A-93758, MAY 12, 1938, 17 COMP. GEN. 934

A-93758: May 12, 1938

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WAS MADE PRIOR TO THE DATE OF THE ADJUSTED COMPENSATION PAYMENT ACT. WAS CREDITED TO UNPAID INTEREST FOR PERIODS BEFORE AND AFTER SEPTEMBER 30. WHICH WAS PAID PRIOR TO THE DATE OF THE ACT. THE ADMINISTRATIVE DISALLOWING OF THE VETERAN'S CLAIM THEREFORE WAS CORRECT. IS AS FOLLOWS: THERE IS TRANSMITTED HEREWITH A LETTER DATED JANUARY 24. TO WHICH HE FEELS THAT HE IS ENTITLED IN CONNECTION WITH FINAL SETTLEMENT OF HIS ADJUSTED SERVICE CERTIFICATE. THE VETERAN WAS ISSUED ADJUSTED SERVICE CERTIFICATE NO. 262046. ON THE SECURITY OF WHICH A LOAN OF $500.00 WAS GRANTED BY THE CLEVELAND. STATING IN HIS ACCOMPANYING COMMUNICATION THAT "ENCLOSED CHECK FOR $500.00 IS TO PAY LOAN ON POLICY IN FULL.

A-93758, MAY 12, 1938, 17 COMP. GEN. 934

VETERANS' ADMINISTRATION - ADJUSTED COMPENSATION LOANS - INTEREST - CLAIM FOR REFUND WHERE REMITTANCE BY A VETERAN, IN CONNECTION WITH A LOAN ON HIS ADJUSTED SERVICE CERTIFICATE, WAS MADE PRIOR TO THE DATE OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, AND SUBSEQUENT TO SEPTEMBER 30, 1931, AND WAS CREDITED TO UNPAID INTEREST FOR PERIODS BEFORE AND AFTER SEPTEMBER 30, 1931, BEFORE APPLICATION OF THE BALANCE TO THE PRINCIPAL OF THE OUTSTANDING LOAN, IN ACCORDANCE WITH ADMINISTRATIVE REGULATIONS THEN CURRENT, THE INTEREST ON THE LOAN FOR THE PERIOD SUBSEQUENT TO SEPTEMBER 30, 1931, MUST BE REGARDED AS HAVING BEEN PAID PRIOR TO THE DATE OF THE SAID ACT, AND AS THE ACT DOES NOT AUTHORIZE THE REFUND OF INTEREST ON A LOAN COVERING A PERIOD AFTER SEPTEMBER 30, 1931, WHICH WAS PAID PRIOR TO THE DATE OF THE ACT, THE ADMINISTRATIVE DISALLOWING OF THE VETERAN'S CLAIM THEREFORE WAS CORRECT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, MAY 12, 1938:

YOUR LETTER OF MARCH 25, 1938, IS AS FOLLOWS:

THERE IS TRANSMITTED HEREWITH A LETTER DATED JANUARY 24, 1938, FROM EDWARD G. MANGOLD, A-1348141, FOR CONSIDERATION OF HIS CLAIM FOR REFUND OF INTEREST AMOUNTING TO $73.50, TO WHICH HE FEELS THAT HE IS ENTITLED IN CONNECTION WITH FINAL SETTLEMENT OF HIS ADJUSTED SERVICE CERTIFICATE.

