A-65805, OCTOBER 5, 1936, 16 COMP. GEN. 325

A-65805: Oct 5, 1936

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

DISPUTED QUESTIONS OF FACT - AUTHORITY OF FEDERAL AGENTS - SET-OFF - PAYMENTS AUTHORIZED UNDER PRIVATE ACTS UPON DISPUTED QUESTIONS OF FACT BETWEEN A CLAIMANT AND THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT THE UNBROKEN RULE OF THE ACCOUNTING OFFICERS IS TO ACCEPT THE STATEMENT OF FACTS FURNISHED BY ADMINISTRATIVE OFFICERS. THERE IS A WELL-KNOWN DISTINCTION BETWEEN THE LIABILITY OF INDIVIDUALS AND THE GOVERNMENT WITH RESPECT TO THEIR AGENTS IN THAT THE FORMER ARE LIABLE TO THE EXTENT OF THE POWER THEY HAVE APPARENTLY GIVEN THEIR AGENTS. WHILE THE GOVERNMENT IS LIABLE ONLY TO THE EXTENT OF THE POWER IT HAS ACTUALLY GIVEN ITS AGENTS BY LAW. THERE IS NO REQUIREMENT OF LAW THAT SUCH AN INDEBTEDNESS MUST FIRST BE REDUCED TO JUDGMENT BEFORE SET-OFF MAY BE MADE.

A-65805, OCTOBER 5, 1936, 16 COMP. GEN. 325

DISPUTED QUESTIONS OF FACT - AUTHORITY OF FEDERAL AGENTS - SET-OFF - PAYMENTS AUTHORIZED UNDER PRIVATE ACTS UPON DISPUTED QUESTIONS OF FACT BETWEEN A CLAIMANT AND THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT THE UNBROKEN RULE OF THE ACCOUNTING OFFICERS IS TO ACCEPT THE STATEMENT OF FACTS FURNISHED BY ADMINISTRATIVE OFFICERS. THERE IS A WELL-KNOWN DISTINCTION BETWEEN THE LIABILITY OF INDIVIDUALS AND THE GOVERNMENT WITH RESPECT TO THEIR AGENTS IN THAT THE FORMER ARE LIABLE TO THE EXTENT OF THE POWER THEY HAVE APPARENTLY GIVEN THEIR AGENTS, WHILE THE GOVERNMENT IS LIABLE ONLY TO THE EXTENT OF THE POWER IT HAS ACTUALLY GIVEN ITS AGENTS BY LAW, AND THE UNAUTHORIZED ACTS OF SUCH AGENTS CANNOT ESTOP THE GOVERNMENT FROM ASSERTING THEIR INVALIDITY. UNDER THE PROVISIONS OF SECTION 236 OF THE REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE ACT OF JUNE 10, 1921, 42 STAT. 24, AN AMOUNT REPRESENTING A PERCENTAGE OF THE PURCHASE PRICE OF LAND ACQUIRED, SUBJECT TO A MORTGAGE THEREON, FROM THE UNITED STATES, AND AUTHORIZED BY A PRIVATE ACT OF CONGRESS TO BE REFUNDED TO THE PURCHASER, MAY PROPERLY BE APPLIED AGAINST THE PURCHASER'S INDEBTEDNESS TO THE UNITED STATES BY REASON OF UNPAID INTEREST ON THE MORTGAGE, AND THERE IS NO REQUIREMENT OF LAW THAT SUCH AN INDEBTEDNESS MUST FIRST BE REDUCED TO JUDGMENT BEFORE SET-OFF MAY BE MADE.

ACTING COMPTROLLER GENERAL ELLIOTT TO CHARLES A. VOLZ, OCTOBER 5, 1936:

CONSIDERATION HAS BEEN GIVEN YOUR REQUEST FOR REVIEW OF SETTLEMENT NO. 0409238, DATED JULY 8, 1936, WHEREIN THE AMOUNT OF $588 FOUND DUE YOU UNDER THE PROVISIONS OF PRIVATE ACT NO. 232, APPROVED AUGUST 19, 1935, 49 STAT. (PT. 2) 103, AS AMENDED BY PRIVATE ACT NO. 546, APPROVED MAY 6, 1936, WAS APPLIED AGAINST YOUR REPORTED INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $1,003.69, REPRESENTING UNPAID INTEREST TO NOVEMBER 30, 1935, ON MORTGAGE COVERING PROPERTY NO. 108 NORTH WILSON AVENUE, BROOKLAWN, N.J.

THE PRIVATE ACT ABOVE REFERRED TO, AS AMENDED, READS, IN PERTINENT PART, AS FOLLOWS:

THAT THE UNITED STATES SHIPPING BOARD BUREAU IS AUTHORIZED AND DIRECTED TO MAKE REFUNDS TO PRESENT OWNERS OF LANDS IN THE BOROUGH OF BROOKLAWN, IN THE STATE OF NEW JERSEY, WHICH HAVE BEEN PURCHASED FROM THE UNITED STATES, OF 14 PERCENTUM OF THE PURCHASE PRICE OF SUCH PURCHASED LANDS WHERE THE FULL PURCHASE PRICE OF SAID LANDS OR WHERE THE FULL AMOUNT OF PRINCIPAL DUE ON PURCHASE MONEY BONDS AND MORTGAGES GIVEN TO THE UNITED STATES OF AMERICA, REPRESENTED BY THE UNITED STATES SHIPPING BOARD,COVERING SUCH LANDS, HAS BEEN PAID BY SUCH OWNERS INTO THE TREASURY OF THE UNITED STATES, PRIOR TO NOVEMBER 1, 1931.

