B-51593, B-76594, JAN. 10, 1966, 45 COMP. GEN. 387

B-51593,B-76594: Jan 10, 1966

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POST OFFICE DEPARTMENT - FUND DEPOSITORIES - POSTMASTERS ACCOUNTS TO REQUIRE POSTMASTERS WHEN QUALIFIED BANKS ARE UNAVAILABLE TO DEPOSIT FUNDS IN THEIR CUSTODY IN UNINSURED NATIONAL OR STATE BANKS WITHOUT LIABILITY FOR LOSS OF FUNDS DUE TO NO FAULT OR NEGLIGENCE ON THEIR PART WOULD CONTRAVENE 39 U.S.C. 2209. AS THE POWER TO ADMINISTER A FEDERAL STATUTE AND TO PRESCRIBE RULES AND REGULATIONS TO THAT END IS NOT THE POWER TO MAKE LAW. POSTMASTERS MAY BE ADVISED THAT SECTION 2403 PROVIDES A MEANS TO RELIEVE THEM FROM RESPONSIBILITY FOR LOSS OF FUNDS DEPOSITED IN UNINSURED BANKS AFTER INVESTIGATION AND DETERMINATION BY THE POSTMASTER GENERAL THAT THE LOSS WAS WITHOUT NEGLIGENCE. 1966: THIS IS IN FURTHER REFERENCE TO LETTER DATED NOVEMBER 5.

B-51593, B-76594, JAN. 10, 1966, 45 COMP. GEN. 387

POST OFFICE DEPARTMENT - FUND DEPOSITORIES - POSTMASTERS ACCOUNTS TO REQUIRE POSTMASTERS WHEN QUALIFIED BANKS ARE UNAVAILABLE TO DEPOSIT FUNDS IN THEIR CUSTODY IN UNINSURED NATIONAL OR STATE BANKS WITHOUT LIABILITY FOR LOSS OF FUNDS DUE TO NO FAULT OR NEGLIGENCE ON THEIR PART WOULD CONTRAVENE 39 U.S.C. 2209, WHICH PERMITS POSTMASTERS IN THEIR OFFICIAL CAPACITY TO DEPOSIT FUNDS IN UNAUTHORIZED BANKS AT THEIR OWN RISK, AND AS THE POWER TO ADMINISTER A FEDERAL STATUTE AND TO PRESCRIBE RULES AND REGULATIONS TO THAT END IS NOT THE POWER TO MAKE LAW, RULES AND REGULATIONS MUST BE IN HARMONY WITH A STATUTE, THEREFORE, IT WOULD NOT BE PROPER FOR THE POSTMASTER GENERAL UNDER 39 U.S.C. 501 TO ISSUE INSTRUCTIONS OR REGULATIONS TO REQUIRE POSTMASTERS TO USE UNDESIGNATED DEPOSITORIES; HOWEVER, POSTMASTERS MAY BE ADVISED THAT SECTION 2403 PROVIDES A MEANS TO RELIEVE THEM FROM RESPONSIBILITY FOR LOSS OF FUNDS DEPOSITED IN UNINSURED BANKS AFTER INVESTIGATION AND DETERMINATION BY THE POSTMASTER GENERAL THAT THE LOSS WAS WITHOUT NEGLIGENCE.

TO THE POSTMASTER GENERAL, JANUARY 10, 1966:

THIS IS IN FURTHER REFERENCE TO LETTER DATED NOVEMBER 5, 1965, FROM THE DEPUTY POSTMASTER GENERAL REQUESTING A DECISION AS TO WHETHER THE POSTMASTER GENERAL MAY REQUIRE POSTMASTERS TO UTILIZE THE BANKING FACILITIES OF UNINSURED BANKS IF THERE ARE NO QUALIFIED BANKS WITHIN REASONABLE PROXIMITY AND ADVISE THE POSTMASTERS THAT THEY WILL NOT BE HELD RESPONSIBLE FOR ANY LOSS OF FUNDS DEPOSITED IN SUCH UNINSURED BANKS IF THE LOSS OCCURS WITHOUT FAULT OR NEGLIGENCE ON THE PART OF THE POSTMASTER.

