A-92049, APRIL 4, 1938, 17 COMP. GEN. 808

A-92049: Apr 4, 1938

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

CHECKS - FORGERIES - LIABILITY OF INDORSER AND TREASURER OF UNITED STATES - LACHES AND INABILITY OF RECOVERY WHERE PAYEE'S ENDORSEMENTS ON GOVERNMENT CHECKS WERE CLEARLY FORGERIES. ABANDONMENT OF THE RECLAMATION PROCEEDINGS IN SUCH CASE IS NOT AUTHORIZED. IS AS FOLLOWS: REFERENCE IS MADE TO THE FOLLOWING CHECKS IN FAVOR OF ALPHONZA C. YOU TRANSMITTED THE CHECKS AND FILE PERTAINING THERETO TO THIS OFFICE WITH ADVICE THAT THE TREASURER'S ACCOUNT WAS CHARGED WITH THE AMOUNTS OF THE CHECKS. SINCE THE ITEMS WERE ISSUED AND NEGOTIATED SUBSEQUENT TO THE PAYEE'S DEATH. REFUND WAS REQUESTED ON SEPTEMBER 14. ATTENTION IS INVITED TO A PHOTOSTATIC COPY OF A LETTER DATED NOVEMBER 8 FROM THE MASSACHUSETTS BONDING AND INSURANCE COMPANY.

A-92049, APRIL 4, 1938, 17 COMP. GEN. 808

CHECKS - FORGERIES - LIABILITY OF INDORSER AND TREASURER OF UNITED STATES - LACHES AND INABILITY OF RECOVERY WHERE PAYEE'S ENDORSEMENTS ON GOVERNMENT CHECKS WERE CLEARLY FORGERIES--- CHECKS HAVING BEEN ISSUED AFTER PAYEE'S DEATH--- THE QUESTION WHETHER AN ENDORSING BANK MAY SUCCESSFULLY DEFEND AGAINST RECLAMATION PROCEEDINGS UPON THE GROUND OF DELAY IN RECEIPT OF NOTICE OF THE FORGERY SHOULD REMAIN FOR JUDICIAL DECISION, IF NECESSARY, AND ABANDONMENT OF THE RECLAMATION PROCEEDINGS IN SUCH CASE IS NOT AUTHORIZED. IN A CLEAR CASE OF FORGERY OF PAYEE'S ENDORSEMENT ON A GOVERNMENT CHECK, ANY INABILITY TO EFFECT RECOVERY FROM AN ENDORSING BANK CAN IN NOWISE BE CONTROLLING UPON THE RESPONSIBILITY OF THE TREASURER OF THE UNITED STATES FOR HAVING PAID THE CHECK UPON THE FORGED ENDORSEMENT.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE TREASURER OF THE UNITED STATES, APRIL 4, 1938:

YOUR LETTER OF DECEMBER 1, 1937, AWS-C, IS AS FOLLOWS:

REFERENCE IS MADE TO THE FOLLOWING CHECKS IN FAVOR OF ALPHONZA C. DOUGLAS:

CHART

NUMBER DATE AMOUNT DRAWER SYMBOL DATE PAID 162701------ 7-31-27 $100.00 H. H. BARRACLOUGH--- 11-4728-9-27 174042------ 8-31-27 100.00 H. H. BARRACLOUGH--- 11-472 9-9-27

UNDER DATE OF SEPTEMBER 7, 1937, YOU TRANSMITTED THE CHECKS AND FILE PERTAINING THERETO TO THIS OFFICE WITH ADVICE THAT THE TREASURER'S ACCOUNT WAS CHARGED WITH THE AMOUNTS OF THE CHECKS, SINCE THE ITEMS WERE ISSUED AND NEGOTIATED SUBSEQUENT TO THE PAYEE'S DEATH. REFUND WAS REQUESTED ON SEPTEMBER 14.

