B-155504, NOV. 23, 1964

B-155504, NOV. 23, 1964

TO THE HONORABLE SECRETARY OF THE TREASURY:

REFERENCE IS MADE TO LETTER OF OCTOBER 29, 1964, AND ATTACHMENTS, FROM THE FISCAL ASSISTANT SECRETARY, CONCERNING A CLAIM BEFORE THE OFFICE OF THE TREASURER OF THE UNITED STATES FROM THE FIRST NATIONAL BANK OF NEVADA (BANK). THE BANK CLAIMS IT IS A HOLDER IN DUE COURSE OF CHECK NO. 51,818,455, DATED SEPTEMBER 9, 1964, FOR $60,010.68, DRAWN OVER SYMBOL 3120, TO THE ORDER OF THE H AND M CONSTRUCTION COMPANY.

THE PERTINENT FACTS GIVING RISE TO THE CLAIM, AS DISCLOSED BY THE RECORD, ARE SET FORTH BELOW.

THE CHECK WAS ISSUED BY THE TREASURY DISBURSING OFFICE IN SAN FRANCISCO, ACTING FOR THE NATIONAL PARK SERVICE. APPARENTLY, INSTEAD OF ONE CHECK BEING DRAWN IN THE FULL AMOUNT TO THE H AND M CONSTRUCTION COMPANY, FOUR SEPARATE CHECKS AGGREGATING THE FULL AMOUNT BUT PAYABLE JOINTLY TO THE H AND M CONSTRUCTION COMPANY AND CERTAIN INSURERS ON A CONTRACTOR'S BOND SHOULD HAVE BEEN ISSUED. UPON LEARNING THAT A MISTAKE HAD BEEN MADE, THE NATIONAL PARK SERVICE ASKED THE TREASURY DISBURSING OFFICE TO STOP PAYMENT OF THE CHECK FOR THE REASON THAT THE PAYEE WAS NOT ENTITLED. THIS WAS DONE.

WHEN THE CHECK WAS PRESENTED TO THE TREASURER OF THE UNITED STATES FOR PAYMENT IT WAS DISHONORED IN ACCORDANCE WITH THE DRAWER'S ORDER, BUT IN ACCORDANCE WITH THE TREASURY DEPARTMENT'S NORMAL PROCEDURE, A NOTICE WAS SENT TO THE FIRST NATIONAL BANK OF NEVADA THAT IF ANY HOLDER WAS UNABLE TO RECOVER FROM A PRIOR PARTY AND CLAIMED TO BE A HOLDER IN DUE COURSE, THE CHECK SHOULD BE RETURNED TO THE TREASURER OF THE UNITED STATES WITH A STATEMENT OF FACTS. THE BANK CLAIMED TO BE A HOLDER IN DUE COURSE AND SENT TO THE TREASURER SUPPORTING DOCUMENTS.

MEANWHILE, THE TREASURY DEPARTMENT HAD RECEIVED A LETTER FROM THE ATTORNEYS (IN SAN DIEGO) FOR THE INSURERS, WHO REPORTED THAT THEY WERE IN POSSESSION OF FACTS WHICH ESTABLISHED THAT THE FIRST NATIONAL BANK OF NEVADA WAS NOT A HOLDER IN DUE COURSE. THE FOLLOWING REASONS ARE ADVANCED BY THE INSURERS' ATTORNEYS AS PRECLUDING THE BANK FROM BEING A HOLDER IN DUE COURSE:

"A) THAT ON OR ABOUT THE 9TH DAY OF OCTOBER, 1963, H AND M CONSTRUCTION CO. ASSIGNED TO SAN DIEGO TRUST AND SAVINGS BANK ALL MONIES DUE OR TO BECOME DUE UNDER CONTRACT NUMBER 14-10-0436-047 WHICH ASSIGNMENT WAS MADE UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940 AS AMENDED. WE ARE INFORMED AND BELIEVE THAT A COPY OF THAT ASSIGNMENT WAS DELIVERED TO AT LEAST ONE AGENCY OF THE U.S. GOVERNMENT. THE CHECK IN QUESTION IMPROPERLY CONTAINED $28,929.62 OF FUNDS WHICH HAD BEEN PREVIOUSLY ASSIGNED TO SAN DIEGO TRUST AND SAVINGS BANK.

