMENT ON THE DUPLICATE CERTIFICATE, WITH INTEREST ON THE LOAN TO THE DATE ON WHICH REIMBURSEMENT IS MADE.

SECTION 705 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED (38 U.S.C. 649), PROVIDES, AMONG OTHER THINGS, THAT WHENEVER IT IS MADE TO APPEAR TO THE SATISFACTION OF THE ADMINISTRATOR OF VETERANS' AFFAIRS THAT THE LAWFUL HOLDER OF AN ADJUSTED-SERVICE CERTIFICATE HAS LOST THE SAME OR IT HAS BEEN DESTROYED, THE SAID DIRECTOR MAY ISSUE A DUPLICATE, SUBJECT TO SUCH REGULATIONS AND RESTRICTIONS AS HE MAY PRESCRIBE. THE "LAWFUL HOLDER" OF SUCH LOST OR DESTROYED CERTIFICATE WHO APPLIES FOR A DUPLICATE MUST, HOWEVER, FURNISH A BOND "WITH CONDITION TO INDEMNIFY AND SAVE HARMLESS THE UNITED STATES FROM ANY CLAIM UPON SUCH LOST OR DESTROYED CERTIFICATE.'

IT IS PARTICULARLY TO BE NOTED THAT THE BOND IS TO BE FURNISHED BY THE "LAWFUL HOLDER; " THE LAW MAKES NO DIRECT PROVISION FOR A BOND WHICH WILL PROTECT THE UNITED STATES AGAINST THE CONTINGENCY THAT THE DUPLICATE SHALL ISSUE TO AN IMPOSTOR. IN OTHER WORDS, THE REQUIRED BOND IS TO PROTECT THE UNITED STATES AGAINST ANY LOSS WHICH MAY RESULT FROM ISSUANCE OF A DUPLICATE CERTIFICATE TO THE "LAWFUL HOLDER" OF THE ORIGINAL, NOT FROM ANY LOSS WHICH MIGHT RESULT FROM ISSUANCE OF A DUPLICATE TO AN IMPOSTOR WHO NEVER HAD ANY VALID CLAIM TO THE ORIGINAL.

BUT THE MERE FACT THAT SECTION 705 OF THE WORLD WAR ADJUSTED COMPENSATION ACT DOES NOT REQUIRE THE ISSUANCE OF A BOND TO COVER LOSS RESULTING FROM ISSUANCE OF A DUPLICATE TO AN IMPOSTOR DOES NOT MEAN THAT IF SUCH A BOND IS IN FACT ISSUED IT SHALL BE INVALID. AS STATED BY THE COURT IN MOSES V. UNITED STATES, 166 U.S. 571, 586:

THE CONSIDERATION OR THE CONDITION OF THE BOND MUST NOT BE IN VIOLATION OF LAW; IT MUST NOT RUN COUNTER TO ANY STATUTE; IT MUST NOT BE EITHER MALUM PROHIBITUM OR MALUM IN SE. OTHERWISE AND FOR ALL PURPOSES OF SECURITY, A BOND MAY BE VALID THOUGH NO STATUTE DIRECTS ITS DELIVERY.

THIS RULE HAS BEEN HELD TO APPLY IN CASES WHERE A BOND WAS ISSUED PURSUANT TO THE TERMS OF A STATUTE BUT FAILED TO CONFORM TO THE STATUTORY REQUIREMENTS. IN OTHER WORDS, AN INTENDED STATUTORY BOND WHICH FAILS TO QUALIFY AS SUCH MAY NEVERTHELESS BE ENFORCED AS A VALID BOND, PROVIDED IT IS ENTERED INTO VOLUNTARILY AND ON A VALID CONSIDERATION AND DOES NOT VIOLATE PUBLIC POLICY OR CONTRAVENE ANY STATUTE. UNITED STATES V. HODSON, 10 WALL 395; 9 C.J. 27. SEE ALSO SIOUX COUNTY V. NATIONAL SURETY CO., 276 U.S. 238.

