B-171593, MAR 9, 1971

B-171593: Mar 9, 1971

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NEGOTIATED BY HIS WIFE BECAUSE PAYEE WAS IN A MILITARY HOSPITAL IN HAWAII AT THE TIME. THE BANK WAS INFORMED OF THE FORGED ENDORSEMENT BY THE TREASURER OF THE U.S. ITS ACCOUNT WAS DEBITED IN THE FACE AMOUNT OF THE CHECK ON DECEMBER 11. THEREAFTER THE BANK BROUGHT SUIT AGAINST THE WIFE FOR RECOVERY WHICH WAS DECIDED BY THE COURT OF THE FIRST INSTANCE OF ILOCOS NORTE. MUST NOW BE DENIED BECAUSE IT WAS NOT ASSERTED WITHIN THE 10-YEARS REQUIRED BY THE ACT OF OCTOBER 9. WAS NOT A PARTY TO THE SUIT. TO THE TREASURER OF THE UNITED STATES HAVE BEEN SUBMITTED TO THIS OFFICE FOR ADVICE AS TO WHETHER THERE IS ANY BASIS FOR RECOGNIZING THE CLAIM OF THE PHILIPPINE NATIONAL BANK FOR REIMBURSEMENT OF THE AMOUNT OF THE SUBJECT CHECK.

B-171593, MAR 9, 1971

NEGOTIABLE INSTRUMENTS - ERRONEOUS ENDORSEMENT DENYING CLAIM OF THE PHILIPPINE NATIONAL BANK FOR REIMBURSEMENT OF THE AMOUNT OF A CHECK ISSUED TO JUAN B. VITIN ON NOVEMBER 29, 1954, AND NEGOTIATED BY HIS WIFE BECAUSE PAYEE WAS IN A MILITARY HOSPITAL IN HAWAII AT THE TIME. WHEN PAYEE RETURNED HOME HE AND HIS WIFE ENCOUNTERED MARITAL DIFFICULTIES WITH THE RESULT THAT PAYEE FILED A CLAIM AGAINST THE U.S. FOR THE PROCEEDS OF THE CHECK IN QUESTION. THE BANK WAS INFORMED OF THE FORGED ENDORSEMENT BY THE TREASURER OF THE U.S. AND ITS ACCOUNT WAS DEBITED IN THE FACE AMOUNT OF THE CHECK ON DECEMBER 11, 1958. THEREAFTER THE BANK BROUGHT SUIT AGAINST THE WIFE FOR RECOVERY WHICH WAS DECIDED BY THE COURT OF THE FIRST INSTANCE OF ILOCOS NORTE, ON APPEAL FROM THE JUSTICE OF THE PEACE COURT AGAINST THE BANK ON MAY 29, 1969. THE CLAIM OF THE BANK AGAINST THE U.S. MUST NOW BE DENIED BECAUSE IT WAS NOT ASSERTED WITHIN THE 10-YEARS REQUIRED BY THE ACT OF OCTOBER 9, 1940, 31 U.S.C. 71A; THE FILING OF THE SUIT IN THE PHILIPPINE COURT DID NOT STOP THE RUNNING OF 10-YEAR PERIOD SINCE THE U.S. WAS NOT A PARTY TO THE SUIT.

TO MR. CONRADO E. MEDINA:

SUBJECT: CHECK NO. 394,622 DATED NOVEMBER 29, 1954, FOR $814.89, SYMBOL 215,586, TO THE ORDER OF JUAN B. VITIN

YOUR LETTERS OF JULY 15, 1969, AND JANUARY 9, 1970, TO THE TREASURER OF THE UNITED STATES HAVE BEEN SUBMITTED TO THIS OFFICE FOR ADVICE AS TO WHETHER THERE IS ANY BASIS FOR RECOGNIZING THE CLAIM OF THE PHILIPPINE NATIONAL BANK FOR REIMBURSEMENT OF THE AMOUNT OF THE SUBJECT CHECK, AND, IF SO, WHETHER THERE IS AUTHORITY FOR REQUESTING THE VETERANS ADMINISTRATION TO WITHHOLD THE AMOUNT INVOLVED FROM ANY MONIES WHICH MAY BE DUE THE PAYEE, JUAN B. VITIN.

