B-12443, OCTOBER 31, 1940, 20 COMP. GEN. 227

B-12443: Oct 31, 1940

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CHECK - NEGOTIATION BY OTHER THAN INTENDED PAYEE - GOVERNMENT LIABILITY WHERE A GOVERNMENT CHECK WAS FORWARDED TO THE INTENDED PAYEE ADDRESSED TO THE TOWN AND STATE AS GIVEN BY HIM. SAID CHECK WAS DELIVERED TO ANOTHER PERSON OF THE SAME NAME. THE GOVERNMENT IS NO LONGER INVOLVED OR CONCERNED WITH THE RIGHTS OR LIABILITIES OF THE ENDORSERS ON THE ORIGINAL CHECK. THIS CHECK WAS INCLUDED BY THE POSTMASTER AT FLORA WITH HER REMITTANCE OF SURPLUS FUNDS TO THE POSTMASTER AT VICKSBURG. SUBSEQUENTLY THE COUNTY AGENT STOPPED PAYMENT ON THIS CHECK AND THE AMOUNT WAS CHARGED BACK TO THE ACCOUNT OF THE FIRST NATIONAL BANK OF VICKSBURG BY THE FEDERAL RESERVE BANK. WAS ISSUED ON FEBRUARY 2. WAS LEFT AT THE BANK OF FLORA.

B-12443, OCTOBER 31, 1940, 20 COMP. GEN. 227

CHECK - NEGOTIATION BY OTHER THAN INTENDED PAYEE - GOVERNMENT LIABILITY WHERE A GOVERNMENT CHECK WAS FORWARDED TO THE INTENDED PAYEE ADDRESSED TO THE TOWN AND STATE AS GIVEN BY HIM, HE HAVING NEGLECTED TO STATE HIS RURAL ROUTE NUMBER IN CONNECTION THEREWITH, AND SAID CHECK WAS DELIVERED TO ANOTHER PERSON OF THE SAME NAME, RECEIVING HIS MAIL AT SAME POST OFFICE, WHO NEGOTIATED THE CHECK TO THE POSTMASTER THERE, THE ACCOUNTS OF ANOTHER POSTMASTER, A SUBSEQUENT ENDORSER, MAY NOT BE CREDITED WITH THE AMOUNT OF THE CHECK AFTER THE GOVERNMENT HAD RECLAIMED THE PROCEEDS THEREOF, HAVING ONCE HONORED IT, AND HAD PAID THE INTENDED PAYEE BY A NEW CHECK, FOR, IN THESE CIRCUMSTANCES, THE GOVERNMENT IS NO LONGER INVOLVED OR CONCERNED WITH THE RIGHTS OR LIABILITIES OF THE ENDORSERS ON THE ORIGINAL CHECK. CASES INVOLVING ADMINISTRATIVE ERROR, OR NEGLIGENCE IN MAILING CHECK TO PERSON OF SAME NAME AS INTENDED PAYEE, DISTINGUISHED.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE POSTMASTER GENERAL, OCTOBER 31, 1940:

THERE HAS BEEN CONSIDERED YOUR LETTER OF JULY 31, 1940, AS FOLLOWS:

ON FEBRUARY 28, 1939, THE POSTMASTER AT FLORA, MISSISSIPPI, ACCEPTED FROM A NEGRO BY THE NAME OF HARVEY TAYLOR, A GOVERNMENT CHECK NO. 534494 FOR $35.57, ISSUED BY THE COUNTY AGRICULTURAL AGENT AT CANTON, MISSISSIPPI, AND CASHED THE CHECK FOR HIM WITH POSTAL FUNDS. THIS CHECK WAS INCLUDED BY THE POSTMASTER AT FLORA WITH HER REMITTANCE OF SURPLUS FUNDS TO THE POSTMASTER AT VICKSBURG, MISSISSIPPI. SUBSEQUENTLY THE COUNTY AGENT STOPPED PAYMENT ON THIS CHECK AND THE AMOUNT WAS CHARGED BACK TO THE ACCOUNT OF THE FIRST NATIONAL BANK OF VICKSBURG BY THE FEDERAL RESERVE BANK. THE FIRST NATIONAL BANK CHARGED THE AMOUNT TO THE ACCOUNT OF THE POSTMASTER AT VICKSBURG AND HE HAS MADE DEMAND ON THE POSTMASTER AT FLORA, MISSISSIPPI, FOR $35.57.

