H. R. 3087 SEVENTY-SIXTH CONGRESS OF THE UNITED STATES OF AMERICA; AT THE THIRD SESSION, BEGun and Held AT THE CITY OF WASHINGTON ON WEDNESDAY, THE THIRD DAY OF JANUARY, ONE THOUSAND NINE HUNDRED AND FORTY AN ACT For the relief of Gdynia America Line, Incorporated, of New York City, New York Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury be, and he is hereby, authorized and directed to pay, out of any money in the Treasury, not otherwise appropriated, to the Gdynia America Line, Incorporated, of New York City, New York, the sum of $2,520, in full settlement of all claims against the United States for duplicate revenue stamps required to be attached to the manifests of the motorship Batory belonging to said corporation, the original revenue stamps having been lost or destroyed in some unknown manner: Provided, That the Secretary of the Treasury shall require the said corporation to give a surety bond to the United States in the amount of $2,520 to indemnify the Government in the event said original revenue stamps are recovered, such bond to run for such period of time as the Secretary of the Treasury shall prescribe: Provided further, That no part of the amount appropriated in this Act in excess of 10 per centum thereof shall be paid or delivered to or received by any agent or attorney on account of services rendered in connection with this claim, and the same shall be unlawful, any contract to the contrary notwithstanding. Any person violating the provisions of this Act shall be deemed guilty of a misdemeanor and upon conviction thereof shall be fined in any sum not exceeding $1,000. WM. B. BANKHEAD, Speaker of the House of Representatives. JNO. N. GARner, Vice President of the United States and President of the Senate. (Endorsement on back of bill:] I certify that this Act originated in the House of Representatives. AFFIDAVIT SOUTH TRIMBLE, Clerk. I, Robert Jorgensen, of New York, being duly sworn, do depose and state as follows: That I am the chief accountant of the Gdynia America Line, Inc., of New York City, N. Y., and that I was acting in the same capacity at the end of August and beginning of September 1938 when documentary stamps in the sum of $2,520 were purchased from the collector of internal revenue to be affixed on the passenger manifest of the motorship Batory which sailed from New York on July 6, 1938. That the said documentary stamps are the subject of bill H. R. 8224 introduced in the House of Representatives on January 30, 1940. That all efforts to trace these stamps have been without avail, wherefore I can only come to the conclusion, and express as my firm belief, that said documentary stamps have been destroyed and are nonexistent. 77TH CONGRESS 1st Session } SENATE {No. 796 REPORT AUTHORIZING THE TREASURER OF THE UNITED STATES TO MAKE SETTLEMENTS WITH PAYEES OF LOST OR STOLEN CHECKS, WHICH HAVE BEEN PAID ON FORGED ENDORSEMENTS, IN ADVANCE OF RECLAMATION OCTOBER 30 (legislative day, OCTOBER 27), 1941.-Ordered to be printed Mr. BROWN, from the Committee on Claims, submitted the following REPORT [To accompany H. R. 5079] The Committee on Claims, to whom was referred the bill (H. R. 5079) to authorize the Treasurer of the United States to make settlements with payees of lost or stolen checks, which have been paid on forged indorsements, in advance of reclamation, and for other purposes, having considered the same, report favorably thereon with the recommendation that the bill do pass without amendment. The facts are fully set forth in House Report No. 1113, Seventyseventh Congress, first session, which is appended hereto and made a part of this report. [H. Rept. No. 1113, 77th Cong., 1st sess.] The Committee on Claims, to whom was referred the bill (H. R. 5079) to authorize the Treasurer of the United States to make settlement with payees of lost or stolen checks, which have been paid on forged endorsements, in advance of reclamation, and for other purposes, having considered the same, report favorably thereon with amendments and recommend that the bill, as amended, do pass. The amendments are as follows: Page 2, line 11, before the phrase "drawn on the Treasurer of the United States", insert "heretofore or hereafter". Page 2, line 21, before the word "may", insert "has been or". The purpose of the proposed legislation is to authorize an appropriation of $50,000, to be available until expended, to be used by the Treasurer of the United States, under the direction of the Secretary of the Treasury, for making settlement with the payees and special endorsees of certain checks drawn on the Treasurer of the United States, as hereinafter provided. This bill in no way affects the duty of the Treasurer of the United States to reclaim, nor the liability of the parties who received the payment on the original check. When recoveries are made from the forger or subsequent transferees of the original check, the amount thereof is deposited back to the credit of the fund out of which the advance has been made. GENERAL STATEMENT There appears to be no authority for issuing a new check by the Government when the original check has been paid on a forged endorsement, until the amount of the original check has been reclaimed from the forger or transferees subsequent to the forgery. One exception to this ruling has been made in the case of checks drawn against a lump-sum appropriation ((1924) 3 Comp. Gen. 453). This exception, however, has been narrowed to include only those cases where the original check has been misdirected by the disbursing officer, so that if a check is properly addressed and in some way falls into the hands of a forger, the payee is in the same position as though his check had not been drawn against a lumpsum appropriation. (See (1939) 19 Comp. Gen. 496, 498; decision B-6590, Nov. 9, 1939.) A further qualification has now been imposed upon this exception. Assistant Comptroller General Elliott recently ruled that although a check was addressed to the wrong address, since the error in the address was not shown to have contributed to the failure of the payee to receive the check, payment of the check must await the outcome of reclamation proceedings. (See decision B-14457, Mar. 19, 1941.) The payees involved are not only entitled to the funds but many of them, including recipients of emergency relief funds, are greatly in need of immediate payment. Your committee is of the opinion that the proposed legislation will relieve the present inequitable situation and will provide uniform treatment for all payees. AMENDMENTS The amendments recommended by your committee are merely clarifying amendments, the adoption of which will make it clear that the bill carries out its intent to cover all checks described therein which are outstanding at the present time as well as checks which may be issued in the future. RECOMMENDATIONS H. R. 5079 is strongly recommended by the Secretary of the Treasury, with the approval of the Bureau of the Budget. Your committee, after