AUGUST 23, 1923, 3 COMP. GEN. 94

AUGUST 23, 1923, 3 COMP. GEN. 94

SIGHT DRAFTS - PRESENTATION FOR PAYMENT A BANK PURCHASING FROM THE GOVERNMENT A SIGHT DRAFT DRAWN AGAINST AN UNREVOCABLE LETTER OF CREDIT EXPIRING ON A SPECIFIED DATE, OF WHICH THE BANK HAD DUE NOTICE, ASSUMED THE RISK OF PRESENTING THE DRAFT FOR PAYMENT WITHIN THE TIME LIMIT, AND MAY NOT HAVE THE AMOUNT OF THE DRAFT REFUNDED WHEN PAYMENT IS REFUSED BECAUSE IT WAS NOT PRESENTED IN TIME.

COMPTROLLER GENERAL MCCARL TO FIRST LIEUT. E. W. WILSON, UNITED STATES ARMY, AUGUST 23, 1923:

BY INDORSEMENT DATED JULY 11, 1923, FORWARDED THROUGH THE OFFICE OF THE CHIEF OF FINANCE AND RECEIVED IN THIS OFFICE JULY 17, 1923, YOU TRANSMIT WITH REQUEST FOR DECISION WHETHER PAYMENT THEREON IS AUTHORIZED A VOUCHER IN FAVOR OF SECOND NATIONAL BANK OF TOLEDO, OHIO, FOR $8,038.72, BEING THE AMOUNT PAID JANUARY 31, 1923, BY SAID BANK TO AN OFFICER OF THE ORDNANCE RESERVE DEPOT AT TOLEDO, OHIO, FOR A SIGHT DRAFT ON THE IRVING NATIONAL BANK OF NEW YORK UNDER AN IRREVOCABLE LETTER OF CREDIT ISSUED NOVEMBER 18, 1922, FOR ACCOUNT OF M. SAMUEL AND SON (INC.), TO COVER THE PURCHASE PRICE OF ORDNANCE SCRAP PURCHASED BY SAID M. SAMUEL AND SON (INC.) FROM THE GOVERNMENT.

THE LETTER OF CREDIT AUTHORIZED THE COMMANDING OFFICER OF THE TOLEDO ORDNANCE RESERVE DEPOT TO DRAW ON THE IRVING NATIONAL BANK FOR ANY SUM OR SUMS NOT EXCEEDING $28,537.12, WHICH WAS THE PRICE AT WHICH A CERTAIN QUANTITY OF ORDNANCE SCRAP WAS SOLD BY THE GOVERNMENT TO M. SAMUEL AND SON (INC.), AND WAS IRREVOCABLE, BUT SAID LETTER OF CREDIT AS EXTENDED JANUARY 12, 1923, STIPULATED THAT DRAFTS DRAWN UNDER AUTHORITY THEREOF MUST BE PRESENTED IN NEW YORK NOT LATER THAN FEBRUARY 1, 1923.

IT APPEARS THAT THE DRAFT INVOLVED IN THIS CASE WAS FOR THE FINAL AMOUNTS DUE THE GOVERNMENT FROM M. SAMUEL AND SON (INC.) UNDER THE TRANSACTION; THAT THE DRAFT WAS DRAWN JANUARY 31, 1923, AND ON SAID DATE TURNED OVER TO THE SECOND NATIONAL BANK OF TOLEDO, TOGETHER WITH THE ORIGINAL LETTER OF CREDIT, INVOICES, ETC.; THAT THE SECOND NATIONAL BANK GAVE THE GOVERNMENT OFFICER A CASHIER'S CHECK FOR $8,038.73 IN PAYMENT FOR THE SIGHT DRAFT; AND THAT WHEN THE SIGHT DRAFT, ACCOMPANIED BY THE LETTER OF CREDIT AND INVOICES, WAS PRESENTED AT THE IRVING NATIONAL BANK FEBRUARY 2, 1923, PAYMENT THEREON WAS REFUSED BECAUSE THE LETTER OF CREDIT HAD EXPIRED FEBRUARY 1, 1923.

THE LETTER OF CREDIT HAD NOT EXPIRED ON JANUARY 31, 1923, WHEN IT WAS TURNED OVER TO THE SECOND NATIONAL BANK WITH THE SIGHT DRAFT FOR THE BALANCE DUE THEREUNDER, AND THE SIGHT DRAFT APPEARS TO HAVE BEEN VALID AND PROPER IN EVERY WAY AND WAS AT THAT TIME WORTH THE AMOUNT PAID FOR IT BY THE BANK TO THE GOVERNMENT. THE BANK HAD DUE NOTICE THAT THE SIGHT DRAFT MUST BE PRESENTED IN NEW YORK ON OR BEFORE FEBRUARY 1, 1923, AND SAID BANK MUST BE REGARDED AS HAVING ASSUMED THE RISK OF PRESENTING SAID DRAFT AT NEW YORK ON OR BEFORE SAID DATE.

THE GOVERNMENT SURRENDERED POSSESSION AND OWNERSHIP OF THE MATERIAL SOLD BECAUSE OF THE PAYMENT MADE TO IT BY THE SECOND NATIONAL BANK OF TOLEDO, AND THE AMOUNT SO PAID WAS NO MORE THAN THE CONTRACT PRICE OF SAID MATERIAL. THE PAYMENT BY THE BANK TO THE GOVERNMENT WAS NOT MADE THROUGH ANY FAULT OR MISTAKE ON THE PART OF ANY OFFICER OR AGENT OF THE GOVERNMENT.

THE PROCEEDS OF SALE NOW ON DEPOSIT IN YOUR SPECIAL DEPOSIT ACCOUNT CAN NOT BE USED TO PAY THE CLAIM OF THE BANK BUT SHOULD BE COVERED INTO THE GENERAL FUND OF THE TREASURY AS REQUIRED BY THE PROVISIONS OF SECTION 3618, REVISED STATUTES.