B-130169, JAN. 25, 1957

B-130169: Jan 25, 1957

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TREASURER OF THE UNITED STATES: REFERENCE IS MADE TO LETTER DATED AUGUST 23. THE LETTER INDICATES THAT RECLAMATION AND INVESTIGATION PROCEEDINGS WERE INSTITUTED PURSUANT TO A CLAIM EXECUTED BY THE PAYEE ALLEGING THAT HE DID NOT RECEIVE OR ENDORSE THE ABOVE DESCRIBED CHECK. INVESTIGATION BY THE UNITED STATES SECRET SERVICE REVEALED THAT THE CHECK WAS NEGOTIATED BY PHILLIP M. HAD SECURED AN INCOME TAX REFUND CHECK FOR HIM BUT HAD REFUSED TO RELEASE THE CHECK UNTIL PAYMENT WAS MADE OF COUNSEL FEES DUE MR. THE PAYMENT OF WHICH SETTLEMENT WAS MADE BY A PARTNERSHIP CHECK IN THE AMOUNT OF $526.00. GILBERT AND SPECTOR FURTHER STATED THAT CONFIRMATION OF THE AUTHORIZATION WAS ACCOMPLISHED BY A LETTER ADDRESSED TO MR.

B-130169, JAN. 25, 1957

TO MRS. IVY BAKER PRIEST, TREASURER OF THE UNITED STATES:

REFERENCE IS MADE TO LETTER DATED AUGUST 23, 1956, FILE REFERENCE CC-455- MC, FROM THE SPECIAL ASSISTANT TREASURER, ENCLOSING THE CHECK CLAIM FILE IN CONNECTION WITH CHECK NO. 19,565,485, DRAWN AUGUST 18, 1952, IN THE AMOUNT OF $1,053.03, BY H. ROGERS, SYMBOL 415, TO THE ORDER OF MILTON BERMAN AS AN INCOME TAX REFUND.

THE LETTER INDICATES THAT RECLAMATION AND INVESTIGATION PROCEEDINGS WERE INSTITUTED PURSUANT TO A CLAIM EXECUTED BY THE PAYEE ALLEGING THAT HE DID NOT RECEIVE OR ENDORSE THE ABOVE DESCRIBED CHECK, AUTHORIZE THE ENDORSEMENT OF HIS NAME THEREON, OR PARTICIPATE IN THE PROCEEDS.

INVESTIGATION BY THE UNITED STATES SECRET SERVICE REVEALED THAT THE CHECK WAS NEGOTIATED BY PHILLIP M. GILBERT AND WILLIAM D. SPECTOR, THE PAYEE'S ATTORNEYS AT THAT TIME. MESSRS. GILBERT AND SPECTOR EXECUTED AFFIDAVITS STATING THAT THE PAYEE, A DENTIST WHOM THEY REPRESENTED IN VARIOUS LEGAL MATTERS, TOLD THEM THAT HIS FORMER ATTORNEY, MR. DON GILMAN, HAD SECURED AN INCOME TAX REFUND CHECK FOR HIM BUT HAD REFUSED TO RELEASE THE CHECK UNTIL PAYMENT WAS MADE OF COUNSEL FEES DUE MR. GILMAN; THAT AT MR. BERMAN'S REQUEST AND WITH HIS APPROVAL THEY OBTAINED THE CHECK FROM GILMAN AFTER HAVING EFFECTED A COMPROMISE SETTLEMENT OF GILMAN'S FEE AT 50 PERCENT OF THE AMOUNT OF THE CHECK, THE PAYMENT OF WHICH SETTLEMENT WAS MADE BY A PARTNERSHIP CHECK IN THE AMOUNT OF $526.00; AND THAT WITH BERMAN'S ORAL AUTHORIZATION AND CONSENT THEY ENDORSED THE CHECK AND DEPOSITED THE PROCEEDS TO THEIR BANK ACCOUNT APPLYING THE REMAINING 50 PERCENT IN SATISFACTION OF ATTORNEY'S FEES WHICH BERMAN OWED TO THEM. MESSRS. GILBERT AND SPECTOR FURTHER STATED THAT CONFIRMATION OF THE AUTHORIZATION WAS ACCOMPLISHED BY A LETTER ADDRESSED TO MR. BERMAN WHICH HE ACKNOWLEDGED BY TELEPHONE AND IN PERSON; THAT AT SOME TIME LATER WHEN BERMAN ONCE AGAIN DECIDED TO CHANGE ATTORNEYS, THEIR COPY OF THE LETTER WAS INADVERTENTLY RELEASED TO HIM WITH HIS FILE FOR TRANSFER TO HIS NEW ATTORNEY.