THE REAL QUESTION FOR DETERMINATION IN THE PRESENT CASE, THEREFORE, APPEARS TO BE WHETHER THE BOND ACTUALLY FURNISHED BY THE IMPOSTER, EVEN THOUGH THE INADVERTENT ISSUANCE OF A DUPLICATE CERTIFICATE TO AN IMPOSTOR, IS NOT EXACTLY COVERED BY THE TERMS OF THE STATUTE, NEVERTHELESS PROTECTS THE UNITED STATES AGAINST A LOSS SUCH AS IT HAS SUSTAINED; OR WHETHER SAID BOND BY ITS TERMS LIMITS THE PROTECTION OFFERED TO SUCH SITUATIONS ONLY AS ARE CLEARLY WITHIN THE CONTEMPLATION OF THE STATUTE. OF COURSE, IF IT IS STIPULATED AS A CONDITION OF THE BOND ITSELF, EITHER DIRECTLY OR BY NECESSARY IMPLICATION, THAT NO PROTECTION IS PROVIDED EXCEPT IN SUCH SITUATIONS AS COME WITHIN THE REQUIREMENTS OF THE STATUTE, SUCH CONDITION IS TO BE GIVEN EFFECT. IN OTHER WORDS, THE PROTECTION AFFORDED BY THE BOND IS TO BE SOUGHT FROM ITS TERMS.

THE BOND BEGINS WITH THESE WORDS: "TO SECURE THE UNITED STATES AGAINST PAYMENT OF ANY SUM WHATSOEVER ON ACCOUNT OF THE ISSUANCE OF ADJUSTED SERVICE CERTIFICATE NO. 921998, FURTHER IDENTIFIED BY THE NUMBER A-138535, ISSUED TO WILLIAM TAPLEY, JR., JANUARY 1, 1925, OF THE FACE VALUE OF $1,230.' IT FURTHER PROVIDES:

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 DIRECTOR, UNITED STATES VETERANS' BUREAU; AND

WHEREAS, THE DIRECTOR OF THE UNITED STATES VETERANS' BUREAU, 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 DIRECTOR OF THE UNITED STATES VETERANS' BUREAU 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 ASSIGN, 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.

THIS BOND WAS ISSUED AUGUST 20, 1931. SEVERAL YEARS LATER (1936) WILLIAM TAPLEY, JR., OF BROOKLYN, N.Y., PRESENTED A CLAIM TO THE PROCEEDS OF THE ORIGINAL CERTIFICATE, WHICH CLAIM WAS ADVERSE TO THAT OF WILLIAM JUNIUS TAPLEY, ALIAS WILLIAM JEFFERSON TAPLEY, ALIAS WILLIAM TAPLEY, JR., OF DANVILLE, VA., WHO FURNISHED THE BOND AND ON THE STRENGTH OF WHICH HE SECURED THE DUPLICATE CERTIFICATE. THIS ADVERSE CLAIM PROVED VALID AND WAS CERTIFIED FOR PAYMENT JUNE 15, 1936.

UPON THE TAKING PLACE OF THIS SERIES OF EVENTS IT SEEMS CLEAR THAT THE SURETY BECAME OBLIGATED UNDER THE "CONDITION" CLAUSE OF THE BOND (THIRD QUOTED PARAGRAPH, SUPRA), TO REIMBURSE THE UNITED STATES FOR THE $1,230 WHICH IT HAD BEEN CALLED UPON TO PAY IN LIQUIDATION OF THIS "VALID ADVERSE CLAIM TO THE PROCEEDS" OF THE ORIGINAL CERTIFICATE, UNLESS THE ENTIRE BOND (INCLUDING THIS CLAUSE) IS RENDERED INVALID BY THE STATEMENTS IN THE "WHEREAS" CLAUSES TO THE GENERAL EFFECT THAT IT IS BEING ISSUED TO SATISFY THE REQUIREMENTS OF SECTION 705 OF THE WORLD WAR ADJUSTED COMPENSATION ACT, AS AMENDED.

SO FAR AS IS KNOWN HERE, IT HAS NEVER BEEN DEFINITELY DETERMINED BY A COURT THAT THE RECITATION IN THE "WHEREAS" CLAUSE THAT THE BOND IS FURNISHED TO SATISFY THE REQUIREMENTS OF SECTION 705 OF THE WORLD WAR ADJUSTED COMPENSATION ACT AUTOMATICALLY CAUSES IT TO BECOME VOID UPON DETERMINATION THAT THE FACTS OF THE CASE ARE NOT SUCH AS ARE COVERED BY SAID STATUTE. IN OTHER WORDS, IT IS NOT CLEAR THAT BECAUSE THE MOTIVE WHICH INDUCED THE ISSUANCE OF THE BOND FAILED, THE OBLIGATION OF THE BOND LIKEWISE FAILED.

