A-92786, APRIL 1, 1938, 17 COMP. GEN. 801

A-92786: Apr 1, 1938

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FOR THE PROCEEDS OF LOST CHECKS OR WARRANTS WHICH HAVE BEEN COVERED INTO OUTSTANDING LIABILITIES NEED NO LONGER BE SUPPORTED BY BONDS TO INDEMNIFY THE UNITED STATES AGAINST LOSS. ON WHICH THE REQUIREMENT FOR BOND WAS PREVIOUSLY BASED HAVING BEEN AMENDED BY SECTION 9 OF THE GOVERNMENT LOSSES IN SHIPMENT ACT OF JULY 8. 1938: THERE IS BEFORE THIS OFFICE FOR SETTLEMENT THE CLAIM OF THE STATE OF UTAH FOR 5 PERCENT OF THE NET PROCEEDS FROM THE SALE OF PUBLIC LAND WITHIN THAT STATE FROM JULY 1. THE STATE ALLEGES NONRECEIPT OF THE WARRANT AND THE RECORDS OF THIS OFFICE DISCLOSE THAT IT IS OUTSTANDING AND UNPAID AND WAS COVERED INTO OUTSTANDING LIABILITIES. THERE WAS RECEIVED FROM THE STATE LAND OFFICE OF UTAH A LETTER ADDRESSED TO THE HONORABLE ABE MURDOCK.

A-92786, APRIL 1, 1938, 17 COMP. GEN. 801

BONDS - INDEMNITY - CLAIMS BY STATES FOR PROCEEDS OF CHECKS OR WARRANTS COVERED INTO OUTSTANDING LIABILITIES CLAIMS BY OR ON BEHALF OF A STATE, FOR THE PROCEEDS OF LOST CHECKS OR WARRANTS WHICH HAVE BEEN COVERED INTO OUTSTANDING LIABILITIES NEED NO LONGER BE SUPPORTED BY BONDS TO INDEMNIFY THE UNITED STATES AGAINST LOSS, SECTION 3646, REVISED STATUTES, ON WHICH THE REQUIREMENT FOR BOND WAS PREVIOUSLY BASED HAVING BEEN AMENDED BY SECTION 9 OF THE GOVERNMENT LOSSES IN SHIPMENT ACT OF JULY 8, 1937, SO AS NO LONGER FOR APPLICATION TO CHECKS IN OUTSTANDING LIABILITIES.

DECISION BY ACTING COMPTROLLER GENERAL ELLIOTT, APRIL 1, 1938:

THERE IS BEFORE THIS OFFICE FOR SETTLEMENT THE CLAIM OF THE STATE OF UTAH FOR 5 PERCENT OF THE NET PROCEEDS FROM THE SALE OF PUBLIC LAND WITHIN THAT STATE FROM JULY 1, 1915, TO JUNE 30, 1916, REPRESENTED BY WARRANT NO. 7189, DATED FEBRUARY 8, 1917, WHICH ISSUED PURSUANT TO CERTIFICATE OF SETTLEMENT NO. 48267, DATED JANUARY 31, 1917, IN THE AMOUNT OF $5,201.32. THE STATE ALLEGES NONRECEIPT OF THE WARRANT AND THE RECORDS OF THIS OFFICE DISCLOSE THAT IT IS OUTSTANDING AND UNPAID AND WAS COVERED INTO OUTSTANDING LIABILITIES, AS REQUIRED BY SECTION 306 OF THE REVISED STATUTES.

IN RESPONSE TO A REQUEST FOR A BOND OF INDEMNITY, THERE WAS RECEIVED FROM THE STATE LAND OFFICE OF UTAH A LETTER ADDRESSED TO THE HONORABLE ABE MURDOCK, MEMBER OF CONGRESS, UNDER DATE OF OCTOBER 28, 1937, AS FOLLOWS:

I AM ENCLOSING HEREWITH COPY OF A LETTER FROM THE GENERAL ACCOUNTING OFFICE IN WASHINGTON REFERRING TO UNPAID CLAIM DUE THE STATE OF UTAH UNDER THE LAW PERMITTING FIVE PERCENT OF THE NET PROCEEDS OF THE SALE OF PUBLIC LANDS TO GO TO THE STATE.