THE FILE SUBMITTED BY THE TREASURER SHOWS THE FACTS TO BE AS SET FORTH BELOW.

THE SUBJECT CHECK WAS ISSUED ON NOVEMBER 29, 1954, TO THE ORDER OF JUAN B. VITIN, REPRESENTING ACTIVE DUTY PAY AND ALLOWANCES AND MUSTERING-OUT PAY FOR HIS SERVICES AS A PRIVATE IN THE UNITED STATES ARMY. THE CHECK WAS MAILED TO THE PAYEE'S HOME ADDRESS IN THE PHILIPPINES, BUT HE DID NOT RECEIVE IT BECAUSE HE WAS IN A MILITARY HOSPITAL IN HAWAII AT THE TIME, SUFFERING FROM SHELL-SHOCK HE HAD RECEIVED DURING THE KOREAN WAR. HIS WIFE, ADRIANA T. VITIN, RECEIVED THE CHECK AND ON OCTOBER 10, 1955, SHE PRESENTED IT TO THE PHILIPPINE NATIONAL BANK AT ITS LAOAG BRANCH FOR PAYMENT WITH THE ENDORSEMENT OF THE PAYEE'S NAME APPEARING ON THE BACK. AFTER REQUIRING HER TO ENDORSE THE INSTRUMENT AND REQUIRING HER MOTHER AND A FRIEND TO ENDORSE AS GUARANTORS, THE BANK ACCEPTED THE CHECK FOR COLLECTION AND ON NOVEMBER 11, 1955, AFTER IT WAS CLEARED BY THE CHASE MANHATTAN BANK OF NEW YORK, PAID HER THE NET PROCEEDS OF THE CHECK.

THE PAYEE RETURNED TO THE PHILIPPINES ON MAY 17, 1957, BUT HE AND HIS WIFE ENCOUNTERED MARITAL DIFFICULTIES AND SEPARATED IN NOVEMBER 1957. THEREAFTER, ON OR ABOUT OCTOBER 15, 1958, JUAN B. VITIN FILED A CLAIM AGAINST THE UNITED STATES FOR THE PROCEEDS OF THE CHECK IN QUESTION, ALLEGING THAT HE HAD BEEN IN HAWAII FROM 1952 TO 1957, THAT HE HAD NOT RECEIVED THE CHECK, THAT HE HAD NOT ENDORSED IT OR AUTHORIZED ANYBODY TO ENDORSE IT FOR HIM, AND THAT HE DID NOT KNOW WHO HAD RECEIVED THE CHECK.

THE PHILIPPINE NATIONAL BANK WAS INFORMED OF THE FORGED ENDORSEMENT BY THE TREASURER OF THE UNITED STATES ON DECEMBER 10, 1958, AND ON RECLAMATION DEMAND BY THE TREASURER, THE CHASE MANHATTAN BANK, ON DECEMBER 11, 1958, DEBITED THE ACCOUNT OF THE PHILIPPINE NATIONAL BANK IN THE FACE AMOUNT OF THE CHECK AND REIMBURSED THE FEDERAL RESERVE BANK OF NEW YORK. NEITHER BANK OFFERED ANY RESISTANCE TO THE RECLAMATION DEMAND. THE CHASE MANHATTAN BANK NEXT WROTE TO THE TREASURER ON MAY 29, 1959, TRANSMITTING TWO AFFIDAVITS THAT IT HAD RECEIVED FROM THE NEW YORK AGENCY OF THE PHILIPPINE NATIONAL BANK, EACH DATED MAY 5, 1959, EXECUTED BY THE PAYEE'S WIFE AND THE PAYEE'S MOTHER-IN-LAW, RESPECTIVELY, TO THE EFFECT THAT THE NEGOTIATION OF THE CHECK HAD BEEN AUTHORIZED BY A LETTER FROM THE PAYEE AND THAT THE PROCEEDS HAD BEEN INVESTED IN JOINT PROPERTY. OTHER THAN THE FOREGOING, THE TREASURER'S FILE SHOWS NO INDICATION OF ANY CORRESPONDENCE FROM YOUR BANK, EITHER DIRECTLY OR THROUGH CHASE MANHATTAN BANK, OBJECTING TO THE RECLAMATION OR MAKING CLAIM TO THE RECLAIMED FUNDS.

