A-13215, JUNE 18, 1928, 7 COMP. GEN. 797

A-13215, JUNE 18, 1928, 7 COMP. GEN. 797

DISBURSING OFFICERS - RESPONSIBILITY FOR ILLEGAL PAYMENTS - RECOVERY FROM PAYEES CREDIT FOR AN ILLEGAL PAYMENT MAY NOT BE ALLOWED A DISBURSING OFFICER BY REASON OF THE PROVISIONS OF THE ACT OF AUGUST 23, 1912, 37 STAT. 375, WHERE THE VOUCHER SUBMITTED TO HIM FOR PAYMENT CONTAINED MATTERS SUFFICIENT TO PUT HIM ON NOTICE OF ITS ILLEGALITY. WHERE CREDIT HAS BEEN DISALLOWED IN A DISBURSING OFFICER'S ACCOUNT FOR AN ILLEGAL PAYMENT MADE BY HIM, THE CLAIM OF THE UNITED STATES ON ACCOUNT THEREOF IS PRIMARILY AGAINST THE DISBURSING OFFICER AND HIS SURETY FOR MONEYS ADVANCED TO HIM FOR WHICH HE HAS NOT ACCOUNTED AND EXCEPT WHERE IT APPEARS THAT PROTECTION OF THE INTERESTS OF THE UNITED STATES--- RATHER THAN PROTECTION OF THE DISBURSING OFFICER--- REQUIRES DIRECT ACTION AGAINST THE PAYEE, THE GENERAL ACCOUNTING OFFICE WILL NOT ATTEMPT, BY DIRECTING SUIT OR OTHERWISE, EXCEPT BY SET-OFF ON OTHER ACCOUNTS, TO EFFECT COLLECTION FROM THE PAYEE OF THE AMOUNT ILLEGALLY PAID BY THE DISBURSING OFFICER AND STANDING AS A DISALLOWANCE IN HIS OFFICIAL ACCOUNTS.

COMPTROLLER GENERAL MCCARL TO THE DIRECTOR, UNITED STATES VETERANS' BUREAU, JUNE 18, 1928:

CONSIDERATION HAS BEEN GIVEN TO YOUR LETTER OF MARCH 19, 1928, RELATIVE TO THE DISALLOWANCE OF CREDIT IN THE ACCOUNTS OF CARY DAWSON, SPECIAL DISBURSING AGENT, UNITED STATES VETERANS' BUREAU, FOR THE AMOUNT OF $330 PAID BY HIM ON VOUCHER 5611, APRIL, 1925, TO THE CLEVELAND LIFE INSURANCE CO., LESSOR, AS THE COST OF RESTORATION OF THE PREMISES LEASED TO THE UNITED STATES, AT EVANSVILLE, IND., TO A LIKE CONDITION AS WHEN OCCUPIED BY THE VETERANS' BUREAU. THE DISALLOWANCE WAS SUSTAINED BY DECISION OF MARCH 18, 1926, 5 COMP. GEN. 731, AFFIRMED AUGUST 11, 1926.

YOU SUBMIT COPIES OF LETTERS SHOWING THAT THE DISBURSING OFFICER HAS BEEN UNSUCCESSFUL IN HIS ATTEMPTS TO SECURE A REFUND OF THE AMOUNT FROM THE CLEVELAND LIFE INSURANCE CO., AND YOU SUGGEST THAT CREDIT FOR THE PAYMENT MAY BE ALLOWED IN DAWSON'S ACCOUNTS IN VIEW OF THE PROVISIONS OF THE ACT OF AUGUST 23, 1912, 37 STAT. 375, AND DECISION OF MAY 25, 1925, 4 COMP. GEN. 991. YOU SUGGEST, ALSO, THAT IF CREDIT CAN NOT BE ALLOWED, THIS OFFICE SHOULD DIRECT THE INSTITUTION OF SUIT BY THE UNITED STATES AGAINST THE PAYEE TO RECOVER THE AMOUNT OF THE ILLEGAL PAYMENT, CITING SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24, WHICH PROVIDES THAT:

ALL CLAIMS * * * IN WHICH THE GOVERNMENT OF THE UNITED STATES IS CONCERNED, EITHER AS DEBTOR OR CREDITOR, SHALL BE SETTLED AND ADJUSTED IN THE GENERAL ACCOUNTING OFFICE.