IF THE EFFECT OF THE "WHEREAS" CLAUSE IS THAT THE UNITED STATES IS TO BE REGARDED AS A GUARANTOR OF THE AUTHENTICITY OF THE DUPLICATE CERTIFICATE IN CONNECTION WITH WHICH THE BOND ISSUED, AND IT IS A CONDITION PRECEDENT TO THE VALIDITY OF THE BOND THAT THE PERSON TO WHOM THE DUPLICATE ISSUED WAS IN FACT THE LAWFUL HOLDER OF THE ORIGINAL, THEN IT MAY BE THE BOND IS WITHOUT FORCE OR EFFECT. ON THE OTHER HAND, IF THE LIABILITY OF THE SURETY IS NOT ABSOLUTELY CONDITIONED UPON THE ACCURACY OF THE DIRECTOR'S CONCLUSION THAT THE APPLICANT FOR THE DUPLICATE CERTIFICATE WAS THE LAWFUL HOLDER OF THE ORIGINAL--- REMEMBERING, OF COURSE, THAT THE DIRECTOR'S CONCLUSION WAS PREDICATED UPON INFORMATION FURNISHED BY THE PRINCIPAL UNDER THE BOND--- THEN THE SURETY WOULD APPEAR TO BE LIABLE IN THE PRESENT CASE. AS A GENERAL RULE THE "WHEREAS" CLAUSES OF AN INSTRUMENT MERELY REPRESENT A RECITAL OF REASONS WHICH INDUCED ITS ISSUANCE. THEY DO NOT EVEN CONSTITUTE POSITIVE AVERMENTS OF FACTS, BUT RATHER A RECITATION OF ASSUMED OR ACCEPTED FACTS. UNITED STATES V. DALLAS, 127 F. 544, 547. CERTAIN CASES, OF COURSE, THE TRUTH AND CONTINUED FORCE AND EFFECTIVENESS OF STATEMENTS MADE IN RECITALS ARE ESSENTIAL TO THE VALIDITY OF AN INSTRUMENT, AS WHERE THE CONSIDERATION OF A CONTRACT IS STATED BY WAY OF RECITAL. IN OTHER CASE, HOWEVER, RECITALS MAY BE ENTIRELY DELETED AND THE FORCE AND EFFECT OF THE INSTRUMENT REMAIN. AS SET FORTH IN WORDS AND PHRASES, FIRST SERIES:

A RECITAL IS THE SETTING DOWN OR REPORT OF SOMETHING DONE BEFORE. * * * IN BATH AND MONTAGUE'S CASE, CH.CAS.PT. 3, P. 101, IT IS SAID: "THE RECITING PART OF A DEED IS NOT AT ALL A NECESSARY PART, EITHER IN LAW OR EQUITY. IT MAY BE MADE USE OF TO EXPLAIN A DOUBT OR THE INTENTION AND MEANING OF THE PARTIES, BUT IT HATH NO EFFECT OR OPERATION.' CLARK V. POST, 113 N.Y. 17, 25, 20 N.E. 573, 575.

A RECITAL IN A DEED DOES NOT NECESSARILY IMPLY A COVENANT, AND WHETHER IT IS SO OR NOT DEPENDS IN SUCH CASE UPON WHAT IS TO BE COLLECTED AS THE INTENTION OF THE PARTIES FROM THE WHOLE INSTRUMENT. A RECITAL IS BUT INTRODUCTORY AND WILL NOT BE DRAWN DOWN INTO THE AGREEMENT WHEN IT APPEARS FROM THE OTHER PORTIONS OF THE CONTRACT THAT SUCH WAS NOT THE INTENTION OF THE PARTIES. MONKS V. PROVIDENT INST. FOR SAV. IN JERSEY CITY, 44 ATL. 968, 969; 64 N.J. LAW 86.

THE RECITAL IN THE PRESENT BOND COULD NOT IMPLY A COVENANT AS BETWEEN THE UNITED STATES AND THE SURETY BECAUSE THE UNITED STATES IS NOT A PARTY TO THE BOND.