"B) THE ACCOUNT, WHICH HOWARD DURWOOD RAYMOND, THE GENERAL PARTNER OF H AND M CONSTRUCTION CO. INVOLVED WAS OPENED APPARENTLY AT THE FIRST NATIONAL BANK OF NEVADA INITIALLY ON SEPTEMBER 14, 1964. WE ARE INFORMED AND BELIEVE THAT MR. RAYMOND OPENED THIS ACCOUNT BY FURNISHING TO THE BANK ONLY A TYPED CONFORMED COPY OF THE CERTIFICATE OF PARTNERSHIP OF H AND M CONSTRUCTION CO. AND NO OTHER PROOF OF HIS AUTHORITY TO ENDORSE THE CHECK IN QUESTION. THE REASON THAT WE HAVE BEEN UNABLE TO ASCERTAIN ANY FURTHER INFORMATION REGARDING THIS FACTOR IS THAT THE FIRST NATIONAL BANK OF NEVADA HAS REFUSED TO LET US REVIEW THEIR RECORDS REGARDING THIS MATTER.

"C) THE CHECK IN QUESTION WAS DEPOSITED ON OR ABOUT SEPTEMBER 14, 1964, AND WAS APPARENTLY NOT PRESENTED FOR COLLECTION TO WASHINGTON UNTIL ON OR ABOUT THE 30TH DAY OF SEPTEMBER, 1964. THE UNDERSIGNED IS INFORMED AND BELIEVES THAT IN THE NORMAL COURSE OF BANKING BUSINESS A PERIOD OF NOT MORE THAN SIX DAYS SHOULD HAVE ELAPSED BETWEEN THE TIME THE CHECK WAS RECEIVED FOR DEPOSIT IN LAS VEGAS AND THE TIME THAT IT WAS PRESENTED TO THE TREASURY DEPARTMENT FOR PAYMENT. THIS WOULD INDICATE TO THE UNDERSIGNED THAT APPARENTLY THE FIRST NATIONAL BANK OF NEVADA DID NOT HANDLE THIS CHECK AS A NORMAL CHECK WOULD BE HANDLED FOR PRESENTMENT AND PAYMENT.

"D) APPARENTLY NO EFFORT WAS MADE BY OFFICERS OF THE BANK TO DETERMINE WHETHER OR NOT MR. RAYMOND HAD AUTHORITY TO CASH THIS CHECK. HAD NORMAL INQUIRY BEEN MADE THEY WOULD HAVE ASCERTAINED THAT MR. DURWOOD RAYMOND SHOULD HAVE BEEN IN FRESNO, CALIFORNIA AT THIS TIME, NOT LAS VEGAS, THEREBY ALERTING THE OTHER PARTNERS THAT HE WAS THERE OTHER THAN ON BUSINESS.

"E) THE BANK REQUESTED THAT MR. HOWARD DURWOOD RAYMOND OBTAIN A SIGNATURE CARD UPON WHICH WOULD APPEAR THE AUTHORIZED SIGNATURE OF ALL PARTNERS. APPARENTLY, MR. RAYMOND RETURNED THIS CARD TO THE BANK AFTER ALL OR MOST OF THE MONEY HAD BEEN WITHDRAWN FROM THE ACCOUNT. ALL OF THE SIGNATURES APPEARING ON THIS CARD WERE ADMITTEDLY FORGED. THIS PROBLEM CONFRONTING US NOW COULD HAVE BEEN PREVENTED HAD A PROPERLY SIGNED COPY OF THE CERTIFICATE OF PARTNERSHIP BEEN DEMANDED BY THE BANK PRIOR TO RELEASING ANY MONEY.