THE FACTS, AS STATED IN THE LETTER OF NOVEMBER 5 ARE AS FOLLOWS:

APPROXIMATELY SEVENTY COMMUNITIES DO NOT HAVE AUTHORIZED DEPOSITORIES. THE POSTMASTER MUST REMIT POSTAL FUNDS TO A DESIGNATED DEPOSITORY BY REGISTERED MAIL. SEE SECTIONS 443.1, 445.1 AND 445.2 POSTAL MANUAL. EXPERIENCE OVER THE PAST FEW YEARS REVEALS THAT THE DEPARTMENT HAS SUFFERED OVER-ALL ANNUAL LOSSES OF CASH SENT BY REGISTERED MAIL IN THE APPROXIMATE AMOUNT OF $100,000. IN ADDITION, THE HANDLING COST OF EACH PIECE OF REGISTERED MAIL IS ESTIMATED TO BE APPROXIMATELY $1.00. BELIEVE THAT IT WOULD BE ADVANTAGEOUS TO THE GOVERNMENT IF THE POSTAL OFFICIAL COULD DEPOSIT THIS CASH IN A LOCAL BANK REGARDLESS OF WHETHER SUCH BANK IS INSURED BY THE FDIC, AND THEN REMIT TO THE FEDERAL RESERVE BY MEANS OF A CHECK. THIS PROCEDURE WOULD ELIMINATE THE NEED FOR REGISTERED MAIL AND PRESUMABLY WOULD ELIMINATE A SUBSTANTIAL PORTION OF THE ANNUAL $100,000 LOSS.

IT IS THE RESPONSIBILITY OF A POSTMASTER, PURSUANT TO 39 U.S.C. 2209, TO KEEP ALL MONEY COLLECTED AT A POST OFFICE, OR COMING INTO THE CUSTODY OF A POST OFFICE WITHOUT "DEPOSITING IN AN UNAUTHORIZED BANK.' HOWEVER, SUBSECTION 2209 (C) PROVIDES IN PERTINENT PART:

(C) A POSTMASTER AT AN OFFICE IN A CITY OR TOWN WHERE THERE IS NO DESIGNATED DEPOSITORY MAY MAKE TEMPORARY DEPOSITS OF MONEY IN HIS CUSTODY, IN A NATIONAL BANK OR STATE BANK---

* * * * * * * THE POSTMASTER SHALL MAKE THE DEPOSITS IN HIS OFFICIAL CAPACITY AND AT HIS OWN RISK. * * *

IT IS STATED IN THE LETTER OF NOVEMBER 5 THAT IN VIEW OF THE ABOVE PROVISIONS OF LAW, POSTMASTERS ARE RELUCTANT TO UTILIZE THE SERVICES OF SUCH BANKS, BUT THAT YOUR OFFICE KNOWS OF NO LOSS SUFFERED BY THE DEPARTMENT BECAUSE OF THE FAILURE OF ANY SUCH BANK DURING THE LAST 20 OR 30 YEARS, OR FROM A LOSS DUE TO EMBEZZLEMENT OCCURRING IN SUCH BANK. REFERENCE IS ALSO MADE IN THE LETTER TO 39 U.S.C. 302, WHICH VESTS IN THE POSTMASTER GENERAL ALL FUNCTIONS OF ALL SUBORDINATE OFFICES AND AGENCIES OF THE POST OFFICE DEPARTMENT, AND TO 39 U.S.C. 501 WHICH SETS FORTH THE GENERAL DUTIES OF THE POSTMASTER GENERAL. THE LATTER SECTION PROVIDES, AMONG OTHER THINGS, THAT THE POSTMASTER GENERAL SHALL PRESCRIBE RULES AND REGULATIONS, AND INSTRUCT ALL PERSONS IN THE DEPARTMENT WITH REFERENCE TO THEIR DUTIES AND IN THIS REGARD THE POSITION IS SET FORTH IN THE LETTER OF NOVEMBER 5 THAT THE POSTMASTER GENERAL CAN REQUIRE POSTMASTERS IN COMMUNITIES NOT HAVING AUTHORIZED DEPOSITORIES TO MAKE DEPOSITS IN NATIONAL OR STATE BANKS WHICH ARE UNINSURED, AND THAT IF THE POSTMASTER GENERAL SHOULD GIVE SUCH ORDERS, IT IS NOT BELIEVED THAT THE POSTMASTERS MAY BE HELD PERSONALLY LIABLE.

ACCEPTANCE OF THE ABOVE-STATED POSITION AS A BASIS TO AVOID THE LIABILITY OF POSTMASTERS FOR ANY LOSSES THAT MAY BE INCURRED THROUGH USE OF AN UNAUTHORIZED BANK WOULD IN EFFECT ALTER THE STATUTE WHICH SPECIFICALLY PROVIDES THAT SUCH DEPOSITS SHALL BE AT THE POSTMASTERS' OWN RISK. ALSO, SINCE THE STATUTORY AUTHORITY TO USE OTHER THAN A DESIGNATED DEPOSITORY FOR TEMPORARY DEPOSITS IS PERMISSIVE INSOFAR AS THE POSTMASTER IS CONCERNED IT RETAINS IN EACH POSTMASTER THE RIGHT TO DETERMINE WHETHER HE WISHES TO SUBJECT HIMSELF TO THE RISK. THEREFORE A REQUIREMENT BY THE POSTMASTER GENERAL THAT UNINSURED NATIONAL OR STATE BANKS SHALL BE USED IN THE CIRCUMSTANCES OUTLINED WOULD BE INVALID AS NOT IN CONFORMANCE WITH THE PROVISIONS OF LAW SET FORTH IN 39 U.S.C. 2209, IT BEING WELL ESTABLISHED THAT THE POWER OF AN ADMINISTRATIVE OFFICER TO ADMINISTER A FEDERAL STATUTE AND TO PRESCRIBE RULES AND REGULATIONS TO THAT END IS NOT THE POWER TO MAKE LAW, THE RULES AND REGULATIONS MUST BE IN HARMONY WITH THE STATUTE. SEE 41 COMP. GEN. 213, AND CASES CITED THEREIN.

IN SUMMARY, IT IS CONCLUDED THAT IT WOULD NOT BE PROPER FOR YOUR DEPARTMENT TO ISSUE INSTRUCTIONS OR REGULATIONS TO REQUIRE POSTMASTERS TO USE UNDESIGNATED DEPOSITORIES.

CONCERNING THE PROVISIONS OF 39 U.S.C. 2403 (A) (2) CITED IN THE SUBMISSION WHICH AUTHORIZE THE POSTMASTER GENERAL TO PAY OR CREDIT THE POSTMASTER FOR LOSSES, NOT IN EXCESS OF $10,000, RESULTING FROM THE LOSS OF FUNDS DEPOSITED IN NATIONAL OR STATE BANKS, SUCH AUTHORITY WAS INITIALLY CONTAINED IN THE ACT OF JUNE 18, 1934, 48 STAT. 990, 39 U.S.C. 49, AND PERTAINED TO LOSSES OF FUNDS REMITTED AFTER APRIL 1, 1924. IT HAS NEVER BEEN VIEWED AS BEING LIMITED IN APPLICABILITY TO INSURED BANKS. PURSUANT TO THE TERMS THEREOF, THE GRANTING OF RELIEF IS DEPENDENT ENTIRELY UPON THE FACTS IN EACH INDIVIDUAL CASE. ACCORDINGLY, THERE WOULD BE NO OBJECTION TO ADVISING POSTMASTERS THAT 39 U.S.C. 2403 PROVIDES A MEANS BY WHICH THEY MAY BE RELIEVED OF RESPONSIBILITY FOR ANY LOSS OF FUNDS DEPOSITED IN UNINSURED BANKS IF THE LOSS OCCURS WITHOUT NEGLIGENCE ON THEIR PART; BUT THAT IN ANY SUCH CASE THE POSTMASTER GENERAL MUST DETERMINE AFTER INVESTIGATION THAT THE LOSS RESULTED WITHOUT NEGLIGENCE OF A POSTMASTER.