B-7413, JUNE 10, 1940, 19 COMP. GEN. 985

B-7413: Jun 10, 1940

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

ESTATES OF - ASSETS - CHECKS - CLAIMS PROCEDURE WHERE WIDOW OR NEXT OF KIN IS CLAIMING PROCEEDS OF AGRICULTURAL CONSERVATION PAYMENT CHECK DRAWN TO PAYEE WHO DIED BEFORE THE CHECK WAS CASHED AND IT IS NOT SHOWN BEYOND A REASONABLE DOUBT THAT SUCH CLAIMANT IS ENTITLED TO AMOUNT DUE TO THE EXCLUSION OF ANY CREDITOR. - WHETHER OR NOT THEIR CLAIMS HAVE PRIORITY UNDER THE STATE LAWS. AS FOLLOWS: REFERENCE IS MADE TO OUR LETTER OF JANUARY 26. A QUESTION WAS RAISED REGARDING THE POSSIBILITY OF CERTIFYING A PAYMENT IN FAVOR OF MRS. THE FACTS IN THIS CASE INDICATE THAT AT THE TIME OF HIS DEATH THE DECEDENT WAS INDEBTED TO THE FIRST NATIONAL BANK BY REASON OF HAVING EXECUTED TWENTY-SIX PROMISSORY NOTES IN THE AGGREGATE AMOUNT OF $13.

B-7413, JUNE 10, 1940, 19 COMP. GEN. 985

DECEDENTS, ESTATES OF - ASSETS - CHECKS - CLAIMS PROCEDURE WHERE WIDOW OR NEXT OF KIN IS CLAIMING PROCEEDS OF AGRICULTURAL CONSERVATION PAYMENT CHECK DRAWN TO PAYEE WHO DIED BEFORE THE CHECK WAS CASHED AND IT IS NOT SHOWN BEYOND A REASONABLE DOUBT THAT SUCH CLAIMANT IS ENTITLED TO AMOUNT DUE TO THE EXCLUSION OF ANY CREDITOR, CLAIM MAY NOT BE ALLOWED UNLESS ALL CREDITORS--- WHETHER OR NOT THEIR CLAIMS HAVE PRIORITY UNDER THE STATE LAWS--- WAIVE THEIR CLAIMS IN FAVOR OF CLAIMING PARTY.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF AGRICULTURE JUNE 10, 1940:

THERE HAS BEEN RECEIVED YOUR LETTER OF MAY 7, 1940, AS FOLLOWS:

REFERENCE IS MADE TO OUR LETTER OF JANUARY 26, 1940, AND YOUR REPLY DATED FEBRUARY 24, 1940 (B-7413). A QUESTION WAS RAISED REGARDING THE POSSIBILITY OF CERTIFYING A PAYMENT IN FAVOR OF MRS. LOUIS RICHARD BY REASON OF HER CLAIM AS WIDOW AND TRUSTEE OF THE HEIRS AND NATURAL GUARDIAN OF THE MINOR HEIRS OF LOUIS RICHARD, DECEASED. THE FACTS IN THIS CASE INDICATE THAT AT THE TIME OF HIS DEATH THE DECEDENT WAS INDEBTED TO THE FIRST NATIONAL BANK BY REASON OF HAVING EXECUTED TWENTY-SIX PROMISSORY NOTES IN THE AGGREGATE AMOUNT OF $13,000.00, WHICH DEBT WAS SECURED BY A MORTGAGE ON PROPERTY ESTIMATED TO BE VALUED AT $20,000.00. THE CLAIM SUBMITTED BY MRS. RICHARD WAS RETURNED WITHOUT CERTIFICATION BECAUSE THERE WAS NO WAIVER BY THE BANKING CORPORATION. IN YOUR DECISION OF FEBRUARY 24 WITH RESPECT TO THIS CASE, YOU AUTHORIZED THE CERTIFICATION OF THE CLAIM IN FAVOR OF MRS. RICHARD, NOTWITHSTANDING THE REPORTED INDEBTEDNESS AGAINST THE ESTATE OF THE DECEDENT.

THERE ARE A NUMBER OF CASES OF A SIMILAR NATURE WHERE THE DECEDENT AT THE TIME OF HIS DEATH WAS INDEBTED TO ONE OR MORE CREDITORS. IN PRACTICALLY ALL OF SUCH CASES THE CREDITOR'S CLAIM DID NOT HAVE PRIORITY OVER THE CLAIM OF THE HEIR WHO EXECUTED STANDARD FORM 1055. THE FOLLOWING ARE TYPICAL CASES OF THIS NATURE WHERE CERTIFICATION OF THE CLAIM FILED BY THE HEIRS OF THE DECEDENT'S ESTATE WAS WITHHELD PENDING THE RECEIPT OF A WAIVER FROM THE CREDITORS OF THE ESTATE.