UPON RECEIPT OF THIS LETTER, WHICH YOU NOTE REQUESTS A BOND, WE TOOK THE MATTER UP WITH THE ATTORNEY GENERAL'S OFFICE, WHO HAVE URGED THE DEPARTMENT TO WAIVE ITS DEMAND FOR INDEMNITY BOND FOR THE REASON THAT THE STATE OF UTAH IS THE PARTY AT INTEREST AND WOULD NATURALLY BE BOUND TO INDEMNIFY ANY LOSS.

CORRESPONDENCE SEEMS TO INDICATE THAT THE DEPARTMENT IS NOT WILLING TO WAIVE THE GIVING OF A BOND AND ARE INSISTING UPON A PERSONAL SURETY BOND TO BE EXECUTED BY THE EXECUTIVE SECRETARY OF THE STATE LAND BOARD AS PRINCIPAL AND TWO OTHER PERSONS AS SURETIES IN THE PENAL SUM OF $5,725.00. WE ARE NOT WILLING NOR ABLE TO COMPLY WITH THIS REQUEST AND ARE WONDERING, THEREFORE, IF YOU COULD NOT PREVAIL UPON THE DIVISION OF ACCOUNTS TO WAIVE THIS REQUIREMENT, OR AT LEAST MODIFY IT SO THAT THE STATE MIGHT RECEIVE THE MONIES DUE.

WE WILL VERY MUCH APPRECIATE YOUR COOPERATION IN THIS MATTER.

VERY TRULY YOURS,

(S.) GEO. A. FISHER,

EXECUTIVE SECRETARY.

IN 8 COMP. GEN. 477, IT WAS STATED:

WHEN THE CHECK IS LOST OR THE PRESENTATION OTHERWISE IS IMPOSSIBLE, NO REMEDY IS PROVIDED UNDER SECTION 308, AND IN SUCH CASES IT HAS BEEN HELD THAT THE MATTER SHOULD BE TREATED THE SAME AS ANY OTHER CASE OF A CHECK LOST, STOLEN, OR DESTROYED, AND PAYMENT MADE ONLY AFTER EXECUTION OF A SURETY BOND TO INDEMNIFY THE UNITED STATES, AS PROVIDED BY SECTION 3648 (3646), REVISED STATUTES, AND REGULATIONS MADE IN PURSUANCE THEREOF, DECISION JANUARY 2, 1926 (A-11066), EXCEPT IN UNUSUAL CASES IN WHICH THE NONPRODUCTION OF A TREASURY DRAFT IS SUFFICIENTLY ACCOUNTED FOR BY PROOF THAT IT WAS STOLEN AND HAS NOT BEEN HEARD OF FOR A NUMBER OF YEARS, IN WHICH EVENT PAYMENT MAY BE MADE UNDER SECTION 308 WITHOUT BOND OF INDEMNITY. WAYNE V. UNITED STATES, 26 CT.CLS. 274.

THIS REQUIREMENT WAS HELD APPLICABLE TO CHECKS OR WARRANTS ISSUED TO STATE OFFICIALS. A-49426, JULY 12, 1933. HERETOFORE SPECIAL ACTS HAVE BEEN PASSED TO AUTHORIZE DUPLICATE CHECKS IN SUCH CASES, AS FOR EXAMPLE--- ACT OF JUNE 15, 1926, 44 STAT. 750.