INVESTIGATION OF THE CASE DISCLOSED THAT THE COUNTY AGRICULTURAL AGENT AT CANTON, MISSISSIPPI, ISSUED TWO SOIL CONSERVATION CHECKS DURING THE MONTH OF FEBRUARY 1939 IN FAVOR OF HARVEY TAYLOR, FLORA, MISSISSIPPI. ONE OF THESE CHECKS, WAS ISSUED ON FEBRUARY 2, 1939, FOR $29.20, AND WAS LEFT AT THE BANK OF FLORA, FLORA, MISSISSIPPI, FOR PERSONAL DELIVERY TO HARVEY TAYLOR WHO WAS LIVING ON THE FARM OF MR. LEON CHAPMAN, THE CONTRACT NUMBER ON THE CHECK BEING NO. 543. THE OTHER CHECK WAS ISSUED FEBRUARY 3, 1939, FOR $35.57, IN FAVOR OF HARVEY TAYLOR AND WAS MAILED TO HIM AT FLORA, MISSISSIPPI, THE CONTRACT NUMBER BEING NO. 1574. THE POSTMASTER AT FLORA DELIVERED THE LETTER CONTAINING THE CHECK FOR $35.37 TO THE HARVEY TAYLOR LIVING ON THE CHAPMAN FARM SINCE THIS MAN RECEIVED MAIL AT THE FLORA POST OFFICE WHILE THE OTHER HARVEY TAYLOR RECEIVED MAIL ON RURAL ROUTE NO. 1 FROM FLORA. HOWEVER, THE ENVELOPE CONTAINING THE CHECK FOR $35.57 WAS NOT ADDRESSED FOR DELIVERY ON RURAL ROUTE NO. 1 BUT WAS SIMPLY ADDRESSED " FLORA, MISSISSIPPI.' BOTH OF THESE MEN ARE NEGROES AND BOTH ARE TENANT FARMERS AND THE POSTMASTER DID NOT KNOW THE ONE RECEIVING MAIL ON THE RURAL ROUTE. THE HARVEY TAYLOR RECEIVING MAIL AT THE POST OFFICE OBTAINED BOTH THE CHECKS INVOLVED AND CASHED THEM BOTH.

AN EFFORT HAS BEEN MADE TO OBTAIN A REFUND OF $35.57 FROM HARVEY TAYLOR BUT HE STATES HE HAS NO MONEY WITH WHICH TO PAY BACK THE AMOUNT. SINCE THE STOPPAGE OF PAYMENT ON CHECK NO. 534494 THE COUNTY AGENT HAS ISSUED A DUPLICATE CHECK FOR $35.57 IN FAVOR OF HARVEY TAYLOR WHO LIVES ON RURAL ROUTE NO. 1, FLORA, MISSISSIPPI.

THE POSTMASTER AT VICKSBURG IS STILL CARRYING THE $35.57 IN HIS ACCOUNTS AND IS DESIROUS OF HAVING THE ITEM CLEARED UP. WILL YOU PLEASE THEREFORE ADVISE THIS OFFICE OF THE ACTION YOU DIRECT IN THE CASE IN ORDER THAT THE POSTMASTER AT VICKSBURG MAY BE PROPERLY INSTRUCTED.

