A-76859, JUNE 24, 1936, 15 COMP. GEN. 1126

A-76859, JUNE 24, 1936, 15 COMP. GEN. 1126

GOVERNMENT CHECKS - ERRONEOUSLY ISSUED - LIABILITY OF CASHING POSTMASTER A POSTMASTER, ALTHOUGH CHARGEABLE WITH ANY SHORTAGE RESULTING FROM THE CASHING OF A GOVERNMENT CHECK ISSUED UPON A FRAUDULENT CLAIM OR CASHED UPON A FORGED INDORSEMENT, NEED NOT BE HELD ACCOUNTABLE IN CONNECTION WITH THE CASHING, ON THE PAYEE'S GENUINE INDORSEMENT, OF A GOVERNMENT CHECK ISSUED UNDER A MISTAKE OF FACT AND INVOLVING A PARTIAL OVERPAYMENT, THE OVERPAYMENT BEING CHARGEABLE TO THE CERTIFYING OFFICER AND THE DISBURSING OFFICER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE POSTMASTER GENERAL, JUNE 24, 1936:

THERE HAS BEEN RECEIVED FROM THE THIRD ASSISTANT POSTMASTER GENERAL LETTER DATED JUNE 12, 1936, MO-HHN, AS FOLLOWS:

UNDER THE PROVISIONS OF SECTION 110, POSTAL LAWS AND REGULATIONS OF 1932, H. M. HALL, POSTMASTER AT MESA, ARIZONA, CASHED CHECK NO. 26344, SYMBOL NO. 63-373, DRAWN IN FAVOR OF VERDELL BLACKBURN FOR $103.75, ISSUED ON MARCH 28, 1935. THIS CHECK WAS REMITTED BY THE POSTMASTER ON MONEY-ORDER ACCOUNT AND SUBSEQUENTLY RETURNED TO HIM DISHONORED FOR THE REASON THAT IT WAS ERRONEOUSLY DRAWN BY THE DISBURSING OFFICER, A. H. KNEALE, SUPERINTENDENT FIELD SERVICE, PIMA INDIAN AGENCY, SACATON, ARIZONA.

THE POSTMASTER HAS BEEN UNSUCCESSFUL IN HIS ENDEAVOR TO OBTAIN A REFUND FROM THE PAYEE OF THE AMOUNT ADVANCED ON THE CHECK.

PAPERS IN THE CASE WERE REFERRED TO THE CHIEF INSPECTOR OF THIS DEPARTMENT AND A COPY OF THE REPORT MADE BY INSPECTOR T. C. MALLALIEU COVERING IN DETAIL HIS INVESTIGATION IS ATTACHED FOR YOUR INFORMATION.

THE SAME REASONING IS BELIEVED TO BE APPLICABLE AND THE CASE IS SIMILAR TO ONE DECIDED BY YOU ON JANUARY 17, 1933 (A-46388), WHICH WAS ADDRESSED TO THE ADMINISTRATOR OF VETERANS' AFFAIRS, AND YOU ARE RESPECTFULLY REQUESTED TO DIRECT THAT THE CHECK BE HONORED NOTWITHSTANDING THE ERROR IN ITS ISSUE BY THE ADMINISTRATIVE OFFICER.

IF THE STOP PAYMENT IS THUS LIFTED, THE CHECK IN QUESTION, WHICH IS ON FILE IN THIS OFFICE, WILL BE RETURNED TO THE POSTMASTER WHO WILL BE INSTRUCTED TO FORWARD IT TO THE TREASURY DEPARTMENT FOR PAYMENT, REFERRING TO YOUR LETTER AS AUTHORITY FOR SUCH ACTION.

