A-29959, MAY 15, 1930, 9 COMP. GEN. 476

A-29959: May 15, 1930

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CHECKS - INDORSEMENTS - FORGERIES WHEN THE GOVERNMENT IN ISSUING AND DELIVERING A CHECK DEALS DIRECTLY BY CORRESPONDENCE OR OTHERWISE WITH THE PARTICULAR PERSON TO WHOM THE CHECK IS ISSUED AND DELIVERED. WHEREIN YOU HAVE CALLED ATTENTION TO THE FACT THAT CHECK NO. 17469. WERE NOT DELIVERED TO THE IMPOSTOR IN PERSON BUT WERE SENT TO HIM BY MAIL. THEREBY RAISING THE QUESTION WHETHER IT IS THE INTENTION OF THIS OFFICE TO EXTEND THE RULE AS STATED IN DECISIONS OF JANUARY 30. INVOLVING CASES IN WHICH THE CHECK WAS DELIVERED BY THE DISBURSING OFFICER TO THE IMPOSTOR IN PERSON. TO THOSE CASES WHERE THE CHECK WAS FORWARDED BY THE DRAWER TO THE IMPOSTOR BY MAIL. IT WAS STATED. THAT THE CHECK WAS INDORSED BY ONE VOGELI OF CLINTON.

A-29959, MAY 15, 1930, 9 COMP. GEN. 476

CHECKS - INDORSEMENTS - FORGERIES WHEN THE GOVERNMENT IN ISSUING AND DELIVERING A CHECK DEALS DIRECTLY BY CORRESPONDENCE OR OTHERWISE WITH THE PARTICULAR PERSON TO WHOM THE CHECK IS ISSUED AND DELIVERED, THOUGH DECEIVED AS TO HIS IDENTITY, RECLAMATION CAN NOT BE EFFECTED FROM THE INDORSER WHO ACCEPTED THE CHECK FROM SUCH PERSON FOR VALUE WITHOUT NOTICE OF HIS LACK OF TITLE TO THE CHECK.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF THE TREASURY, MAY 15, 1930:

THERE HAS BEEN RECEIVED YOUR LETTER OF APRIL 10, 1930, REFERRING TO LETTER OF THIS OFFICE DATED JANUARY 16, 1930, TO THE TREASURER OF THE UNITED STATES, A-29959, WHEREIN YOU HAVE CALLED ATTENTION TO THE FACT THAT CHECK NO. 17469, DATED JANUARY 23, 1928 (INADVERTENTLY DATED 1928 INSTEAD OF 1929), FOR $23.09, AND CHECK NO. 15731 DATED NOVEMBER 24, 1928, FOR $85, DRAWN TO THE ORDER OF PHILIP V. WALTERS BY L. GREEN,DISBURSING AGENT, UNITED STATES VETERANS' BUREAU, WERE NOT DELIVERED TO THE IMPOSTOR IN PERSON BUT WERE SENT TO HIM BY MAIL, THEREBY RAISING THE QUESTION WHETHER IT IS THE INTENTION OF THIS OFFICE TO EXTEND THE RULE AS STATED IN DECISIONS OF JANUARY 30, 1929, A-25029, AND SEPTEMBER 11, 1929, A-28578, INVOLVING CASES IN WHICH THE CHECK WAS DELIVERED BY THE DISBURSING OFFICER TO THE IMPOSTOR IN PERSON, TO THOSE CASES WHERE THE CHECK WAS FORWARDED BY THE DRAWER TO THE IMPOSTOR BY MAIL.

IN THE SAID LETTER OF JANUARY 16, 1930, WITH REFERENCE TO CHECK NO. 17469 (SECOND LOAN), IT WAS STATED, AS FOLLOWS:

IT APPEARS THAT ONE DAVID CARSON, REPRESENTING HIMSELF TO BE PHILIP V. WALTERS, FRAUDULENTLY SECURED THE ISSUANCE OF THE ABOVE CHECK BY PRESENTING ADJUSTED SERVICE CERTIFICATE NO. 601526, PAYABLE TO PHILIP V. WALTERS AND SIGNING APPLICATION FOR A LOAN THEREUNDER; THAT THE CHECK WAS INDORSED BY ONE VOGELI OF CLINTON, MISSOURI, THE BRINKERHOSS FARIS TRUST AND SAVINGS COMPANY OF CLINTON, MISSOURI, AND THE WESTERN EXCHANGE BANK OF KANSAS CITY, MISSOURI, AND PAID BY THE TREASURER OF THE UNITED STATES FEBRUARY 7, 1929, THROUGH THE FEDERAL RESERVE BANK AT KANSAS CITY, MISSOURI; THAT CARSON, HAVING BEEN APPREHENDED AND ARRESTED WHILE IN THE ACT OF STEALING AN AUTOMOBILE, ADMITTED STEALING THE ADJUSTED SERVICE CERTIFICATE NO. 601526 PAYABLE TO PHILIP V. WALTERS FROM THE AMERICAN LEGION HALL AT SAPULPA, OKLAHOMA, AND MAKING APPLICATION FOR TWO LOANS THEREUNDER, ONE OF WHICH INVOLVES THE CHECK HERE IN QUESTION; THAT CARSON PLEAD GUILTY, WAIVED A HEARING, WAS CONVICTED ON FOUR COUNTS UNDER SECTIONS 148 AND 151 ON FEBRUARY 15, 1929, AND, ON FEBRUARY 28, 1929, WAS SENTENCED TO TWO YEARS IN THE UNITED STATES REFORMATORY, CHILLICOTHE, OHIO, AND FINED $100; THAT REFUND HAS BEEN RECLAIMED FROM THE SECOND OR SUBSEQUENT INDORSER; AND THAT THE AMOUNT IS NOW BEING HELD IN YOUR RECLAMATION ACCOUNT.

THIS STATEMENT OF FACTS, SUPRA, WAS BASED IN PART ON SECRET SERVICE OPERATIVES' REPORT DATED APRIL 1, 1929, WITH REFERENCE TO THE ISSUANCE AND NEGOTIATION OF CHECKS NOS. 15731 AND 17469, WHEREIN IT WAS STATED THAT:

ON FEBRUARY 11TH, 1929, SPECIAL AGENT W. W. MCBRIDE OF THE BUREAU OF INVESTIGATION TURNED OVER TO ME A STATEMENT MADE BY DAVID CARSON TO THE EFFECT THAT HE HAD STOLEN FROM THE AMERICAN LEGION HALL AT SAPULPA, OKLAHOMA, ADJUSTED SERVICE CERTIFICATE NO. 601526, PAYABLE TO PHILIP V. WALTERS, FOR $715.00; THAT HE TOOK IT TO BARTLESVILLE, OKLAHOMA, AND SIGNED AN APPLICATION FOR A LOAN IN WALTER'S NAME, SECURING THEREBY CHECK NO. 15731, WHICH HE FORGED AND CASHED; THAT HE LATER OBTAINED CHECK NO. 17469 AS AN ADDITIONAL LOAN IN THE NAME OF WALTERS, AND FORGED AND CASHED IT. * * *

THE DRAWER OF THE CHECKS, BY LETTER DATED AUGUST 29, 1929, STATED AS FOLLOWS:

THE FIRST LOAN IN THE AMOUNT OF $85.00, ISSUED IN NOVEMBER, 1928, WAS MAILED TO GENERAL DELIVERY, KANSAS CITY, MO. THERE IS NO RECORD IN THIS OFFICE OF THE PERSON EXECUTING THE NOTE AFTER A RELOAN HAS BEEN MADE, INASMUCH AS THE ORIGINAL LOAN NOTE IS STAMPED PAID AND FORWARDED TO THE PAYEE WHEN THE CHECK FOR THE RELOAN IS MAILED. HOWEVER, NO EMPLOYEE IN THIS OFFICE EXECUTED THE NOTE AS THERE HAS NOT BEEN, AT ANY TIME, AN EMPLOYEE AUTHORIZED TO EXECUTE THE NOTES.

THE SECOND LOAN NOTE WAS EXECUTED BY A NOTARY PUBLIC OF JACKSON COUNTY NOT CONNECTED WITH THE VETERANS' BUREAU IN ANY WAY. THIS CHECK WAS MAILED TO CLINTON, MISSOURI, IN CARE OF LEE THEATER.

THERE ARE NO LOAN CHECKS DELIVERED IN PERSON TO THE APPLICANTS FROM THIS OFFICE.

