A-27076, MAY 7, 1929, 8 COMP. GEN. 592

A-27076: May 7, 1929

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IS NOT ENTITLED TO REFUND OF THE WHOLE OR ANY PART OF THE DOWN PAYMENT MADE BY HIM WHEN HE SUBSEQUENTLY BREACHES THE CONTRACT AND THE PROPERTY IS RESOLD FOR MORE THAN IT WAS SOLD TO HIM. FOR DECISION WHETHER YOU ARE AUTHORIZED TO CAUSE TO BE PAID TO J. THERE WAS ADVERTISED ON AUGUST 31. WAS $17. PROSPECTIVE BIDDERS WERE INFORMED. IN PARAGRAPH 17 OF THE SPECIFICATIONS WHICH WERE MADE A PART OF THE CONTRACT OF SALE IN THIS CASE. PROSPECTIVE BIDDERS WERE INFORMED. TITLE THERETO WOULD REMAIN VESTED IN THE UNITED STATES UNTIL THE FULL PURCHASE PRICE SHOULD HAVE BEEN PAID BY THE PURCHASER. J. HAEUSER APPEARS TO HAVE BEEN THE HIGHEST BIDDER FOR THE PROPERTY AT A PRICE OF $18. WAS MADE AT THE TIME OF THE EXECUTION OF THE CONTRACT OF SALE AND THE BALANCE OF THE PURCHASE PRICE WAS TO BE PAID IN SEMI ANNUAL INSTALLMENTS OF $3.

A-27076, MAY 7, 1929, 8 COMP. GEN. 592

SALES - REAL ESTATE - DEFAULT OF PURCHASERS A DEFAULTING PURCHASER UNDER A CONTRACT FOR THE PURCHASE OF REAL ESTATE FROM THE GOVERNMENT, WHICH PROVIDES THAT IN THE EVENT OF DEFAULT HE SHALL BE RESPONSIBLE FOR ANY COST, EXPENSE, OR LOSS RESULTING FROM SUCH DEFAULT, IS NOT ENTITLED TO REFUND OF THE WHOLE OR ANY PART OF THE DOWN PAYMENT MADE BY HIM WHEN HE SUBSEQUENTLY BREACHES THE CONTRACT AND THE PROPERTY IS RESOLD FOR MORE THAN IT WAS SOLD TO HIM.

COMPTROLLER GENERAL MCCARL TO THE SECRETARY OF WAR, MAY 7, 1929:

THERE HAS BEEN RECEIVED YOUR REQUEST, DATED APRIL 26, 1929, FOR DECISION WHETHER YOU ARE AUTHORIZED TO CAUSE TO BE PAID TO J. J. HAEUSER FROM FUNDS HELD IN A SPECIAL DEPOSIT ACCOUNT AS PROCEEDS DERIVED FROM THE RESALE OF PROPERTY, THE SUM OF $3,878.05 AS REPRESENTING THE DIFFERENCE BETWEEN THE DOWN PAYMENT OF $6,208.34 MADE BY MR. HAEUSER FOR THE PROPERTY AND THE TOTAL LOSS OF $2,330.29 SUSTAINED BY THE GOVERNMENT THROUGH HIS FAILURE TO COMPLETE HIS PAYMENTS IN ACCORDANCE WITH THE TERMS OF THE CONTRACT DATED OCTOBER 20, 1926.

PURSUANT TO THE ACT OF MARCH 4, 1923, 42 STAT. 1450, 1451, THERE WAS ADVERTISED ON AUGUST 31, 1926, FOR SALE TO THE HIGHEST BIDDER, ALL THE RIGHT, TITLE, AND INTEREST OF THE UNITED STATES TO THE LAND AND IMPROVEMENTS COMPRISING THE FORT ST. PHILIP MILITARY RESERVATION IN THE PARISH OF PLAQUEMINES, LA. THE APPRAISED VALUE OF THE PROPERTY, MADE IN ACCORDANCE WITH SECTION 2 OF THE SAID ACT OF MARCH 4, 1923, WAS $17,233.11, AND PROSPECTIVE BIDDERS WERE INFORMED, AMONG OTHER THINGS, IN PARAGRAPH 17 OF THE SPECIFICATIONS WHICH WERE MADE A PART OF THE CONTRACT OF SALE IN THIS CASE, THAT:

IN THE EVENT OF DEFAULT ON THE PART OF THE PURCHASER OR PURCHASERS TO COMPLY WITH THE TERMS OF THE CONTRACT OF SALE AFTER EXECUTION THEREOF, THE GOVERNMENT MAY AT ITS OPTION RESELL OR OTHERWISE DISPOSE OF THE PROPERTY COVERED BY SAID CONTRACT, AND COMPLETE THE TERMS OF SALE AS MAY BE DEEMED TO BE TO THE BEST INTEREST OF THE UNITED STATES OF AMERICA AND THE DEFAULTING PURCHASER SHALL BE HELD RESPONSIBLE FOR ANY COST, EXPENSE, OR LOSS RESULTING FROM SUCH DEFAULT AND DISPOSAL OF THE PROPERTY.

PROSPECTIVE BIDDERS WERE INFORMED, ALSO, THAT WHILE PHYSICAL POSSESSION OF THE PROPERTY WOULD BE DELIVERED UPON EXECUTION OF THE CONTRACT OF SALE, TITLE THERETO WOULD REMAIN VESTED IN THE UNITED STATES UNTIL THE FULL PURCHASE PRICE SHOULD HAVE BEEN PAID BY THE PURCHASER, OR AS MIGHT BE LATER MUTUALLY AGREED UPON BETWEEN THE GOVERNMENT AND THE PURCHASER. J. HAEUSER APPEARS TO HAVE BEEN THE HIGHEST BIDDER FOR THE PROPERTY AT A PRICE OF $18,625, AND UNDER PARAGRAPH 22 OF THE SPECIFICATIONS, A PAYMENT OF ONE-THIRD THEREOF, OR $6,208.34, WAS MADE AT THE TIME OF THE EXECUTION OF THE CONTRACT OF SALE AND THE BALANCE OF THE PURCHASE PRICE WAS TO BE PAID IN SEMI ANNUAL INSTALLMENTS OF $3,104.17 WITH INTEREST ON THE DEFERRED PAYMENTS AT THE RATE OF 5 PERCENT PER ANNUM.

NONE OF THE DEFERRED PAYMENTS WAS MADE AND FINALLY MR. HAEUSER WAS DECLARED IN DEFAULT AND AFTER DUE NOTICE WAS SERVED ON HIM, THE GOVERNMENT REPOSSESSED ITSELF OF THE PROPERTY AND REOFFERED IT FOR SALE ON NOVEMBER 26, 1928, UNDER SEALED BIDS WHICH WERE OPENED ON JANUARY 8, 1929. THE PROPERTY WAS RESOLD FOR $20,073. BY LETTER DATED APRIL 8, 1929, MR. HAEUSER HAS REQUESTED REFUND OF THE DOWN PAYMENT ON THE GROUND THAT THE PROPERTY RESOLD FOR MORE THAN ENOUGH ,TO PAY EXPENSES OF CARETAKER, COST OF REPRINTING SPECIFICATIONS, AND COST OF ADVERTISING SALE.' AS STATED, DECISION HAS BEEN REQUESTED AS TO WHETHER HE MAY NOT BE PAID FROM THE SUM OF $6,691, DOWN PAYMENT ON THE RESALE, NOW HELD IN THE SPECIAL DEPOSIT ACCOUNT, THE SUM OF $3,878.05 AS THE DIFFERENCE BETWEEN THE DOWN PAYMENT AND THE EXPENSES TO THE GOVERNMENT IN THE RESALE, TC., OF THE PROPERTY, TOGETHER WITH UNPAID INTEREST ON THE DEFERRED PAYMENTS UNTIL THE DATE OF RESALE.

