A-47535, MARCH 21, 1933, 12 COMP. GEN. 553

A-47535: Mar 21, 1933

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IN THE EVENT THAT FORECLOSURE PROCEEDINGS ARE INSTITUTED IN ORDER TO PROTECT LOANS MADE BY THE BOARD AND THE PROPERTY IS PURCHASED BY THE GOVERNMENT AT FORECLOSURE SALE THE QUESTION HAS ARISEN AS TO WHETHER THE FEDERAL FARM BOARD ON THE SALE OF THE PROPERTY BY THE GOVERNMENT WILL BE ENTITLED TO HAVE THE PURCHASE PRICE PAID INTO THE REVOLVING FUND UP TO THE AMOUNT OF THE UNPAID BALANCE OF THE LOAN MADE BY THE BOARD. IN THIS CONNECTION ATTENTION IS CALLED TO SECTION 8 (B) OF THE AGRICULTURAL MARKETING ACT WHICH PROVIDES THAT "PAYMENTS OF PRINCIPAL OR INTEREST UPON ANY SUCH LOAN OR ADVANCES SHALL BE COVERED INTO THE REVOLVING FUND.'. YOUR OPINION ON THE FOREGOING QUESTION IS RESPECTFULLY REQUESTED.

A-47535, MARCH 21, 1933, 12 COMP. GEN. 553

FEDERAL FARM BOARD - FORECLOSURE OF MORTGAGES THE PROCEEDS OF SALE OF PROPERTY ACQUIRED BY THE FEDERAL FARM BOARD UNDER FORECLOSURE OF MORTGAGES TAKEN BY THE BOARD TO SECURE LOANS MAY BE DEPOSITED IN THE REVOLVING FUND TO THE EXTENT OF THE UNPAID BALANCES ON THE LOANS WITH INTEREST THEREON; THE EXCESS PROCEEDS, IF ANY, SHOULD BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.

COMPTROLLER GENERAL MCCARL TO THE CHAIRMAN OF THE FEDERAL FARM BOARD, MARCH 21, 1933:

THERE HAS BEEN RECEIVED YOUR LETTER OF FEBRUARY 21, 1933, AS FOLLOWS:

THE FEDERAL FARM BOARD HAS MADE A NUMBER OF LOANS UNDER THE AGRICULTURAL MARKETING ACT FROM THE REVOLVING FUND ON THE SECURITY OF MORTGAGES OR DEEDS OF TRUST EXECUTED BY THE BORROWING COOPERATIVE ASSOCIATIONS, ON PROPERTY OWNED BY THEM.

IN THE EVENT THAT FORECLOSURE PROCEEDINGS ARE INSTITUTED IN ORDER TO PROTECT LOANS MADE BY THE BOARD AND THE PROPERTY IS PURCHASED BY THE GOVERNMENT AT FORECLOSURE SALE THE QUESTION HAS ARISEN AS TO WHETHER THE FEDERAL FARM BOARD ON THE SALE OF THE PROPERTY BY THE GOVERNMENT WILL BE ENTITLED TO HAVE THE PURCHASE PRICE PAID INTO THE REVOLVING FUND UP TO THE AMOUNT OF THE UNPAID BALANCE OF THE LOAN MADE BY THE BOARD, WITH INTEREST THEREON. IN THIS CONNECTION ATTENTION IS CALLED TO SECTION 8 (B) OF THE AGRICULTURAL MARKETING ACT WHICH PROVIDES THAT "PAYMENTS OF PRINCIPAL OR INTEREST UPON ANY SUCH LOAN OR ADVANCES SHALL BE COVERED INTO THE REVOLVING FUND.' IN THE OPINION OF THE FEDERAL FARM BOARD THIS WOULD AUTHORIZE THE PAYMENT INTO THE REVOLVING FUND OF AN AMOUNT EQUAL TO THE UNPAID BALANCE, WITH INTEREST, ON ANY SUCH LOANS.

YOUR OPINION ON THE FOREGOING QUESTION IS RESPECTFULLY REQUESTED.

IT IS SPECIFICALLY PROVIDED IN SECTION 8 (B) OF THE AGRICULTURAL MARKETING ACT OF JUNE 15, 1929, 46 STAT. 15, AS QUOTED IN YOUR LETTER, THAT FUNDS RECEIVED AS REPAYMENTS OF LOANS OR ADVANCES MADE FROM THE REVOLVING FUND, INCLUDING INTEREST THEREON, SHALL BE COVERED INTO AND BECOME A PART OF THE REVOLVING FUND, SO THAT THE ONLY QUESTION FOR CONSIDERATION IN CONNECTION WITH THE PRESENT MATTER IS WHETHER, AFTER THE BOARD HAS, IN ITS ATTEMPT TO ENFORCE PAYMENT, ACQUIRED THE PROPERTY REPRESENTING THE SECURITY OF THE LOAN OR ADVANCE AND SUBSEQUENTLY SOLD THE SAME, THE PROCEEDS THEREOF MAY BE CONSIDERED AS REPAYMENTS OF THE LOANS WITHIN THE MEANING OF SECTION 8 (B).

SINCE THE ONLY PURPOSE OF OR AUTHORITY FOR THE PROCEDURE OF FORECLOSING THE MORTGAGE, PURCHASING THE PROPERTY AT THE FORECLOSURE SALE AND RESELLING SAME IS TO EFFECT A RECOVERY OR REPAYMENT OF THE LOAN OR ADVANCE, THERE WOULD APPEAR TO BE NO GOOD REASON WHY A RECOVERY OR REPAYMENT EFFECTED IN THIS WAY SHOULD NOT BE COVERED INTO THE REVOLVING FUND THE SAME AS A RECOVERY OR REPAYMENT EFFECTED IN ANY OTHER WAY. OTHERWISE, THERE WOULD RESULT A DEPLETION OF THE REVOLVING FUND AND AN AUGMENTATION OF THE GENERAL FUND OF THE TREASURY NOT CONTEMPLATED BY THE LAW UNDER WHICH THE TRANSACTION AROSE. THEREFORE, IN ORDER TO CARRY OUT THE APPARENT INTENT OF THE LAW I HAVE TO ADVISE THAT TO THE EXTENT OF UNPAID BALANCES ON ANY SUCH LOANS OR ADVANCES WITH INTEREST, THE PROCEEDS FROM SALES IN SUCH CASES MAY BE CONSIDERED AS REPAYMENTS OF SUCH LOANS OR ADVANCES WITHIN THE MEANING OF SECTION 8 (B), SUPRA, THE EXCESS, IF ANY, TO BE COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS.