A-57298, SEPTEMBER 11, 1934, 14 COMP. GEN. 212

A-57298: Sep 11, 1934

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IT IS NOT BOUND TO FOLLOW ALL OF ITS PROVISIONS WHERE IT HAS BEEN ADOPTED BY STATUTE IN ANY PARTICULAR STATE. A GOVERNMENT CHECK IS DRAWN TO THE ORDER OF A DEAD PAYEE. THAT MAY BE DONE ONLY IN THOSE CASES WHERE IT IS CONCLUSIVELY ESTABLISHED THAT THE AMOUNT OF THE CHECK IS PROPERLY AND LAWFULLY DUE SOME OTHER PERSON. AS FOLLOWS: REFERENCE IS MADE TO THE FOLLOWING CHECK IN FAVOR OF STARYOS ANASTASIADIS: NUMBER DATE AMOUNT DRAWER SYMBOL DATE PAID 92-681 11 3-30 $197 N. B. HARRISON 99-129 11-13-30 REFERENCE IS MADE TO YOUR LETTER OF JUNE 7. WITH AUTHORITY TO RECLAIM THE AMOUNT THEREOF FOR THE REASON THAT THE CHECK WAS NEGOTIATED SUBSEQUENT TO THE DEATH OF THE PAYEE ON MAY 26. WHEREIN IT WAS HELD "THAT WHERE AN INDIVIDUAL WHO IS LATER NAMED AS THE PAYEE OF A CHECK IMPOSES UPON THE PERSON WHO BECOMES THE MAKER OF THE CHECK TO THE EXTENT THAT HE CONVINCES SUCH MAKER THAT HE IS THE ACTUAL PERSON WHO IS LATER NAMED AS PAYEE.

A-57298, SEPTEMBER 11, 1934, 14 COMP. GEN. 212

CHECKS - UNIFORM NEGOTIABLE INSTRUMENT LAW - DECEASED PAYEE THE SO-CALLED "UNIFORM NEGOTIABLE INSTRUMENT LAW" HAS NOT BEEN EMBODIED IN ANY FEDERAL STATUTE, AND WHILE THE GOVERNMENT IN TRANSACTING ITS BUSINESS HAS APPLIED MANY OF THE UNDERLYING PRINCIPLES THEREOF, IT IS NOT BOUND TO FOLLOW ALL OF ITS PROVISIONS WHERE IT HAS BEEN ADOPTED BY STATUTE IN ANY PARTICULAR STATE. WHERE, THROUGH A MISTAKE OF FACT, A GOVERNMENT CHECK IS DRAWN TO THE ORDER OF A DEAD PAYEE, SUCH CHECK, OTHERWISE VOIDABLE, MAY BE NEGOTIATED ONLY ON AN AUTHORIZATION BY THE GENERAL ACCOUNTING OFFICE PLACED ON THE BACK OF THE CHECK, BUT THAT MAY BE DONE ONLY IN THOSE CASES WHERE IT IS CONCLUSIVELY ESTABLISHED THAT THE AMOUNT OF THE CHECK IS PROPERLY AND LAWFULLY DUE SOME OTHER PERSON.

COMPTROLLER GENERAL MCCARL TO THE TREASURER OF THE UNITED STATES, SEPTEMBER 11, 1934:

CONSIDERATION HAS BEEN GIVEN TO THE MATTER PRESENTED IN YOUR LETTER OF JULY 31, 1934, REF. AWS-C, AS FOLLOWS:

REFERENCE IS MADE TO THE FOLLOWING CHECK IN FAVOR OF STARYOS ANASTASIADIS: NUMBER DATE

AMOUNT DRAWER SYMBOL DATE PAID 92-681 11 3-30 $197 N. B. HARRISON 99-129 11-13-30

REFERENCE IS MADE TO YOUR LETTER OF JUNE 7, 1933 (CU:F-0416728-AVF), TRANSMITTING THE ABOVE CHECK, WITH AUTHORITY TO RECLAIM THE AMOUNT THEREOF FOR THE REASON THAT THE CHECK WAS NEGOTIATED SUBSEQUENT TO THE DEATH OF THE PAYEE ON MAY 26, 1928.