BY LETTER DATED JULY 20, 1935, THE DISBURSING OFFICER, IN REPLY TO AN INQUIRY FROM THE POSTAL INSPECTOR RELATIVE TO THE CIRCUMSTANCES UNDER WHICH SUBJECT CHECK WAS ISSUED, STATED IN PART AS FOLLOWS:

MISS BLACKBURN WAS APPOINTED ON SEPTEMBER 10, 1934, IN POSITION OF ELEMENTARY TEACHER, GRADE 6, THE COMPENSATION WHICH WE UNDERSTOOD AT THAT TIME TO BE $1,560 PER ANNUM, LESS $180 PER ANNUM FOR QUARTERS, FUEL, LIGHT, AND ALSO LESS THE 5 PERCENT ECONOMY LEGISLATION DEDUCTION. MISS BLACKBURN WAS SEPARATED FROM THIS POSITION ON DECEMBER 21, 1934, AND WAS AGAIN TAKEN UP IN A SIMILAR POSITION AT COMPENSATION OF $1,500 PER ANNUM, LESS $180 PER ANNUM FOR QUARTERS, FUEL, LIGHT, AND THE 5 PERCENT ECONOMY LEGISLATION DEDUCTION. SHE WAS SEPARATED FROM THIS POSITION ON FEBRUARY 28, 1935.

THERE IS NO AMOUNT STILL DUE MISS BLACKBURN FOR HER SERVICES HERE AS HER SERVICES TERMINATED AT THE CLOSE OF FEBRUARY 1935.

THE CHECK OF $103.75 WAS ISSUED FOR THE REASON THAT AS OF THE DATE OF ISSUE WE HAD NO ADVICE FROM OUR OFFICE THAT A LESSER RATE WOULD BE IN EFFECT.

UNDER DATE OF FEBRUARY 21, 1935, INDIAN OFFICE CIRCULAR NO. 3058, OUR OFFICE ADVISES THAT THE DECISION OF THE COMPTROLLER GENERAL WAS THAT EMPLOYEES WHO ENTERED ON OR AFTER SEPT. 5, 1934, COULD ONLY BE EMPLOYED AT A CERTAIN RATE, AND THAT "THERE ARE TWO GRADES SET UP FOR THE ELEMENTARY TEACHERS, NAMELY GRADES 6 AND 7. IF TEMPORARY EMPLOYMENTS HAVE BEEN MADE IN THESE GROUPS, SALARIES MUST BE REDUCED TO $1,440 FOR GRADE 6 POSITIONS.' IT ALSO STATED "THE GENERAL ACCOUNTING OFFICE MAY TAKE EXCEPTION TO ACCOUNTS COVERING THE APPOINTMENTS MADE SUBSEQUENT TO SEPTEMBER 5, SO IT IS ESSENTIAL THAT FIELD OFFICERS IMMEDIATELY TAKE STEPS TO PROTECT THEMSELVES AS DISBURSING OFFICERS. OFFICERS SHOULD MAKE EVERY REASONABLE EFFORT TO MAKE COLLECTION.' THIS CIRCULAR, UNFORTUNATELY, DID NOT REACH THIS OFFICE UNTIL MARCH 4. ON THAT DAY WE ASKED OUR SCHOOL PRINCIPAL, MR. C. T. HANCHEY, TO INTERVIEW MISS BLACKBURN AND TELL HER THAT UNLESS IMMEDIATE REFUND WAS MADE ON THIS CHECK IT WOULD BE NECESSARY FOR US TO STOP PAYMENT IF SHE HAD CASHED THE CHECK. IF SHE HAD NOT CASHED THE CHECK HE WAS TO GET THE CHECK AND BRING IT TO THIS OFFICE AND WE WOULD ISSUE HER A NEW CHECK FOR THE CORRECT AMOUNT, LESS THE AMOUNT OF DEDUCTION AS APPLIES TO THE NEW RATE OF PAY.

THE DISBURSING OFFICER, WHO IS NO LONGER IN THE SERVICE, STATED FURTHER THAT ON MARCH 6, 1935, AFTER ALL EFFORTS TO SECURE A REFUND FROM THE PAYEE WERE UNSUCCESSFUL, HE REQUESTED THE TREASURER OF THE UNITED STATES TO STOP PAYMENT ON THE SUBJECT CHECK, AND IN REPLY TO AN INQUIRY FROM THE POSTAL INSPECTOR HE STATED THAT $44.65 OF THE AMOUNT OF THE SUBJECT CHECK REPRESENTED AN OVERPAYMENT.

