B-129118, DEC. 3, 1957

B-129118, DEC. 3, 1957

TO DANIEL G. MARSHALL, ESQUIRE:

YOUR LETTER OF OCTOBER 22, 1957, WRITTEN IN BEHALF OF MR. AND MRS. FRED LENTZ, REFERS TO A DECISION OF OUR OFFICE, B-129118, DATED DECEMBER 4, 1956, ADDRESSED TO THE TREASURER OF THE UNITED STATES, CONCERNING TWO TREASURY CHECKS DRAWN TO THE ORDER OF LENTZ AND MCELVANY, WHICH WERE IN PAYMENT OF MANGANESE ORE DELIVERED TO THE GOVERNMENT DEPOT AT WENDEN, ARIZONA.

ON THE BASIS THAT FRED LENTZ AND J. L. MCELVANY WERE ENGAGED IN A JOINT MINING VENTURE AND THAT THE ENDORSEMENT OF THE TWO CHECKS IN QUESTION BY ONE OF THE JOINT ADVENTURERS WITHOUT THE AUTHORITY OF THE OTHER DID NOT PASS TITLE TO THE CHECK TO THE CASHING BANK, OUR OFFICE AUTHORIZED THE TREASURER OF THE UNITED STATES TO RECLAIM THE AMOUNTS FROM THE BANKS.

YOU SAY THAT THE TREASURER OF THE UNITED STATES ADVISED THAT THE ENDORSING BANK, THE BANK OF AMERICA, HAS DENIED LIABILITY AND, THEREFORE, THE TREASURER HAS NO FUNDS AVAILABLE FOR THE SETTLEMENT OF MR. LENTZ'S CLAIM. YOU ASK TO BE ADVISED AS TO WHAT ACTION OUR OFFICE CONTEMPLATES OR HAS UNDERTAKEN TO IMPLEMENT THE AUTHORITY GRANTED TO THE TREASURER UNDER THESE CIRCUMSTANCES.

OUR LETTER TO THE TREASURER OF THE UNITED STATES, B-129118, DATED DECEMBER 4, 1956, STATED IN PERTINENT PART AS FOLLOWS:

"WHILE MR. LENTZ CLAIMS THE FULL AMOUNT OF THE CHECKS, HE DOES NOT, ANY MORE THAN MR. MCELVANY, APPEAR TO BE ENTITLED TO THE AMOUNT DUE THEM JOINTLY. MOREOVER, WHILE MCELVANY ALLEGES THAT HE EXPENDED ON THE JOINT VENTURE SUMS IN EXCESS OF THE AMOUNTS OF THE INVOLVED CHECKS, AND HAS SUBMITTED CANCELLED CHECKS AS EVIDENCE THEREOF, IT IS NOTED THAT MOST OF THE CANCELLED CHECKS WERE ISSUED PRIOR TO THE DATE OF THE GOVERNMENT CHECKS INVOLVED. ALSO, THE GOVERNMENT, IS NOT IN A POSITION TO ASCERTAIN WHETHER THE EXPENDITURES CLAIMED TO HAVE BEEN MADE WERE EXPENDITURES PROPERLY CHARGEABLE TO THE JOINT ENTERPRISE, NOR TO ACT AS AN ARBITER OF THE DISPUTES BETWEEN THE JOINT VENTURERS.

"ACCORDINGLY, THE AMOUNT RECLAIMED, SHOULD BE PAID OUT ONLY UPON RECEIPT OF AN AGREEMENT ESTABLISHING THAT MCELVANY, LENTZ AND THE PERSON WHO SUSTAINED THE LOSS IN RECLAMATION ARE AGREEABLE TO SUCH DISPOSITION OR UPON THE DECISION OF A COURT OF COMPETENT JURISDICTION AS TO THE SHARE TO WHICH EACH IS ENTITLED.'

THE QUOTED PARAGRAPHS SHOW CLEARLY THAT OUR OFFICE HAS NOT ATTEMPTED TO DETERMINE WHETHER MR. LENTZ OR MR. MCELVENY IS ENTITLED TO THE PROCEEDS OF THE CHECKS. OUR REASON FOR REQUESTING THE TREASURER TO RECLAIM THE AMOUNTS OF THE CHECKS FROM THE CASHING BANK WAS TO SECURE AND HOLD THE PROCEEDS UNTIL AN AGREEMENT COULD BE REACHED, OR A DECISION OF A COURT OF COMPETENT JURISDICTION COULD BE RENDERED, AS TO THE SHARE OF EACH OF THE JOINT ADVENTURES. IN NO WAY WAS THAT DECISION ONE WHICH CONCERNED THE SUBSTANTIVE RIGHTS TO THE PROCEEDS OF THE CHECKS OF LENTZ OR MCELVANY.

AS YOU WERE ADVISED, THE TREASURER OF THE UNITED STATES MADE DEMAND UPON THE BANK OF AMERICA FOR THE AMOUNT OF THE CHECKS IN QUESTION AND THE BANK HAS DENIED LIABILITY ASSERTING AS A REASON THAT THE BANK'S LIABILITY HAS BEEN BROUGHT TO ISSUE IN A CIVIL ACTION FILED BY MR. LENTZ AGAINST MR. MCELVANY AND THE BANK IN THE SUPERIOR COURT, IMPERIAL COUNTY, STATE OF CALIFORNIA. WE HAVE BEEN INFORMED THAT A JUDGMENT WAS RENDERED IN FAVOR OF THE DEFENDANT BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION WITH COSTS AND THAT THE COMPLAINT OF THE PLAINTIFF WAS DIRECTED TO BE DISMISSED WITH PREJUDICE AS TO SAID DEFENDANT BANK ONLY.

FURTHER, WE HAVE RECEIVED NOTICE FROM THE DEPARTMENT OF JUSTICE THAT A SUIT WAS FILED BY YOU IN BEHALF OF FRED LENTZ AGAINST THE UNITED STATES IN THE COURT OF CLAIMS, NO. 490-57, ON OCTOBER 21, 1957. SINCE IT IS FAIR TO ASSUME THAT THE VALUE OF THE TWO CHECKS IN QUESTION ARE INCLUDED IN THE AMOUNT CLAIMED IN THAT SUIT AND SINCE THE CIVIL SUIT BY MR. LENTZ AGAINST MR. MCELVANY FILED IN THE CALIFORNIA COURT HAS NOT BEEN DISPOSED OF, NO FURTHER DEMANDS WILL BE MADE AGAINST THE BANK PENDING OUTCOME OF THE LITIGATION IN QUESTION.