IT APPEARS THAT CARSON, THE IMPOSTOR, WAS GOING UNDER THE NAME OF WALTERS AT BARTLESVILLE, LA., WHEN HE MADE APPLICATION TO THE VETERANS' BUREAU HEADQUARTERS AT KANSAS CITY FOR THE FIRST LOAN, AND LATER WENT TO KANSAS CITY WHERE HE RECEIVED THE CHECK MAILED TO GENERAL DELIVERY, KANSAS CITY, MO. WHILE THE FACTS ARE NOT CLEAR, IT WOULD APPEAR THAT THE FIRST CHECK WAS MAILED TO HIM AFTER HE HAD APPEARED IN PERSON AT THE VETERANS' BUREAU, AT WHICH TIME, AS INDICATED BY LETTER DATED AUGUST 29, 1929, HE WAS NOTIFIED BY THE DRAWER OF THE CHECKS THAT NO LOAN CHECKS ARE DELIVERED IN PERSON TO THE APPLICANTS FROM THAT OFFICE. IT WOULD APPEAR, ALSO, THAT THE IMPOSTOR ACTUALLY WENT TO THE VETERANS' BUREAU HEADQUARTERS IN KANSAS CITY TO MAKE APPLICATION FOR THE SECOND LOAN (CHECK NO. 17469) AND HAD THE CHECK SENT TO HIM AT CLINTON, MO., IN CARE OF LEE THEATER. NO VETERAN'S NOTE OR CERTIFICATE OF IDENTIFICATION HAS BEEN FILED FOR CHECK NO. 15731; HOWEVER, THERE IS ON FILE A PHOTOSTAT COPY OF VETERAN'S NOTE AND CERTIFICATE OF IDENTIFICATION EXECUTED AT KANSAS CITY, MO., FOR THE SECOND LOAN RESULTING IN THE ISSUANCE OF THE SECOND CHECK, NO. 17469.

YOU REFER TO DECISION OF JANUARY 30, 1929, A-25029, WITH THE OBSERVATION THAT---

THE DETERMINATION TO RELEASE THE INDORSERS FROM LIABILITY WAS BASED UPON THE FACT THAT THE DRAWER OF THE CHECK HAD DEALT DIRECTLY WITH THE PERSON WHO POSED AS THE HOLDER OF THE ADJUSTED-SERVICE CERTIFICATE AND WHO EXECUTED THE FRAUDULENT NOTES AND YOU DIFFERENTIATED BETWEEN THESE CIRCUMSTANCES AND A CASE WHERE THE CHECK WAS FORWARDED BY THE DRAWER TO THE IMPOSTOR BY MAIL. * * *

IN THE DECISION REFERRED TO IT WAS STATED---

IT WAS RECOGNIZED IN THE DECISION OF NOVEMBER 12, 1928, THAT THERE WAS A PRINCIPLE OF LAW AS STATED IN LAND TITLE AND TRUST COMPANY V. NORTHWESTERN NATIONAL BANK, 50 L.R.A. 75, THAT THE MAKER OF A CHECK WAS RESPONSIBLE FOR ANY LOSS WHEN HE DREW THE CHECK AND DEALT DIRECTLY WITH A PARTICULAR PERSON UNDER THE NAME USED THOUGH DECEIVED AS TO HIS IDENTITY. * * *

IT WAS NOT INTENDED IN THAT DECISION, NOR IN THE OTHER CASE REFERRED TO BY YOU, A-28578 OF SEPTEMBER 11, 1929, TO HOLD THAT DEALING WITH A MAN BY CORRESPONDENCE IS NOT DEALING DIRECTLY WITH HIM. THE RULE AS STATED IN THE LAND TITLE AND TRUST COMPANY CASE IS NOT RESTRICTED TO THOSE SITUATIONS WHERE THE DRAWER DELIVERS THE CHECK TO THE IMPOSTOR IN PERSON. SEE FOOTNOTES 50 L.R.A. 77-83.