ON JUNE 19, 1959, THE TREASURER REFERRED THE PAYEE'S CLAIM TO THE CLAIMS DIVISION, UNITED STATES GENERAL ACCOUNTING OFFICE, FOR CONSIDERATION AND ADVICE AS TO THE DISPOSITION TO BE MADE OF THE RECLAIMED FUNDS. OUR CLAIMS DIVISION, ON SEPTEMBER 15, 1959, REQUESTED THAT THE TREASURER INVESTIGATE FURTHER AND ATTEMPT TO OBTAIN BOTH THE HUSBAND'S LETTER AUTHORIZING HIS WIFE TO CASH THE CHECK AND DOCUMENTARY EVIDENCE SHOWING THE ACTUAL USE OF THE PROCEEDS IN THE MANNER STATED IN HER AFFIDAVIT. THE TREASURER REPORTED ON FEBRUARY 25, 1960, AND AGAIN ON APRIL 25, 1960, THAT ADRIANA T. VITIN HAD FAILED TO REPLY TO REPEATED REQUESTS FOR FURTHER EVIDENCE SUBSTANTIATING HER AFFIDAVIT.

ON AUGUST 10, 1960, OUR CLAIMS DIVISION ADVISED THE TREASURER THAT, IN VIEW OF THE UNSUCCESSFUL EFFORTS TO OBTAIN FURTHER EVIDENCE FROM MRS. VITIN, THE TREASURER WAS AUTHORIZED TO EFFECT SETTLEMENT OF THE RECLAIMED FUNDS BY SETTING OFF A SEPARATE INDEBTEDNESS OF JUAN B. VITIN TO THE UNITED STATES IN THE AMOUNT OF $241.40 AND BY PAYING THE REMAINING BALANCE OF $573.49 TO HIM. IN SEPTEMBER 1960, THE TREASURER WROTE TO THE CHASE MANHATTAN BANK INFORMING IT OF THE DECISION TO GRANT THE PAYEE'S CLAIM TO THE RECLAIMED FUNDS.

THE FILE DOES NOT REVEAL THAT ANY OBJECTION TO THE DECISION OR ANY REQUEST FOR RECONSIDERATION WAS MADE BY EITHER YOUR BANK OR THE CHASE MANHATTAN BANK. THE NEXT CORRESPONDENCE RECEIVED WAS A LETTER FROM THE CHASE MANHATTAN BANK TO THE TREASURER, FORWARDING A LETTER FROM THE PHILIPPINE NATIONAL BANK DATED OCTOBER 15, 1961, REQUESTING THE ORIGINAL TREASURY CHECK FOR THE PURPOSE OF FILING LEGAL ACTION AGAINST THE ALLEGED FORGERS. THE ORIGINAL CHECK WAS SENT TO YOUR BANK BY THE SPECIAL ASSISTANT TREASURER ON DECEMBER 29, 1961, VIA THE CHASE MANHATTAN BANK, WITH THE REQUEST THAT IT BE RETURNED AFTER IT HAD SERVED ITS PURPOSE. FURTHER CORRESPONDENCE BETWEEN 1961 AND 1965, CONCERNING THE RETURN OF THE ORIGINAL CHECK, REVEALED THAT YOUR BANK DID FILE SUIT AGAINST ADRIANA T. VITIN AND THAT THE BANK FILED AN APPEAL IN 1965. HOWEVER, NO CLAIM OR DEMAND AGAINST THE UNITED STATES FOR REIMBURSEMENT OF THE RECLAIMED AMOUNT WAS MADE UNTIL JULY 15, 1969, WHEN YOU WROTE TO THE UNITED STATES TREASURER, C/O AMERICAN EMBASSY, MANILA, STATING THAT THE APPEAL HAD BEEN DECIDED AGAINST THE BANK AND REQUESTING REIMBURSEMENT OF THE FACE AMOUNT OF THE CHECK IN VIEW OF THE COURT'S DECISION.