IN ONE CASE SARAH A. BURLESON FILED A CLAIM ON STANDARD FORM 1055 AS PREFERRED CREDITOR OF THE ESTATE OF AND TRUSTEE FOR THE HEIRS OF A. N. BURLESON, DECEASED, FOR THE PROCEEDS OF THREE CHECKS AGGREGATING $829.37. THERE WAS A COURT ORDER SUBMITTED WITH THE CLAIM AUTHORIZING THE SETTLEMENT OF THE ESTATE WITHOUT ADMINISTRATION. THERE WAS ALSO A STATEMENT INDICATING THAT THE DECEDENT WAS INDEBTED TO THE MAGNOLIA PETROLEUM COMPANY IN THE PRINCIPAL SUM OF $234.00. THIS CLAIM WAS RETURNED WITHOUT CERTIFICATION FOR THE FOLLOWING REASON: "RETURNED WITHOUT CERTIFICATION BECAUSE THE FULL AMOUNT PROPOSED DOES NOT APPEAR AUTHORIZED IN THE ABSENCE OF A WAIVER FROM MAGNOLIA PETROLEUM COMPANY OF PAMPA.'

IN ANOTHER CASE A CLAIM WAS SUBMITTED BY MRS. C. B. PAYNE, TRUSTEE FOR THE HEIRS OF C. B. PAYNE, DECEASED, ON STANDARD FORM 1055 FOR THE PROCEEDS OF A CHECK IN THE AMOUNT OF $223.11. THERE WERE CLAIMS OF APPROXIMATELY $3,500.00 AGAINST THE DECEDENT'S ESTATE. MRS. PAYNE'S CLAIM WAS RETURNED WITHOUT CERTIFICATION BECAUSE THERE WERE NO WAIVERS FROM THE CREDITORS OF THE ESTATE.

IN ANOTHER CASE BEULAH E. STEVENS FILED A CLAIM AS WIDOW AND TRUSTEE OF THE HEIRS OF R. E. STEVENS, DECEASED. THIS CLAIM WAS RETURNED WITHOUT CERTIFICATION WITH THE FOLLOWING NOTATION ON THE PREAUDIT DIFFERENCE STATEMENT: "APPLICATION RETURNED WITHOUT CERTIFICATION BECAUSE THE DECEDENT'S ESTATE APPEARS TO BE INDEBTED TO UNITED LIFE AND ACCIDENT INSURANCE COMPANY, AND IN THE ABSENCE OF A WAIVER OF SUCH COMPANY'S RIGHTS TO CLAIM THE AMOUNT OF THE PROPOSED PAYMENT, THERE APPEARS TO BE NO AUTHORITY TO CERTIFY THIS PAYMENT AS NOW PROPOSED.'

SINCE IT IS OFTEN IMPOSSIBLE TO OBTAIN WAIVERS FROM CREDITORS OF THE DECEDENT'S ESTATE AND IN MANY CASES IT IS DIFFICULT TO DETERMINE WHETHER THE CLAIMS OF CREDITORS HAVE PRIORITY OVER THE CLAIM OF AN HEIR OF THE ESTATE OF THE DECEDENT, WE BELIEVE THAT CLAIMS IN SUCH CASES SHOULD BE SETTLED WITHOUT OBTAINING A WAIVER FROM ANY CREDITOR OF THE ESTATE OF A DECEDENT EXCEPT IN THE CASE OF UNPAID FUNERAL EXPENSES. THIS WOULD IN EFFECT EXTEND THE PRINCIPLE OF YOUR DECISION IN THE RICHARD CASE TO ALL CASES OF A SIMILAR NATURE, AND WOULD FACILITATE THE SETTLEMENT OF CLAIMS IN CASES INVOLVING DECEASED PAYEES. IF, HOWEVER, A CREDITOR OF AN ESTATE FILES A CLAIM PRIOR TO ALLOWANCE OF AN HEIR'S CLAIM, IT IS PROPOSED THAT THE CREDITOR'S CLAIM BE ALLOWED IN ACCORDANCE WITH THE APPLICABLE STATE LAWS. IT IS BELIEVED THAT THE FOREGOING PROPOSAL IS IN LINE WITH THE PROCEDURE IN FORCE AT THE TIME THE CLAIMS DIVISION OF YOUR OFFICE HANDLED DEATH CLAIMS UNDER THE AGRICULTURAL CONSERVATION PROGRAMS.

YOUR EARLY CONSIDERATION OF THE FOREGOING WILL BE APPRECIATED.

THE QUESTION YOU SUBMIT NECESSARILY REQUIRES CONSIDERATION OF CERTAIN LEGAL PRINCIPLES WHICH MAY NOT BE IGNORED. IF PAYMENT SHOULD BE MADE TO A PERSON NOT ENTITLED THERETO UNDER APPLICABLE STATE LAWS, THERE WOULD ARISE THE QUESTION OF WHETHER THE OBLIGATION OF THE UNITED STATES HAS, IN FACT, BEEN DISCHARGED, THUS POSSIBLY SUBJECTING THE APPROPRIATION USED TO A DUPLICATE CHARGE. THE PRIMARY CONCERN OF THIS OFFICE, THEREFORE, IN ALL SUCH CASES OF DECEDENT'S ESTATES IS THAT THE UNITED STATES, IN MAKING THE PROPOSED PAYMENT, RECEIVES A VALID ACQUITTANCE.