IN CONNECTION THEREWITH, THE SECURITY FIRST NATIONAL BANK, LOS ANGELES, IN A LETTER DATED JANUARY 26, 1934, CALLS ATTENTION TO THE CASE OF RYAN V. BANK OF ITALY, 106 C.A. 690, WHEREIN IT WAS HELD "THAT WHERE AN INDIVIDUAL WHO IS LATER NAMED AS THE PAYEE OF A CHECK IMPOSES UPON THE PERSON WHO BECOMES THE MAKER OF THE CHECK TO THE EXTENT THAT HE CONVINCES SUCH MAKER THAT HE IS THE ACTUAL PERSON WHO IS LATER NAMED AS PAYEE, THE MAKER OF THE CHECK IS THE ONE IMPOSED UPON, AND NOT ANY PERSON WHO MIGHT SUBSEQUENTLY TAKE THE CHECK UPON THE ENDORSEMENT OF THE SUPPOSED PAYEE.'

IN VIEW OF THE ABOVE, THE CHECK, TOGETHER WITH THE FILE, IS RETURNED HEREWITH, AND ADVICE IS REQUESTED AS TO WHETHER THIS OFFICE SHOULD INSIST ON RECLAMATION.

THE SUBJECT CHECK REPRESENTS THE FIRST OF A SERIES OF THREE LOANS MADE BY THE VETERANS' ADMINISTRATION ON THE SECURITY OF THE ADJUSTED SERVICE CERTIFICATE ISSUED TO ONE WORLD WAR VETERAN, STARYOS ANASTASIADIS, XC- 1,202,705--- THE CHECK HAVING BEEN ISSUED ON NOVEMBER 3, 1930, WHEREAS THE RIGHTFUL PAYEE WAS THEN DEAD, HAVING DIED ON MAY 26, 1928.

WITH REFERENCE TO THE 2 OTHER LOAN CHECKS, IT APPEARS THAT RECLAMATION HAS BEEN COMPLETED ON 1 AND THAT THE OTHER WAS REFERRED TO THE ATTORNEY GENERAL ON NOVEMBER 4, 1933, FOR NECESSARY ACTION WITH RESPECT TO WHICH NO REPORT HAS BEEN MADE REGARDING THE PROGRESS OF THE EFFORT TO EFFECT RECOVERY.

THE CIRCUMSTANCES UNDER WHICH THE CHECK IN QUESTION HERE WAS DRAWN WERE REPORTED TO YOU BY LETTER FROM THE VETERANS' ADMINISTRATION, DATED NOVEMBER 24, 1933, AS FOLLOWS:

"* * * THAT IT IS TRUE THAT INFORMATION WAS FURNISHED THIS ADMINISTRATION THAT ONE STERGOS KONSTANTINOU ANASTASSIADES, OF THE ISLAND OF RHODES, DIED DURING THE JOURNEY FROM AMERICAN TO EUROPE ON MAY 26, 1928. HOWEVER, IT WAS NOT UNTIL JUNE, 1931, THAT THE ADMINISTRATION WAS ABLE TO OBTAIN A DULY AUTHENTICATED CERTIFICATE OF DEATH SHOWING THE DATE AND CAUSE OF THE VETERAN'S DECEASE. * * *

"THE ADJUSTED-SERVICE CERTIFICATE OF THE VETERAN WAS SUBMITTED TO THE LOS ANGELES OFFICE, TOGETHER WITH AN EXECUTED NOTE (FORM 1185), UPON WHICH THE APPLICANT HAD BEEN IDENTIFIED BY A PERSON RECOGNIZED TO PERFORM THAT SERVICE AS THE VETERAN TO WHOM THE ADJUSTED-SERVICE CERTIFICATE IN QUESTION WAS ISSUED. THE REGIONAL OFFICE, RELYING ON THE IDENTIFICATION AND HAVING NO KNOWLEDGE OF THE DEATH OF THE VETERAN, GRANTED THE ABOVE- DESCRIBED LOANS.

