A-3551, FEB. 3, 1964

A-3551, FEB. 3, 1964

TO THE SECRETARY OF THE ARMY:

BY LETTER DATED SEPTEMBER 6, 1963, THE ASSISTANT SECRETARY OF THE ARMY (FINANCIAL MANAGEMENT) REQUESTED A DECISION AS TO WHETHER ANY OR ALL OF THE REPORTING REQUIREMENTS NOW IN EFFECT IN CONNECTION WITH THE MAILING OF RETIRED PAY CHECKS TO RETIRED ARMY PERSONNEL MAY BE DISCONTINUED.

IT WAS STATED THAT CURRENT PROCEDURES REQUIRE THAT STATEMENTS OR REPORTS OF EXISTENCE ARE REQUIRED TO BE FURNISHED EACH MONTH WHEN RETIRED PAY CHECKS ARE ISSUED AS FOLLOWS:

"A. PAYABLE TO A BANK FOR CREDIT TO THE ACCOUNT OF A RETIRED MEMBER.

"B. PAYABLE TO A THIRD PARTY FOR A MEMBER WHO IS MENTALLY INCOMPETENT.

"C. PAYABLE TO A MEMBER WHO IS TRAVELING OUTSIDE THE UNITED STATES AND THE CHECK IS MAILED IN CARE OF A BANK OR TO A RESIDENCE IN THE UNITED STATES.

"D. PAYABLE TO A MEMBER RESIDING IN THE PHILIPPINES AND WHO HAS CHECKS MAILED TO A BANK IN THE UNITED STATES. MEMBERS WHO RESIDE IN THE PHILIPPINE ISLANDS AND HAVE CHECKS MAILED TO THEIR LOCAL ADDRESSES RECEIVE RETIRED PAY CHECKS THROUGH THE FINANCE AND ACCOUNTING OFFICER, CLARK AIR FORCE BASE, AND REPORTS ARE SUBMITTED TO HIM. THESE CHECKS ARE MAILED TO THE FINANCE AND ACCOUNTING OFFICER EACH MONTH BY THE FINANCE CENTER, U.S. ARMY.' THESE REQUIREMENTS ARE IN ACCORDANCE WITH OUR DECISIONS OF APRIL 6, 1931, JUNE 23, 1931, AND MARCH 9, 1951, ALL NUMBERED A-3551 AND PARAGRAPH 7-5 OF AR 37-104-1, JULY 5, 1961.

RETIRED PAY IS PAYABLE DURING THE LIFETIME OF THOSE PERSONS WHO HAVE QUALIFIED FOR RETIREMENT WITH PAY. TRADITIONALLY, FOR THE PROTECTION OF THE GOVERNMENT, CERTAIN SAFEGUARDS HAVE BEEN REQUIRED TO INSURE THAT RETIRED PAY CHECKS ARE NOT ISSUED AFTER THE DEATH OF THE BENEFICIARY; SUCH AS, THE FURNISHING OF A CERTIFICATE OF EXISTENCE PRIOR TO RELEASE OF THE CHECKS, SPECIAL INSTRUCTIONS TO THE POST OFFICE EMPLOYEES RESTRICTING DELIVERY OF THE CHECK ENVELOPES, APPROPRIATE LEGENDS ON THE CHECKS TO GIVE NOTICE TO ENDORSERS THAT THE CHECKS ARE PAYABLE ONLY DURING THE LIFETIME OF THE PAYEE AND THE FURNISHING OF SPECIFIC POWERS OF ATTORNEY FOR PERIODS NOT EXCEEDING 12 MONTHS. THE REQUIREMENTS HAVE BEEN CHANGED FROM TIME TO TIME TO KEEP ABREAST OF CHANGING CIRCUMSTANCES. BECAUSE OF THE LEGENDS APPEARING ON THE CHECKS AND THE ENVELOPES IN WHICH THE CHECKS ARE MAILED, THE COST OF MAINTAINING CONTROLS, AND THE FACT THAT TO DATE RECOVERY HAS BEEN MADE IN ALL INSTANCES WHERE A RETIRED PAY CHECK HAS BEEN ENDORSED FRAUDULENTLY OR DEPOSITED TO AN ACCOUNT AT A BANK SUBSEQUENT TO THE DEATH OF THE MEMBER, IT IS INFERRED IN THE SUBMISSION THAT REPORTS OF EXISTENCE UNDER PRESENT CONDITIONS SERVE NO USEFUL PURPOSE AND SHOULD BE ABOLISHED.