THE RECORD IN THE INSTANT CASE DISCLOSES THAT AT THE TIME THE RIGHTFUL PAYEE OF TREASURY CHECK NO. 534494, DATED FEBRUARY 3, 1939, FOR $35.57, DRAWN TO THE ORDER OF HARVEY TAYLOR, APPLIED FOR THE AGRICULTURAL CONSERVATION PROGRAM BENEFITS COVERED BY THE CHECK, HE STATED IN HIS APPLICATION FOR SUCH BENEFITS THAT HIS ADDRESS WAS FLORA, MISS., AND THAT THE CHECK WAS MAILED TO THAT POSTAL ADDRESS BY THE OFFICE OF THE COUNTY ADMINISTRATION ASSISTANT OF THE AGRICULTURAL CONSERVATION PROGRAM FOR MADISON COUNTY, MISS., WHERE IT WAS DELIVERED TO AN EMPLOYEE OF THE POST OFFICE TO ANOTHER PERSON BEARING THE NAME HARVEY TAYLOR WHO IMPROPERLY NEGOTIATED THE CHECK TO THE POSTMASTER AT THAT PLACE AND APPROPRIATED THE PROCEEDS TO HIS OWN USE. IT APPEARS FURTHER THAT THE CHECK BEARING THE PURPORTED ENDORSEMENT BY MARK OF THE PAYEE, TOGETHER WITH THE ENDORSEMENTS OF THE POSTMASTER AT FLORA, MISS., THE POSTMASTER AT VICKSBURG, MISS., AND THE FIRST NATIONAL BANK AND TRUST CO. OF VICKSBURG, MISS., IN THE ORDER NAMED, WAS PAID BY THE TREASURER OF THE UNITED STATES ON MARCH 3, 1939.

SUBSEQUENTLY, UPON IT BEING ASCERTAINED THAT THE FIRST ENDORSEMENT APPEARING ON THE CHECK WAS THAT OF A PERSON WHO WAS NOT INTENDED AS THE PAYEE THEREOF AND THAT THE RIGHTFUL PAYEE DID NOT PARTICIPATE IN THE PROCEEDS OF THE INSTRUMENT, THE SAID FIRST NATIONAL BANK AND TRUST CO. REFUNDED THE AMOUNT OF THE CHECK TO THE TREASURER OF THE UNITED STATES AND CHARGED SAID AMOUNT AGAINST THE ACCOUNT OF THE POSTMASTER AT VICKSBURG, AND HE IN TURN HAS MADE DEMAND FOR REIMBURSEMENT ON THE POSTMASTER AT FLORA. THE RECORD DISCLOSES, ALSO, THAT THE PROCEEDS OF THE AMOUNT RECOVERED FROM THE FIRST NATIONAL BANK AND TRUST CO. WERE PAID TO THE RIGHTFUL PAYEE BY THE TREASURER BY CHECK NO. 26434, DATED JULY 14, 1939.

THERE CAN BE NO QUESTION BUT THAT THE GOVERNMENT'S OBLIGATION WITH RESPECT TO CHECK NO. 534494 WAS FOR DISCHARGING ONLY UPON PAYMENT TO THE PERSON BEARING THE NAME HARVEY TAYLOR WHO WAS INTENDED BY THE GOVERNMENT AS THE PAYEE THEREOF. BUT THE CHECK WAS NOT DELIVERED TO HIM AND IT DID NOT BEAR HIS GENUINE ENDORSEMENT. HENCE, THERE WAS NO TRANSFER OF THE TITLE WHICH HE HAD TO THE INSTRUMENT AND NONE OF THE HOLDERS THEREOF HAD THE RIGHT TO RECEIVE OR RETAIN THE PROCEEDS OF THE CHECK.