THE DECISION OF THE COURT OF FIRST INSTANCE OF ILOCOS NORTE, REPUBLIC OF THE PHILIPPINES, DATED MAY 29, 1969, A COPY OF WHICH WAS ENCLOSED WITH YOUR LETTER, SHOWS THAT, ON APPEAL FROM THE JUSTICE OF THE PEACE COURT, THE COURT OF FIRST INSTANCE CONDUCTED A TRIAL DE NOVO AND, AFTER HEARING THE EVIDENCE, CONCLUDED THAT THE PAYEE'S WIFE HAD BEEN AUTHORIZED BY HER HUSBAND TO NEGOTIATE THE SUBJECT CHECK, AND, THEREFORE, RENDERED JUDGMENT DISMISSING THE BANK'S CASE. THE DECISION ALSO SHOWS THAT THE PAYEE WAS BROUGHT INTO THE CASE AS THIRD-PARTY DEFENDANT BY HIS WIFE, BUT THERE IS NO INDICATION THAT THE BANK PROCEEDED AGAINST HIM.

ON DECEMBER 16, 1969, THE TREASURER ADVISED YOU THAT YOUR REQUEST FOR REIMBURSEMENT COULD NOT BE HONORED. ON JANUARY 9, 1970, YOU REPLIED, BY LETTER TO THE TREASURER, STATING THAT IN THE COURT PROCEEDINGS ALL PARTIES INCLUDING MR. VITIN WERE GIVEN A FULL OPPORTUNITY TO PRESENT THEIR SIDES AND THAT THE QUESTION OF AUTHORITY TO CASH THE CHECK WAS FULLY THRESHED OUT. YOUR LETTER STATES THAT THE PAYEE AND HIS WIFE SHOULD NOT BE ALLOWED TO COLLECT TWICE ON THE CHECK AND THAT, SINCE MR. VITIN AUTHORIZED THE NEGOTIATION OF THE CHECK, HE SHOULD BE REQUIRED TO PAY YOU. HOWEVER, YOU FAIL TO EXPLAIN WHY NO CLAIM AGAINST THE UNITED STATES WAS MADE UNTIL 1969 OR WHY THE BANK DID NOT PURSUE ITS CLAIM DIRECTLY AGAINST MR. VITIN IN THE PROCEEDINGS BEFORE THE COURT OF FIRST INSTANCE IN WHICH HE APPEARED AND IN WHICH THE FACTS CONCERNING THE NEGOTIATION OF THE CHECK WERE "FULLY THRESHED OUT." YOUR LETTER CLOSES BY REQUESTING ASSISTANCE IN COLLECTING THE VALUE OF THE CHECK FROM JUAN B. VITIN BY WITHHOLDING FROM HIS MONTHLY PENSION.

WITHOUT GOING INTO THE MERITS OF YOUR BANK'S CLAIM AGAINST THE UNITED STATES GOVERNMENT, WE BELIEVE THAT THE CLAIM IS BARRED BY TITLE 31, U.S.C. SECTION 71A, WHICH PROVIDES:

"(1) EVERY CLAIM OR DEMAND (EXCEPT A CLAIM OR DEMAND BY ANY STATE, TERRITORY, POSSESSION OR THE DISTRICT OF COLUMBIA) AGAINST THE UNITED STATES COGNIZABLE BY THE GENERAL ACCOUNTING OFFICE UNDER SECTIONS 71 AND 236 OF THIS TITLE SHALL BE FOREVER BARRED UNLESS SUCH CLAIM, BEARING THE SIGNATURE AND ADDRESS OF THE CLAIMANT OR OF AN AUTHORIZED AGENT OR ATTORNEY, SHALL BE RECEIVED IN SAID OFFICE WITHIN TEN FULL YEARS AFTER THE DATE SUCH CLAIM FIRST ACCRUED *** ."

AS WE VIEW IT, THE BANK'S CLAIM FIRST ACCRUED ON DECEMBER 11, 1958, WHEN THE ACCOUNT OF THE PHILIPPINE NATIONAL BANK WAS DEBITED BY THE CHASE MANHATTAN BANK OF NEW YORK PURSUANT TO THE RECLAMATION DEMAND OF THE UNITED STATES TREASURER. AT THAT POINT, RECLAMATION COULD HAVE BEEN RESISTED OR YOUR BANK COULD HAVE IMMEDIATELY FILED A CLAIM AGAINST THE UNITED STATES FOR REIMBURSEMENT. IF IT HAD DONE SO, THE MATTER WOULD HAVE BEEN FULLY CONSIDERED AT THAT TIME, BUT THE BANK DID NEITHER, AND, EVEN AFTER THE PAYEE'S CLAIM WAS APPROVED ON AUGUST 10, 1960, IT CHOSE TO SUE THE ALLEGED FORGERS AND NOT TO FILE ANY CLAIM AGAINST THE UNITED STATES. THUS, THE UNITED STATES HAD NO NOTICE THAT THE PHILIPPINE NATIONAL BANK INTENDED TO SEEK REIMBURSEMENT FROM IT UNTIL THE TREASURER RECEIVED YOUR LETTER OF JULY 15, 1969.