"AN INVESTIGATION CONDUCTED BY THE SECRET SERVICE DIVISION, UNITED STATES TREASURY DEPARTMENT, FAILED TO DISCLOSE THE IDENTITY OF THE HYPOTHECATOR OF THE CERTIFICATE. INASMUCH AS THE IMPOSTER IMPERSONATED A DECEASED VETERAN, IT WOULD APPEAR THAT RECLAMATION OF PAYMENT SHOULD BE ACCOMPLISHED, AND THE AMOUNT RECOVERED DEPOSITED TO THE APPROPRIATION FROM WHICH DRAWN.'

IT APPEARS THAT RECLAMATION PROCEEDINGS ARE BEING RESISTED ON THE SUBJECT CHECK ON TWO GROUNDS, NAMELY:

1. THAT THE CHECK HAVING BEEN DRAWN TO THE ORDER OF A DEAD PERSON, IT BECAME A BEARER INSTRUMENT UNDER THE NEGOTIABLE INSTRUMENT LAW OF THE STATE OF CALIFORNIA AND, AS SUCH, SAID CHECK WAS NEGOTIABLE WITHOUT ENDORSEMENT, IN VIEW OF WHICH ANY ENDORSEMENT ON THE CHECK BECAME A NULLITY--- THUS NEGATIVING ANY ELEMENT OF FORGERY.

2. THAT THERE HAS BEEN NO FORGERY OF A GOVERNMENT CHECK WHEN THE PERSON WHO ENDORSES THE CHECK IS THE PERSON TO WHOM SAID CHECK WAS ISSUED AND DELIVERED, THOUGH THE GOVERNMENT WAS DECEIVED AS TO THE IDENTITY OF THE PAYEE THEREIN NAMED.

THE PERTINENT PROVISION OF THE NEGOTIABLE INSTRUMENT LAW OF THE STATE OF CALIFORNIA, THE STATE WHERE THE CHECK WAS NEGOTIATED, UPON WHICH THE FIRST CONTENTION IS PREDICATED, IS QUOTED AS FOLLOWS:

THE INSTRUMENT IS PAYABLE TO BEARER * * * WHEN IT IS PAYABLE TO THE ORDER OF A FICTITIOUS OR NONEXISTING PERSON, AND SUCH FACT WAS KNOWN TO THE PERSON MAKING IT SO PAYABLE.

IN RESPECT OF THIS CONTENTION IT IS PERTINENT TO NOTE THAT THE CONGRESS OF THE UNITED STATES HAS NEVER ENACTED LEGISLATION ADOPTING THE SO-CALLED UNIFORM NEGOTIABLE INSTRUMENT LAW AS THE LAW OF THE UNITED STATES GOVERNMENT. THEREFORE, WHILE THE GOVERNMENT IN TRANSACTING ITS BUSINESS HAS ADOPTED MANY OF THE UNDERLYING PRINCIPLES OF WHAT IS KNOWN AS THE UNIFORM NEGOTIABLE INSTRUMENT LAW, IT IS NOT BOUND TO FOLLOW ALL OF THE PROVISIONS THEREOF WHERE IT HAS BEEN ADOPTED BY STATUTE IN ANY PARTICULAR STATE. THE GOVERNMENT DOES NOT ISSUE CHECKS PAYABLE TO "BEARER.' WHERE, UNDER A MISTAKE OF FACT, THE GOVERNMENT ISSUES A CHECK TO A DEAD PERSON, THERE IS NO INTENT ON THE PART OF THE GOVERNMENT THAT SUCH CHECK BE NEGOTIATED BY DELIVERY ONLY (8 C.J. 178, 179, SECS. 304 AND 305). ON THE CONTRARY, SUCH CHECKS HAVE BEEN HELD BY THIS OFFICE TO BE VOID FOR MOST PURPOSES; IN OTHERS, VOIDABLE ONLY. WHILE, IN CERTAIN INSTANCES, THIS OFFICE AUTHORIZES THE NEGOTIATION OF A GOVERNMENT CHECK WHICH, THROUGH A MISTAKE OF FACT, HAS BEEN DRAWN TO A DEAD PERSON, IT DOES SO ONLY IN THOSE CASES WHERE IT IS CONCLUSIVELY ESTABLISHED THAT THE AMOUNT OF THE CHECK IS PROPERLY AND LAWFULLY DUE SOME OTHER PERSON, IN WHICH EVENT A PROPER AUTHORIZATION IS MADE BY THIS OFFICE ON THE BACK OF THE OTHERWISE VOIDABLE CHECK SHOWING THE PERSON LAWFULLY ENTITLED TO THE PROCEEDS OF THE CHECK. THIS CONDITION, HOWEVER, IS NOT FOR APPLICATION TO THE CHECK IN QUESTION HERE. FOR THE REASONS JUST STATED IT IS OBVIOUS THAT THE FIRST CONTENTION, SUPRA, MAY NOT PREVAIL IN RESPECT OF A GOVERNMENT CHECK.