YOU ALSO QUOTE A SENTENCE FROM DECISION TO YOU OF MARCH 3, 1928, A 20206, FROM WHICH IT APPARENTLY HAS BEEN INFERRED THAT THIS OFFICE WILL, UPON REQUEST, DIRECT THE INSTITUTION OF SUIT BY THE UNITED STATES TO RECOVER DIRECTLY FROM THE PAYEES THE AMOUNTS OF ILLEGAL PAYMENTS FOR WHICH CREDIT HAS BEEN DISALLOWED IN THE ACCOUNTS OF GOVERNMENT DISBURSING OFFICERS.

IT IS CLEAR THAT THERE IS NO BASIS FOR ALLOWANCE OF CREDIT TO THE DISBURSING OFFICER IN THIS INSTANCE UNDER THE PROVISION OF THE ACT OF AUGUST 23, 1912, SUPRA, THAT:

* * * THE DISBURSING OFFICER SHALL MAKE ONLY SUCH EXAMINATION OF VOUCHERS AS MAY BE NECESSARY TO ASCERTAIN WHETHER THEY REPRESENT LEGAL CLAIMS AGAINST THE UNITED STATES.

IN DECISION OF MAY 25, 1925, 4 COMP. GEN. 991, TO WHICH YOU REFER, IT WAS HELD THAT IN VIEW OF SAID ACT, A DISBURSING OFFICER WAS ENTITLED TO CREDIT FOR ILLEGAL PAYMENTS MADE ON VOUCHERS PROPERLY CERTIFIED AND APPROVED BY ADMINISTRATIVE OFFICERS AND CONTAINING NOTHING ON THE FACE THEREOF THAT WOULD PUT HIM ON NOTICE THAT PAYMENT WOULD BE ILLEGAL. THAT DECISION HAS NO APPLICATION TO THE PRESENT MATTER. THE VOUCHER ON WHICH THE DISBURSING OFFICER MADE THE PAYMENT HERE IN QUESTION REFERRED TO ATTACHED COPIES OF CORRESPONDENCE SHOWING THE ALLEGED BASIS FOR THE LESSOR'S CLAIM, LEAVING FOR DETERMINATION BY THE DISBURSING OFFICER THE QUESTION OF WHETHER OR NOT UNDER THE CIRCUMSTANCES SHOWN THE VOUCHER REPRESENTED A LEGAL CLAIM AGAINST THE UNITED STATES. THE APPROVAL OF SUCH VOUCHER BY AN ADMINISTRATIVE OFFICER DID NOT RELIEVE THE DISBURSING OFFICER FROM THE DUTY OF DETERMINING WHETHER IT WAS IN ALL RESPECTS A LEGAL AND PROPER CLAIM AGAINST THE GOVERNMENT ON THE FACTS SHOWN; NEITHER DID IT RELIEVE HIM FROM PERSONAL RESPONSIBILITY FOR THE PAYMENT WHERE THAT QUESTION WAS INCORRECTLY DETERMINED BY HIM. IN THIS CONNECTION, SEE THE SECOND PARAGRAPH OF THE SYNOPSIS OF THE DECISION OF MAY 25, 1925, 4 COMP. GEN. 991, TO WHICH YOU REFER, AND DECISION OF NOVEMBER 10, 1926, A 3817, TO WILLIAM H. HOLMES, DISBURSING CLERK, UNITED STATES VETERANS' BUREAU, WHEREIN IT WAS SAID, RELATIVE TO THE APPLICABILITY OF THE PROVISIONS OF THE ACT OF AUGUST 23, 1912, SUPRA, TO A PAYMENT MADE BY HIM:

* * * THERE DOES NOT APPEAR EVER TO HAVE BEEN ANY QUESTION AS TO THE ACTUAL FACTS OBTAINING IN THIS CASE, AND CONSEQUENTLY THE ERRONEOUS PAYMENT COULD NOT HAVE BEEN DUE TO ANY MISTAKE OF FACT BUT RATHER TO AN ADMINISTRATIVE MISTAKE OF LAW. THE RELATION OF A DISBURSING OFFICER TO THE GOVERNMENT IS DIRECT AND PERSONAL AND HE IS DIRECTLY RESPONSIBLE FOR THE LEGALITY OF PAYMENTS MADE BY HIM FROM GOVERNMENT FUNDS. SEE DECISION OF NOVEMBER 25, 1924, A-6189. IN 25 COMP. DEC. 437, IT WAS HELD THAT A DISBURSING OFFICER WOULD NOT BE RESPONSIBLE FOR THE CORRECTNESS OF STATEMENTS OF FACTS APPEARING ON THE PAY ROLL, OF WHICH HE COULD HAVE NO KNOWLEDGE AND WHICH ARE CERTIFIED TO HIM BY PROPER ADMINISTRATIVE OFFICERS AS BEING CORRECT, BUT THAT HE WOULD BE RESPONSIBLE FOR THE CORRECT APPLICATION OF THE LAWS AND REGULATIONS TO THE STATEMENT OF FACTS CERTIFIED AND FOR THE SUFFICIENCY OF THE FACTS STATED.