"F) HOWARD RAYMOND ALLEGEDLY TOLD HIS BROTHER, DONALD RAYMOND, WHO IS A RECENT LAW SCHOOL GRADUATE, THAT HE HAD BEEN ABLE TO CASH THIS CHECK AND WITHDRAW THE MONEY FROM THE FIRST NATIONAL BANK OF NEVADA BECAUSE "YOU CAN GET ANYTHING YOU WANT IN LAS VEGAS FOR $10,000" AND ALSO STATED THAT HE HAD PAID SOME OFFICER OR EMPLOYEE OF THE BANK TO RECEIVE THE FUNDS IN QUESTION.

"G) THAT UNDER BANKING PRACTICE, BANKS DO NOT PERMIT A NEW ACCOUNT TO BE OPENED WITH A DEPOSIT OF A $60,000.00 CHECK AND PERMIT THE MONEY TO BE WITHDRAWN PRIOR TO THE CHECK HAVING CLEARED THROUGH THE FEDERAL RESERVE SYSTEM.'

THE FISCAL ASSISTANT SECRETARY STATES THAT IT IS THE OPINION OF YOUR DEPARTMENT THAT THE BANK IS A HOLDER OF THE CHECK IN DUE COURSE, NOTWITHSTANDING THAT THE ALLEGATIONS CONTAINED IN THE LETTER FROM THE INSURERS' ATTORNEYS MIGHT BE PROVED. HE STATES THAT THIS OPINION IS SUPPORTED BY THE LEGAL AUTHORITIES REFERRED TO IN PATON'S DIGEST OF LEGAL OPINIONS, VOLUME I, SECTION 7A:5 AND 7A:6 (BANK PERSONNEL) AND VOLUME II, SECTION 10:1 (HOLDERS IN DUE COURSE) AND FOLLOWING SUBSECTIONS.

SECTION 52 OF THE SO-CALLED "UNIFORM NEGOTIABLE INSTRUMENTS LAW" AS IT APPEARS IN BEUTEL'S BRANNAN, NEGOTIABLE INSTRUMENTS LAW, DEFINES A HOLDER IN DUE COURSE AS FOLLOWS:

"A HOLDER IN DUE COURSE IS A HOLDER WHO HAS TAKEN THE INSTRUMENT UNDER THE FOLLOWING ONDITIONS:

"/1) THAT IS COMPLETE AND REGULAR UPON ITS FACE;

"/2) THAT HE BECAME THE HOLDER OF IT BEFORE IT WAS OVERDUE, AND WITHOUT NOTICE THAT IT HAD BEEN PREVIOUSLY DISHONORED, IF SUCH WAS THE FACT;

"/3) THAT HE TOOK IT IN GOOD FAITH AND FOR VALUE;

"/4) THAT AT THE TIME IT WAS NEGOTIATED TO HIM HE HAD NO NOTICE OF ANY INFIRMITY IN THE INSTRUMENT OR DEFECT IN THE TITLE OF THE PERSON NEGOTIATING IT.'

IT IS ALLEGED, IN EFFECT, BY THE ATTORNEYS FOR THE INSURERS THAT THE BANK DID NOT TAKE THE CHECK IN GOOD FAITH AND THAT AT THE TIME IT WAS NEGOTIATED THE BANK HAD NOTICE OR SHOULD HAVE BEEN ON NOTICE OF A DEFECT IN THE TITLE OF THE PERSON NEGOTIATING THE CHECK.

SECTION 5Y OF THE NEGOTIABLE INSTRUMENTS LAW CITED ABOVE PROVIDES THAT:

"TO CONSTITUTE NOTICE OF AN INFIRMITY IN THE INSTRUMENT OR DEFECT IN THE TITLE OF THE PERSON NEGOTIATING THE SAME, THE PERSON TO WHOM IT IS NEGOTIATED MUST HAVE HAD ACTUAL KNOWLEDGE OF THE INFIRMITY OR DEFECT, OR KNOWLEDGE OF SUCH FACTS THAT HIS ACTION IN TAKING THE INSTRUMENT AMOUNTED TO BAD FAITH.'