IT IS NOT MATERIAL WHETHER THE IMPOSTOR APPEARS IN PERSON BEFORE THE BUREAU OR CONDUCTS HIS BUSINESS BY CORRESPONDENCE IF THE BUREAU OR PERSON ISSUING THE CHECK INTENDS THE CHECK TO BE RECEIVED AND CASHED BY THE MAN WHO MADE THE WRITTEN APPLICATION THEREFOR. SEE EMPORIA NATIONAL BANK V. SHOTWELL, 35 KAN. 360, 57 AM.REP. 171, 11 PAC. 141, WHERE AN IMPOSTOR, BY ASSUMING THE NAME OF THE OWNER OF PROPERTY, PROCURED A LOAN, THE PROCEEDS OF WHICH WERE SENT BY MAIL IN THE FORM OF A DRAFT IN WHICH THE PAYEE WAS DESIGNATED BY THE NAME OF THE OWNER OF THE PROPERTY. THE DRAFT WAS ENDORSED AND NEGOTIATED BY THE IMPOSTOR BY THE WRONGFUL USE OF THE NAME OF THE OWNER OF THE PROPERTY, AND THE COURT HELD THAT THE LENDER, RATHER THAN THE DRAWEE BANK MUST BEAR THE LOSS, BECAUSE HE INTENDED THE DRAFT TO BE SENT TO THE PARTY WHO EXECUTED THE NOTES AND MORTGAGES, AND INTENDED IT TO BE PAID TO THE PERSON TO WHOM HE SENT IT, AND WHOM HE DESIGNATED BY THE NAME OF THE OWNER OF THE PROPERTY, BECAUSE THAT WAS THE NAME WHICH HE ASSUMED IN EXECUTING THE NOTES AND MORTGAGES, AND, THEREFORE, THAT THE BANK WAS PROTECTED IN PAYING THE DRAFT TO THE VERY PERSON WHOM THE LENDER INTENDED TO DESIGNATE BY THAT NAME. IT WAS CONTENDED IN THAT CASE THAT THE BANK DID NOT USE SUFFICIENT CARE AND DILIGENCE IN HAVING THE PAYEE OF THE DRAFT IDENTIFIED, BUT THE COURT HELD THAT THAT WAS NOT IMPORTANT IN VIEW OF THE INTENTION OF THE LENDER. SEE, ALSO, MALONEY V. CLARK, 6 KAN. 82, CITED IN LAND TITLE AND TRUST CO. V. NORTHWESTERN NATIONAL BANK, 196 PA. 230, 50 L.R.A. AT P. 82, WHERE PLAINTIFF WAS INDUCED TO SEND DRAFT DRAWN TO THE ORDER OF HIS BROTHER TO A STRANGER, WHO IN THE CORRESPONDENCE HAD PERSONATED HIS BROTHER. THE STRANGER INDORSED THE NAME OF THE PLAINTIFF'S BROTHER ON THE DRAFT, AND SOLD IT TO THE DEFENDANTS, WHO WERE BANKERS. IT WAS HELD UNDER THESE FACTS THE PLAINTIFF COULD NOT RECOVER. TO THE SAME EFFECT IS THE HOLDING IN CRIPPEN V. AMERICAN NATIONAL BANK, 51 MO.APP. 508, THE JURISDICTION IN WHICH THE CHECKS HERE IN QUESTION WERE CASHED.

IN THE INSTANT CASE, CARSON, THE IMPOSTOR, APPLIED TO THE BUREAU FOR THE LOANS, AND THE BUREAU INTENDED THE CHECKS TO BE RECEIVED, INDORSED, AND CASHED BY HIM. REGARDLESS OF WHETHER CARSON EVER APPEARED PERSONALLY AT THE BUREAU, THE BUREAU HAD JUST AS MUCH OPPORTUNITY TO IDENTIFY THIS APPLICANT, BY COMPARISON OF SIGNATURE AND RECORDS, AS IT WOULD HAVE HAD IF HE HAD APPEARED IN PERSON.

AS WAS STATED IN DECISION OF JANUARY 16, 1930, A-29959, THE PRINCIPLE AS STATED IN LAND TITLE AND TRUST COMPANY V. NORTHWESTERN NATIONAL BANK, SUPRA, TO THE EFFECT THAT THE MAKER OF A CHECK IS RESPONSIBLE FOR ANY LOSS WHEN HE DREW THE CHECK AND DEALT DIRECTLY WITH THE PARTICULAR PERSON UNDER THE NAME USED, THOUGH DECEIVED AS TO HIS IDENTITY, IS APPLICABLE TO THE PRESENT CASE AND YOU ARE AUTHORIZED TO REVERSE RECLAMATION ON CHECK NO. 17469, AND RETURN TO THE PROPER INDORSER THE AMOUNT COLLECTED FROM IT. ALSO, AS STATED IN LETTER OF MARCH 7, 1930, FILE CU: F 094078-GBK, TO THE TREASURER OF THE UNITED STATES, THE ABANDONMENT OF RECLAMATION PROCEEDINGS ON CHECK NO. 15731 IS AUTHORIZED.