AS TO THIS OFFICE DIRECTING THE INSTITUTION OF A SUIT AGAINST THE CLEVELAND LIFE INSURANCE CO. FOR RECOVERY OF THE AMOUNT ILLEGALLY PAID TO IT BY DISBURSING AGENT DAWSON, YOU ARE ADVISED THAT THE GENERAL RULE IN SUCH MATTERS IS THAT THE UNITED STATES WILL LOOK FIRST TO THE DISBURSING OFFICER AND HIS SURETIES TO MAKE GOOD ILLEGAL PAYMENTS, AND, EXCEPT WHERE PROTECTION OF THE INTERESTS OF THE UNITED STATES REQUIRES OTHERWISE, THAT THE REMEDY AGAINST THE DISBURSING OFFICER AND HIS SURETY IS TO BE EXHAUSTED BEFORE RECOURSE IS TAKEN TO DIRECT ACTION AGAINST THE PAYEE TO RECOVER AN ILLEGAL PAYMENT. THE NECESSITY FOR THIS RULE IS PRACTICALLY INHERENT IN THE ACCOUNTING SYSTEM OF THE UNITED STATES. DISBURSING OFFICERS ARE NOT REQUIRED TO MAKE, AND ARE NOT SUPPOSED TO MAKE, PAYMENTS WHERE THERE IS ANY DOUBT OF THEIR LEGALITY. VOUCHERS FOR SUCH PAYMENTS MAY AND SHOULD BE SUBMITTED TO THIS OFFICE EITHER FOR ADVANCE DECISION AS TO THEIR LEGALITY OR FOR DIRECT SETTLEMENT AS CLAIMS. ILLEGAL PAYMENTS ONCE MADE ARE MOST DIFFICULT TO RECOVER FROM THE PAYEES, AS IS INSTANCED IN THIS CASE AS WELL AS IN MANY OTHERS WHICH COME BEFORE THIS OFFICE. THE MOST EFFICACIOUS WAY TO KEEP TO A MINIMUM THE NUMBER OF ILLEGAL PAYMENTS BY DISBURSING OFFICERS OF THE GOVERNMENT IS TO REQUIRE THAT THEY RECOGNIZE THEIR FULL AND PERSONAL RESPONSIBILITY THEREFOR. ANY PROCEDURE WHICH TENDS TO RELIEVE THE DISBURSING OFFICER FROM ANY PART OF SUCH RESPONSIBILITY CAN TEND ONLY TO DECREASE THE NECESSITY OR INCENTIVE FOR THE EXERCISE OF THAT DEGREE OF CARE WHICH SHOULD BE EXERCISED BY DISBURSING OFFICERS GENERALLY IN EXAMINING VOUCHERS TO DETERMINE THEIR LEGALITY BEFORE PAYMENT. IF A DISBURSING OFFICER COULD SHIFT TO THE UNITED STATES THE BURDEN AND EXPENSE OF RECOVERING FROM PAYEES THE AMOUNTS OF ILLEGAL PAYMENTS MADE BY HIM, THERE WOULD BE NO PARTICULAR NEED OF CARE OR CAUTION ON HIS PART WHEN CALLED UPON TO MAKE A QUESTIONABLE PAYMENT. IN THIS CONNECTION, SEE DECISION OF MARCH 30, 1926, A-12877, WHEREIN IT WAS SAID:

WITH REGARD TO YOUR REQUEST THAT ARRANGEMENTS BE MADE WHEREBY THE SUM DUE FROM ENSIGN ROSENTHAL BE COLLECTED THROUGH THE BUREAU UNDER WHICH HE IS NOW EMPLOYED, YOU ARE ADVISED THAT WHILE THIS OFFICE AFFORDS TO DISBURSING OFFICERS ASSISTANCE IN RECOVERING OVERPAYMENTS BY OFFSETTING AMOUNTS THAT MAY BE ALLOWED ON OTHER ACCOUNTS TO PAYEES WHO HAVE RECEIVED IMPROPER PAYMENTS, AND TO THAT END RECORD IS MADE OF PERSONS TO WHOM ILLEGAL PAYMENTS HAVE BEEN MADE BY DISBURSING OFFICERS; THE DISBURSING OFFICER AND HIS BONDSMEN ARE PRIMARILY LIABLE TO THE UNITED STATES FOR THE ILLEGAL PAYMENTS. A DISBURSING OFFICER HAS A PERSONAL RIGHT OF ACTION AGAINST A PERSON TO WHOM HE HAS MADE ILLEGAL PAYMENTS, AND IT IS HIS DUTY TO ENFORCE THAT RIGHT BY ANY AND ALL APPROPRIATE MEANS. AS INDEPENDENT ACTION BY THIS OFFICE (OTHER THAN OFFSET AS STATED) AGAINST THE PAYEE MIGHT IMPAIR THE DISBURSING OFFICER'S RIGHT, OR MIGHT TEND TO PREJUDICE THE PRIMARY RIGHT OF THE UNITED STATES AGAINST THE DISBURSING OFFICER AND HIS BONDSMEN, ACTION WITH A VIEW TO COLLECTION FROM THE PAYEE SHOULD BE INITIATED AND PROSECUTED BY THE DISBURSING OFFICER CONCERNED WITHOUT INTERVENTION OF THIS OFFICE.

FOR THE REASONS HEREIN STATED, THE COGENCY OF WHICH ARE, PERHAPS, MORE OBVIOUS WHEN CONSIDERED IN CONNECTION WITH THE ENTIRE ACCOUNTING SYSTEM RATHER THAN IN THEIR APPLICATION TO A PARTICULAR CASE, THE RULE MUST BE, ORDINARILY, AND EXCEPT WHERE IN THE EXERCISE OF A SOUND DISCRETION IT APPEARS THAT PROTECTION OF THE INTERESTS OF THE UNITED STATES--- RATHER THAN PROTECTION OF THE DISBURSING OFFICER--- REQUIRES DIRECT ACTION AGAINST THE PAY" THAT THIS OFFICE WILL NOT ATTEMPT, BY DIRECTING SUIT OR OTHERWISE, EXCEPT BY SET-OFF ON OTHER ACCOUNTS, TO EFFECT COLLECTION FROM PAYEES OF AMOUNTS ILLEGALLY PAID BY DISBURSING OFFICERS AND STANDING AS DISALLOWANCES IN THEIR OFFICIAL ACCOUNTS WITH THE UNITED STATES. THIS RULE IS NOT IN CONFLICT WITH THE PROVISION OF SECTION 305 OF THE BUDGET AND ACCOUNTING ACT HEREINBEFORE QUOTED, FOR THE REASON THAT THE CLAIM OF THE UNITED STATES IN SUCH CASES IS PRIMARILY A CLAIM AGAINST THE DISBURSING OFFICER AND HIS SURETY FOR MONEYS ADVANCED TO HIM FOR WHICH HE HAS NOT ACCOUNTED. THE STATEMENT QUOTED BY YOU FROM DECISION OF MARCH 3, 1928, A-20206, IN SO FAR AS IT MAY BE TAKEN AS INFERRING A DIFFERENT PROCEDURE, SHOULD BE DISREGARDED.

NO REASON IS APPARENT WHY THE GENERAL RULE AS HEREINBEFORE STATED IS NOT FOR APPLICATION TO THE PAYMENT HERE IN QUESTION. ACCORDINGLY, YOU ARE ADVISED THAT, ON THE RECORD NOW BEFORE THIS OFFICE, CREDIT FOR SAID PAYMENT MAY NOT BE ALLOWED IN CARY DAWSON'S ACCOUNTS, AND THAT YOUR REQUEST THAT SUIT BE INSTITUTED BY THIS OFFICE AGAINST THE CLEVELAND LIFE INSURANCE CO. MUST BE AND IS DENIED.

THE AMOUNT INVOLVED SHOULD BE DEPOSITED BY THE DISBURSING AGENT WITHOUT FURTHER DELAY.