THE VETERAN WAS ISSUED ADJUSTED SERVICE CERTIFICATE NO. 262046, IN THE FACE AMOUNT OF $1,013.00, ON THE SECURITY OF WHICH A LOAN OF $500.00 WAS GRANTED BY THE CLEVELAND, OHIO, OFFICE OF THIS ADMINISTRATION ON AUGUST 29, 1931. THE VETERAN REPAID $500.00 BY CHECK DATED JUNE 8, 1935, STATING IN HIS ACCOMPANYING COMMUNICATION THAT "ENCLOSED CHECK FOR $500.00 IS TO PAY LOAN ON POLICY IN FULL. PLEASE SEND ME A STATEMENT OF THIS ACCOUNT.' INTEREST AT THE LEGAL RATE FROM AUGUST 29, 1931, TO JUNE 29, 1935, THE MONTHLY ANNIVERSARY DATE OF THE LOAN, AMOUNTED TO $75.44. THE REMITTANCE WAS CREDITED, IN ACCORDANCE WITH ADMINISTRATION REGULATIONS, FIRST TO INTEREST AND THE REMAINDER TO PRINCIPAL, LEAVING AN INDEBTEDNESS OF $75.44. THE FACE OF THE RECEIPT FORWARDED TO THE VETERAN BEARS THE NOTATION "PAYMENT IN PART" AND ON THE REVERSE OF THE RECEIPT THE FOLLOWING STATEMENT APPEARS: "BALANCE DUE $75.44 PLUS INTEREST FROM 6-29-35.' ADDITIONAL LOAN OF $430.62 WAS GRANTED ON JANUARY 25, 1936, MAKING A TOTAL INDEBTEDNESS OF $506.06 AS OF THAT DATE.

AS STATED ABOVE, THE VETERAN FORWARDED THE REPAYMENT IN QUESTION, AND REQUESTED A STATEMENT OF HIS ACCOUNT, WITHOUT MAKING SPECIFIC REFERENCE TO CREDITING THE REMITTANCE TO PRINCIPAL ONLY. ALSO, IN ISSUING THE RECEIPT, IT WAS SPECIFICALLY STATED THEREON THAT THE PAYMENT DID NOT SATISFY THE WHOLE LIEN AGAINST THE CERTIFICATE, BUT WAS ONLY "PAYMENT IN PART.'

THE VETERAN FILED AN APPLICATION ON FEBRUARY 8, 1936, FOR SETTLEMENT OF THE CERTIFICATE UNDER THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, AND THE TOTAL AMOUNT OF HIS INDEBTEDNESS, $506.06, WAS DEDUCTED FROM $1,013.00, THE FACE AMOUNT OF THE CERTIFICATE, LEAVING A BALANCE OF $506.94 DUE HIM IN FINAL SETTLEMENT, WHICH AMOUNT WAS CERTIFIED BY THE VETERANS' ADMINISTRATION, CLEVELAND, OHIO, TO THE TREASURY FISCAL OFFICE ON JUNE 15, 1936, UNDER ADMINISTRATIVE 81251, VOUCHER NO. 813.

NO COMPLAINT WAS RECEIVED FROM THE VETERAN RELATIVE TO THE APPLICATION OF HIS REMITTANCE UNTIL CERTIFICATION WAS MADE TO HIM UNDER THE PROVISIONS OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, AT WHICH TIME HE PROTESTED THAT THE AMOUNT OF SETTLEMENT WAS INCORRECT AND MADE CLAIM FOR A REFUND OF $73.50, STATING THAT HIS REPAYMENT OF $500.00 SHOULD HAVE BEEN CREDITED TO PRINCIPAL ONLY. THE VETERANS' ADMINISTRATION, CLEVELAND, OHIO, DISAPPROVED THE CLAIM AND FURNISHED THE VETERAN WITH A DETAILED STATEMENT OF HIS ACCOUNT AND THE REASON FOR DENIAL OF THE REFUND. THIS DECISION WAS UPHELD BY THE VETERANS' ADMINISTRATION, WASHINGTON, D.C., AND THE VETERAN SO ADVISED.

THERE IS QUOTED BELOW IN PART, VETERANS' ADMINISTRATION SERVICE LETTER DATED FEBRUARY 27, 1936, GOVERNING THE CREDITING OF PARTIAL PAYMENTS MADE ON LOANS SECURED BY ADJUSTED SERVICE ERTIFICATES:

"IN ORDER TO DETERMINE THE AMOUNT TO BE DEDUCTED FROM THE FACE VALUE OF AN ADJUSTED SERVICE CERTIFICATE, THERE WILL BE ASCERTAINED THE AMOUNT OF ALL INDEBTEDNESS THEREUNDER AS, OF, AND INCLUDING SEPTEMBER 30, 1931, THE PRINCIPAL SUM AS HEREINAFTER EXPLAINED TO BE SHOWN SEPARATELY FROM THE INTEREST AS BELOW DEFINED. TO THE AMOUNT OF THE INDEBTEDNESS, INCLUDING INTEREST OUTSTANDING SEPTEMBER 30, 1931, WILL BE ADDED THE PRINCIPAL SUM OF ANY AMOUNTS ACTUALLY PAID OUT AS LOANS AFTER SEPTEMBER 30, 1931. UNLESS SPECIFIC DIRECTION WAS GIVEN BY THE REMITTER AT THE TIME OF MAKING A REMITTANCE REGARDING THE APPLICATION TO BE MADE OF THE AMOUNT REMITTED, ANY AMOUNTS REPAID WILL BE CONSIDERED AS APPLYING, FIRST, TO INTEREST IN THE CHRONOLOGICAL ORDER IN WHICH IT WAS EARNED, WHETHER BEFORE OR AFTER OCTOBER 1, 1931, AND THEREAFTER TO PRINCIPAL; HOWEVER, ANY AMOUNT IN EXCESS OF THE TOTAL INTEREST EARNED UP TO THE DATE OR RECEIPT OF SUCH PAYMENT SHALL BE APPLIED AS A PAYMENT TO REDUCE THE PRINCIPAL AS OF SUCH DATE. FOR THE PURPOSE OF THESE COMPUTATIONS IT WILL NOT BE CONSIDERED THAT INTEREST ADDED TO THE PRINCIPAL SHALL BECOME A NEW PRINCIPAL, EXCEPT FOR THE PURPOSE OF COMPUTING THE INTEREST ON THE INTEREST, BUT THE PRINCIPAL WHICH WILL BE USED FOR THESE DETERMINATIONS WILL BE ONLY THE ACTUAL PAYMENTS MADE AS LOANS, AND INTEREST WILL BE CONSIDERED SEPARATELY AND WILL NOT BE CONVERTED INTO A PART OF A PRINCIPAL. REMITTANCES FOR APPLICATION IN ACCORDANCE HEREWITH TO INTEREST ACCRUED SUBSEQUENT TO SEPTEMBER 30, 1931, WILL NOT BE REFUNDED OR OTHERWISE CREDITED TO THE VETERAN. LOANS COMPLETELY REPAID AND LIQUIDATED, WITHOUT REGARD TO THE DATE OF LIQUIDATION, WILL NOT BE FOR CONSIDERATION IN MAKING CALCULATIONS OF THIS TYPE.'

IN THIS CONNECTION, REFERENCE IS MADE TO DECISION A-71030 OF THE FORMER COMPTROLLER GENERAL DATED FEBRUARY 20, 1935, PAGE 1, PARAGRAPH 2.

AS THE VETERAN HAS REFUSED TO ACCEPT THE DECISION MADE BY THE VETERANS' ADMINISTRATION DISAPPROVING HIS CLAIM, THE MATTER IS REFERRED TO YOU WITH THE REQUEST FOR A DECISION AS TO WHETHER OR NOT ANY ADDITIONAL AMOUNT IS DUE THE VETERAN.

LETTER FROM CLAIMANT TO THE VETERANS' ADMINISTRATION, DATED JANUARY 24, 1938, IS AS FOLLOWS:

I WISH TO MAKE A FORMAL APPEAL FROM THE DECISION RENDERED ON MY CLAIM OF APRIL 5, 1937, BY THE DIRECTOR OF FINANCE, VETERANS' ADMINISTRATION, AND REQUEST A RULING FROM YOUR BOARD BEFORE WITNESS.

MY CLAIM REFERS TO ADJUSTED SERVICE PAYMENTS DENIED ME--- FILE DBB D- A1348141. MY CLAIM COVERS A BALANCE DUE ME OF $73.50 WHICH WAS WITHHELD FROM ME AT THE TIME MY ADJUSTED COMPENSATION WAS PAID, AND WHICH SUM REPRESENTS INTEREST ON A LOAN OF $500 MADE AUGUST 29, 1931--- THE PRINCIPAL OF WHICH WAS REPAID IN FULL ON OR ABOUT JUNE 8, 1935.