AS INDICATED ABOVE, THE REQUIREMENT OF A BOND IN SUCH CASES WAS BASED UPON THE PROVISIONS OF SECTION 3646, REVISED STATUTES, HOWEVER, SAID SECTION OF THE REVISED STATUTES HAS BEEN AMENDED BY SECTION 9 OF THE GOVERNMENT LOSSES IN SHIPMENT ACT, APPROVED JULY 8, 1937, 50 STAT. 482, TO READ AS FOLLOWS:

(A) EXCEPT AS HEREINAFTER PROVIDED, WHENEVER IT IS CLEARLY PROVED TO THE SATISFACTION OF THE SECRETARY OF THE TREASURY THAT ANY ORIGINAL CHECK OF THE UNITED STATES IS LOST, STOLEN, OR WHOLLY OR PARTLY DESTROYED, OR IS SO MUTILATED OR DEFACED AS TO IMPAIR ITS VALUE TO ITS OWNER OR HOLDER, PERSONS AUTHORIZED TO ISSUE SUCH CHECKS ON BEHALF OF THE UNITED STATES ARE AUTHORIZED, BEFORE THE CLOSE OF THE FISCAL YEAR FOLLOWING THE FISCAL YEAR IN WHICH THE ORIGINAL CHECK WAS ISSUED, TO ISSUE TO THE OWNER OR HOLDER THEREOF A SUBSTITUTE, MARKED "DUPLICATE" AND SHOWING THE NUMBER, DATE, AND PAYEE OF THE ORIGINAL CHECK, UPON THE RECEIPT AND APPROVAL BY THE SECRETARY OF THE TREASURY OF A BOND, TO INDEMNIFY THE UNITED STATES, IN SUCH FORM AND AMOUNT AND WITH SUCH SURETY, SURETIES, OR SECURITY AS THE SECRETARY OF THE TREASURY SHALL REQUIRE; BUT NO SUCH SUBSTITUTE SHALL BE PAYABLE IF THE ORIGINAL CHECK SHALL FIRST HAVE BEEN PAID: PROVIDED, HOWEVER, THAT THE AUTHORITY HEREIN CONFERRED TO ISSUE SUBSTITUTE CHECKS MAY, IN THE CASE OF CHECKS ISSUED ON ACCOUNT OF PUBLIC-DEBT OBLIGATIONS AND TRANSACTIONS REGARDING THE ADMINISTRATION OF BANKING AND CURRENCY LAWS, BE ISSUED WITHOUT LIMITATION OF TIME.

(B) A BOND OF INDEMNITY SHALL NOT BE REQUIRED UNDER SUBSECTION (A) OF THIS SECTION IN ANY OF THE FOLLOWING CLASSES OF CASES EXCEPT AS HEREINAFTER PROVIDED: (1) IF THE SECRETARY OF THE TREASURY IS SATISFIED THAT THE LOSS, THEFT, DESTRUCTION, MUTILATION, OR DEFACEMENT, AS THE CASE MAY BE, OCCURRED WITHOUT FAULT OF THE OWNER OR HOLDER AND WHILE THE CHECK WAS IN THE CUSTODY OR CONTROL OF THE UNITED STATES (NOT INCLUDING THE POSTAL SERVICE WHEN ACTING SOLELY IN ITS CAPACITY AS THE PUBLIC CARRIER OF THE MAILS), OR OF A PERSON THEREUNTO DULY AUTHORIZED AS LAWFUL AGENT OF THE UNITED STATES, OR WHILE IT WAS IN THE COURSE OF SHIPMENT EFFECTED PURSUANT TO AND IN ACCORDANCE WITH THE REGULATIONS ISSUED UNDER THE PROVISIONS OF THE GOVERNMENT LOSSES IN SHIPMENT ACT; (2) IF SUBSTANTIALLY THE ENTIRE CHECK IS PRESENTED AND SURRENDERED BY THE OWNER OR HOLDER AND THE SECRETARY OF THE TREASURY IS SATISFIED AS TO THE IDENTITY OF THE CHECK PRESENTED AND THAT ANY MISSING PORTIONS ARE NOT SUFFICIENT TO FORM THE BASIS OF A VALID CLAIM AGAINST THE UNITED STATES; (3) IF THE SECRETARY OF THE TREASURY IS SATISFIED THAT THE ORIGINAL CHECK IS NOT NEGOTIABLE AND CANNOT BE MADE THE BASIS OF A VALID CLAIM AGAINST THE UNITED STATES; (4) IF THE AMOUNT OF THE CHECK IS LESS THAN $50 AND THE SECRETARY OF THE TREASURY IS SATISFIED THAT THE GIVING OF A BOND OF INDEMNITY WOULD BE AN UNDUE HARDSHIP TO THE OWNER OR HOLDER; (5) IF THE OWNER OR HOLDER IS A STATE OR POLITICAL SUBDIVISION THEREOF, A CORPORATION THE WHOLE OF WHOSE CAPITAL IS OWNED BY THE UNITED STATES, A FOREIGN GOVERNMENT, OR A FEDERAL RESERVE BANK: PROVIDED, HOWEVER, THAT IN ANY OF THE FOREGOING CLASSES OF CASES THE SECRETARY OF THE TREASURY MAY REQUIRE A BOND OF INDEMNITY IF HE DEEMS IT ESSENTIAL TO THE PUBLIC INTEREST.