SINCE THE BANK'S CLAIM AGAINST THE UNITED STATES FIRST ACCRUED ON DECEMBER 11, 1958, AND WAS NOT FILED WITH THE TREASURER OF THE UNITED STATES UNTIL JULY 15, 1969, AND WAS NOT RECEIVED IN THE GENERAL ACCOUNTING OFFICE UNTIL APRIL 7, 1970, IT IS APPARENT THAT THE CLAIM WAS NOT FILED WITHIN THE 10-YEAR PERIOD OF LIMITATIONS ON CLAIMS PROVIDED IN 31 U.S.C. 71A. THE BARRED CLAIMS ACT HAS BEEN HELD TO BE MANDATORY AND TO PROHIBIT CONSIDERATION BY THE GENERAL ACCOUNTING OFFICE OF ALL CLAIMS NOT FILED IN THE GENERAL ACCOUNTING OFFICE WITHIN 10 YEARS AFTER THE DATE SUCH CLAIMS FIRST ACCRUED. SEE 45 COMP. GEN. 249, 251 (1965); AND B-166696, JUNE 23, 1969. IN OUR OPINION, THE FILING OF THE SUIT IN THE PHILIPPINES COURT DID NOT STOP THE RUNNING OF THE 10-YEAR PERIOD SINCE THE UNITED STATES WAS NOT A PARTY TO THAT SUIT. THUS, EVEN THOUGH IT APPEARS THAT THE BANK MAY HAVE BEEN UNAWARE OF THE 10-YEAR BAR OR THAT IT MAY HAVE ERRONEOUSLY ASSUMED THAT THE SUIT WOULD SERVE TO EXTEND THE TIME FOR FILING A CLAIM AGAINST THE UNITED STATES, THIS OFFICE IS NOT NOW AUTHORIZED TO CONSIDER THE CLAIM.

WE MIGHT NOTE THAT, EVEN IF THE SUBMISSION OF THE TWO AFFIDAVITS BY THE PHILIPPINE NATIONAL BANK IN MAY 1959 COULD BE CONSIDERED AS CONSTITUTING A CLAIM AGAINST THE UNITED STATES FOR REIMBURSEMENT ON THE CHECK, ANY SUCH CLAIM WAS DECIDED IN AUGUST 1960 WHEN THE AMOUNT RECLAIMED BY THE TREASURER WAS AWARDED TO JUAN B. VITIN. REQUESTS FOR RECONSIDERATION MUST BE MADE WITHIN A REASONABLE TIME (SEE 32 COMP. GEN. 107 (1952)), AND WE DO NOT CONSIDER YOUR LETTER OF JULY 15, 1969, TO HAVE BEEN SUBMITTED WITHIN A REASONABLE TIME.

FINALLY, YOUR REQUEST FOR ASSISTANCE IN COLLECTING FROM THE PAYEE BY WITHHOLDING FROM HIS MONTHLY PENSION MAY NOT BE HONORED BECAUSE THE UNITED STATES GOVERNMENT IS NOT AUTHORIZED TO ASSIST PRIVATE PARTIES IN THE COLLECTION OF ANY AMOUNTS THAT MAY BE OWED THEM. MOREOVER, PAYMENTS OF VETERANS' BENEFITS ARE EXEMPT FROM THE CLAIMS OF CREDITORS AND SHALL NOT BE LIABLE TO ATTACHMENT, LEVY, OR SEIZURE BY OR UNDER ANY LEGAL OR EQUITABLE PROCESS WHATEVER, EITHER BEFORE OR AFTER RECEIPT BY THE BENEFICIARY. 38 U.S.C. 3101.