A PURCHASER OF NEGOTIABLE PAPER FAIR AND REGULAR ON ITS FACE, BEFORE MATURITY AND IN DUE COURSE IS UNDER NO DUTY TO MAKE INQUIRY INTO THE CONSIDERATION GIVEN THEREFOR OR THE TRANSACTION OUT OF WHICH IT AROSE OR AS TO INFIRMITIES IN THE INSTRUMENT OR DEFECTS IN TITLE. TO DEFEAT THE TITLE OF ONE OTHERWISE A HOLDER IN DUE COURSE WHO DOES NOT HAVE KNOWLEDGE OF AN INFIRMITY OR DEFECT THERE MUST BE ACTUAL BAD FAITH. 11 AM.JR. 2D BILLS AND NOTES 431. IT IS WELL-ESTABLISHED BY THE GREAT WEIGHT OF AUTHORITY THAT MERELY SUSPICIOUS CIRCUMSTANCES SUFFICIENT TO PUT A PRUDENT MAN ON INQUIRY OR EVEN NEGLIGENCE AT THE TIME A PERSON ACQUIRES A NOTE ARE NOT SUFFICIENT OF THEMSELVES TO PRECLUDE RECOVERY ON A NOTE IN THE ABSENCE OF A SHOWING OF FRAUD OR BAD FAITH. IN TOPCO ASSOCIATES, INC. V. FIRST NAT. BANK OF PORTLAND, 273 P.2D 420, IT IS STATED THAT:

"THE COURTS HAVE, GENERALLY, (AS HAS THIS COURT) REJECTED THE DEFENSE OF NEGLIGENCE AND CONSTRUCTIVE NOTICE OF SUCH FACTS AS WOULD PUT A PURCHASER UPON NOTICE WHERE THE PURCHASER OF A NEGOTIABLE INSTRUMENT IS A PURCHASER FOR VALUE. "THE STRICTNESS OF THE GENERAL EQUITY DOCTRINE OF CONSTRUCTIVE NOTICE IS NOT APPLIED TO A PURCHASER FOR VALUE OF NEGOTIABLE INSTRUMENTS BEFORE MATURITY. SUCH PURCHASER IS NOT "PUT UPON INQUIRY" BY SUSPICION, BY KNOWLEDGE OF SUCH FACTS AS OUGHT TO PUT AN ORDINARILY PRUDENT MAN UPON INQUIRY, NOR BY NEGLIGENCE. HE IS NOT REQUIRED TO BUSY HIMSELF INQUIRING ABOUT INFIRMITIES OR SEARCHING FOR DEFECTS, ONLY KNOWLEDGE OF SUCH FACTS AS WOULD MAKE HIS PURCHASE AN ACT OF BAD FAITH IS SUFFICIENT TO IMPEACH HIS TITLE AS A HOLDER IN DUE COURSE. PRUDENCE IS NOT THE CRITERION. * * * THE QUESTION IS ONE OF GOOD FAITH OR BAD FAITH, HONESTY OR DISHONESTY.

SEE ALSO FIRST NATL. BANK OF ALBUQUERQUE V. STOVER, 155 P. 905; AND AMALGAMATED SUGAR CO. V. UNITED STATES NAT. BANK, 187 F. 746. WHILE THERE ARE CASES TO THE CONTRARY, SUCH CASES ARE AGAINST THE GREAT WEIGHT OF AUTHORITY. SEE SECTION 56 (-AGE 777), BEUTEL'S BRANNAN, NEGOTIABLE INSTRUMENTS LAW.