(C) THE SECRETARY OF THE TREASURY SHALL HAVE THE POWER TO MAKE SUCH RULES AND REGULATIONS AS HE MAY DEEM NECESSARY FOR THE ADMINISTRATION OF THE PROVISIONS OF THIS SECTION.

AS SECTION 3646, REVISED STATUTES, AS AMENDED, IS BY ITS TERMS NOW APPLICABLE ONLY TO CHECKS ,BEFORE THE CLOSE OF THE FISCAL YEAR FOLLOWING THE FISCAL YEAR IN WHICH THE ORIGINAL CHECK WAS ISSUED," IT HAS NO APPLICATION TO CHECKS WHICH HAVE BEEN COVERED INTO OUTSTANDING LIABILITIES PURSUANT TO SECTION 21 OF THE PERMANENT APPROPRIATION REPEAL ACT, APPROVED JUNE 26, 1934, 48 STAT. 1235, WHICH SUPERSEDES 306 OF THE REVISED STATUTES.

ACCORDINGLY, IN THE SETTLEMENT BY THIS OFFICE OF CLAIMS FOR THE PROCEEDS OF CHECKS OR WARRANTS WHICH HAVE BEEN COVERED INTO OUTSTANDING LIABILITIES AND REPORTED AS LOST OR DESTROYED, THE QUESTION OF WHETHER A BOND OF INDEMNITY SHALL BE REQUIRED RESTS NOT UPON THE REQUIREMENTS OF SECTION 3646, REVISED STATUTES, AS FORMERLY, BUT UPON THE DETERMINATION BY THIS OFFICE OF THE NECESSITY OF SUCH A BOND TO PROTECT THE INTEREST OF THE GOVERNMENT AGAINST DUPLICATE CLAIMS ACCOMPANIED BY THE ORIGINAL CHECKS OR WARRANTS.

AS CHECKS OR WARRANTS DRAWN TO THE ORDER OF A STATE COULD ONLY BE NEGOTIATED BY ENDORSEMENT OF A PROPER STATE OFFICIAL AND GENERALLY ONLY FOR THE PURPOSE OF COLLECTION THROUGH BANKING FACILITIES, THE POSSIBILITY OF THE PRESENTATION OF A DUPLICATE CLAIM BY A STATE OR BY A BONA FIDE HOLDER AS TRANSFEREE OF A STATE ARE TOO REMOTE TO WARRANT SERIOUS CONSIDERATION. IN VIEW THEREOF NO BOND OF INDEMNITY WILL HEREAFTER BE REQUIRED IN SUPPORT OF CLAIMS FOR THE PROCEEDS OF LOST CHECKS OR WARRANTS WHICH HAVE BEEN COVERED INTO OUTSTANDING LIABILITIES WHEN PRESENTED BY OR IN BEHALF OF A STATE.

ACCORDINGLY, THERE IS CERTIFIED AS DUE THE STATE OF UTAH $5,201.32, PAYABLE FROM THE ACCOUNT ,OUTSTANDING LIABILITIES.'