B-146158, JUN. 28, 1961

B-146158: Jun 28, 1961

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ARE THAT THE CHECKS WERE ISSUED SUBSEQUENT TO THE DEATH OF THE PAYEE ON SEPTEMBER 29. WHO WAS PERSONALLY KNOWN TO YOU. WERE CASHED BY YOU AT YOUR PLACE OF BUSINESS. THIS DEMAND WAS COMPLIED WITH IN ACCORDANCE WITH THE USUAL CUSTOM OF BANKS AND THE PROVISIONS OF THE NEGOTIABLE INSTRUMENTS LAW. WHILE THE RIGHT OF SAID BANK TO RECOVER BY A CHARGE BACK AGAINST YOUR CHECKING ACCOUNT WAS CHALLENGED BY YOU THROUGH ACTION BROUGHT IN THE DISTRICT COURT OF EL PASO COUNTY. A JUDGMENT WAS RENDERED BY THE COURT IN FAVOR OF THE BANK. 421 AND IT IS FOR THIS SUM THAT YOU REQUEST WE SUBMIT YOUR CLAIM TO CONGRESS FOR CONSIDERATION UNDER THE MERITORIOUS CLAIMS ACT. OBVIOUSLY ANY RECOURSE YOU MIGHT HAVE WOULD BE AGAINST JOHN G.

B-146158, JUN. 28, 1961

TO MR. FRANK BERTOLLI:

BY LETTER DATED MAY 18, 1961, AND ENCLOSURES, YOUR ATTORNEY, MR. ALAN V. RASH, SUBMITTED ON YOUR BEHALF A CLAIM IN THE AMOUNT OF $1,421 FOR A LOSS SUFFERED BY YOU THROUGH CASHING 47 SOCIAL SECURITY CHECKS BEARING THE FORGED SIGNATURE OF THE PAYEE, MARY BERKA. YOUR ATTORNEY HAS PRESENTED THE CLAIM TO OUR OFFICE FOR CONSIDERATION UNDER THE MERITORIOUS CLAIMS ACT OF APRIL 10, 1928, 31 U.S.C. 236.

THE CIRCUMSTANCES INVOLVING YOUR CLAIM, AS REPORTED BY MR. RASH, ARE THAT THE CHECKS WERE ISSUED SUBSEQUENT TO THE DEATH OF THE PAYEE ON SEPTEMBER 29, 1953, BUT PRIOR TO THE SOCIAL SECURITY ADMINISTRATION RECEIVING NOTICE THEREOF. OVER A PERIOD EXTENDING FROM JULY 1954 TO AUGUST 1959, THE CHECKS BEARING THE PURPORTED ENDORSEMENT OF THE PAYEE, AND THE ENDORSEMENT OF ONE JOHN G. BERKA, WHO WAS PERSONALLY KNOWN TO YOU, WERE CASHED BY YOU AT YOUR PLACE OF BUSINESS. SUBSEQUENT INVESTIGATION BY THE UNITED STATES SECRET SERVICE DISCLOSED THAT MARY BERKA, THE PAYEE, HAD DIED ON SEPTEMBER 29, 1953. THE TREASURER OF THE UNITED STATES THEREUPON MADE DEMAND AGAINST THE STATE NATIONAL BANK OF EL PASO FOR REFUND OF ALL CHECKS BEARING THE FORGED ENDORSEMENT OF MARY BERKA. THIS DEMAND WAS COMPLIED WITH IN ACCORDANCE WITH THE USUAL CUSTOM OF BANKS AND THE PROVISIONS OF THE NEGOTIABLE INSTRUMENTS LAW, SAID BANK IN TURN MAKING RECLAMATION FROM YOU AS THE ENDORSER FROM WHOM IT HAD RECEIVED THE CHECKS. WHILE THE RIGHT OF SAID BANK TO RECOVER BY A CHARGE BACK AGAINST YOUR CHECKING ACCOUNT WAS CHALLENGED BY YOU THROUGH ACTION BROUGHT IN THE DISTRICT COURT OF EL PASO COUNTY, TEXAS, A JUDGMENT WAS RENDERED BY THE COURT IN FAVOR OF THE BANK. AS THIRD ENDORSER YOU SUFFERED A LOSS OF $1,421 AND IT IS FOR THIS SUM THAT YOU REQUEST WE SUBMIT YOUR CLAIM TO CONGRESS FOR CONSIDERATION UNDER THE MERITORIOUS CLAIMS ACT.

OBVIOUSLY ANY RECOURSE YOU MIGHT HAVE WOULD BE AGAINST JOHN G. BERKA FROM WHOM YOU RECEIVED THE CHECKS. THE RECORD SHOWS THAT JOHN G. BERKA AND FLORENCE MARIE BERKA WERE APPREHENDED AND CONFINED IN PRISON FOR UNLAWFULLY TAKING THE CHECKS IN QUESTION AND FALSELY FORGING THE NAME OF THE PAYEE. SINCE YOUR ATTORNEY STATES THAT YOU HAVE EXHAUSTED ALL LEGAL REMEDIES AVAILABLE TO YOU IN STATE AND CIVIL COURTS, IT IS ASSUMED THAT JOHN G. BERKA HAD NO PROPERTY SUBJECT TO JUDGMENT AND RECOVERY COULD NOT BE HAD FROM HIM.

