B-254649, Date: October 20, 1993

B-254649: Oct 20, 1993

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Hinchman Subject: Request for Proceeds of Uncurrent Depositary Checks (Z-2868543 and Z-2868734) B-254649 Returned are your files Z-2868543 and Z-2868734 concerning a request by the Department of the Army. For check number 1473512 GAO settlement is unnecessary if the Army is satisfied the person entitled to the payment actually received payment. Sec. 3328(b) provides that if a check issued by a disbursing official and drawn on a depositary bank is not paid by the last day of the fiscal year after the fiscal year in which the check was issued. The amount of the check is withdrawn from the account with the depositary and deposited to a consolidated account of the Treasury. The statute contemplates that a claim for the proceeds of such an unpaid check will be paid from the consolidated account by a check drawn on the Treasury on settlement by the Comptroller General. 31 U.S.C.

B-254649, Date: October 20, 1993

Memorandum

To: Director, Claims Group/GGD Sharon Green From: General Counsel James F. Hinchman

Subject: Request for Proceeds of Uncurrent Depositary Checks (Z-2868543 and Z-2868734) B-254649

Returned are your files Z-2868543 and Z-2868734 concerning a request by the Department of the Army, 7th Medical Command (MedCom), for the return of funds deposited to the Treasury consolidated account for uncurrent depositary checks, numbers 1473512 and 473458. You ask what action should be taken concerning the proceeds of these checks. As explained in further detail below, Treasury may transfer the proceeds for check number 473458. For check number 1473512 GAO settlement is unnecessary if the Army is satisfied the person entitled to the payment actually received payment.

Paragraph (1) of 31 U.S.C. Sec. 3328(b) provides that if a check issued by a disbursing official and drawn on a depositary bank is not paid by the last day of the fiscal year after the fiscal year in which the check was issued, the amount of the check is withdrawn from the account with the depositary and deposited to a consolidated account of the Treasury. The statute contemplates that a claim for the proceeds of such an unpaid check will be paid from the consolidated account by a check drawn on the Treasury on settlement by the Comptroller General. 31 U.S.C. Sec. 3328(b)(2).

On January 19, 1990, MedCom issued check 473458, for 400,000 Lire, payable to Luigi Severnio Brandi (Brandi check), and on February 6, 1990, check 1473512, for 360,409 Lire, payable to Vivienne Pinkston (Pinkston check), drawn on the Merchants National Bank, Frankfurt am Main, Germany. These checks were not negotiated and on August 12, 1992, a stop payment order was issued to Credito Italiano, the correspondent bank for the Merchants for both checks. On October 13, 1992, Credito Italiano confirmed that it had received the order and that it would place a stop payment against MedCom's reserves for the aforementioned checks. On March 16, 1993, MedCom, in accordance with 31 U.S.C. Sec. 3328, transferred the proceeds of the unnegotiated checks to the uncurrent depositary check account.

In 1993, Mr. Brandi presented his check and it was paid to him. Credito Italiano now wishes to debit the Lire account MedCom has with Merchants, and Merchants has asked MedCom to authorize payment of the check (unfortunately the paid check was lost in transit). On February 26, 1993, the Pinkston check was negotiated and Merchants debited MedCom's Lire account for this payment. MedCom asks that Treasury refund the funds transferred for this check to the uncurrent depositary check account.

We have considered similar questions under 31 U.S.C. Sec. 3328 (b) and concluded that a distinction must be drawn between transactions which in effect involve claims for the proceeds of stale checks and those which represent mere bookkeeping adjustments. 112924-O.M., May 13, 1974. Thus, when a transfer merely involves a bookkeeping adjustment to an accountable officer's account, we have concluded that settlement by GAO is not necessary as long as there is no question concerning the payee's entitlement. Id. However, for those situations involving a claim from a depositary, rather than a bookkeeping adjustment, there is a claim under the statute that requires settlement action by GAO. Id.

The Brandi check represents a claim by Credito Italiano to the proceeds of the check and thus requires settlement by GAO. In similar situations, we have authorized the return of funds if the requesting agency has not found anything in the record to indicate that the payee was not, at the time the check was honored, entitled to the proceeds of the check. See, e.q., B-112924-O.M., May 13, 1974. Although the Brandi check was lost in transit, the record reflects that it was presented for payment by Mr. Brandi. Therefore, although Credito Italiano ignored the stop payment order it had previously confirmed, you properly may authorize return of the funds from the consolidated account to the depositary account.

Although the Pinkston check involves a mere bookkeeping transaction rather than a claim by a depositary, and does not require settlement by GAO under our prior decisions, we note that under our prior decisions one of the prerequisites for a transfer is that there be no question as to the payee's entitlement. The record reflects that the stale Pinkston check was presented for payment and paid on February 26, 1993, notwithstanding the stop payment order.

However, the record does not reflect who negotiated the check or whether that person was entitled to payment. Therefore, the proceeds may be transferred without GAO settlement as long as it is determined that a person entitled to payment negotiated the stale check.