B-139989, AUG. 13, 1959

B-139989: Aug 13, 1959

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THE CHECK IN QUESTION IS INCOME TAX REFUND CHECK NO. 15. PALMER) WHO WERE HUSBAND AND WIFE. RECOVERY OF THE FULL AMOUNT WAS EFFECTED FROM JOHN G. JOHN GUY PALMER EXECUTED A PROPERTY SETTLEMENT AGREEMENT WHICH WAS WITNESSED BY THEIR RESPECTIVE ATTORNEYS. ON WHICH THERE WILL BE AN INCOME TAX REFUND OF APPROXIMATELY $389.00. SINCE THE REFUND COMES AS A RESULT OF A STOCK LOSS HAD BY WIFE ON CERTAIN PROPERTY WHICH WAS HER SEPARATE PROPERTY. THE AGREEMENT WAS MADE PART OF THE INTERLOCUTORY DIVORCE DECREE GRANTED MRS. THE UNITED STATES SECRET SERVICE REPORTS THAT THE COURT SUBSEQUENTLY RULED THAT THAT PORTION OF THE SETTLEMENT AGREEMENT PERTAINING TO THE CHECK "WAS NOT LEGAL IN THAT THAT COURT DID NOT HAVE THE JURISDICTION OF DIRECTING THE DISPOSITION OF THE PROCEEDS OF THE CHECK.'.

B-139989, AUG. 13, 1959

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

ON JUNE 2, 1959, FILE CC-424-L, THE SPECIAL ASSISTANT TREASURER REFERRED TO OUR OFFICE FOR CONSIDERATION THE QUESTION OF WHAT DISPOSITION SHOULD BE MADE OF THE PROCEEDS OF A CHECK ON WHICH RECLAMATION ACTION HAD RESULTED IN A COLLECTION FROM THE CASHING ENDORSER UNDER THE FACTS AND CIRCUMSTANCES HEREINAFTER RELATED.

THE CHECK IN QUESTION IS INCOME TAX REFUND CHECK NO. 15,491,827, DATED APRIL 22, 1958, FOR $389.37, DRAWN IN FAVOR OF THE CO-PAYEES J. G. AND M. R. PALMER (FULL NAMES JOHN G. AND MYRTLE R. PALMER) WHO WERE HUSBAND AND WIFE. PURSUANT TO THE CLAIM OF MYRTLE R. PALMER, WHO ALLEGED FORGERY OF HER NAME ON THE ITEM, RECOVERY OF THE FULL AMOUNT WAS EFFECTED FROM JOHN G. PALMER.

ON JUNE 3, 1958, MYRTLE R. AND JOHN GUY PALMER EXECUTED A PROPERTY SETTLEMENT AGREEMENT WHICH WAS WITNESSED BY THEIR RESPECTIVE ATTORNEYS. PARAGRAPH IV THEREOF PROVIDES AS FOLLOWS:

"HUSBAND AGREES THAT THE INCOME TAX RETURN COMING TO THE PARTIES ON THEIR JOINT RETURN FOR THE TAX YEAR 1957, AND ON WHICH THERE WILL BE AN INCOME TAX REFUND OF APPROXIMATELY $389.00, SHALL BE PAYABLE TO WIFE,SINCE THE REFUND COMES AS A RESULT OF A STOCK LOSS HAD BY WIFE ON CERTAIN PROPERTY WHICH WAS HER SEPARATE PROPERTY. HUSBAND AGREES TO ENDORSE SAID CHECK TO WIFE, AND ANY AND ALL OTHER DOCUMENTS NECESSARY TO MAKE SAID REFUND THE SEPARATE PROPERTY OF WIFE.'

THE AGREEMENT WAS MADE PART OF THE INTERLOCUTORY DIVORCE DECREE GRANTED MRS. PALMER BY THE CALIFORNIA SUPERIOR COURT ON JUNE 20, 1958. HOWEVER, PRIOR TO THE EXECUTION OF THE AGREEMENT, MR. PALMER HAD RECEIVED, ENDORSED, AND NEGOTIATED THE CHECK WITHOUT HIS WIFE'S KNOWLEDGE.