IT APPEARS FROM THE RECORD BEFORE US THAT THE PARTNERSHIP WAS A FAMILY PARTNERSHIP CONSISTING OF TWO BROTHERS, THEIR MOTHER, AND THE WIFE OF ONE OF THE BROTHERS. TWO OF THE OTHER THREE PARTNERS (THE THIRD PARTNER BEING ELDERLY AND ILL) HAVE INDICATED IN SWORN STATEMENTS MADE ON OCTOBER 1, 1964, THAT THE PARTNER WHO CASHED THE CHECK WAS, IN EFFECT, THE MANAGING PARTNER AND CONDUCTED THE BUSINESS OPERATIONS. IT FURTHER APPEARS FROM THE STATEMENT OF ONE OF THE OTHER PARTNERS THAT THE ORIGINAL PARTNERSHIP AGREEMENT AUTHORIZED ANY OF THE PARTNERS TO SIGN CHECKS AND WITHDRAW FUNDS FROM THE PARTNERSHIP ACCOUNT. FURTHER, THERE IS NOTHING IN THE RECORD TO INDICATE THAT ANY OF THE PARTNERS HAVE NOW OR WOULD HAVE HAD AT THE TIME, ANY OBJECTIONS TO THE CHECK TRANSACTION INVOLVED HERE. IN FACT THE RECORD INDICATES THAT IF THE BANK HAD MADE INQUIRY OF TWO OF THE OTHER PARTNERS AS TO THE AUTHORITY OF THE MANAGING PARTNER TO DEPOSIT CHECKS OR WITHDRAW FUNDS, THEY WOULD HAVE INDICATED HE HAD SUCH AUTHORITY.

THERE IS NOTHING IN THE RECORD BEFORE US TO INDICATE THAT THE BANK HAD NOTICE OF ANY ASSIGNMENT MADE BY THE H AND M CONSTRUCTION COMPANY PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED. THE RECORD DISCLOSES THAT THE CHECK IN QUESTION WAS COMPLETE AND REGULAR ON ITS FACE AND WAS INDORSED "H AND M CONSTRUCTION COMPANY BY HOWARD DURWOOD RAYMOND.' OTHER WORDS THE CHECK WAS ENDORSED IN BLANK WITHOUT RESTRICTION. PRESUMABLY THE PARTNER WHO DEPOSITED THE CHECK ESTABLISHED HIS IDENTITY TO THE SATISFACTION OF THE BANK AND ALSO SATISFIED THE BANK THAT HE WAS A PARTNER IN THE FIRM AND AUTHORIZED TO SIGN CHECKS. AT LEAST, THERE IS NOTHING IN THE RECORD TO THE CONTRARY. THE FACT THAT THE BANK RELIED ON A TYPED CONFORMED COPY OF THE PARTNERSHIP AGREEMENT IN OPENING THE ACCOUNT IS NOT A BASIS FOR HOLDING THAT THE BANK IS NOT A HOLDER IN DUE COURSE, IN THE ABSENCE OF A SHOWING THAT THE BANK ACTED IN BAD FAITH. MOREOVER, IN VIEW OF THE RECORD BEFORE US, IT APPEARS THAT IF THE BANK HAD INVESTIGATED THE MATTER IT WOULD HAVE DISCOVERED FACTS SUFFICIENT TO JUSTIFY A REASONABLE MAN BELIEVING THAT THE PARTNER WHO DEPOSITED THE CHECK HAD AUTHORITY TO MAKE WITHDRAWALS FROM THAT ACCOUNT. IT HAS BEEN HELD THAT WHERE THE CIRCUMSTANCES ARE SUCH AS TO PUT A BANK ON INQUIRY, WHERE SUCH INQUIRY, THOUGH NOT MADE, WOULD HAVE DISCLOSED AN APPARENT AUTHORITY FOR THE ACTS DONE, THE PURCHASER OF THE PAPER IS ENTITLED TO THE BENEFIT OF ANY FACTS WHICH MIGHT HAVE EXISTED. SEE BUCKLEY V. LINCOLN TRUST CO., 131 N.Y.S. 105.