THERE IS NO LEGAL GROUND FOR THE GOVERNMENT TO REIMBURSE YOU FOR THE LOSS SUSTAINED SINCE YOUR ONLY CLAIM TO THE PROCEEDS OF THE CHECKS MUST REST UPON THE THEORY THAT YOU HAD SUCH A TITLE OR INTEREST IN THE CHECKS AS ENTITLED YOU TO THE MONEYS REPRESENTED THEREBY. YOUR CLAIM TO TITLE IS BASED ON THE TRANSFER FROM BERKA WHO, BECAUSE OF THE FORGED ENDORSEMENT, HAD NO TITLE OR RIGHT TO SAID CHECKS WHICH HE COULD TRANSFER. SEE SECTION 23 OF THE UNIFORM NEGOTIABLE INSTRUMENTS LAW, WHICH HAS BEEN ADOPTED BY THE STATE OF TEXAS. WHERE AS HERE THE PRESENTING BANK'S TITLE TO A GOVERNMENT CHECK IS DEFECTIVE, THE UNITED STATES IS ENTITLED TO RECLAIM THE AMOUNT PAID OUT, AND THE CASHING BANK WHICH GUARANTEED ALL PRIOR ENDORSEMENTS CHARGED THE AMOUNT OF THE CHECKS BACK TO YOUR ACCOUNT. SEE CLEAR FIELD TRUST CO. V. UNITED STATES. 318 U.S. 363. IN REGARD TO THE CONTENTION THAT YOUR LOSS WOULD NOT HAVE OCCURRED BUT FOR THE CONTINUED ISSUANCE OF THE CHECKS BY THE GOVERNMENT AFTER THE DEATH OF THE PAYEE, SUCH ACTION WAS NOT THE PROXIMATE CAUSE OF THE PAYMENT OF THE MONEYS ON THE INSTRUMENTS INVOLVED. THERE WAS AN INDEPENDENT, INTERVENING CAUSE, TO WIT, THE CRIMINAL ACT OF FORGERY. BY YOUR ACCEPTANCE OF THE CHECKS YOU ASSUMED THE RISK IN THE MATTER. MOREOVER, THE FAILURE OF THE GOVERNMENT TO DISCOVER FRAUD PRIOR TO A GUARANTY OF THE GENUINENESS OF PRIOR ENDORSEMENTS, AS IN THIS CASE, DOES NOT ABSOLVE THE GUARANTOR FROM LIABILITY IN CASES WHERE THE PRIOR ENDORSEMENTS HAVE BEEN FORGED. NATIONAL METROPOLITAN BANK V. UNITED STATES, 323 U.S. 454. THE RIGHT OF THE GUARANTOR, THE STATE NATIONAL BANK OF EL PASO, TO RECOVER FROM YOU HAS BEEN UPHELD BY COURT ACTION AS HERETOFORE RELATED.

YOUR ATTORNEY HAS CITED 42 U.S.C. 404 AS SUPPORTING THE CONTENTION THAT IT IS WITHIN THE SPIRIT OF THE SOCIAL SECURITY LAW TO HOLD THE GOVERNMENT RESPONSIBLE FOR ITS ERRORS AS BETWEEN IT AND AN INNOCENT PARTY. SUCH SECTION RELATES TO ADJUSTMENTS OF OVERPAYMENTS OR UNDERPAYMENTS TO SOCIAL SECURITY BENEFICIARIES, AND WE DO NOT VIEW IT AS EXTENDING TO LIABILITIES ARISING UNDER THE LAW OF NEGOTIABLE INSTRUMENTS.

THE MERITORIOUS CLAIMS ACT, 31 U.S.C. 236, PROVIDES AS FOLLOWS:

"WHEN THERE IS FILED IN THE GENERAL ACCOUNTING OFFICE A CLAIM OR DEMAND AGAINST THE UNITED STATES THAT MAY NOT LAWFULLY BE ADJUSTED BY THE USE OF AN APPROPRIATION THERETOFORE MADE, BUT WHICH CLAIM OR DEMAND IN THE JUDGMENT OF THE COMPTROLLER GENERAL OF THE UNITED STATES CONTAINS SUCH ELEMENTS OF LEGAL LIABILITY OR EQUITY AS TO BE DESERVING OF THE CONSIDERATION OF THE CONGRESS, HE SHALL SUBMIT THE SAME TO THE CONGRESS BY A SPECIAL REPORT CONTAINING THE MATERIAL FACTS AND HIS RECOMMENDATION THEREON.'

THAT ACT PROVIDES FOR THE SUBMISSION TO THE CONGRESS OF ONLY THOSE CASES WHEREIN THERE IS A LEGAL OR EQUITABLE LIABILITY ON THE PART OF THE GOVERNMENT AND SETTLEMENT CANNOT BE MADE BECAUSE OF THE ABSENCE OF AN APPROPRIATION THEREFOR. SINCE, AS INDICATED ABOVE, THERE IS NO LIABILITY ON THE PART OF THE GOVERNMENT IN THIS CASE, THE MATTERIS NOT WITHIN THE PURVIEW OF THE MERITORIOUS CLAIMS ACT, AND WE HAVE NO AUTHORITY THEREUNDER TO SUBMIT IT TO THE CONGRESS.