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U.S. Supreme Court

United States v. Guaranty Trust Co., 293 U.S. 340 (1934)

United States v. Guaranty Trust Company of New York

No. 120

Argued November 13, 14, 1934

Decided December 10, 1934.

293 U.S. 340


1. By the law of the District of Columbia, a forged signature of the payee on a check is inoperative to pass to a subsequent bona fide holder for value, either the title to the instrument, or the right to enforce payment, or the right to retain the proceeds if payment is made in ignorance of the forgery. P. 293 U. S. 345.

2. Under settled principles of conflict of laws, the validity of a transfer of a chattel brought into a country by consent of the owner is governed by the law of that country, and this rule applies to negotiable instruments. P. 293 U. S. 345.

3. The principle applies in the present case to a government check, drawn and payable in the District of Columbia, but which was chanroblesvirtualawlibrary

Page 293 U. S. 341

mailed by the Government from the District to the payee at his residence in Yugoslavia, and was negotiated in that Kingdom. P. 293 U. S. 346.

4. By the law of Yugoslavia, as stipulated in this case, the transferee of a check who takes it in good faith and for value without notice that the endorsement of the payee's name was forged or notice of other defect, and without negligence or fraud on his own part, acquires title to the instrument and the right to collect it and retain the proceeds. Held that a holder of a check acquired by transfer under these circumstances in Yugoslavia had the right in this country to enforce payment and to retain the proceeds as against the drawer, although, by the law of the District of Columbia, where the check was drawn and made payable and was delivered by mailing, a forged endorsement is inoperative, the check having been sent by the drawer to the payee in Yugoslavia with the presumed intention that it should be negotiated there according to the law of that country. P. 293 U. S. 346.

5. An express guarantee of prior endorsements means no more than what is implied by every unrestricted endorsement -- namely, that the endorsements were effective to give legal title and the right to enforce payment. P. 293 U. S. 348.

6. A Treasury circular declared that the handling of Government checks by Reserve Banks should be "subject to examination and payment by the Treasurer of the United States," and a circular of a Reserve Bank declared that, as the Government exercised the right of returning at any time checks which, for any cause, were not considered good, the Bank, as fiscal agent, as a condition of receiving checks on the Treasury, reserved the right to charge back and return them unconditionally. Held that collection of a government check through the agency of the Bank with knowledge of these provisions does not imply consent that the Government may demand restitution irrespective of its obligation to make the payment. P. 293 U. S. 349.

7. As against the United States, the rights of the holder of its checks drawn upon the Treasurer are the same as those accorded by commercial practice to the checks of private individuals. P. 293 U. S. 350.

69 F.2d 799 affirmed.

Certiorari to review the reversal of a judgment recovered by the United States in an action for money paid chanroblesvirtualawlibrary

Page 293 U. S. 342

on a check bearing a forged endorsement of the payee's name.

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