B-134150, JAN. 22, 1958

B-134150, JAN. 22, 1958

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

ON JULY 22, 1957, FILE CC-455-MC, THE SPECIAL ASSISTANT TREASURER FORWARDED THE FILE CONCERNING TREASURY (COMPENSATION) CHECK NO. 87,409,913, DRAWN DECEMBER 31, 1956, BY L. W. LOOKER, SYMBOL 410, IN THE AMOUNT OF $116, PAYABLE TO THE ORDER OF FREDERICK J. WILLIAMS, C-4 821 531, 2817 NORTH 20TH, KANSAS CITY, KANSAS, AND REQUESTED ADVICE AS TO THE LIABILITY OF THE CASHING ENDORSER.

THE RECORD SHOWS THAT THE CHECK WAS DRAWN IN FAVOR OF, AND BORE ON ITS FACE THE VETERANS ADMINISTRATION C NUMBER AND THE HOME ADDRESS OF, THE INTENDED PAYEE, FREDERICK J. WILLIAMS. AS A RESULT OF THE MISASSOCIATION OF A CHANGE OF ADDRESS REQUEST FILED BY ANOTHER VETERAN, FREDERICK G. WILLIAMS, JR., C-4 943 838, WITH THE FILE OF THE INTENDED PAYEE, THE CHECK WAS INCORRECTLY MAILED TO PRISONERS' MAIL BOX 73016, UNITED STATES PENITENTIARY, LEAVENWORTH, KANSAS. THE CHECK WAS RECEIVED BY FREDERICK G. WILLIAMS, JR., WHO ENDORSED IT IN THE NAME OF FREDERICK J. WILLIAMS AND NEGOTIATED IT AT THE PENITENTIARY, WHICH CREDITED THE AMOUNT THEREOF TO THE ACCOUNT OF FREDERICK G. WILLIAMS, JR. UPON DISCOVERY OF THE MISTAKE AFTER THE INTENDED PAYEE ADVISED THE VETERANS ADMINISTRATION OF THE NONRECEIPT OF THE CHECK, FREDERICK G. WILLIAMS, JR. REPAID THE BALANCE STILL IN HIS ACCOUNT, $83.60, BUT WAS UNABLE TO REPAY THE REMAINING $32.40 AS HE WAS WITHOUT FUNDS. THE PENITENTIARY HAS RESISTED RECLAMATION OF THE REMAINING $32.40. THE WARDEN STATED THAT THEIR INMATE, FREDERICK G. WILLIAMS, JR., HAD WRITTEN TO THE VETERANS ADMINISTRATION REGARDING THE REACTIVATION OF HIS DISABILITY PENSION AND THAT WHEN THE CHECK ARRIVED ACCOMPANIED BY A VETERANS ADMINISTRATION TRANSMITTAL SLIP CONTAINING THE NAME OF FREDERICK J. WILLIAMS AND THE PRISON REGISTER NUMBER AND ADDRESS OF THEIR INMATE, FREDERICK G. WILLIAMS, JR., IT WAS BELIEVED THAT THEIR INMATE WAS THE INTENDED PAYEE AND THE PENITENTIARY CASHED THE CHECK IN GOOD FAITH.

WHILE THE TRANSMITTAL SLIP, THROUGH THE VETERANS ADMINISTRATION'S ERROR IN MISASSOCIATING THE CHANGE OF ADDRESS REQUEST, CONTAINED THE INMATE'S PRISON NUMBER AND ADDRESS, NOT ONLY THE SLIP BUT THE CHECK ITSELF CONTAINED THE PROPER MIDDLE INITIAL OF THE INTENDED PAYEE, WHICH WAS DIFFERENT FROM THAT OF THE INMATE. MOREOVER, THE CHECK CONTAINED ON ITS FACE THE VETERANS ADMINISTRATION C NUMBER AND THE ADDRESS OF THE INTENDED PAYEE, BOTH OF WHICH DIFFERED FROM THOSE OF THE INMATE. THE PENITENTIARY ADMITTED ITS AWARENESS OF THE DIFFERENCE IN THE MIDDLE INITIAL OF THE INMATE AND THAT APPEARING ON THE CHECK, AND CERTAINLY EITHER HAD OF RECORD THE FORMER ADDRESS OF ITS INMATE OR COULD EASILY HAVE SECURED IT. ALSO, THE PENITENTIARY MUST HAVE KNOWN, OR AT LEAST WAS IN A POSITION READILY TO ASCERTAIN, THE VETERANS ADMINISTRATION C NUMBER ASSIGNED TO ITS INMATE.

IT HAS FREQUENTLY BEEN HELD THAT THE MIDDLE INITIAL IS AN IMPORTANT PART OF THE NAME AND THAT THE FAILURE OF THE CASHING ENDORSER OF A CHECK TO QUESTION A DISCREPANCY THEREIN RENDERS SUCH ENDORSER LIABLE. IT ALSO HAS BEEN HELD THAT THE VETERANS ADMINISTRATION C NUMBER ON A CHECK IS A "MASTER KEY" TO THE PAYEE'S IDENTITY. IN THE CASE OF FULTON NATIONAL BANK OF ATLANTA V. UNITED STATES, 107 F.2D 86, A CASE VERY SIMILAR TO THE PRESENT, THE COURT STATED:

"THIS CASE DOES NOT FALL WITHIN THE RULE APPLICABLE TO IMPOSTERS. HERE THE RECEIVER OF THE CHECK, WILLIAM ALSTON, DID NOT STAND AS AN IMPOSTER TO SECURE THE CHECK. HE WAS NOT INTENDED AS THE ONE TO BE PAID. THE CHECK WAS NEVER INDORSED BY THE ONE TO WHOM IT WAS MADE PAYABLE AND SENT. WAS INDORSED BY WILLIAM ALSTON AND NOT WILLIAM T. ALSTON. IN MODERN COMMERCIAL BUSINESS DEALINGS THE INITIAL IS AN IMPORTANT PART OF THE NAME AND THE BANK SHOULD NOT HAVE PAID WILLIAM ALSTON, HE HAVING NO MIDDLE INITIAL. MOREOVER, THE SERIAL NUMBER OF WILLIAM T. ALSTON, ,C-1,454,554," APPEARED ON THE CHECK AND WAS THE MASTERKEY TO THE IDENTITY OF THE PAYEE OF THE CHECK AND COULD HAVE BEEN USED BY THE BANK TO DISCOVER WHETHER OR NOT THE PERSON PRESENTING THE CHECK WAS THE ONE FOR WHOM IT WAS INTENDED. IT WAS THE DUTY OF THE BANK TO ASCERTAIN THE TRUE INDIVIDUAL AND TO PAY NO ONE ELSE. FAILING IN THIS DUTY IT MUST BE HELD LIABLE. * * *"

IN 26 COMP. GEN. 834, WE HELD, QUOTING FROM THE SYLLABUS:

"IN THE ABSENCE OF A DECISION BY THE FEDERAL COURTS RESPECTING THE GOVERNMENT'S LIABILITY WHERE A CHECK INTENDED FOR ONE PERSON AND MADE PAYABLE TO SUCH PERSON ERRONEOUSLY IS DELIVERED TO ANOTHER PERSON OF SAME NAME WHO IS NOT ENTITLED THERETO, IT IS NECESSARY, AS A CONDITION PRECEDENT TO THE GOVERNMENT'S LIABILITY, THAT THERE BE SHOWN NEGLIGENCE ON THE PART OF THE ADMINISTRATIVE OFFICE WHICH RESULTED IN THE ISSUANCE OF THE CHECK TO THE WRONGFUL PAYEE AND, ALSO, THAT THE BANK OR PERSON WHO CASHED THE CHECK COULD NOT, BY THE EXERCISE OF REASONABLE DILIGENCE, HAVE ASCERTAINED THAT THE WRONGFUL PAYEE DID NOT HAVE ANY RIGHT TO THE CHECK.'

WE FURTHER SAID IN THAT DECISION THAT WHERE A CHECK BEARING THE NAME AND ADDRESS OF THE INTENDED PAYEE IS RECEIVED AND NEGOTIATED BY A PERSON OF THE SAME NAME BUT OF A DIFFERENT ADDRESS, SUCH DISCREPANCY ALONE IS SUFFICIENT TO PLACE THE CASHING ENDORSER ON NOTICE THAT THE PERSON PRESENTING THE CHECK MAY NOT BE THE PAYEE DESCRIBED THEREIN, AND IN SUCH A CASE, IF THE ENDORSER DOES NOT ESTABLISH THAT OTHER EFFORTS TO ASCERTAIN THE TRUE FACTS WERE MADE, RECLAMATION SHOULD BE EFFECTED.

IT IS APPARENT FROM THE ABOVE THAT, WHILE THE CHECK WAS DELIVERED TO FREDERICK G. WILLIAMS, R., AT THE PENITENTIARY THROUGH THE ERROR OF THE VETERANS ADMINISTRATION, THE PENITENTIARY WAS CHARGEABLE WITH NOTICE THAT THEIR INMATE MAY NOT HAVE BEEN THE PAYEE DESCRIBED IN THE CHECK AND BY THE EXERCISE OF REASONABLE DILIGENCE READILY COULD HAVE ASCERTAINED THE TRUE FACTS. HENCE, IN OUR OPINION, THE PENITENTIARY IS LIABLE FOR THE UNCOLLECTED AMOUNT OF $32.40 AND RECLAMATION SHOULD BE MADE. THE CHECK AND FILE ARE RETURNED HEREWITH.