B-134195, FEB. 20, 1958

B-134195: Feb 20, 1958

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THE FACTS ARE THAT THE PAYEE. PAYMENT OF THE CHECK WAS DECLINED BY THE FEDERAL RESERVE BANK OF CHICAGO ON MARCH 4. RALPH RIZZA WAS UNABLE TO LOCATE THE PERSON WHO PRESENTED THE CHECK TO HIM FOR PAYMENT AND SUBSEQUENTLY RIZZA WAS FORCED OUT OF BUSINESS. RIZZA WAS FOUND MURDERED. THE MATTER WAS REFERRED TO THE UNITED STATES SECRET SERVICE. ITS INVESTIGATION REPORT DISCLOSES THAT NO EXECUTOR OR ADMINISTRATOR OF THE ESTATE OF RALPH RIZZA HAD BEEN APPOINTED AND THAT HE IS SURVIVED BY HIS WIDOW KATHRYN RIZZA AND TWO INFANT CHILDREN. IT IS WELL SETTLED THAT IF A CHECK DRAWN PAYABLE TO ORDER IS ENDORSED IN BLANK IT THEREBY BECOMES NEGOTIABLE BY DELIVERY ALONE AND THAT IF THE CHECK THEN BE LOST OR STOLEN.

B-134195, FEB. 20, 1958

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

ON SEPTEMBER 11, 1957, YOUR FILE 460-BZS, THE SPECIAL ASSISTANT TREASURER OF THE UNITED STATES REFERRED TO US FOR CONSIDERATION THE CLAIMS OF DAVID RICE, AS PAYEE, AND KATHRYN RIZZA, AS SURVIVING SPOUSE OF THE SECOND ENDORSER, FOR THE PROCEEDS OF TREASURY (SOCIAL SECURITY) CHECK NO. 46,576,634, DRAWN FEBRUARY 15, 1955, FOR $505, BY W. WELDON, SYMBOL 407 TO THE ORDER OF DAVID RICE.

BRIEFLY, THE FACTS ARE THAT THE PAYEE, DAVID RICE RECEIVED THIS CHECK IN PAYMENT OF SOCIAL SECURITY BENEFITS DUE HIM, HE ENDORSED THE CHECK IN BLANK AND THEREAFTER LOST THE CHECK SO ENDORSED. SOMEONE REPRESENTING HIMSELF TO BE THE PAYEE OF THE CHECK PRESENTED IT TO RALPH RIZZA, DOING BUSINESS AS LAKE SIDE LIQUORS, IN CHICAGO, ILLINOIS IN PAYMENT OF MERCHANDISE. RIZZA ACCEPTED THE CHECK IN PAYMENT OF MERCHANDISE, GIVING THE BALANCE OF THE AMOUNT OF THE CHECK TO THE PERSON TENDERING IT IN CASH. PAYMENT OF THE CHECK WAS DECLINED BY THE FEDERAL RESERVE BANK OF CHICAGO ON MARCH 4, 1955, PURSUANT TO A REPORT FROM THE PAYEE THAT HE HAD LOST THE CHECK AFTER ENDORSING IT IN BLANK. RALPH RIZZA WAS UNABLE TO LOCATE THE PERSON WHO PRESENTED THE CHECK TO HIM FOR PAYMENT AND SUBSEQUENTLY RIZZA WAS FORCED OUT OF BUSINESS. HIS BANK, THE SOUTHMOOR BANK AND TRUST COMPANY OF CHICAGO INFORMED YOUR DEPARTMENT THAT HE HAD CLOSED HIS ACCOUNT AND STATED THAT HE HAD NO FURTHER INTEREST IN TRYING TO COLLECT FROM THE PAYEE. IN RESPONSE TO AN INQUIRY FROM OUR OFFICE, THE SOUTHMOOR BANK AND TRUST COMPANY REPORTED THAT RIZZA DID NOT EXECUTE A WRITTEN WAIVER TO HIS RIGHTS IN THE MATTER. ON JUNE 25, 1956, RIZZA WAS FOUND MURDERED.

THE MATTER WAS REFERRED TO THE UNITED STATES SECRET SERVICE. ITS INVESTIGATION REPORT DISCLOSES THAT NO EXECUTOR OR ADMINISTRATOR OF THE ESTATE OF RALPH RIZZA HAD BEEN APPOINTED AND THAT HE IS SURVIVED BY HIS WIDOW KATHRYN RIZZA AND TWO INFANT CHILDREN. MRS. RIZZA NOW CLAIMS THE PROCEEDS OF THE CHECK. THE PAYEE, DAVID RICE, HAS MADE REPEATED DEMANDS FOR PAYMENT OF THE CHECK AND HAS EXECUTED A BOND OF INDEMNITY.