THERE IS SOME REASON TO BELIEVE, THEREFORE, THAT AN INSTRUMENT WILL NOT BE PERMITTED TO FAIL BECAUSE OF INACCURACY IN OR FAILURE OF THE "WHEREAS" CLAUSE, EXCEPT IN A CASE WHERE THE MATTER CONTAINED IN SAID CLAUSE IS ESSENTIAL TO THE VALIDITY OF THE REST OF THE INSTRUMENT OR WHERE IT IS CLEARLY CONTEMPLATED THAT ITS VALIDITY IS RESTED UPON THE CONTINUED FORCE AND EFFECT OF THE ,WHEREAS" CLAUSE. NOWHERE IS IT SPECIFICALLY STIPULATED IN THE PRESENT BOND THAT ITS VALIDITY OR ENFORCEABILITY IS CONTINGENT UPON THIS CLAUSE. BOTH THE UNITED STATES AND THE SURETY APPARENTLY BELIEVED AT THE TIME THE BOND ISSUED THAT WILLIAM TAPLEY, OF DANVILLE, VA., WAS THE "LAWFUL OLDER" OF THE ORIGINAL CERTIFICATE, AND INTENDED THAT IF THE UNITED STATES SHOULD BE CALLED UPON TO PAY ANY VALID CLAIM TO THE PROCEEDS OF THE ORIGINAL, WHICH WAS ADVERSE TO THAT OF THE WILLIAM TAPLEY WHO WAS PRINCIPAL ON THE BOND, THE SURETY WOULD BEAR ANY LOSS THUS SUSTAINED BY THE UNITED STATES. FROM A PRACTICAL STANDPOINT, THERE IS AS MUCH, IF NOT MORE, REASON WHY THE UNITED STATES SHOULD BE PROTECTED AGAINST ANY CLAIM TO THE ORIGINAL WHERE THE DUPLICATE ISSUES TO AN IMPOSTER AS WHERE IT ISSUES TO THE "LAWFUL HOLDER" OF THE ORIGINAL. FURTHERMORE, THE WILLIAM TAPLEY OF DANVILLE, VA., PRINCIPAL ON THE BOND, PRESUMABLY COULD NOT BE HEARD TO ALLEGE THAT HIS LIABILITY THEREUNDER IS INVALIDATED BY THE FACT THAT HE WAS AN IMPOSTER, AND IT IS AT LEAST DEBATABLE WHETHER THE SURETY STANDS IN A MORE ADVANTAGEOUS POSITION THAN ITS PRINCIPAL.

WHILE, AS PREVIOUSLY NOTED, IT HAS NEVER BEEN DETERMINED BY ANY COURT, AS FAR AS IS KNOWN HERE, WHETHER A BOND SUCH AS THE ONE HERE IN QUESTION IS INVALID UNDER THE CIRCUMSTANCES HERE APPEARING, IT DOES APPEAR THAT INACCURACY OR FAILURE OF THE "WHEREAS" CLAUSE IN AN INSTRUMENT DOES NOT IN ALL CASES MEAN THAT THE BOND IS UNENFORCEABLE. THERE IS CONSIDERABLE DOUBT, THEREFORE, WHETHER THE SURETY IS RELIEVED FROM LIABILITY UNDER CIRCUMSTANCES HERE APPEARING. WHEN A CASE ARISES WITH RESPECT TO WHICH THERE IS NO CONTROLLING JUDICIAL PRECEDENT, AND AS TO WHICH SUBSTANTIAL DOUBT EXISTS AS TO THE ACTION WHICH A COURT OF COMPETENT JURISDICTION MIGHT TAKE, IT IS REGARDED AS THE DUTY OF ACCOUNTING OFFICERS TO RESOLVE THE DOUBT IN FAVOR OF THE INTERPRETATION WHICH WILL BEST SERVE THE INTERESTS OF THE UNITED STATES. I AM CONSTRAINED TO HOLD, THEREFORE, THAT UNLESS AND UNTIL A JUDICIAL DETERMINATION TO THE CONTRARY IS FORTHCOMING, THE SURETY IN THIS AND SIMILAR CASES SHOULD BE REGARDED AS LIABLE UNDER THE TERMS OF THE BOND.

TO THE EXTENT THAT 17 COMP. GEN. 510 IS CONSIDERED TO BE IN CONFLICT WITH THIS DECISION, IT MAY BE REGARDED AS MODIFIED TO CONFORM TO THE VIEWS HEREIN EXPRESSED.