A-42261, MAY 25, 1932, 11 COMP. GEN. 447

A-42261: May 25, 1932

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RECLAMATION FROM SUCH THIRD PARTY OF THE AMOUNT OF THE CHECK IS PROPER. 6 COMP. WHEREIN WAS DISALLOWED THE CLAIM OF DAVID N. AGAINST WHICH RECLAMATION WAS AFFECTED AND THE AMOUNT DEPOSITED TO THE CREDIT OF THE APPROPRIATION UNDER WHICH DRAWN. BROWN OBTAINED NO BETTER TITLE TO THE CHECK THAN THE FORGER AND THAT THE CHECK WAS CASHED ON A FORGED INDORSEMENT. I WISH TO SAY: AS A GENERAL PROPOSITION YOUR STATEMENT IS CORRECT. THERE ARE SPECIAL CIRCUMSTANCES. WHICH I HAVE SET UP IN THE AFFIDAVITS FURNISHED YOU WHICH ESTOP YOUR DEPARTMENT FROM RELYING ON SUCH A DEFENSE. IN THE FIRST PLACE THIS CHECK WAS ISSUED. I UNDERSTAND YOUR FILES WILL SHOW. YOU DID NOT KNOW THAT FILEY WAS DEAD. YOU DID NOT KNOW THAT THE SIGNATURE WAS FORGED.

A-42261, MAY 25, 1932, 11 COMP. GEN. 447

CHECKS - FORGERY THERE HAS BEEN A FORGERY OF A GOVERNMENT CHECK WHERE AN IMPOSTOR FORGES THE NAME OF A VETERAN OF THE WORLD WAR TO AN APPLICATION FOR A LOAN UNDER HIS ADJUSTED SERVICE CERTIFICATE, AND LATER FORGES THE NAME OF THE BENEFICIARY TO THE CHECK RECEIVED IN RESPONSE TO SUCH FORGED APPLICATION, AND AN INNOCENT THIRD PARTY WHO CASHES SUCH A CHECK OBTAINS NO BETTER TITLE TO IT THAN THE FORGER THEREOF. RECLAMATION FROM SUCH THIRD PARTY OF THE AMOUNT OF THE CHECK IS PROPER. 6 COMP. GEN. 532, DISTINGUISHED.

DECISION BY COMPTROLLER GENERAL MCCARL, MAY 25, 1932:

REQUEST HAS BEEN MADE FOR REVIEW OF SETTLEMENT NO. 0241785, DATED MARCH 1, 1932, WHEREIN WAS DISALLOWED THE CLAIM OF DAVID N. BROWN; TRADING AS THE BROWN'S LUNCH ROOM, FOR THE PROCEEDS OF TREASURER'S CHECK NO. 3269 DRAWN APRIL 29, 1927, FOR $75, IN FAVOR OF WILLIAM H. FILEY, AGAINST WHICH RECLAMATION WAS AFFECTED AND THE AMOUNT DEPOSITED TO THE CREDIT OF THE APPROPRIATION UNDER WHICH DRAWN, NAMELY (OT875) "UNITED STATES GOVERNMENT LIFE INSURANCE FUND, V.A., " SEPTEMBER 27, 1928, BY CERTIFICATE OF DEPOSIT NO. 485.

IN REQUESTING REVIEW, THE ATTORNEY FOR THE CLAIMANT STATES:

REPLYING TO YOUR LETTER OF MARCH 1, 1932, IN WHICH YOU STATE THAT MY CLIENT DAVID N. BROWN OBTAINED NO BETTER TITLE TO THE CHECK THAN THE FORGER AND THAT THE CHECK WAS CASHED ON A FORGED INDORSEMENT, I WISH TO SAY:

AS A GENERAL PROPOSITION YOUR STATEMENT IS CORRECT, BUT THERE ARE SPECIAL CIRCUMSTANCES, WHICH I HAVE SET UP IN THE AFFIDAVITS FURNISHED YOU WHICH ESTOP YOUR DEPARTMENT FROM RELYING ON SUCH A DEFENSE. IN THE FIRST PLACE THIS CHECK WAS ISSUED, I UNDERSTAND YOUR FILES WILL SHOW, ON THE STRENGTH OF A FORGED APPLICATION MADE UNDER OATH, SO THAT WHEN YOUR DEPARTMENT ISSUED THAT CHECK YOU INTENDED ACTUALLY THAT THE FORGER WHO MADE THE APPLICATION WOULD RECEIVE THE CHECK AND THE PROCEEDS THEREOF. OF COURSE, YOU DID NOT KNOW THAT FILEY WAS DEAD, AND YOU DID NOT KNOW THAT THE SIGNATURE WAS FORGED, BUT YOU DID KNOW THAT YOU HAD AN APPLICATION BEFORE YOU, WHICH SUBSEQUENT EVENTS SHOW WAS FORGED, AND YOU DID INTEND THAT IT BE CASHED. THAT STATE OF FACTS SHOWS CLEARLY THAT THE RULE DOES NOT APPLY, AND THAT THE FORGER WOULD GET SUCH TITLE, THAT HE COULD PASS ON TO BROWN, WHO WOULD TAKE THE SAME AS A BONA FIDE PURCHASER FOR VALUE.

