B-137876, JUL. 29, 1959

B-137876, JUL. 29, 1959

TO RICHARD BENNETT, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF JULY 8, 1959, REQUESTING THAT WE FURTHER RECONSIDER THAT PART OF OUR SETTLEMENT OF MARCH 19, 1959, DISALLOWING PAYMENT TO CAPTAIN J. A. BARHANOVIC UPON SIX OF 18 CHECKS INVOLVED IN HIS CLAIM NO. Z-159901, WHICH SETTLEMENT WAS TWICE SUSTAINED AFTER RECONSIDERATIONS PURSUANT TO YOUR EARLIER REQUESTS OF APRIL 17, AND JUNE 9, 1959.

THE BASIS FOR THE DISALLOWANCE HAS BEEN FULLY EXPLAINED IN OUR LETTERS OF MAY 21 AND JULY 6, 1959, AND IT WOULD SERVE NO USEFUL PURPOSE TO REITERATE THE REASONS STATED THEREIN.

YOUR LATEST REQUEST FOR RECONSIDERATION OF THE CLAIM IS APPARENTLY BASED UPON THE BELIEF THAT WE HAVE MISCONSTRUED THE HOLDING OF THE COURT IN UNITED STATES V. GUARANTY TRUST COMPANY OF NEW YORK, 293 U.S. 340, RELIED UPON BY US IN REACHING OUR DECISION. YOU STATE THAT UNDER THE LAW OF YUGOSLAVIA, CAPTAIN BARHANOVIC, AS THE HOLDER OF THE CHECKS IN QUESTION, HAS GOOD TITLE TO THEM AND IS ENTITLED TO PAYMENT; THAT IT IS NOT NECESSARY THAT HE BE A BONA FIDE HOLDER OF THE CHECKS. YOU STATE ALSO THAT IN THE GUARANTY TRUST CASE, THE BANK ACQUIRED GOOD TITLE TO THE CHECK INVOLVED "IN SPITE OF A KNOWN FORGED INDORSEMENT.'

IT IS OBVIOUS FROM EVEN A CURSORY READING OF THE GUARANTY TRUST CASE THAT THE BANK WAS NOT AWARE OF THE FORGED INDORSEMENT AT THE TIME IT ACCEPTED TRANSFER OF THE CHECK. IN A RECITATION OF THE FACTS IN THE CASE, IT IS STATED AT PAGE 344 "THAT EACH OF THESE BANKS PAID A VALUABLE CONSIDERATION, RECEIVED THE CHECK IN GOOD FAITH, TOOK IT WITHOUT NOTICE OF THE FORGERY OR OTHER DEFECT, AND WAS NOT GUILTY OF ANY FRAUD OR NEGLIGENCE.' IT IS EQUALLY OBVIOUS THAT HAD THE BANK KNOWN OF THE FORGED INDORSEMENT PRIOR TO ITS BECOMING TRANSFEREE OF THE CHECK, THE COURT WOULD NOT HAVE REACHED THE CONCLUSION IT DID, AND THAT WHERE THE COURT SPEAKS OF THE "TRANSFEREE WITHOUT INDORSEMENT" AT PAGE 348, IT IS REFERRING TO A BONA FIDE TRANSFER FOR VALUE.

AS TO THE APPLICABLE PROVISIONS OF THE LAW OF YUGOSLAVIA, THERE IS QUOTED BELOW A PORTION OF THE FOOTNOTE APPEARING AT 293 U.S. 343, PARAGRAPHS (A) (B) AND (C) OF WHICH CLEARLY REQUIRE THE BONA FIDES OF THE TRANSFEREE IN ORDER FOR HIM TO OBTAIN GOOD TITLE.

"UPON THE NEGOTIATION AND TRANSFER OF A CHECK OR BILL OF EXCHANGE EACH TRANSFEREE, ENDORSEE, OR HOLDER THEREOF OBTAINS A GOOD TITLE TO THE INSTRUMENT AND ACQUIRES THE RIGHT TO COLLECT AND RETAIN THE PROCEEDS THEREOF, EVEN THOUGH THE ENDORSEMENT OF THE PAYEE IS FORGED WHERE

"/A) THE INSTRUMENT PURPORTS TO BEAR A CHAIN OR SERIES OF ENDORSEMENTS FROM THE PAYEE OF THE INSTRUMENT TO THE TRANSFEREE, HOLDER OR ENDORSEE THEREOF; AND

"/B) THE SAID TRANSFEREE, HOLDER OR ENDORSEE GIVES VALUABLE CONSIDERATION FOR THE INSTRUMENT; AND

"/C) THE SAID TRANSFEREE, HOLDER OR ENDORSEE TAKES THE INSTRUMENT WITHOUT ACTUAL NOTICE OF ANY FORGERY OR OTHER DEFECT IN THE INSTRUMENT AND IS NOT GUILTY OF ANY FRAUD OR GROSS NEGLIGENCE IN TAKING THE INSTRUMENT: "

AS YOU HAVE NOT SET FORTH ANY SOUND BASIS UPON WHICH THE DECISIONS WE HAVE PREVIOUSLY RENDERED IN THE MATTER MIGHT BE CONSIDERED AS BEING IN ERROR, OUR SETTLEMENT OF MARCH 19, 1959, IS AGAIN SUSTAINED.