THE UNITED STATES SECRET SERVICE REPORTS THAT THE COURT SUBSEQUENTLY RULED THAT THAT PORTION OF THE SETTLEMENT AGREEMENT PERTAINING TO THE CHECK "WAS NOT LEGAL IN THAT THAT COURT DID NOT HAVE THE JURISDICTION OF DIRECTING THE DISPOSITION OF THE PROCEEDS OF THE CHECK.'

UPON INTERVIEW BY THE SECRET SERVICE MR. PALMER EXECUTED RELEASE FORM NO. 6735, RELEASING HIS CLAIM FOR THE PROCEEDS OF THE CHECK IN QUESTION BUT HE SPECIFICALLY DELETED THE LANGUAGE ACKNOWLEDGING RECEIPT OF THE AMOUNT THEREOF. HE EXPLAINED THAT HE DID NOT INTEND TO WAIVE HIS RIGHT TO MAKE CLAIM FOR ONE-HALF OF THE AMOUNT OF THE CHECK.

THE SPECIAL ASSISTANT TREASURER SAYS THAT IT IS THE CONTENTION OF CO- PAYEE JOHN GUY PALMER THAT HE IS ENTITLED TO ONE-HALF THE AMOUNT INVOLVED IN VIEW OF THE RULING OF THE CALIFORNIA SUPERIOR COURT AND INTENDS TO PRESS HIS CLAIM THEREFOR, AND THAT CO-PAYEE MYRTLE R. PALMER REFUSES TO ACCEPT ONE-HALF THE AMOUNT OF THE CHECK AND INSISTS THAT HER CLAIM FOR THE ENTIRE AMOUNT BE APPROVED.

WITH RESPECT TO THE REPORTED RULING BY THE CALIFORNIA SUPERIOR COURT TO THE EFFECT THAT THAT PORTION OF THE SETTLEMENT AGREEMENT PERTAINING TO THE CHECK WAS NOT LEGAL IN THAT THE COURT DID NOT HAVE JURISDICTION OF DIRECTING THE DISPOSITION OF THE PROCEEDS OF THE CHECK, IT IS OBVIOUS THAT THE RULING OF THE COURT RELATED TO THE PROPRIETY OF INCLUDING THAT PORTION OF THE AGREEMENT IN THE DIVORCE DECREE RATHER THAN RELATING TO THE MERITS OF SUCH PORTION OF THE AGREEMENT. THIS IS BECAUSE THE STATED REASON FOR THE RULING IS THAT THE COURT LACKED JURISDICTION TO DIRECT THE DISPOSITION OF THE PROCEEDS OF THE CHECK. FURTHERMORE, IT IS WELL ESTABLISHED THAT A VALID CONTRACT SETTLING PROPERTY RIGHTS BETWEEN MARRIED PERSONS DOES NOT REQUIRE THE APPROVAL OF A DIVORCE COURT TO RENDER IT EFFECTIVE. IT IS BINDING ON THE PARTIES AND ENFORCEABLE BY EITHER OF THEM AGAINST THE OTHER EVEN THOUGH THE COURT FAILS OR REFUSES TO ADOPT OR APPROVE THE AGREEMENT BY ITS DECREE IN A DIVORCE PROCEEDING. SANBORN V. SANBORN, 39 P.2D 830; GREEN V. GREEN, 151 P.2D 679; ROBERTS V. ROBERTS, 256 P. 826; SCHNERR F. SCHNERR, 17 P.2D 749; SECTIONS 158, 159, CIVIL CODE OF THE STATE OF CALIFORNIA. IT THUS APPEARS THAT THE VALIDITY OF THE SETTLEMENT AGREEMENT, HERE INVOLVED, HAS NOT BEEN AFFECTED BY THE SUBSEQUENT RULING OF THE COURT THAT THE PORTION RELATING TO THE TAX REFUND CHECK WAS IMPROPERLY INCLUDED IN THE DIVORCE DECREE. ACCORDINGLY, PAYMENT OF THE FULL AMOUNT OF THE CHECK MAY BE MADE TO MYRTLE R. PALMER.