THERE IS NOTHING IN THE CONTRACT OF SALE, OR THE SPECIFICATIONS MADE A PART THEREOF, WHICH SPECIFICALLY AUTHORIZES REFUND TO THE DEFAULTING PURCHASER OF THE DIFFERENCE BETWEEN THE DOWN PAYMENT AND THE LOSSES SUSTAINED BY THE GOVERNMENT THROUGH HIS FAILURE TO CONSUMMATE THE CONTRACT BY MAKING THE DEFERRED PAYMENTS AS AND WHEN DUE. THE GOVERNMENT RESERVED THE RIGHT TO REPOSSESS THE PROPERTY AND TO RESELL OR OTHERWISE DISPOSE OF IT AS MIGHT BE DEEMED TO THE BEST INTEREST OF THE UNITED STATES WITH A STIPULATION THAT THE DEFAULTING PURCHASER SHOULD BE HELD RESPONSIBLE FOR ANY COST, EXPENSE, OR LOSS RESULTING FROM SUCH DEFAULT AND DISPOSAL OF THE PROPERTY. IT SO HAPPENED IN THIS CASE THAT THERE WAS NO LOSS IN THE RESALE OF THE PROPERTY AND THAT THE DOWN PAYMENT MADE BY THE DEFAULTING PURCHASER WAS MORE THAN SUFFICIENT TO ABSORB THE COST AND EXPENSES TO THE GOVERNMENT OF THE RESALE, BUT THIS DOES NOT REQUIRE CONCLUSION THAT ANY EXCESS IS TO BE REFUNDED TO THE DEFAULTING PURCHASER. THE CASE IS SIMILAR IN MANY RESPECTS TO THAT OF HANSBROUGH V. PECK, 5 WALLACE 497, 506, WHERE THE COURT SAID THAT THE MODE OF SELLING REAL ESTATE ON DEFERRED PAYMENTS--

* * * IN THE UNITED STATES IS A VERY COMMON AND FAVORITE ONE, AND THE PRINCIPLES GOVERNING THE CONTRACT, BOTH IN LAW AND EQUITY, ARE MORE FULLY AND PERFECTLY SETTLED THAN IN ENGLAND OR ANY OTHER COUNTRY. THE BOOKS OF REPORTS ARE FULL OF CASES ARISING OUT OF IT, AND EVERY PHASE OF THE LITIGATION REPEATEDLY CONSIDERED AND ADJUDGED. AND NO RULE IN RESPECT TO THE CONTRACT IS BETTER SETTLED THAN THIS: THAT THE PARTY WHO HAS ADVANCED MONEY, OR DONE AN ACT IN PART PERFORMANCE OF THE AGREEMENT, AND THEN STOPS SHORT AND REFUSES TO PROCEED TO ITS ULTIMATE CONCLUSION, THE OTHER PARTY BEING READY AND WILLING TO PROCEED AND FULFILL ALL HIS STIPULATIONS ACCORDING TO THE CONTRACT, WILL NOT BE PERMITTED TO RECOVER BACK WHAT HAS THUS BEEN ADVANCED OR DONE.

THIS CASE IS ENTIRELY UNLIKE CASES WHICH HAVE BEEN BEFORE THIS OFFICE INVOLVING REFUND OF A PART OR ALL OF THE PURCHASE PRICE PAID FOR SURPLUS WAR SUPPLIES WHICH WERE FOUND TO BE NOT AS ADVERTISED AND WHICH WERE EITHER RETAINED BY THE PURCHASERS OR RETURNED TO THE UNITED STATES, TO WHICH REFERENCE IS MADE IN THE SUBMISSION.

ANSWERING YOUR QUESTION SPECIFICALLY, YOU ARE ADVISED THAT THERE IS NO AUTHORITY OF LAW TO REFUND TO THE DEFAULTING PURCHASER OF THE REAL ESTATE IN THIS CASE, THE WHOLE OR ANY PART OF THE DOWN PAYMENT MADE BY HIM UPON EXECUTION OF THE CONTRACT OF SALE OF OCTOBER 20, 1926, WHICH HE BREACHED, DUE TO HIS FAILURE TO MAKE THE DEFERRED PAYMENTS AS AND WHEN DUE.