carefully considering the merits of this bill, believes that it is meritorious legislation and should be promptly enacted into law. TREASURY DEPARTMENT, Hon. DAN R. McGEHEE, Chairman, Committee on Claims, House of Representatives. DEAR MR. CHAIRMAN: Further reference is made to your letter of June 20, 1941, enclosing three copies of H. R. 5079, "to authorize the Treasurer of the United States to make settlements with payees of lost or stolen checks, which have been paid on forged endorsements, in advance of reclamation, and for other purposes," and requesting a statement of this Department's views on the proposed legislation. The purpose of the proposed legislation is to relieve the inequitable condition arising when the payee or a special endorsee of a check, which has been improperly negotiated through no fault of his and paid upon a forgery of his endorsement, is deprived of the amount due him until such indeterminate future time as recovery has been effected from the forger or the bank or other party cashing the check by setting up a small revolving fund out of which payments may be made in advance of reclamation. In 1909 (16 Comp. Dec. 151, 152), the Comptroller of the Treasury, relying upon an earlier decision and an opinion of the Attorney General, said that "The issuance and mailing of a check * * * does not of itself constitute payment of a debt. Until the creditor has received the amount of his obligation in money or its equivalent in law he has not been paid nor is the debt of the Government discharged." Notwithstanding this principle, there appears to be no authority for issuing a new check, where the original check has been paid on a forged endorsement, until the amount of the original check has been reclaimed from the forger or transferees subsequent to the forgery. Shortly after taking office, in 1922, the first Comptroller General, Mr. McCarl, called attention to the delay in making settlements with innocent payees in this type of case, and requested this Department's suggestions on the matter of expediting settlements. The then Under Secretary, Mr. Gilbert, suggested that the matter be handled by settlements in advance of reclamation, but, after an investigation of the matter, the Comptroller General, on September 1, 1922, ruled that no authority existed for the suggested procedure. One exception to this ruling has been made in the case of checks drawn against a'lump-sum appropriation (1924, 3 Comp. Gen. 453), to the following effect that-'In view of the long-continued and generally recognized practice which is not prohibited by any law enacted by Congress, claims by the rightful payee of a Government check which has been cashed by another under a forged endorsement, may continue to be allowed by the General Accounting Office, if drawn against a lump-sum appropriation, without awaiting the reclamation of the amount." Therefore, the question whether a payee whose check has been lost or stolen without his fault and subsequently paid upon a forged endorsement must await the outcome of reclamation proceedings before receiving money admittedly due him is made to turn upon the fortuitous circumstance of whether or not his check happened to be drawn against a lump-sum appropriation. The exception in the case of lump-sum appropriations has been narrowed to include only those cases where the original check has been misdirected by the disbursing officer, so that if a check is properly addressed and in some way falls into the hands of a forger, the payee is in the same position as though his check had not been drawn against a lump-sum appropriation ((1939) 19 Comp. Gen. 496, 498; decision B--6590, Nov. 9, 1939). A further qualification has now been imposed upon this exception. Assistant Comptroller General Elliott recently ruled, B-14457, March 19, 1941, that although a check was addressed to the wrong address, since the error in the address was not shown to have contributed to the failure of the payee to receive the check, payment of the check must await the outcome of reclamation proceedings. Many of the payees involved are the recipients of emergency relief funds. They are not only entitled to the funds but greatly in need of immediate payment. The proposed legislation is, therefore, very desirable from the standpoint of such persons. Moreover, it will provide uniform treatment for all payees. For your information, H. R. 4656, for the relief of Thomas S. Robinson, now being considered by your committee, is typical of the many claims arising when payees of checks which have been paid upon forged endorsements are deprived of the amount due until such indeterminate future time as recovery has been effected, or, in the rare cases in which such recovery cannot be effected, until relief is afforded through private relief legislation. In this instance, refund of the amount involved was refused by the endorsers because of the Government's alleged unreasonable delay in giving notice of the forgery. The matter of effecting recovery was referred to the Department of Justice for whatever action it deemed necessary for the protection of the interest of the United States. It is believed that this bill, H. R. 5079, will relieve the inequitableness of such situations. The bill in no way affects the duty of the Treasurer to reclaim, nor the liability of the parties who received the payment on the original check. When recoveries are made from the forger or subsequent transferees of the original check, the amount thereof is deposited back to the credit of the fund out of which the advance has been made. The provisions of this bill were intended, it is believed, to cover all checks described therein which are outstanding at the present time. The Department is of the opinion that all outstanding checks should be covered. In order that there may be no doubt as to the meaning of the language used in H. R. 5079, this Department recommends that section 2 (a), page 2, lines 10 to 12 of the bill, be amended to read: * * "SEC. 2. Whenever it is established (a) that any check heretofore or hereafter drawn on the Treasurer of the United States has been lost or stolen, (Proposed change in italic.) In accordance with the above suggestions, it is further recommended that section 2 (d), page 2, lines 19 to 24, of the bill, be amended to read: * * (d) that reclamation from the forger or transferees or parties on such check subsequent to the forgery has been or may be delayed or be unsuccessful, the Treasurer of the United States is authorized and directed to draw on the fund prior to reclamation to pay such payee or special endorsee the amount of such check, without interest." (Proposed change in italic.) The Treasury Department believes that this proposed legislation is particularly constructive, and strongly urges, for the above reasons, its enactment with the suggested changes. The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee. Very truly yours, D. W. BELL, Acting Secretary of the Treasury. O |