IN AN AFFIDAVIT MR. GILMAN AFFIRMED THE AFOREMENTIONED COMPROMISE SETTLEMENT AND STATED THAT HIS FIRM HELD THE PAYEE'S PROMISSORY NOTE IN THE AMOUNT OF $1,500.00 FOR LEGAL SERVICES RENDERED. FURTHER, THAT UPON RECEIPT OF GILBERT AND SPECTOR'S CHECK FOR $526.00 IN FULL SETTLEMENT OF THE CLAIM FOR COUNSEL FEES, HE RELEASED BERMAN'S INCOME TAX REFUND CHECK TO THEM.

IT IS STATED IN THE LETTER OF AUGUST 23, 1956, THAT THE ENDORSERS HAVE DISCLAIMED LIABILITY IN CONNECTION WITH THE CHECK AND THAT IT WAS DOUBTFUL THAT A CIVIL SUIT TO EFFECT COLLECTION COULD BE PROSECUTED TO A SUCCESSFUL CONCLUSION UNDER THE CIRCUMSTANCES ATTENDING THE NEGOTIATION OF THE CHECK. THE CASE IS REFERRED TO OUR OFFICE FOR CONSIDERATION AS TO WHETHER RECLAMATION PROCEEDINGS MAY BE ABANDONED AND THE PAYEE NOTIFIED THAT HIS CLAIM IS FOR ADJUSTMENT BETWEEN HIM AND HIS FORMER ATTORNEYS.

THE EVIDENCE SUBMITTED IN THIS CASE FROM THE FORMER ATTORNEYS OF THE PAYEE INDICATES THE RENDITION OF LEGAL SERVICES ON BEHALF OF THE PAYEE IN A VALUE IN EXCESS OF THE AMOUNT OF THE CHECK. THAT BEING THE CASE, THE USE OF THE CHECK PROCEEDS IN SATISFACTION OF THE LEGAL FEES OF MR. GILMAN AND MESSRS. GILBERT AND SPECTOR RESULTED IN THE RECEIPT BY THE PAYEE OF BENEFITS IN EXCESS OF THE AMOUNT OF THE CHECK. ALSO, THE PAYEE HAS NOT DENIED THE EXISTENCE OF SUCH COUNSEL FEES NOR HAS HE DISCLAIMED THE BENEFITS DERIVED FROM THE COMPROMISE AGREEMENT REFERRED TO ABOVE WHICH RESULTED IN THE REDUCTION OF ATTORNEY FEES.

UNDER THE CIRCUMSTANCES IT WOULD APPEAR THAT THE PAYEE HAS RECEIVED BENEFITS IN EXCESS OF THE AMOUNT OF THE CHECK AND HENCE WOULD BE PRECLUDED FROM ASSERTING THAT THE ENDORSEMENT WAS FORGED UNDER THE SO CALLED DOCTRINE OF ESTOPPEL. SEE 8 AM.JUR., BILLS AND NOTES, SEC. 606. ACCORDINGLY, ON THE BASIS OF THE PRESENT RECORD, THE RECLAMATION PROCEEDINGS MAY BE ABANDONED AND THE PAYEE SHOULD BE NOTIFIED THAT THE CLAIM MAY NOT BE ALLOWED BUT RATHER IS A MATTER FOR ADJUSTMENT BETWEEN HIM AND HIS FORMER ATTORNEYS. HOWEVER, IN THE EVENT THE PAYEE DENIES THAT THE ATTORNEYS ACTED IN HIS BEHALF IN EFFECTING THE COMPROMISE TRANSACTION PURSUANT TO WHICH THEY OBTAINED POSSESSION OF THE CHECK OR IF HE REPUDIATES THE DEBTS FOR COUNSEL FEES TO WHICH THE PROCEEDS OF THE CHECK WERE APPLIED, YOU ARE AUTHORIZED TO CONTINUE RECLAMATION PROCEEDINGS AND TO REMIT THE AMOUNT RECLAIMED FROM THE ENDORSERS TO THE PAYEE--- THE CHECK ADMITTEDLY NOT HAVING BEEN ENDORSED BY THE PAYEE.