AN EXAMINATION OF VOUCHER NO. 1790, THE VOUCHER ON WHICH THE CHECK WAS ISSUED, SHOWS THE PAYEE AS A TEMPORARY TEACHER, GRADE 6, AT A SALARY RATE OF $1,500 PER ANNUM OR $125 PER MONTH LESS A DEDUCTION OF $21.75 FOR QUARTERS ($15) AND ECONOMY ACT ($6.25).

THE CIRCULAR OF FEBRUARY 21, 1935, CITED ABOVE, PRESUMABLY REFERRED TO THE DECISION OF THIS OFFICE DATED NOVEMBER 14, 1934 (AND DECISIONS THEREIN CITED), TO THE SECRETARY OF THE INTERIOR, REPORTED IN 14 COMP. GEN. 392, WHEREIN IT WAS HELD, QUOTING FROM THE SYLLABUS:

AS THE ENTIRE SALARY RANGE PRESCRIBED BY THE CLASSIFICATION ACT, AS AMENDED, FOR A PARTICULAR GRADE, RATHER THAN ONE OR ANY NUMBER OF SALARY RATES LESS THAN THE TOTAL PRESCRIBED FOR THE GRADE, ATTACHES TO ANY POSITION, EITHER FIELD OR DEPARTMENTAL, PLACED OR ALLOCATED IN SAID GRADE, REGARDLESS OF THE CLASS OF POSITION, THERE IS NO AUTHORITY FOR ADMINISTRATIVE ACTION PRESCRIBING A SALARY RANGE FOR A CERTAIN CLASS OF POSITION IN THE FIELD SERVICE BEGINNING AT A RATE HIGHER THAN THE MINIMUM SALARY RATE OF THE RANGE PRESCRIBED BY THE CLASSIFICATION ACT, AS AMENDED, FOR THE ENTIRE GRADE IN WHICH SUCH POSITION IS PROPERLY PLACED OR ALLOCATED.

AS THE RECORDS DISCLOSE THAT THE PAYEE WAS ORIGINALLY APPOINTED AFTER SEPTEMBER 5, 1934, UNDER THE PRINCIPLE AS STATED IN THE DECISION OF 14 COMP. GEN. 392 AND DECISIONS THEREIN CITED, THERE WAS NO AUTHORITY OF LAW FOR SALARY PAYMENTS TO HER IN EXCESS OF THE PER ANNUM RATE OF $1,440, AND PAYMENTS IN EXCESS OF THAT RATE WERE MADE WITHOUT AUTHORITY OF LAW, NOTWITHSTANDING THE FAILURE OF THE ADMINISTRATIVE OFFICE TO NOTIFY THE DISBURSING OFFICER OF THE DECISION JUST CITED.

PARAGRAPH 2 OF SECTION 110 OF THE POSTAL LAWS AND REGULATIONS CITED ABOVE PROVIDE IN PART AS FOLLOWS:

POSTMASTERS MAY CASH WITH POSTAL FUNDS DISBURSING POSTMASTERS' CHECKS, PENSION CHECKS, POST OFFICE DEPARTMENT WARRANTS, POSTAL SAVINGS SYSTEM CHECKS, AND OTHER KINDS OF GOVERNMENT PAPER, PROVIDED THEY ARE RECEIVED FROM RESPONSIBLE PERSONS WHOSE INDORSEMENT ON SAID PAPER THE POSTMASTER IS WILLING TO GUARANTEE. * * *

IN DECISION OF FEBRUARY 5, 1924, REPORTED IN 3 COMP. GEN. 473, IT WAS HELD, QUOTING FROM THE SYLLABUS:

POSTMASTERS CASHING GOVERNMENT CHECKS ERRONEOUSLY ISSUED TO PERSONS NOT ENTITLED TO THE PAYMENTS REPRESENTED THEREBY MAY NOT BE RELIEVED FROM LIABILITY FOR SUCH ERRONEOUS PAYMENTS. THE POSTMASTER'S LIABILITY TO THE BANK IN WHICH SUCH CHECKS ARE DEPOSITED OR CASHED IS A MATTER BETWEEN THE POSTMASTER AND THE BANK IN WHICH THE GENERAL ACCOUNTING OFFICE IS NOT DIRECTLY CONCERNED.

