A-94478, JUNE 2, 1938, 17 COMP. GEN. 1045

A-94478: Jun 2, 1938

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CHECKS - FORGERIES - RECLAMATION - NAME SIMILARITY WHERE PAYEE OF CHECK BEARING NOTATION IT WAS IN PAYMENT OF ADJUSTED SERVICE BONDS HAS EXECUTED AFFIDAVIT OF NONRECEIPT OF CHECK. RECLAMATION PROCEEDINGS SHOULD BE INSTITUTED NOTWITHSTANDING THE CASHING BANK IS ATTEMPTING TO JUSTIFY ITS HANDLING OF THE CHECK BY ALLEGING IT WAS CASHED FOR A PERSON OF SAME SURNAME LIVING IN THE SAME TOWN AS THE PAYEE AND THAT THE EXAMINER OF QUESTIONED DOCUMENTS IS OF THE OPINION THAT THE SUSPECT WROTE THE NAME OF THE PAYEE ON THE CHECK. THE BANK HAVING FAILED TO EXERCISE THE DILIGENCE IN THE IDENTIFICATION OF THE NEGOTIATOR WHICH READILY WOULD HAVE ENABLED IT TO DETERMINE THAT THE PERSON PRESENTING THE ITEM WAS NOT THE PAYEE.

A-94478, JUNE 2, 1938, 17 COMP. GEN. 1045

CHECKS - FORGERIES - RECLAMATION - NAME SIMILARITY WHERE PAYEE OF CHECK BEARING NOTATION IT WAS IN PAYMENT OF ADJUSTED SERVICE BONDS HAS EXECUTED AFFIDAVIT OF NONRECEIPT OF CHECK, RECLAMATION PROCEEDINGS SHOULD BE INSTITUTED NOTWITHSTANDING THE CASHING BANK IS ATTEMPTING TO JUSTIFY ITS HANDLING OF THE CHECK BY ALLEGING IT WAS CASHED FOR A PERSON OF SAME SURNAME LIVING IN THE SAME TOWN AS THE PAYEE AND THAT THE EXAMINER OF QUESTIONED DOCUMENTS IS OF THE OPINION THAT THE SUSPECT WROTE THE NAME OF THE PAYEE ON THE CHECK, THE CHRISTIAN NAME OF THE SUSPECT KNOWN TO THE BANK BEING DIFFERENT THAN THAT OF THE PAYEE SHOWN ON THE CHECK, AND THE BANK HAVING FAILED TO EXERCISE THE DILIGENCE IN THE IDENTIFICATION OF THE NEGOTIATOR WHICH READILY WOULD HAVE ENABLED IT TO DETERMINE THAT THE PERSON PRESENTING THE ITEM WAS NOT THE PAYEE.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE TREASURER OF THE UNITED STATES, JUNE 2, 1938:

YOUR LETTER OF JANUARY 8, 1938, AWS-C, IS AS FOLLOWS:

REFERENCE IS MADE TO THE FOLLOWING CHECK IN FAVOR OF EDWARD DEWITT:

NUMBER 11,494; DATE 6-22-36; AMOUNT $300.00; DRAWER ERIC C. GOZA; SYMBOL 16-799; DATE PAID 6-29-36.

THE ABOVE CHECK, TOGETHER WITH THE FILE PERTAINING THERETO, IS FORWARDED HEREWITH.

INASMUCH AS THE CHECK WAS APPARENTLY RECEIVED AND NEGOTIATED BY ONE ED. M. DEWITT, THE MATTER IS REFERRED TO YOU FOR CONSIDERATION.

YOUR ATTENTION IS INVITED TO THE FACT THAT THE ENDORSERS HAVE DECLINED TO REFUND THE AMOUNT OF THE ITEM.

THE RECORDS SHOW 12 $50 BONDS NUMBERED 29,035,052 TO 29,035,063, INCLUSIVE, WERE ISSUED TO THE VETERAN, EDWARD DEWITT, A-3,179,610, PURSUANT TO APPLICATION FILED WITH THE VETERANS' ADMINISTRATION UNDER PROVISIONS OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT.1099, AND THAT SIX OF THE $50 BONDS NUMBERED 29,035,058 TO 29,035,063, INCLUSIVE, WERE REDEEMED PURSUANT TO SECTION 4 OF SAID ACT BY THE POSTMASTER AT COLUMBIA, S.C. PAYMENT FOR THE REDEEMED BONDS WAS MADE BY THE INVOLVED CHECK WHICH BEARS THE FOLLOWING STATEMENT ON THE FACE THEREOF,"OBJECT FOR WHICH DRAWN:PAYMENT OF ADJUSTED-SERVICE BONDS NUMBERED: 29035058-29035063.'