BUT SUPPOSE I AM WRONG IN MY CONTENTION, SECONDLY, AND THAT BROWN RECEIVED NO TITLE. THE NEGLIGENCE OF THE GOVERNMENT IN MAKING THE INVESTIGATION, TAKING THE FORGER'S APPLICATION UNDER OATH AND FINDING THAT IT WAS GENUINE AND THAT THE FORGER WAS THE RIGHTFUL PAYEE OF THE CHECK, ISSUING THE SAME, MAILING IT TO HIM AT HIS ADDRESS, THUS INDUCING BROWN TO PURCHASE THE SAME ON THE STRENGTH OF ITS BEING REPRESENTED THUS TO BE GENUINE, SHOULD ESTOP THE GOVERNMENT FROM MAKING THIS DEFENSE. WE CAN NOT GET AWAY FROM THE FACT THAT IT WAS CARELESSNESS ON THE PART OF YOUR DEPARTMENT THAT CAUSED BROWN TO PART WITH HIS MONEY.

THIRDLY, AND LASTLY, IF YOUR DEPARTMENT HAD PROMPTLY DISCOVERED THE FORGERY, IT IS CONCEIVABLE THAT BROWN MIGHT HAVE HAD THE FORGER ARRESTED AND PERHAPS HAVE RECOVERED HIS CASH. BUT MONTHS PASSED BEFORE ANY NOTICE WAS GIVEN.

ON ANY ONE OF THESE THREE THEORIES YOUR DEPARTMENT SHOULD REVERSE YOUR DECISION IN THIS MATTER. SINCE THERE IS NO DOUBT YOU INTENDED THAT THE MAN WHO APPLIED SHOULD RECEIVE THE CHECK AND CASH IT, YOU INTENDED TO PASS TITLE; AND SINCE IT WAS YOUR NEGLIGENCE, AND NOT BROWN'S THAT CAUSED HIS LOSS, AND SINCE THERE WAS A DELAY OF SEVERAL MONTHS IN NOTIFYING HIM OF THE FORGERY, MAKING IT POSSIBLE FOR THE IMPOSTOR TO BE HOPELESSLY OUT OF REACH OF BROWN, I CAN SEE NO REASON WHY THE GOVERNMENT SHOULD NOT PAY THE CLAIM.

THE FACTS APPEAR TO BE AS FOLLOWS:

ONE WILLIAM H. RILEY, SERVED IN THE WORLD WAR, BUT FOR SOME REASON NOT STATED APPEARS TO HAVE BEEN CARRIED ON THE ARMY ROLLS AS WILLIAM H. FILEY, A-3053291, XC-690017, WITH ADJUSTED SERVICE CERTIFICATE NO. 1834661. WAS KILLED ON THE C. AND N.W. RAILROAD RIGHT-OF-WAY, IN WHITESIDE COUNTY, ILL. (NORTHWESTERN PART OF THE STATE), DECEMBER 2, 1926.

ON APRIL 27, 1927, A PARTY REPRESENTING HIMSELF TO BE WILLIAM H. FILEY, CALLED AT THE CHICAGO BRANCH UNITED STATES VETERANS' BUREAU, WITH ADJUSTED SERVICE CERTIFICATE NO. 1834661, AND APPLIED VERBALLY FOR AN ADJUSTED SERVICE LOAN OF $75; THAT HE WAS GIVEN A BLANK VETERANS' BUREAU NOTE AND ADVISED TO HAVE SAME FILLED OUT AND SWORN TO BEFORE AN OFFICER WITH A SEAL; THAT HE RETURNED LATER WITH THE DOCUMENT DULY EXECUTED BEFORE E. H. MAGEHN, NOTARY PUBLIC, ROOM 318, CHICAGO AND NORTHWESTERN BUILDING, CHICAGO, ILL., AT WHICH TIME HE GAVE HIS ADDRESS AS THE LENOX HOTEL, DORCHESTER AND SIXTY-THIRD STREETS, CHICAGO; AND THAT CHECK NO. 3269 IN THE AMOUNT OF $75 WAS MAILED TO THE APPLICANT AT THE ADDRESS GIVEN APRIL 29, 1927.

LATER WHEN THE FRAUD WAS DISCOVERED THE DECEASED VETERAN'S SISTER, MISS MARIE RILEY, COUNCIL BLUFFS, IOWA (BENEFICIARY), REPORTED THAT SO FAR AS SHE KNEW THE ADJUSTED SERVICE CERTIFICATE MENTIONED WAS IN HER BROTHER'S POSSESSION WHEN HE WAS KILLED. HOWEVER, THE CORONER OF STERLING, ILL., WHO HELD THE INQUEST, REPORTED THAT THE ONLY DOCUMENTS FOUND ON OR IN THE POSSESSION OF THE VETERAN AT THE TIME OF HIS DEATH WERE CERTAIN RAILROAD PAPERS.