SEC. 2. THERE IS HEREBY APPROPRIATED, OUT OF ANY MONEY IN THE TREASURY NOT OTHERWISE APPROPRIATED, SUCH SUMS AS MAY BE NECESSARY TO CARRY OUT THE PROVISIONS OF THIS ACT: PROVIDED, THAT SAID REFUNDS SHALL BE IN FULL SETTLEMENT OF ALL CLAIMS THAT SUCH OWNERS OF LANDS, AS HEREINBEFORE DESCRIBED IN THIS ACT, MAY HAVE AGAINST THE GOVERNMENT OF THE UNITED STATES: * * *

UNDER DATE OF DECEMBER 12, 1935, THE UNITED STATES SHIPPING BOARD BUREAU, DEPARTMENT OF COMMERCE, FORWARDED TO THIS OFFICE FOR SETTLEMENT YOUR CLAIM, ADMINISTRATIVELY APPROVED FOR $588, SUBMITTED PURSUANT TO THE PROVISIONS OF THE ABOVE ACT, CALLING ATTENTION, HOWEVER, TO THE FACT THAT "THE UNITED STATES SHIPPING BOARD MERCHANT FLEET CORPORATION HAS A CHARGE AGAINST THE SAID CHAS. A. VOLZ IN THE AMOUNT OF $1,003.69, REPRESENTING INTEREST TO NOVEMBER 30, 1935, ON MORTGAGE COVERING PREMISES NO. 108 NORTH WILSON AVENUE, BROOKLAWN, N.J.' IN RESPONSE TO A REQUEST OF THIS OFFICE FOR INFORMATION SHOWING HOW AND IN WHAT MANNER YOUR REPORTED INDEBTEDNESS AROSE, THE FOLLOWING INFORMATION WAS SUBMITTED BY LETTER DATED APRIL 16, 1936:

MR. VOLZ PURCHASED THE PROPERTY, NO. 108 NORTH WILSON AVENUE, BROOKLAWN, SUBJECT TO MORTGAGE IN THE AMOUNT OF $3,395.00, EXECUTED BY CHARLES BENNETT COLE AND WIFE. ON SEPTEMBER 20, 1936, CHARLES A. VOLZ AND WIFE ENTERED INTO AN AGREEMENT WITH THE UNITED STATES OF AMERICA, REPRESENTED BY UNITED STATES SHIPPING BOARD, PROVIDING FOR THE EXTENSION OF THE TIME FOR PAYMENT OF THE PRINCIPAL OF THE BOND SECURED BY THE SAID MORTGAGE FOR THREE YEARS FROM THE DATE OF MATURITY THEREOF, AND BY THE TERMS OF WHICH CHARLES A. VOLZ AND WIFE ASSUMED, COVENANTED AND AGREED TO PAY AND MAKE PROMPT PAYMENT OF THE PRINCIPAL AND INTEREST OF SAID BOND SO SECURED, AND TO ABIDE BY AND PERFORM THE COVENANTS, CONDITIONS, AND AGREEMENTS IN SAID BOND AND MORTGAGE SECURING THE SAME SET FORTH AND CONTAINED, ACCORDING TO THE TRUE INTENT, MEANING, TENOR, AND EFFECT THEREOF, AND AS MODIFIED BY THE AGREEMENT.

THE PRINCIPAL OF THE MORTGAGE DEBT WAS INCREASED TO $3,409.29 BY THE ADDITION OF FIRE INSURANCE PREMIUMS TOTALING $14.29, PAID BY THE UNITED STATES SHIPPING BOARD MERCHANT FLEET CORPORATION ON POLICIES HELD AS COLLATERAL SECURITY WITH THE MORTGAGE AND WHICH WERE RENEWED BY THE CORPORATION DURING THE YEARS 1932 AND 1933, AFTER MR. VOLZ HAD FAILED TO COMPLY WITH REQUESTS THAT HE FURNISH RENEWALS OF THIS INSURANCE. MR. VOLZ PAID INTEREST ON THE MORTGAGE TO JANUARY 1, 1931, AND THE CHARGE AGAINST HIM OF $1,003.69, OF WHICH I INFORMED THE COMPTROLLER GENERAL IN MY LETTER OF SEPTEMBER 12, 1935, REPRESENTS INTEREST FROM THAT DATE TO NOVEMBER 30, 1935, SINCE WHICH DATE ADDITIONAL INTEREST HAS ACCRUED AT THE RATE OF 6 PERCENT.

