A-54351, SEPTEMBER 9, 1935, 15 COMP. GEN. 179

A-54351: Sep 9, 1935

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PAYMENT IS AUTHORIZED OF ALL TAXES. NEITHER PAYMENT OF TAXES NOR PAYMENT OF PREMIUMS ON INSURANCE IS AUTHORIZED FOR ANY PERIOD SUBSEQUENT TO THE ACQUISITION OF TITLE. THE INSURANCE WAS SECURED BY THE NORTH DAKOTA-MONTANA WHEAT GROWERS' ASSOCIATION. THE OBLIGATION TO PAY THE INSURANCE PREMIUMS WAS THAT OF THE ASSOCIATION. THE UNPAID PREMIUMS WERE NOT A LIEN AGAINST THE MORTGAGED PROPERTY AND COULD NOT BECOME AN OBLIGATION OF A SUBSEQUENT TITLE HOLDER. THE FEDERAL FARM BOARD (NOW FARM CREDIT ADMINISTRATION) WAS UNDER NO OBLIGATION TO ASSUME THE PERSONAL OBLIGATIONS OF THE MORTGAGOR. PAYMENT OF THE INSURANCE PREMIUM WAS THE PERSONAL OBLIGATION OF THE ASSOCIATION AND SUCH PAYMENT IS NOT FOR ASSUMING BY THE UNITED STATES ANY MORE THAN ANY OTHER PERSONAL OBLIGATIONS OF THE DEBTOR.

A-54351, SEPTEMBER 9, 1935, 15 COMP. GEN. 179

MORTGAGES - REAL ESTATE - FORECLOSURE - TAXES AND INSURANCE PREMIUMS UNPAID PREMIUMS FOR INSURANCE, OBTAINED BY A MORTGAGOR ON A GRAIN ELEVATOR MORTGAGED TO THE UNITED STATES TO SECURE PAYMENT OF A LOAN, THE TERMS OF THE MORTGAGE REQUIRING THE MORTGAGOR TO KEEP THE PROPERTY INSURED, DO NOT BECOME A LIEN AGAINST THE MORTGAGED PROPERTY AND PAYMENT THEREOF MAY NOT BE ASSUMED BY THE UNITED STATES UPON FORECLOSURE AND PURCHASE OF THE PROPERTY. PAYMENT IS AUTHORIZED OF ALL TAXES, INCLUDING INTEREST AND PENALTIES ACCRUED, LEGALLY LEVIED AND ASSESSED AGAINST PROPERTY MORTGAGED TO THE UNITED STATES PRIOR TO ACQUISITION OF TITLE THERETO BY THE UNITED STATES, BUT NEITHER PAYMENT OF TAXES NOR PAYMENT OF PREMIUMS ON INSURANCE IS AUTHORIZED FOR ANY PERIOD SUBSEQUENT TO THE ACQUISITION OF TITLE.

COMPTROLLER GENERAL MCCARL TO THE GOVERNOR, FARM CREDIT ADMINISTRATION, SEPTEMBER 9, 1935:

CONSIDERATION HAS BEEN GIVEN YOUR LETTER OF AUGUST 9, 1934, SUPPLEMENTED BY YOUR LETTER OF APRIL 19, 1935, RELATING TO THE CLAIM OF WIRT WILSON AND CO. FOR PREMIUMS ON INSURANCE POLICIES ON A GRAIN ELEVATOR LOCATED IN MINNEAPOLIS, MINN., WHICH BECAME THE PROPERTY OF THE UNITED STATES PURSUANT TO FORECLOSURE PROCEEDINGS ON A MORTGAGE EXECUTED BY THE NORTH DAKOTA-MONTANA WHEAT GROWERS' ASSOCIATION TO SECURE THE PAYMENT OF A LOAN OF $25,000, AND TO YOUR LETTER OF MARCH 29, 1935, RELATING TO TAXES LEVIED AND ASSESSED AGAINST SAID PROPERTY FOR THE YEARS 1932 AND 1933.