IT IS WELL SETTLED THAT IF A CHECK DRAWN PAYABLE TO ORDER IS ENDORSED IN BLANK IT THEREBY BECOMES NEGOTIABLE BY DELIVERY ALONE AND THAT IF THE CHECK THEN BE LOST OR STOLEN, A BONA FIDE HOLDER FOR VALUE ACQUIRES TITLE TO IT EVEN AGAINST THE TRUE OWNER. A BONA FIDE HOLDER MAY HOLD SUCH CHECK EVEN IF THE CHECK WAS PURCHASED FROM THE FINDER OR THIEF, THOUGH HE TOOK IT NEGLIGENTLY, AND NOTWITHSTANDING THAT THE CIRCUMSTANCES ATTENDING THE TRANSFER MAY HAVE BEEN SUSPICIOUS, SO LONG AS HE DID NOT HAVE ACTUAL OR CONSTRUCTIVE NOTICE THAT THE INSTRUMENT WAS NOT THE PROPERTY OF THE PERSON WHO OFFERED IT FOR SALE. THAT IS, NOTHING SHORT OF BAD FAITH DEFEATS HIS RIGHT. SEE MICHIGAN BANK V. ELDRED, 9 WALL. 544, 551; SHAW V. RAILROAD, 101 U.S. 557, 564 AND SWIFT V. SMITH, 102 U.S. 442, 444.

AS IT APPEARS THE CHECK WAS ENDORSED BY THE PAYEE IN BLANK AND THERE IS NOTHING TO INDICATE NOTICE TO RALPH RIZZA OF ANY INFIRMITY IN THE CHECK, WE CONCLUDE THAT RALPH RIZZA WAS A HOLDER IN DUE COURSE AND, IF ALIVE, WOULD BE ENTITLED TO THE PROCEEDS OF THE CHECK. THE FACT THAT DAVID RICE EXECUTED THE BOND OF INDEMNITY DOES NOT, OF COURSE, ESTABLISH HIS LEGAL ENTITLEMENT TO THE PROCEEDS OF THE CHECK OR CONSTITUTE A PROPER BASIS FOR MAKING PAYMENT OF THE AMOUNT OF THE CHECK TO HIM. HIS CLAIM IS ACCORDINGLY FOR DISALLOWANCE AND THE PROCEEDS OF THE CHECK CONSTITUTE AN ASSET OF THE ESTATE OF RALPH RIZZA.

IN HER ORIGINAL CLAIM KATHRYN RIZZA STATED THAT, AT THE TIME OF THE FILING OF HER CLAIM, THE FUNERAL EXPENSES OF RALPH RIZZA HAD NOT BEEN PAID. UNDER ILLINOIS LAW FUNERAL EXPENSES CONSTITUTE A PREFERRED CLAIM AGAINST THE ESTATE OF A DECEDENT. SEE SMITH-HURD ILLINOIS ANNOTATED STATUTES (1957 SUPP.) CHAPTER 3, SECTION 354. ON NOVEMBER 8, 1957, AND AGAIN ON JANUARY 20, 1958, WE WROTE TO KATHRYN RIZZA, INQUIRING AS TO WHETHER THE FUNERAL EXPENSES OF RALPH RIZZA HAVE BEEN PAID, AND IF SO, BY WHOM. WE HAVE NOT RECEIVED AN ANSWER TO EITHER OF THESE LETTERS.

THEREFORE, AS THE PAYEE, DAVID RICE, IS NOT ENTITLED TO THE PROCEEDS OF THE CHECK, AND NO DISPOSITION CAN BE MADE OF THE CLAIM OF KATHRYN RIZZA UNTIL THE REQUESTED INFORMATION RELATIVE TO THE FUNERAL EXPENSES OF THE DECEDENT IS FURNISHED, THE PROCEEDS OF THE CHECK SHOULD BE DEPOSITED INTO THE ACCOUNT "8881 UNCLAIMED MONEYS OF INDIVIDUALS WHOSE WHEREABOUTS ARE UNKNOWN (RALPH ZA).' SHOULD ANY FURTHER CORRESPONDENCE IN THE MATTER BE RECEIVED FROM OR ON BEHALF OF MRS. RIZZA, IT SHOULD BE REFERRED TO OUR CLAIMS DIVISION FOR CONSIDERATION.

A COPY OF THIS DECISION HAS BEEN FURNISHED TO SENATOR EVERETT MCKINLEY DIRKSEN AND WILLIAM H. ROBINSON, MEMBER OF THE GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, WHO HAVE MADE INQUIRIES IN BEHALF OF THE PAYEE.