THE PAYEE, EDWARD DEWITT OF CONWAY, S.C., EXECUTED AFFIDAVIT OF NONRECEIPT OF THE CHECK ON SEPTEMBER 21, 1936, FOLLOWING WHICH THE MATTER OF THE NEGOTIATION OF THE ITEM WAS THOROUGHLY INVESTIGATED BY THE SECRET SERVICE DIVISION, TREASURY DEPARTMENT. THE INVESTIGATION DISCLOSED THAT THE CHECK WAS CASHED BY THE PEOPLES NATIONAL BANK, CONWAY, S.C., AND ITS PRESIDENT, MR. SPIVEY, STATED ON SEPTEMBER 25, 1936, TO A REPRESENTATIVE OF THE SECRET SERVICE THAT NEITHER CASHIER KING NOR ANY OF THE TELLER RECALLED HANDLING THIS CHECK; THAT THE PAYEE IS WELL KNOWN TO PRESIDENT SPIVEY BUT HE IS NOT KNOWN BY THE OTHER BANK PERSONNEL.

IT APPEARS THE CASHING BANK LEARNED OF THE WRONGFUL NEGOTIATION OF THE ITEM PRIOR TO THE TIME THE MATTER WAS REFERRED TO THE SECRET SERVICE FOR INVESTIGATION AND THE BANK HAS ATTEMPTED TO JUSTIFY ITS HANDLING OF THE ITEM BY ALLEGING THAT IT WAS CASHED FOR A COLORED MINISTER LIVING IN THE SAME TOWN AS THE PAYEE BUT WHOSE NAME IS ED. M. DEWITT. HOWEVER, ED. M. DEWITT AND HIS WIFE FIRMLY DENY HAVING CASHED THE ITEM OR HAVING RECEIVED ANY OF THE PROCEEDS THEREOF ALTHOUGH THIS COLORED MINISTER DOES ADMIT THAT HE CASHED A $130.94 SEED LOAN CHECK AT THE PEOPLES NATIONAL BANK. NONE OF THE BANK OFFICIALS RECALL HAVING CASHED MORE THAN ONE CHECK FOR ED. M. DEWITT AND, SINCE IT HAS BEEN ESTABLISHED IT WAS THE $130.94 CHECK HE CASHED AT THIS BANK, IT IS APPARENT SAID BANK CANNOT BE CERTAIN FOR WHOM IT HANDLED THE $300 ITEM. THE BANK OFFICIALS HAVE ALSO STATED THEY COULD NOT TESTIFY ON THE WITNESS STAND THAT THE $300 EDWARD DEWITT CHECK HAD BEEN CASHED FOR ED. M. DEWITT.

THERE HAS NOT BEEN OVERLOOKED OPINION BY THE EXAMINER OF QUESTIONED DOCUMENTS DATED JANUARY 28, 1937, THAT ED. M. DEWITT WROTE THE NAME OF THE PAYEE ON THE REVERSE OF THIS CHECK, WHICH ASSERTION THE SUSPECT STEADFASTLY DENIES. HOWEVER, IT APPEARS SIGNIFICANT THAT EMPLOYEES OF THE CASHING BANK ARE UNABLE TO TESTIFY THAT THE CHECK WAS CASHED FOR THIS SUSPECT. IN ANY EVENT, THE EXERCISE OF SOME DEGREE OF DILIGENCE IN IDENTIFYING THE NEGOTIATOR WOULD HAVE ENABLED THE CASHING BANK TO DETERMINE THAT THE PERSON PRESENTING THE ITEM WAS NOT THE PAYEE.

THE BANK HAVING CASHED THE CHECK WITHOUT THE GENUINE INDORSEMENT OF THE PAYEE'S NAME, IT BECOMES LIABLE ON THE BREACH OF ITS INDORSEMENT CONTRACT GUARANTEEING THE GENUINENESS OF ALL PRIOR INDORSEMENTS. UNITED STATES V. NATIONAL BANK OF COMMERCE, 205 FED.REP. 433. FURTHERMORE, UNDER THE PROVISIONS OF TREASURY DEPARTMENT CIRCULAR NO. 176, GOVERNING THE PAYMENT OF CHECKS BY THE TREASURER OF THE UNITED STATES, THE GOVERNMENT RESERVED THE RIGHT TO RETURN SUCH FORGED CHECKS TO THE INDORSING BANKS. SEE, GENERALLY, CLOSTER NATIONAL BANK V. FEDERAL RESERVE BANK OF NEW YORK, 285 FED. 138 (C.C.A.2ND, 1922), CERTIORARI DENIED 261 U.S. 613.

THE ENTIRE FILE INCLUDING THE CHECK WHICH HAS BEEN CHARGED IN YOUR ACCOUNT IS HEREWITH RETURNED AND UPON THE BASIS OF THE PRESENT RECORD RECLAMATION PROCEEDINGS SHOULD BE VIGOROUSLY INSISTED UPON AND SUCH FURTHER ACTION TAKEN AS MAY BE FOUND NECESSARY TO PROTECT THE INTERESTS OF THE UNITED STATES. THE AMOUNT RECOVERED UPON THE SAID CHECK SHOULD BE REMITTED TO THE PAYEE.