AS WAS POINTED OUT IN THE DECISION JUST CITED, THE REGULATION QUOTED PERMITS BUT DOES NOT REQUIRE POSTMASTERS TO CASH CHECKS WITH POSTAL FUNDS IN THEIR POSSESSION, AND IT DOES NOT EVEN PURPORT TO RELIEVE THEM OF RESPONSIBILITY FOR LOSSES THAT MAY RESULT THEREFROM.

THE DECISION OF JANUARY 17, 1933, REPORTED IN 12 COMP. GEN. 492 AND CITED IN THE PENULTIMATE PARAGRAPH OF THE PRESENT SUBMISSION AS AUTHORITY FOR REMOVAL OF STOPPAGE, HELD, QUOTING FROM THE SYLLABUS:

WHEN THE GOVERNMENT FOLLOWS THE USUAL COMMERCIAL PRACTICE IN THE CONDUCT OF ITS BUSINESS IT INCURS THE RESPONSIBILITY OF PRIVATE PERSONS IN SIMILAR CIRCUMSTANCES, SO THAT, WHEN IT ISSUES CHECKS, IT BECOMES SUBJECT TO THE ORDINARY RULES APPLICABLE TO THE ISSUANCE OF NEGOTIABLE INSTRUMENTS BY PRIVATE PERSONS.

WHEN A CHECK ISSUED BY A GOVERNMENT DISBURSING OFFICER PASSES INTO THE HANDS OF A BONA FIDE HOLDER FOR VALUE, PAYMENT THEREOF CAN NOT BE WITHHELD ON THE GROUND THAT THROUGH A MISTAKE OF FACT THE CHECK WAS IMPROPERLY ISSUED.

IT IS WELL ESTABLISHED THAT A POSTMASTER IS ACCOUNTABLE FOR ALL PUBLIC MONEYS COMING INTO HIS POSSESSION AND GENERALLY HE MAY NOT, UNDER THE PRINCIPLE ANNOUNCED IN 12 COMP. GEN. 492, BE RELIEVED OF SUCH RESPONSIBILITY, PARTICULARLY WHERE THE SHORTAGE IS THE RESULT OF CASHING A GOVERNMENT CHECK ISSUED UPON A FRAUDULENT CLAIM OR UPON WHICH THE ENDORSEMENT OF THE PAYEE IS FORGED. HOWEVER, IN THE PRESENT CASE NO FRAUD APPEARS. THE CHECK WAS CASHED BY THE FORMER POSTMASTER FOR THE PAYEE UPON HER GENUINE ENDORSEMENT AND WHILE IT WAS ERRONEOUSLY ISSUED UNDER A MISTAKE OF FACT BY THE DISBURSING OFFICER WHO WAS THE CERTIFYING OFFICER ALSO, NEVERTHELESS THE PAYEE WAS ENTITLED TO PART OF THE PROCEEDS OF THE CHECK AND THE DISBURSING AND CERTIFYING OFFICER AND/OR HIS SURETY IS RESPONSIBLE FOR THE OVERPAYMENT RESULTING FROM THE ISSUANCE OF SAID CHECK AND SAID DISBURSING OFFICER'S ACCOUNTS WILL BE ADJUSTED ACCORDINGLY.

IN CONCLUSION, I HAVE TO ADVISE THAT THE TREASURER OF THE UNITED STATES TODAY IS BEING AUTHORIZED TO PAY THE CHECK IF PRESENTED BEFORE THE CLOSE OF THE FISCAL YEAR 1936, AND ACCORDINGLY THE CHECK SHOULD BE PRESENTED FOR PAYMENT TO THAT OFFICE AT ONCE.