ATTENTION IS INVITED TO A PHOTOSTATIC COPY OF A LETTER DATED NOVEMBER 8 FROM THE MASSACHUSETTS BONDING AND INSURANCE COMPANY, BONDING COMPANY FOR THE NATIONAL ROCKLAND BANK OF BOSTON, DENYING LIABILITY AND CITING VARIOUS CASES IN SUPPORT OF THEIR OPINION.

IN VIEW OF THE ABOVE, THE CHECKS AND FILE ARE RETURNED HEREWITH WITH THE REQUEST THAT THIS OFFICE BE ADVISED WHETHER RECLAMATION SHOULD BE INSISTED UPON, IN VIEW OF THE ENCLOSED LETTER OF FEBRUARY 9, 1937, FROM THE VETERANS' ADMINISTRATION INDICATING THAT IT HAD NOTICE OF THE PAYEE'S DEATH ON FEBRUARY 23, 1928, BUT HAD TAKEN NO ACTION TOWARD RECLAMATION UNTIL FEBRUARY 9, 1937.

THE SUBJECT CHECKS WERE ISSUED TO THE PAYEE, A WORLD WAR VETERAN, IN PAYMENT OF DISABILITY COMPENSATION FOR THE MONTHS OF JULY AND AUGUST 1927. THE RECORD SHOWS, HOWEVER, THAT THE PAYEE DIED ON JUNE 30, 1927, AND HENCE THE SAID CHECKS COULD NOT HAVE BEEN NEGOTIATED UPON THE PAYEE'S ENDORSEMENT, HE BEING DECEASED. THE FILE CONTAINS SOME EVIDENCE TENDING TO SHOW THAT THE CHECKS WERE NEGOTIATED BY SOME MEMBER OR MEMBERS OF THE PAYEE'S FAMILY BUT THERE HAS BEEN NO DEFINITE FINDING AS TO WHO IS RESPONSIBLE FOR THE ENDORSEMENT OF THE PAYEE'S NAME ON THE CHECKS.

IT APPEARS FROM THE PHOTOSTATIC COPY OF LETTER FROM THE BONDING AND INSURANCE COMPANY REFERRED TO BY YOU, THAT RECLAMATION PROCEEDINGS ON THE INVOLVED CHECKS ARE BEING RESISTED UPON THE GROUND THAT REQUEST FOR REFUND WAS DELAYED UNTIL 10 YEARS AFTER NOTICE OF THE PAYEE'S DEATH WAS FURNISHED TO THE GOVERNMENT.

THERE IS NOTED THE STATEMENT IN THE CONCLUDING PARAGRAPH OF YOUR LETTER REGARDING THE APPARENT DATE OF NOTICE BY THE VETERANS' ADMINISTRATION OF THE PAYEE'S DEATH. THE CITED LETTER FROM THE VETERANS' ADMINISTRATION DOES NOT SHOW SPECIFICALLY THE DATE OF RECEIPT OF SUCH NOTICE--- SAID LETTER MERELY STATING IN PERTINENT PART THAT: "REFUND OF THE TOTAL AMOUNT OF THE TWO CHECKS WAS REQUESTED UNDER DATES OF FEBRUARY 23, 1928, APRIL 13, 1928, AND DECEMBER 4, 1936.' IT WOULD APPEAR FROM THE PHOTOSTATIC COPY OF THE DEATH CERTIFICATE WITH THE RECLAMATION FILE THAT NOTICE IN THE VETERANS' ADMINISTRATION OF THE VETERAN'S DEATH WAS AUGUST 25, 1927--- THAT BEING THE DATE SHOWN ON THE RECEIPT STAMP APPEARING ON THE CERTIFICATE. HOWEVER, THE MATTER OF THE FORGED ENDORSEMENTS IN RESPECT OF THE INVOLVED CHECKS WAS NOT REPORTED TO THIS OFFICE FOR APPROPRIATE ACTION UNTIL ON OR ABOUT FEBRUARY 19, 1937, BY LETTER FROM THE CHIEF DISBURSING OFFICER, DIVISION OF DISBURSEMENT, TREASURY DEPARTMENT.