PAYMENT ON THE APPLICATION OF MRS. LOUIS RICHARD WAS AUTHORIZED ON THE BASIS OF THE LAWS OF THE STATE OF LOUISIANA. UNDER THE LAWS OF THAT STATE IT APPEARS THAT WHERE THE WIDOW OR MINOR CHILDREN OF A DECEDENT ARE LEFT IN NECESSITOUS CIRCUMSTANCES, AND DO NOT POSSESS IN THEIR OWN RIGHTS PROPERTY AMOUNTING TO $1,000, THEY ARE ENTITLED TO RECEIVE FROM THE ESTATE A SUM SUFFICIENT TO MAKE UP $1,000, WHICH SUM IS TO BE PAID IN PREFERENCE TO ANY UNSECURED INDEBTEDNESS. RICHARD LEFT A FARM VALUED AT $20,000, SUBJECT TO A MORTGAGE OF $13,000. NO OTHER INDEBTEDNESS AGAINST THE ESTATE WAS REPORTED, AND NO OTHER PROPERTY WAS SHOWN TO BE OWNED BY RICHARD, HIS WIDOW, OR HIS CHILDREN. IT WAS CONSIDERED, THEREFORE, THAT THE GOVERNMENT WOULD RECEIVE A PROPER ACQUITTANCE BY MAKING PAYMENT TO THE WIDOW IN HER OWN RIGHT AND AS REPRESENTATIVE AND GUARDIAN OF THE HEIRS, FOR THE REASON THAT IF THE PROPERTY SECURING THE INDEBTEDNESS WAS NOT OF SUCH VALUE AS TO LIQUIDATE THE INDEBTEDNESS, THEN THE WIDOW AND MINOR CHILDREN WOULD BE CONSIDERED AS IN NECESSITOUS CIRCUMSTANCES, AND IF THE PROPERTY COVERED BY THE MORTGAGE WAS OF SUFFICIENT VALUE TO LIQUIDATE THE MORTGAGE DEBT THERE WOULD BE NO OCCASION FOR THE MORTGAGEE TO ASSERT ANY CLAIM AGAINST THE OTHER ASSETS OF THE ESTATE.

THE ACTION TAKEN IN THAT CASE, HOWEVER, IS NOT NECESSARILY TO BE CONSIDERED AS A PRECEDENT IN OTHER CASES WHERE THE NATURE OF THE INDEBTEDNESS AND THE STATE LAWS MAY BE DIFFERENT. WHERE A PRODUCER DIES AFTER A CHECK PAYABLE TO HIM HAS BEEN ISSUED AND PLACED IN THE MAILS, THE AMOUNT OF THE CHECK BECOMES AN ASSET OF HIS ESTATE, AND SHOULD BE DISTRIBUTED IN ACCORDANCE WITH APPLICABLE STATE LAWS. WHEN IT IS KNOWN THAT THERE ARE DEBTS AGAINST THE ESTATE, SUCH DEBTS SHOULD NOT BE IGNORED, AS YOU SEEM TO SUGGEST IN YOUR LETTER. IN SUCH CASES WHERE IT IS NOT SHOWN BEYOND A REASONABLE DOUBT THAT THE CLAIMING WIDOW OR NEXT OF KIN IS OR ARE ENTITLED TO THE AMOUNT DUE FROM THE GOVERNMENT TO THE EXCLUSION OF ANY CREDITOR, THE INTERESTS OF THE GOVERNMENT WOULD NOT BE ADEQUATELY PROTECTED BY AUTHORIZING PAYMENT TO ANYONE OTHER THAN THE LEGAL REPRESENTATIVE OF THE ESTATE, UNLESS ALL CREDITORS--- REGARDLESS OF WHETHER THEIR CLAIMS MAY OR MAY NOT HAVE PRIORITY UNDER THE LAWS OF THE STATE INVOLVED--- WAIVE THEIR CLAIMS IN FAVOR OF THE CLAIMING PARTY. YOUR APPARENT UNDERSTANDING THAT A DIFFERENT PROCEDURE HAS BEEN FOLLOWED BY THE CLAIMS DIVISION OF THIS OFFICE IS NOT CORRECT.

WITH RESPECT TO THE THREE SPECIFIC CASES REFERRED TO IN YOUR LETTER YOU ARE ADVISED THAT SINCE YOUR LETTER DOES NOT DISCLOSE THE STATE IN WHICH THEY AROSE AND OTHER ESSENTIAL FACTS WITH RESPECT THERETO, A DECISION THEREON MAY NOT BE RENDERED AT THIS TIME.