B-126761, MAR. 8, 1956

B-126761, MAR. 8, 1956

TO LAKE COUNTY CURRENCY EXCHANGE:

YOUR RECENT LETTER REQUESTS REVIEW OF OUR SETTLEMENT OF DECEMBER 8, 1955, WHICH DISALLOWED YOUR CLAIM ON BEHALF OF THE LAKE COUNTY CURRENCY EXCHANGE FOR THE PROCEEDS OF TREASURY (POST OFFICE) CHECK NO. 2,178,458, DATED DECEMBER 16, 1953, FOR $46.36, DRAWN BY CARL A. SCHROADER, SYMBOL 804, TO THE ORDER OF EARL B. CECIL.

THE RECORD SHOWS THAT AFTER THE ISSUANCE OF THE CHECK TO THE PAYEE, IT WAS ALTERED (PRESUMABLY BY THE PAYEE) FROM $46.36 TO $146.36. THE FORGERY WAS ACCOMPLISHED BY PARTIALLY ERASING ASTERISKS IN FRONT OF THE AMOUNT IN BOTH THE BODY AND MARGIN OF THE CHECK AND SUPERIMPOSING THE NUMERAL ," APPARENTLY IN PENCIL, OVER THE PARTIALLY OBLITERATED ASTERISKS, RAISING THE AMOUNT OF THE CHECK TO $146.36. THE GREEN SURFACE TINTING OF THE CHECK WAS DISTURBED BY THE ERASURE, DISCLOSING THE WHITE BACKGROUND IN THAT AREA OF THE CHECK. THE CHECK WAS CASHED AT THE LAKE COUNTY CURRENCY EXCHANGE BY THE PAYEE WHO RECEIVED THE ALTERED AMOUNT. PAYMENT UPON THE ALTERED INSTRUMENT WAS DECLINED BY THE FEDERAL RESERVE BANK OF CHICAGO.

IN THE ABOVE DISALLOWANCE OF DECEMBER 8, 1955, YOU WERE ADVISED, IN EFFECT, THAT THE FRAUDULENT AND MATERIAL ALTERATION OF THE CHECK DESTROYED ITS VALIDITY AS TO THE PAYEE AND EXTINGUISHED AS TO HIM THE OBLIGATION IT WAS INTENDED TO SATISFY. YOU WERE FURTHER ADVISED THAT INASMUCH AS THE LAKE COUNTY CURRENCY EXCHANGE HAD ACCEPTED AND CASHED A CHECK ON WHICH THE ALTERATION WAS APPARENT AS WOULD PUT AN AVERAGE PRUDENT MAN ON NOTICE OF ITS IRREGULARITY, THE LAKE COUNTY CURRENCY EXCHANGE COULD NOT BE REGARDED AS A HOLDER IN DUE COURSE AND, THEREFORE, PAYMENT COULD NOT BE MADE TO THE EXCHANGE ON THE CHECK ACCORDING TO ITS ORIGINAL TENOR.

IN REQUESTING REVIEW, YOU SAY THAT THE ALTERATION WAS NOT NOTICEABLE., THAT "THERE WAS A CONSIDERATION" FOR THE $46.36; AND THAT YOU ACCEPTED THE CHECK IN GOOD FAITH. ALSO, YOU INQUIRE AS TO WHAT DISPOSITION WILL BE MADE OF THE ORIGINAL AMOUNT OF THE CHECK.

IT IS OBVIOUS, FROM A MERE INSPECTION OF THE CHECK, THAT THE CHECK WAS ALTERED. FURTHERMORE, THE FACTS THAT THERE WAS A CONSIDERATION FOR THE $46.36, AND THAT YOU MAY HAVE ACCEPTED THE CHECK IN GOOD FAITH ARE NOT HERE CONTROLLING.

A HOLDER IN DUE COURSE IS DEFINED BY SECTION 52 OF THE UNIFORM NEGOTIABLE INSTRUMENTS LAW AS ONE WHO TOOK THE INSTRUMENT UNDER THE FOLLOWING CONDITIONS:

"/1) THAT IT IS COMPLETE AND REGULAR UPON ITS FACE;

"/2) THAT HE BECAME THE HOLDER OF IT BEFORE IT WAS OVERDUE, AND WITHOUT NOTICE THAT IT HAD BEEN PREVIOUSLY DISHONORED, IF SUCH WAS THE FACT;

"/3) THAT HE TOOK IT IN GOOD FAITH AND FOR VALUE;

"/4) THAT AT THE TIME IT WAS NEGOTIATED TO HIM HE HAD NO NOTICE OF ANY INFIRMITY IN THE INSTRUMENT OR DEFECT IN THE TITLE OF THE PERSON NEGOTIATING IT.'

THE FACTS OF RECORD CLEARLY ESTABLISH THAT THE CHECK IN QUESTION WAS NOT COMPLETE AND REGULAR ON ITS FACE WHEN ACCEPTED BY LAKE COUNTY CURRENCY EXCHANGE. ALSO, AS ABOVE INDICATED, THE CONCLUSION APPEARS WARRANTED THAT THE ALTERATIONS WERE SO APPARENT AS WOULD PUT AN AVERAGE PRUDENT MAN ON NOTICE OF THE IRREGULARITY. IT HAS BEEN HELD THAT WHERE AN ALTERATION IS APPARENT ON ITS FACE, A PURCHASER CANNOT BECOME A HOLDER IN DUE COURSE OF THE CHECK AND RECOVER ON THE INSTRUMENT ACCORDING TO ITS ORIGINAL TENOR. PENSACOLA STATE BANK V. MELTON, 210 F. 57; ELIAS V. WHITNEY, 98 N.Y. SUPP. 667. HENCE, IT MUST BE HELD THAT THE LAKE COUNTY CURRENCY EXCHANGE IS NOT A HOLDER IN DUE COURSE OF THE CHECK, AND THE CHECK IS AVOIDED AS TO IT AND THAT IT HAS NO LEGAL RIGHT TO PAYMENT ACCORDING TO ITS ORIGINAL TENOR. THE CHECK WILL BE CANCELED.