ON MARCH 25, 1928, A PRINCIPAL OPERATIVE UNITED STATES SECRET SERVICE, REPORTED THAT HE HAD CALLED UPON E. H. MAGEHN, NOTARY PUBLIC, HEREINBEFORE MENTIONED, WHO WAS UNABLE TO GIVE ANY INFORMATION REGARDING THE PARTY FOR WHOM HE HAD ATTESTED OFFICIAL IDENTIFICATION, ALSO, SIGNATURE OF THE ALLEGED VETERAN; THAT THE MANAGER OF THE LENOX HOTEL HAD A FAINT RECOLLECTION OF A PARTY CALLING UPON HIM AND STATING THAT HE EXPECTED SOME MAIL FROM THE GOVERNMENT AND FOR HIM TO HOLD SAME, AND THAT LATER THIS PARTY CAME IN AND OBTAINED THE MAIL; THAT THE STRANGER CASHED THE CHECK AT BROWN'S LUNCH ROOM AS CLAIMED; AND THAT THE RECORDS OF THE C. AND N.W. RAILWAY CO. FAILED TO SHOW THAT ANY ONE BY THE NAME OF FILEY HAD BEEN IN ITS EMPLOY.

IT WILL BE NOTED THAT THE ADJUSTED SERVICE CERTIFICATE OF WILLIAM H. FILEY, DECEASED, WAS EITHER LOST OR STOLEN, AND CAME INTO THE POSSESSION OF SOME OTHER PERSON WHOSE IDENTITY IS UNKNOWN, WHO FORGED THE NAME OF THE VETERAN TO AN APPLICATION FOR A LOAN, AND AGAIN FORGED THE NAME OF THE VETERAN TO THE CHECK. THUS, THE CLAIMANT IN THE INSTANT CASE OBTAINED NO BETTER TITLE TO THE CHECK THAN THE FORGER THEREOF.

IT HAS BEEN HELD THAT WHERE AN IMPOSTOR OBTAINED A CHECK FROM A PAYMASTER OF A COMPANY BY REPRESENTING HIMSELF TO BE THE EMPLOYEE OF THE COMPANY UNDER A CERTAIN NAME AND THE CHECK WAS CASHED BY AN INNOCENT THIRD PERSON WHO DID NOT KNOW THE REAL PAYEE OR IMPOSTOR, THE DRAWER OF THE CHECK IS NOT LIABLE FOR PAYMENT. ROLLING V. EL PASO R.R.CO., 127 W. 302; SIMPSON V. DENVER, ETC. R.R.CO , 43 UTAH 105, 46 L.R.A./N.S.), 1164.

THIS OFFICE HAS UNIFORMLY HELD THAT TO COME WITHIN THE RULE OF THE PHILIP V. WALTERS CASE, 9 COMP. GEN. 476, IT MUST APPEAR THAT THE IMPOSTOR NOT ONLY DECEIVED THE DRAWER OF THE CHECK AS TO HIS IDENTITY BUT, ALSO, THAT HE CONTINUED TO IMPERSONATE THE RIGHTFUL PAYEE TO SUCH AN EXTENT THAT THE INDORSER BY WHOM THE CHECK WAS CASHED FOR THE IMPOSTOR, AFTER EXERCISING DUE CAR AND DILIGENCE TO ASCERTAIN THE IDENTITY OF THE IMPOSTOR, HAD REASON TO BELIEVE THAT HE WAS THE RIGHTFUL PAYEE. SEE A-41610, DATED APRIL 7, 1932.

THE EVIDENCE IN THE PRESENT CASE INDICATES THAT THE CHECK WAS CASHED FOR THE FORGER AT THE CLAIMANT'S LUNCH ROOM WITHOUT ANY EFFORT ON THE PART OF THE CLAIMANT BEING MADE TO ASCERTAIN WHETHER THE PERSON PRESENTING THE CHECK WAS THE PERSON NAMED AS PAYEE THEREIN, NOR IS THERE ANY EVIDENCE THAT THE IMPOSTOR ASSUMED THE NAME OF THE PAYEE EXCEPT FOR SECURING AND CASHING SAID CHECK. NOTWITHSTANDING THE NEGLIGENCE OF CERTAIN VETERANS' BUREAU OFFICIALS IN PERMITTING THE CHECK TO GET INTO THE HANDS OF THIS IMPOSTOR, THE FACTS AND CIRCUMSTANCES DID NOT WARRANT'S BROWN'S LUNCH ROOM IN ASSUMING THE PARTY WHO HAD POSSESSION OF THE CHECK AND WHO PRESENTED IT FOR CASHING WAS THE PAYEE NAMED THEREIN.