AS TO PRESENTMENT OF THE CHECK FOR COLLECTION, IT APPEARS FROM THE RECORD THAT THE CHECK WAS FORWARDED BY THE FIRST NATIONAL BANK THROUGH NORMAL TRANSIT CHANNELS TO THE LOS ANGELES BRANCH, FEDERAL RESERVE BANK OF SAN FRANCISCO, LOS ANGELES, CALIFORNIA, ON SEPTEMBER 14, 1964, THE SAME DATE ON WHICH THE CHECK WAS RECEIVED BY THE FIRST NATIONAL BANK FOR DEPOSIT. THUS, IT DOES NOT APPEAR THAT THERE WAS ANY DELAY IN THE TRANSMISSION OF THE CHECK FOR COLLECTION BY THE FIRST NATIONAL BANK.

FURTHER, EVEN ASSUMING THAT GENERALLY UNDER BANK PRACTICE, BANKS DO NOT PERMIT A NEW ACCOUNT TO BE OPENED WITH A DEPOSIT OF A $60,000 CHECK AND PERMIT THE MONEY TO BE WITHDRAWN PRIOR TO THE CHECK HAVING CLEARED THROUGH THE FEDERAL RESERVE SYSTEM, THAT WOULD NOT PRECLUDE THE BANK FROM BEING A HOLDER IN DUE COURSE, IN A CASE WHERE THE GOVERNMENT IS THE DRAWER OF THE CHECK, ABSENT A SHOWING OF BAD FAITH ON THE PART OF THE BANK IN PERMITTING SUCH WITHDRAWAL, SINCE THE BANK IN SUCH A CASE WOULD NOT BE CONCERNED WITH THE ABILITY OF THE DRAWER TO PAY THE CHECK. MOREOVER, IT IS ALMOST UNIVERSALLY HELD OR STATED THAT WHEN A BANK PERMITS ITS DEPOSITOR TO WITHDRAW COMPLETELY OR OTHERWISE EMPLOY THE PROCEEDS OF THE ITEM DEPOSITED PRIOR TO RECEIPT OF ANY NOTICE THAT PAYMENT HAS BEEN STOPPED OR THAT THE INSTRUMENT IS DEFECTIVE, THE BANK HAS GIVEN VALUE FOR THE PAPER AND MAY BE A HOLDER IN DUE COURSE. 11 AM.JUR. 2D BILLS AND NOTES 339 AND CASES CITED THEREIN. THIS WOULD INDICATE THAT THERE IS NO STANDARD PRACTICE ON THE PART OF THE BANKS CONCERNING THE WITHDRAWAL OF FUNDS CONTAINED IN A DEPOSITED CHECK PRIOR TO COLLECTION OF THE CHECK BY THE BANK. ALSO, WHILE THE SIGNATURES OF THE OTHER PARTNERS ON THE SIGNATURE CARD MAY HAVE BEEN FORGED, IT APPEARS FROM THE RECORD THAT THE SIGNATURES OF THE OTHER PARTNERS WERE NOT FURNISHED THE BANK UNTIL "ALL OR MOST OF THE MONEY HAD BEEN WITHDRAWN.' THUS, AT THE TIME OF THE DEPOSIT OF THE CHECK AND THE WITHDRAWAL OF MOST OF THE FUNDS, THE BANK HAD NOT RECEIVED THE SIGNATURE CARD AND, HENCE, COULD NOT HAVE BEEN ON NOTICE OF ANY FORGED SIGNATURES THEREON.

CONCERNING THE BRIBERY ALLEGATION, THERE IS NO PROOF IN THE RECORD TENDING TO SUPPORT SUCH ALLEGATION OTHER THAN THE STATEMENT OF THE INSURERS' ATTORNEYS, AND THE BANK STATES THAT AN INVESTIGATION HAS DISCLOSED THAT THE ALLEGATION IS FALSE AND WITHOUT ANY SUBSTANTIATION OR MERIT.