THERE IS NO QUESTION ABOUT THE MATTER OF FORGERY OF THE PAYEE'S ENDORSEMENT ON THE SUBJECT CHECKS. WITH RESPECT TO THE RIGHT OF THE UNITED STATES TO RECOVER MONEY PAID ON A CHECK UPON THE BASIS OF A FORGED ENDORSEMENT THE UNITED STATES SUPREME COURT, IN UNITED STATES V. NATIONAL EXCHANGE BANK, 214 U.S. 302, STATED AT PAGE 320, THAT:

UNDER THESE CONDITIONS THE WARRANTY OF GENUINENESS IMPLIED BY THE PRESENTATION AND COLLECTION OF THE CHECKS BEARING THE FORGED ENDORSEMENT HAVING BEEN BROKEN AT THE TIME THE CHECKS WERE CASHED BY THE UNITED STATES, AND THE CAUSE OF ACTION HAVING THEREFORE THEN ACCRUED, THE RIGHT TO SUE TO RECOVER BACK FROM THE EXCHANGE BANK WAS NOT CONDITIONED UPON EITHER DEMAND OR THE GIVING OF NOTICE OF THE DISCOVERY OF FACTS WHICH BY THE OPERATION OF THE LEGAL WARRANTY WERE PRESUMABLY WITHIN THE KNOWLEDGE OF THE DEFENDANT.

THIS OFFICE HAS CAREFULLY CONSIDERED THE AUTHORITIES RELIED UPON BY THE ENDORSING BANK IN DENYING LIABILITY ON THE CHECKS UPON THE GROUND OF LACHES, NAMELY, UNITED STATES V. CLINTON NATIONAL BANK, 28 FED.REP. 357; LADD AND TILTON BANK V. UNITED STATES, 30 FED./2D) 334; UNITED STATES V. BARKER, 12 WHEATON 559; THE BANK OF THE UNITED STATES V. THE UNITED STATES, 2 HOWARD 11; AND THE UNITED STATES V. THE BANK OF THE METROPOLIS, 15 PETERS 377. HOWEVER, ORDINARILY LACHES IS NOT IMPUTABLE TO THE GOVERNMENT--- SEE 39 FED.REP. 259, AFFIRMED 64 FED.REP. 703, 14 COMP. GEN. 221--- AND IN THIS CASE NOTWITHSTANDING THERE MAY HAVE BEEN DELAY ON THE PART OF THE GOVERNMENT IN THE INSTITUTION OF RECLAMATION PROCEEDINGS, IN VIEW OF WHAT IS SAID IN THE NATIONAL EXCHANGE BANK CASE, SUPRA, THIS OFFICE WILL NOT UNDERTAKE TO DECIDE WHETHER THE ENDORSING BANK IN THIS CASE MAY SUCCESSFULLY DEFEND UPON THE GROUND OF DELAY IN RECEIPT OF NOTICE OF FORGERY, AS ASSERTED, BUT PERMIT IT TO REMAIN FOR JUDICIAL DECISION IF NECESSARY.

BUT ASIDE FROM ANY DEFENSE WHICH THE ENDORSING BANK MAY ASSERT, THE CASE HERE, INVOLVING A CLEAR CASE OF FORGERY, ANY INABILITY TO EFFECT RECOVERY FROM THE ENDORSING BANK CAN IN NOWISE BE CONTROLLING UPON THE RESPONSIBILITY OF THE TREASURER OF THE UNITED STATES FOR HAVING PAID THE CHECKS HERE INVOLVED UPON FORGED ENDORSEMENTS OF THE PAYEE'S NAME. THEREFORE, UNDER THE FACTS AS PRESENTED BY THE RECORD I HAVE TO ADVISE THAT THERE IS NO AUTHORITY OF LAW TO ABANDON RECLAMATION PROCEEDINGS ON THE SUBJECT CHECKS, OR TO ALLOW CREDIT IN THE ACCOUNTS OF THE TREASURY OF THE UNITED STATES.