IT APPEARS THAT AT SOME TIME PRIOR TO FEBRUARY 1933 THE FEDERAL FARM BOARD (NOW FARM CREDIT ADMINISTRATION) EXTENDED A LOAN FROM THE AGRICULTURAL MARKETING REVOLVING FUND TO THE NORTH DAKOTA-MONTANA WHEAT GROWERS' ASSOCIATION IN THE SUM OF $25,000 AND AS SECURITY THEREFOR ACCEPTED A MORTGAGE ON A GRAIN ELEVATOR LOCATED IN MINNEAPOLIS. BY THE TERMS OF THE MORTGAGE, THE MORTGAGOR AGREED TO KEEP THE PROPERTY INSURED IN AN AMOUNT NOT LESS THAN THE UNPAID PRINCIPAL OF THE LOAN WITH A CLAUSE DIRECTING THE PAYMENT OF ANY LOSS THEREUNDER TO THE BOARD TO BE CREDITED AS PAYMENT ON THE LOAN. THE MORTGAGOR AGREED TO PAY ALL PREMIUMS UPON INSURANCE POLICIES AND ALL TAXES LEVIED OR ASSESSED AGAINST THE MORTGAGED PREMISES AND IN CASE OF DEFAULT THEREOF, CONSENTED THAT THE BOARD MIGHT PAY SAID INSURANCE PREMIUMS AND TAXES AND AGREED THAT THE SAME SHOULD CONSTITUTE A LIEN AGAINST THE PROPERTY AND BECOME A PART OF THE PRINCIPAL DEBT AND BE SECURED BY THE MORTGAGE.

APPARENTLY, THE INSURANCE WAS SECURED BY THE NORTH DAKOTA-MONTANA WHEAT GROWERS' ASSOCIATION, THE MORTGAGOR. THE OBLIGATION TO PAY THE INSURANCE PREMIUMS WAS THAT OF THE ASSOCIATION. THE UNPAID PREMIUMS WERE NOT A LIEN AGAINST THE MORTGAGED PROPERTY AND COULD NOT BECOME AN OBLIGATION OF A SUBSEQUENT TITLE HOLDER. THE FEDERAL FARM BOARD (NOW FARM CREDIT ADMINISTRATION) WAS UNDER NO OBLIGATION TO ASSUME THE PERSONAL OBLIGATIONS OF THE MORTGAGOR. PAYMENT OF THE INSURANCE PREMIUM WAS THE PERSONAL OBLIGATION OF THE ASSOCIATION AND SUCH PAYMENT IS NOT FOR ASSUMING BY THE UNITED STATES ANY MORE THAN ANY OTHER PERSONAL OBLIGATIONS OF THE DEBTOR-- - THE DEBTOR WAS IN DEFAULT, THE MORTGAGE HAD BEEN FORECLOSED AND

YOU REPORT THAT---

THE ONE-YEAR PERIOD OF REDEMPTION PROVIDED BY STATUTE IN MINNESOTA EXPIRED ON FEBRUARY 13, 1934, AND UNDER THE LAWS OF THAT STATE THE GOVERNMENT ACQUIRED ABSOLUTE TITLE TO THE PROPERTY AS OF THAT DATE.

ORDER NO. 487, UNDERTAKING TO INCREASE THE AMOUNT OF THE LOAN TO THE NORTH DAKOTA-MONTANA WHEAT GROWERS' ASSOCIATION AND SET UP A COMMITMENT IN THE SUM OF $586.90 FOR THE PURPOSE OF PAYING THE INSURANCE PREMIUMS IN QUESTION, WAS ENTERED ON FEBRUARY 9, 1934, ONLY 4 DAYS BEFORE TITLE WAS TO BECOME ABSOLUTE IN THE UNITED STATES. THE GRANTING OF A LOAN UNDER SUCH CIRCUMSTANCES APPEARS AS A GRATUITY AND CONFLICTS WITH THE FORECLOSURE. UNDER THIS COMMITMENT THE INSURANCE UNDERWRITERS WERE PAID $286.58 ON MARCH 12, 1934. UPON A PRO RATA BASIS THIS WAS THE AMOUNT OF PREMIUM TO THE DATE TITLE TO THE PROPERTY BECAME ABSOLUTE IN THE UNITED STATES. THE INSURANCE UNDERWRITERS CLAIM AN ADDITIONAL AMOUNT BASED UPON A SHORT-RATE COMPUTATION IN CONNECTION WITH CANCELLATION OF POLICIES. THERE IS NO LEGAL BASIS FOR CHARGING PUBLIC FUNDS TO PAY ANY BALANCE CLAIMED AS INSURANCE PREMIUMS ON THE POLICIES IN QUESTION. NO QUESTION WILL BE RAISED AT THIS TIME AS TO PAYMENTS HERETOFORE MADE. LEVIED AND ASSESSED AGAINST THE PROPERTY PRIOR TO ACQUISITION OF TITLE BY THE UNITED STATES IS AUTHORIZED FROM THE ADMINISTRATIVE EXPENSE FUND AND NOT FROM THE REVOLVING FUND.

PAYMENT OF TAXES OR PREMIUMS ON INSURANCE FOR ANY PERIOD SUBSEQUENT TO PASSING OF TITLE TO THE UNITED STATES WOULD NOT, OF COURSE, BE AUTHORIZED.