WE HAVE APPROVED THE DISCONTINUANCE OF ANNUAL REPORTS OF EXISTENCE IN CASES WHERE RETIRED PAY CHECKS ARE DRAWN AND DELIVERED TO THE RETIRED MEMBER AT HIS HOME IN THE UNITED STATES--- HIS PERSONAL ENDORSEMENT ON THE CHECKS BEING CONSIDERED SUFFICIENT EVIDENCE OF HIS CONTINUED EXISTENCE. WE HAVE NOT OBJECTED TO DELIVERY OF CHECKS DRAWN TO RETIRED MEMBERS RESIDING IN FOREIGN COUNTRIES WITHOUT OBTAINING EVIDENCE OF EXISTENCE WHERE PERSONAL DELIVERY IS MADE BY AN EMPLOYEE OF THE UNITED STATES, AS WHERE CHECKS ARE MAILED IN CARE OF AN APO, FPO, FINANCE OFFICER, U.S. CONSULATE, EMBASSY, OR MILITARY ATTACHE. ALSO, WE HAVE APPROVED DELIVERY OF CHECKS DRAWN TO THE RETIRED MEMBER AND MAILED TO RESPONSIBLE BANKS OR TRUST COMPANIES UNDER SPECIAL POWERS OF ATTORNEY OF NOT MORE THAN 12 MONTHS DURATION, THERE APPEARING TO BE NO MATERIAL NEED FOR DISTINGUISHING SUCH CHECKS FROM OTHERS WHICH MAY BE SO NEGOTIATED. HOWEVER, IT HAS BEEN AND REMAINS OUR VIEW THAT WHERE RETIRED PAY CHECKS ARE MAILED TO A FOREIGN ADDRESS OR ARE MADE PAYABLE TO THIRD PARTIES FOR MEMBERS WHO ARE MENTALLY INCOMPETENT, MONTHLY CERTIFICATES OF EXISTENCE SHOULD CONTINUE TO BE REQUIRED FOR THE PROTECTION OF THE GOVERNMENT.

ACCORDINGLY, CERTIFICATES OF EXISTENCE SHOULD CONTINUE TO BE REQUIRED IN CATEGORY B, BUT NO OBJECTION IS RAISED TO DISCONTINUING THEIR USE IN CATEGORIES C AND D, IT APPEARING THAT THE CHECKS IN THESE LATTER INSTANCES WILL EITHER BE CREDITED TO THE ACCOUNT OF THE PAYEE IN A REPUTABLE DOMESTIC BANK OR THAT THE CHECKS WILL BE NEGOTIATED OVER THE PAYEE'S OWN SIGNATURE.

WITH RESPECT TO QUESTION A, THE PROHIBITION CURRENTLY CONTAINED IN ARMY REGULATIONS 37-104, PARAGRAPH 1-10, AGAINST THE TRANSFER, HYPOTHECATION, PLEDGE, OR DELIVERY OF PAY NOT DUE FOR THE PURPOSE OF OBTAINING CREDIT OR ANYTHING OF VALUE HAS BEEN NOTED. SO LONG AS THAT PROHIBITION IS IN EFFECT AND IF IT IS PUBLISHED IN THE FEDERAL REGISTER, THERE IS NO OBJECTION TO THE ISSUANCE OF RETIRED PAY CHECKS PAYABLE TO A BANK FOR CREDIT TO THE ACCOUNT OF A RETIRED OFFICER OF THE ARMY WHO HAS MADE AN ASSIGNMENT THEREOF UNDER THE PROVISIONS OF 37 U.S.C. 701 IF THE CHECK CARRIES AN APPROPRIATE LEGEND TO THE EFFECT THAT THE CHECK IS PAYABLE ONLY DURING THE LIFE OF THE RETIRED OFFICER AND THAT THE CHECK IS NOT SUBJECT TO DEPOSIT TO A JOINT ACCOUNT IN WHICH THE RETIRED OFFICER IS NAMED AND THE BANK IS APPROPRIATELY NOTIFIED THAT THE CREDITING OF THE CHECK TO A JOINT ACCOUNT WILL BE AT ITS RISK. SEE THE LETTER OF MAY 8, 1931, FROM THE ACTING SECRETARY OF WAR TO THE COMPTROLLER GENERAL IN RESPONSE TO WHICH DECISION OF JUNE 23, 1931, WAS RENDERED.

ALSO, THERE IS NO OBJECTION TO THE ISSUANCE OF CHECKS IN RETIRED MEMBER'S NAME WHERE THEY ARE NEGOTIATED UNDER A SPECIAL POWER OF ATTORNEY NAMING A BANK AS ATTORNEY IN FACT, LIMITED TO A PERIOD NOT EXCEEDING 12 MONTHS AND RECITING THAT IT IS NOT GIVEN TO CARRY INTO EFFECT AN ASSIGNMENT OF THE RIGHT TO RECEIVE PAYMENT, EITHER TO THE ATTORNEY IN FACT OR TO ANY OTHER PERSON. SEE SECTION 5 OF TREASURY DEPARTMENT CIRCULAR NO. 21 GOVERNING THE ENDORSEMENT AND PAYMENT OF CHECKS DRAWN ON THE TREASURER OF THE UNITED STATES. SIMILARLY, IF ALLOTMENTS OF RETIRED PAY ARE AUTHORIZED BY REGULATIONS, THERE IS NO OBJECTION TO PERMITTING AN ALLOTMENT OF A MEMBER'S RETIRED PAY IN FAVOR OF A BANK IF THE SAME CHECK LEGEND AND NOTICE TO THE BANK MENTIONED ABOVE WITH RESPECT TO ASSIGNMENTS UNDER 37 U.S.C. 701 ARE ADOPTED.