United States v. NATIONAL BANK OF COM. IN NEW ORLEANS
| Decision Date | 02 March 1970 |
| Docket Number | Civ. A. No. 69-271. |
| Citation | 309 F. Supp. 979 |
| Parties | UNITED STATES of America v. NATIONAL BANK OF COMMERCE IN NEW ORLEANS. |
| Court | U.S. District Court — Eastern District of Louisiana |
Charles H. White, Asst. U.S. Atty., Eastern District of Louisiana, New Orleans, La., for plaintiff-mover.
Henry P. Dart, III, of Dart & Dart, New Orleans, La., for defendant-mover.
This is an action by the United States of America against the National Bank of Commerce in New Orleans, hereafter referred to as the Bank, to recover the proceeds of twenty-two Treasury checks presented by the Bank to and paid by the plaintiff as drawee.
Cross motions for summary judgment brought by the plaintiff and the defendant came on for hearing on January 21, 1970. After submission of memoranda and oral argument, this matter was submitted to the Court for adjudication, there being no dispute as to the material facts involved.
The facts, appearing in the verified pleadings, and affidavits made a part of the record, are as follows:
Prior to May, 1965, Raymond Durwood Clark, Sr., a retired Civil Service employee, maintained a checking account, No. XXXX-XX-XXX, in the main office of the defendant Bank.
The Civil Service Commission, pursuant to Clark's request, mailed his retirement benefit checks to the Bank for deposit to his account, which checks were so deposited.
On May 27, 1965, unknown to the Bank or the Civil Service, Clark died. The Civil Service continued to mail checks payable to Clark to the Bank for deposit to his account.
The Clark heirs took no immediate steps to institute probate proceedings or to notify the Bank or the Government of Clark's death. On or about April 1, 1967, the heirs notified the Bank of the fact, but not the date, of Clark's death. When the next retirement check from the Civil Service payable to Clark arrived, the Bank returned the check with a notice that the payee had died.
On June 23, 1967, Joseph Defley, Jr., attorney, Port Sulphur, Louisiana, wrote a letter on behalf of the Clark heirs to the Bureau of Retirement and Insurance, U. S. Civil Service Commission, Washington, D. C., advising the Civil Service that Clark died in May, 1965. Civil Service did not notify the Bank that it had a claim for refund of the money represented by the checks issued between May, 1965, and April, 1967, nor did it notify the heirs or the attorneys for the decedent's estate that it had any claim of any nature against Clark's estate. On the contrary, Civil Service records indicate that when the heirs presented their claim for benefits under the Federal Employees' Group Life Insurance Plan in July, 1967, the Commission referred the heirs to the Office of Federal Employees' Group Life Insurance for payment. A claim form was submitted by the heirs through Mrs. Adelaide Baudier, attorney, New Orleans, Louisiana, dated July 11, 1967, which claim was acknowledged under date of July 26, 1967, by the Office of the Federal Employees' Group Life Insurance, copies of which documents are a part of the record herein. Pursuant to this claim and acknowledgment, in July, 1967, the Federal Employees' Group Life Insurance paid the Clark heirs Five Thousand Six Hundred Dollars ($5600.00) in insurance benefits.
On July 24, 1967, Judge Clarence Dowling of the Civil District Court for the Parish of Orleans, in proceedings No. 466-245, Succession of Raymond Durwood Clark, Sr., signed a judgment of possession recognizing the named heirs as Clark's sole heirs, and sending them into possession of his entire estate, and, more particularly, Account No. XXXX-XX-XXX, standing in the name of the deceased in the defendant Bank. A certified copy of this judgment of possession was presented to the defendant Bank, and thereafter, the Bank delivered a check covering the entire balance remaining in the account, payable to the heirs, to the attorney for the succession. This occurred some four months after the Bank returned Clark's April, 1967, check to the Civil Service with the advice that Clark was then deceased, and one month after an attorney for the Clark heirs had written Civil Service advising of Clark's death in May of 1965.
In November or December of 1967, more than four months after the Bank had issued its check payable to the heirs, and some five months after the Civil Service had known that Clark died in May, 1965, the Civil Service first notified the Bank that Civil Service retirement checks to which Clark was not entitled had been paid into his account.
The Government demanded refund by the Bank, whereupon the Bank advised the Government that it had disbursed the funds to the heirs, and suggested that the Government make its claim against the heirs. The Government replied by filing this suit against the Bank for recovery of Seven Thousand Two Hundred Forty-One Dollars ($7241.00).
Counsel for the Government contends that, under Title 31, Code of Federal Regulations, Section 360.5,1 the Government can recover from the defendant Bank on Government annuity checks issued to a deceased payee when the Bank guaranteed the absence of the payee's indorsement. It is the Government's position, further, that the Treasurer is not precluded from recovering merely because the Civil Service Commission failed to act timely after being informed of the payee's death.
The Bank contends initially that the Government has not suffered any loss since it has an available remedy under Louisiana law to proceed against the heirs to recover the amount erroneously deposited to Clark's account by the Civil Service Commission. Defendant further contends that any loss which the Government may suffer in this matter has been occasioned by the neglect or delay of its agents. The Bank further specially pleads the Government's laches as a defense to this action.
Under the facts of this case, as shown in the verified pleadings and uncontroverted affidavits and exhibits made a part of the record herein, it appears that the loss, if any, of which the Government complains was caused solely through the fault, neglect and delay of its own agents. In this suit, the Government seeks to place the onus of this negligence on the Bank who, it appears, acted in good faith and with due diligence throughout.
The Civil Service Commission had notice of the fact of Clark's death in April, 1967, and of the date of his death on or about June 23, 1967. Armed with this information, as well as the names of attorneys for the Clark succession, the Civil Service Commission took no action to reclaim the improvidently paid retirement benefits.
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United States v. City National Bank & Trust Co.
...of factual situations. This is demonstrated in a recent Fifth Circuit case. The District Court in United States v. National Bank of Commerce in New Orleans, 309 F.Supp. 979 (E.D., La.1970) had held that Clearfield barred the United States from recovering the proceeds of retirement checks de......