U.S. District Court Judge Albert V. Bryan Jr. dismissed a suit yesterday against the U.S. Army that claimed the service had violated the privacy of an Army intelligence officer and his wife by obtaining their American Express records without a court order.

Bryan ruled that government auditors had a right to the records of Laura and Lt. Col. Dale E. Duncan of Annandale because their credit card had been used mostly for government expenses related to a now-defunct covert Army operation run by Duncan. The records had been sought to complete an audit of that operation.

"It would stand the Privacy Act on its head if [government] auditors could not determine or find the records which supported expenditures for business purposes," Bryan said in the Alexandria court.

Despite testimony from the Duncans that they had maintained the account as a personal one since 1969, Bryan said "this was not these plaintiffs' personal account, except marginally." Most of the account's expenditures were for travel or other expenses incurred by Duncan as head of Business Services International of Annandale and they were paid for with government funds, testimony showed.

Ostensibly a private security consulting firm, BSI actually was an Army cover operation providing security to secret Army operations.

"We believe the Army and the individuals were vindicated," said federal prosecutors Pamela A. Smith and Robert C. Erickson.

"I think his ruling was directly contrary to the evidence," said the Duncans' attorney David J. Fudala. The implication of the ruling, which will be appealed, Fudala said, is "that when a person uses his private credit card for business expenses, he loses his right to privacy."

Testimony disclosed that in preparation for a 1983 audit of BSI books, a BSI employe went to American Express offices in Fort Lauderdale, Fla., to obtain the Duncans' records. He carried an identification card from an unspecified Army agency identifying him as a "special investigator," though that was not his real job and he used the card only for that trip.

Fudala argued this was a "bogus" identification card and the records should have been sought by subpoena. Government lawyers said that the identification card was not bogus because it had been issued in the employe's real name.

Claims by the Duncans against American Express were dropped yesterday at the start of the trial. Lawyers for both sides declined to say if a settlement had been reached. Claims against three former BSI employes, William T. Golden, Gary Peisen and Thomas M. Belcher, had previously been dropped.

Duncan is awaiting sentencing, expected next week, for convictions last month on federal charges of filing false statements and theft stemming from his handling of BSI funds.