THE LAW AS PASSED BY CONGRESS, PUBLIC, NO. 24, 74TH CONGRESS, STATES THAT NO INTEREST SHALL BE CHARGED ON OUTSTANDING LOANS AFTER SEPTEMBER 30, 1931. HAD THE CLEVELAND OFFICE OF THE VETERANS' ADMINISTRATION APPLIED THE $500 AS PER MY DEFINITE INSTRUCTIONS ON THE PRINCIPAL, THE INTEREST AS OF THAT DATE WOULD HAVE BEEN $75.44, OF WHICH $1.94 WOULD HAVE COVERED THE INTEREST FOR THE PERIOD FROM AUGUST 29, 1931, TO SEPTEMBER 30, 1931, LEAVING A BALANCE OF $73.50.

THE CLEVELAND OFFICE MADE ANOTHER ERROR IN THAT WHEN I REQUESTED ON JUNE 8, 1935, THEY SEND ME A STATEMENT OF MY ACCOUNT, THEY MERELY TYPED ON THE BACK OF THE FIELD SERVICE RECEIPT THAT THERE WAS A BALANCE OF $75.44 PLUS INTEREST FROM 6/29/35. I AM ATTACHING HEREWITH COPIES OF ALL THE CORRESPONDENCE AND PHOTOSTATS OF THE FIELD SERVICE RECEIPTS.

I FEEL THAT MY CLAIMS ARE JUST AND FAIR AND SHOULD BE ALLOWED. TO MY KNOWLEDGE YOUR HONORABLE BOARD HAS NEVER RENDERED A DECISION IN A SIMILAR CASE, AND I REQUEST A REVIEW IN FRONT OF WITNESS AND FURTHER REQUEST THAT YOU COMMUNICATE WITH THE OFFICE OF CONGRESSMAN DOW W. HARTER AND ADVISE HIM AS TO THE DATE ON WHICH THIS MATTER WILL COME UP FOR REVIEW.

THE ACTION OF THE VETERANS' ADMINISTRATION IN CREDITING THE PARTIAL REMITTANCE OF $500 IN JUNE 1935, SUBSEQUENT TO SEPTEMBER 30, 1931, AND PRIOR TO JANUARY 27, 1936, DATE OF THE ADJUSTED COMPENSATION PAYMENT ACT, FIRST TO UNPAID INTEREST FOR PERIODS BOTH BEFORE AND AFTER SEPTEMBER 30, 1931, AND THE BALANCE TO THE PRINCIPAL OF THE OUTSTANDING LOAN WAS IN ACCORDANCE WITH ADMINISTRATIVE REGULATIONS THEN CURRENT WHICH HAVE THE FORCE AND EFFECT OF LAW. THERE IS NOTHING IN THE ORIGINAL WORLD WAR ADJUSTED COMPENSATION ACT OR ANY OF ITS AMENDMENTS PRECLUDING SUCH AN ADMINISTRATIVE REGULATION. HENCE, THE INTEREST ON THE LOAN OF $500 MADE AUGUST 29, 1931, FOR THE PERIOD SUBSEQUENT TO SEPTEMBER 30, 1931, MUST BE REGARDED AS HAVING BEEN PAID PRIOR TO JANUARY 27, 1936, THE DATE OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936. NO PROVISION OF THAT STATUTE MAY BE REGARDED AS HAVING ABROGATED THE ADMINISTRATIVE REGULATIONS LAWFULLY ADOPTED PRIOR THERETO REQUIRING THE CREDITING OF A PARTIAL REMITTANCE ON A LOAN FIRST TO UNPAID INTEREST AND THERE IS NOTHING IN THE STATUTE AUTHORIZING REFUND OF INTEREST ON A LOAN COVERING A PERIOD AFTER SEPTEMBER 30, 1931, WHICH WAS PAID PRIOR TO THE DATE OF THE ACT.

ACCORDINGLY, IT IS THE VIEW OF THIS OFFICE THAT THE ADMINISTRATIVE ACTION OF THE VETERANS' ADMINISTRATION DISALLOWING THE CLAIM OF THE VETERAN WAS CORRECT.