THE RULE SET FORTH IN THE SECOND CONTENTION IS THAT ESTABLISHED IN UNITED STATES V. CHASE NATIONAL BANK, 241 FED.REP. 535, AND HAS BEEN APPLIED IN NUMEROUS DECISIONS BY THIS OFFICE WHEN THE FACTS OF A PARTICULAR CASE ARE SHOWN TO FALL SQUARELY WITHIN THE FACTS OF THAT DECISION. HOWEVER, IN THAT CONNECTION, THERE IS FOR CONSIDERATION THE LIMITATION OF SAID RULE AS COVERED IN THE DECISION OF THIS OFFICE REPORTED IN 11 COMP. GEN. 48, THE SYLLABUS OF WHICH IS AS FOLLOWS:

"THE GENERAL RULE THAT 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 CANNOT BE EFFECTED FROM THE ENDORSER WHO ACCEPTED THE CHECK FROM SUCH PERSON FOR VALUE WITHOUT NOTICE OF HIS LACK OF TITLE TO THE CHECK, IS NOT FOR APPLICATION WHERE IT APPEARS THAT THE IMPOSTOR MADE NO REPRESENTATIONS TO THE ENDORSER WHO CASHED THE CHECK OTHER THAN THE INFERENCE WHICH MIGHT BE DRAWN FROM HIS POSSESSION OF THE ENDORSED CHECK, AND THAT SAID ENDORSER MADE NO ATTEMPT TO ASCERTAIN WHETHER THE PERSON PRESENTING THE CHECK WAS THE PERSON NAMED AS THE PAYEE OF THE CHECK.'

WHILE THE SECOND ENDORSER IS REPORTED TO HAVE EXERCISED SOME DEGREE OF DILIGENCE IN IDENTIFYING THE PAYEE OF THE CHECK, SUCH DILIGENCE APPEARS TO HAVE CONSISTED CHIEFLY IN THE POSSESSION BY THE IMPOSTOR OF THE VETERAN'S DISCHARGE PAPERS, ETC. SUCH DEGREE OF DILIGENCE IS NOT SUFFICIENT TO RELIEVE THE SECOND ENDORSER OF HIS LIABILITY ON THE ENDORSEMENT. SEE IN THIS CONNECTION UNITED STATES V. NATIONAL BANK OF COMMERCE, 205 FED.REP. 433, HOLDING, IN EFFECT, THAT WHERE A GOVERNMENT CHECK DRAWN BY A DISBURSING AGENT IS PRESENTED TO A BANK FOR PAYMENT, IT IS THE BANK'S DUTY TO ASCERTAIN WHETHER THERE IS SUCH A PERSON AS THE PAYEE NAMED IN THE CHECK AND TO KNOW THAT THE PERSON PRESENTING THE CHECK IS ENTITLED TO RECEIVE PAYMENT, AND IF PAYMENT IS MADE WITHOUT INVESTIGATION, IDENTIFICATION, OR OTHER PRECAUTION, IT IS AT THE BANK'S RISK. SUCH RULE IS FOR APPLICATION HERE. SEE ALSO 11 COMP. GEN. 447.

IN ANSWER TO YOUR SPECIFIC INQUIRY, THEREFORE, YOU ARE ADVISED THAT ON THE BASIS OF THE PRESENT RECORD, RECLAMATION SHOULD BE INSISTED UPON.