HOWEVER, IF IT IS ESTABLISHED THAT A BRIBE WAS PAID BY THE PARTNER TO A BANK OFFICIAL OR EMPLOYEE INCIDENT TO THE DEPOSIT OF THE CHECK AND SUBSEQUENT WITHDRAWAL OF THE PROCEEDS, WE CANNOT SAY ON THE BASIS OF THE PRESENT RECORD THAT THE BANK IS A HOLDER IN DUE COURSE. IT IS A WELL- SETTLED EXCEPTION TO THE GENERAL RULE REGARDING THE IMPUTATION TO A BANK OF THE KNOWLEDGE OF ITS OFFICER OR AGENT THAT WHEN THE OFFICER OR AGENT OF A BANK IS ACTING IN A TRANSACTION IN WHICH HE IS PERSONALLY OR ADVERSELY INTERESTED, EITHER IN THE LEGITIMATE TRANSACTION OF HIS OWN IN THE PERPETRATION OF AN INDEPENDENT FRAUDULENT TRANSACTION WHICH IT WOULD BE TO HIS INTEREST TO CONCEAL, THE BANK IS NOT CHARGEABLE WITH HIS UNCOMMUNICATED KNOWLEDGE OF FACTS DEROGATORY TO SUCH INTERESTS OR TO THE TITLE TO THE PROPERTY WHICH IS THE SUBJECT OF THE TRANSACTION. HOWEVER, THE PREVAILING RULE DOES NOT RECOGNIZE THE EXCEPTION TO THE GENERAL RULE OF IMPUTATION OF KNOWLEDGE WHEN THE OFFICER OR AGENT WHO IS ACTING ADVERSELY OR FRAUDULENTLY IS THE SOLE REPRESENTATIVE OF THE BANK; IN SUCH CASE THE RULE IS THAT THE KNOWLEDGE OF THE SOLE REPRESENTATIVE OF THE BANK BECOMES THE KNOWLEDGE OF THE BANK BY IMPUTATION. SEE 10 AM. JUR. BANKS 168 AND CASES CITED THEREIN. CF. KEAN V. NATIONAL CITY BANK, 294 F. 214; CURTIS, COLLINS AND HOLBROOK COMPANY V. UNITED STATES, 262 U.S. 215.

IN THE ABSENCE OF ANY FURTHER EVIDENCE TO SUPPORT THE ALLEGATION OF BRIBERY IN THE INSTANT CASE, THE BANK MAY BE CONSIDERED A HOLDER IN DUE COURSE. HOWEVER, IF A BRIBE WAS PAID WE CANNOT SAY ON THE BASIS OF THE PRESENT RECORD THAT THE BANK IS A HOLDERIN DUE COURSE. IF A BRIBE WAS PAID, IT IS OUR VIEW THAT THE CHECK IN QUESTION SHOULD NOT BE PAID PENDING JUDICIAL DETERMINATION OF THE MATTER, IN LIGHT OF THE APPARENT CONFLICT IN THE DECIDED CASES INVOLVING THE "SOLE ACTOR" DOCTRINE.

IN LIGHT OF THE FOREGOING AND ASSUMING THAT THERE IS NO FURTHER EVIDENCE OF BRIBERY, IT IS OUR VIEW THAT ON THE BASIS OF THE PRESENT RECORD THE BANK MAY BE CONSIDERED A HOLDER IN DUE COURSE. WE UNDERSTAND THAT IF THE GOVERNMENT IS REQUIRED TO MAKE PAYMENT TO ANY OTHER PARTY ON ACCOUNT OF THE CHECK, YOU WILL TAKE RECOVERY ACTION AGAINST THE BANK AS GUARANTOR OF ALL PRIOR INDORSEMENTS.