THIS CASE IS TO BE DISTINGUISHED FROM ONE WHERE, THROUGH ADMINISTRATIVE ERROR OR NEGLIGENCE, A CHECK IS MAILED TO A PERSON BEARING THE SAME NAME AS THE RIGHTFUL PAYEE, AND IS RECEIVED AND NEGOTIATED BY SUCH PERSON. HERE, THE GOVERNMENT MAILED THE CHECK TO FLORA, MISS.--- THE EXACT ADDRESS GIVEN BY THE INTENDED PAYEE AT THE TIME HE APPLIED FOR THE BENEFITS COVERED THEREBY--- AND, AS BETWEEN THE GOVERNMENT AND THE ENDORSERS OF THE CHECK, THE FACT THAT HIS CORRECT POSTAL ADDRESS WAS RURAL ROUTE NO. 1, FLORA, MISS., AND NOT SIMPLY FLORA, MISS., CAN FURNISH NO SUBSTANTIAL BASIS FOR A CONTENTION THAT THE GOVERNMENT IS PRECLUDED FROM ASSERTING THAT THE PROPORTIONED ENDORSEMENT OF THE PAYEE APPEARING ON THE CHECK WAS SPURIOUS. THE MISTAKEN IDENTITY WAS ON THE PART OF THE SECOND ENDORSER--- THE POSTMASTER AT FLORA--- WHO CASHED THE CHECK UPON THE ENDORSEMENT OF A PERSON OTHER THAN THE RIGHTFUL PAYEE AND SHE AS WELL AS THE POSTMASTER AT VICKSBURG AND THE FIRST NATIONAL BANK AND TRUST CO. OF VICKSBURG BECAME LIABLE ON ACCOUNT OF THE BREACH OF THE WARRANTY IMPLIED BY THEIR UNRESTRICTED ENDORSEMENTS. WITH RESPECT TO THE QUESTION OF WHO MUST BEAR THE LOSS WHEN A CHECK IS PAID UPON THE SPURIOUS ENDORSEMENT OF ONE BEARING THE SAME NAME AS THE PAYEE, SEE 14 COMP. GEN. 840, AND CASES CITED THEREIN; ALSO, UNITED STATES V. NATIONAL CITY BANK OF NEW YORK, 28 FED. SUPP. 144.

SUCH BEING THE FACTS AND CIRCUMSTANCES IN THE PRESENT CASE AND SINCE THE LIABILITY OF THE POSTMASTER AT VICKSBURG AS AN UNRESTRICTED ENDORSER OF CHECK NO. 534494, IS NOT FOR DETERMINING BY HIS ABILITY OR LACK OF ABILITY TO OBTAIN REIMBURSEMENT FROM A PRIOR ENDORSER, 14 COMP. GEN. 221, THE ACTION TAKEN BY THE FIRST NATIONAL BANK AND TRUST CO. IN REFUNDING THE AMOUNT OF THE CHECK TO THE GOVERNMENT AND CHARGING THE SAME AGAINST HIS ACCOUNT APPEARS REGULAR AND PROPER; AND WHILE IT IS TRUE THAT THE POSTMASTER AT VICKSBURG HAS A RIGHT OF RECOURSE AGAINST THE PRIOR ENDORSERS--- THE POSTMASTER AT FLORA AND THE PERSON WHO IMPROPERLY NEGOTIATED THE CHECK AS ITS PAYEE--- THE ASSERTION AND SATISFACTION OF SUCH CLAIM IS A PERSONAL MATTER BETWEEN HIM AND SAID PRIOR ENDORSERS AND THE QUESTION AS TO WHETHER THE LOSS SHALL BE BORNE BY THE POSTMASTER AT VICKSBURG OR BY A PRIOR ENDORSER IS NOT ONE IN WHICH THE UNITED STATES IS DIRECTLY INVOLVED OR CONCERNED. (SEE 3 COMP. GEN. 473; 15 ID. 218; 18 ID. 41.)

ACCORDINGLY, YOU ARE ADVISED THAT NO REASON IS APPARENT FOR DISTURBING THE ACCOUNTS OF THE POSTMASTER AT VICKSBURG WITH RESPECT TO THE CHARGE FOR THE AMOUNT OF SAID CHECK AND THAT HE MAY NOT BE RELIEVED FROM THE LIABILITY WHICH HE ASSUMED AS AN UNRESTRICTED ENDORSER THEREOF, UNLESS AND UNTIL HE SHALL EFFECT RECOVERY OF SAID AMOUNT FROM A PRIOR ENDORSER.