ON NOVEMBER 4, 1931, THE UNITED STATES, REPRESENTED BY THE UNITED STATES SHIPPING BOARD, ENTERED INTO AN AGREEMENT TO SELL TO THE BROOKLAWN HOUSING CORPORATION, ALL OF THE BONDS AND MORTGAGES HELD BY THE GOVERNMENT COVERING PROPERTIES IN BROOKLAWN, AS WELL AS CERTAIN REAL ESTATE THEREIN. THIS AGREEMENT PROVIDED THAT ALL INTEREST WHICH HAD THERETOFORE BEEN PAID OR MIGHT THEREAFTER BE PAID ON THE BONDS AND MORTGAGES COVERED BY THE AGREEMENT PRIOR TO THE EXECUTION AND DELIVERY OF ASSIGNMENTS THEREOF TO THE PURCHASER WAS TO BE RETAINED BY AND BECOME THE PROPERTY OF THE SELLER AND THAT ALL INTEREST REMAINING DUE AND UNPAID UPON THE SAID BONDS AND MORTGAGES AT THE TIME OF THE EXECUTION AND DELIVERY OF ASSIGNMENTS THEREOF WAS TO BE AND BECOME THE PROPERTY OF THE PURCHASER. THE SAID AGREEMENT IS STILL IN FORCE AND THE MORTGAGE COVERING THE PROPERTY NO. 108 NORTH WILSON AVENUE, AND THE BOND SECURED THEREBY HAVE NOT YET BEEN ASSIGNED TO THE PURCHASER. INTEREST CONTINUES TO ACCRUE UPON THE MORTGAGE AND MR. VOLZ IS PERSONALLY LIABLE FOR THE PAYMENT THEREOF BY VIRTUE OF HIS EXECUTION OF THE EXTENSION AGREEMENT ABOVE REFERRED TO. ANY PART OF THE INTEREST WHICH CAN BE COLLECTED FROM HIM PRIOR TO THE ASSIGNMENT OF THE MORTGAGE BECOMES THE PROPERTY OF THE UNITED STATES AND IS TO BE RETAINED BY IT.

UPON THE BASIS OF THESE REPORTED FACTS, AND OTHER SUPPORTING DATA, THE AMOUNT FOUND DUE YOU UNDER THE ACT, SUPRA, WAS APPLIED AGAINST YOUR REPORTED INDEBTEDNESS AS INDICATED IN THE SETTLEMENT IN QUESTION OF WHICH YOU NOW REQUEST REVIEW.

THE REQUEST FOR REVIEW IS IN THE FORM OF A PETITION SETTING FORTH A NUMBER OF POINTS UNDER WHICH YOU DISCLAIM LIABILITY FOR ANY PART OF THE REPORTED INDEBTEDNESS.

POINTS 1, 2, AND 3 RECITE THE FACTS LEADING TO THE ACQUISITION OF THE PROPERTY AND APPEAR TO BE IN SUBSTANTIAL ACCORD WITH THE FACTS REPORTED IN THE ABOVE-QUOTED PORTION OF THE DEPARTMENT'S LETTER OF APRIL 16, 1936.

IN THE FOURTH POINT IT IS STATED THAT APPROXIMATELY 335 OF THE BROOKLAWN PROPERTIES FELL BACK INTO THE HANDS OF THE SHIPPING BOARD DUE TO INABILITY OF THE MORTGAGORS TO MEET THEIR REQUIREMENTS. IN THIS CONNECTION YOUR ATTENTION IS DIRECTED TO THE ADMINISTRATIVE REPORT OF SEPTEMBER 18, 1936, AS FOLLOWS:

* * * THE SHIPPING BOARD REACQUIRED BY FORECLOSURE AND OTHERWISE 75 OF THE BROOKLAWN PROPERTIES. SEVENTY-ONE OF THESE PROPERTIES WERE STILL HELD BY THE BOARD WHEN THE CONTRACT OF SALE WITH THE BROOKLAWN HOUSING CORPORATION OF NOVEMBER 4, 1931, WAS ENTERED INTO AND WERE INCLUDED IN THAT CONTRACT. AT THAT TIME THE BOARD HELD 260 MORTGAGES COVERING BROOKLAWN PROPERTIES, ONE OF WHICH WAS THE MORTGAGE COVERING THE PROPERTY, NO. 108 NORTH WILSON AVENUE, PAYMENT OF WHICH HAD BEEN GUARANTEED BY CHARLES A. VOLZ AND WIFE, AND THESE MORTGAGES WERE ALSO INCLUDED IN THE SALE CONTRACT. THE OWNERS OF MANY OF THE MORTGAGED PROPERTIES HAD PAID THEIR INTEREST AND TAXES IN FULL UP TO THAT TIME.

IN THE FIFTH POINT THERE IS TAKEN UP THE MATTER OF THE SUBMISSION OF A BID BY YOU FOR THE MORTGAGE IN RESPONSE TO AN ADVERTISEMENT BY THE FORMER SHIPPING BOARD TO SELL THE DELINQUENT PROPERTY, AND THE REJECTION OF YOUR BID ON THE COLE PROPERTY BY THE SAID BOARD. THE PERTINENCY OF THIS MATTER TO THE QUESTION HERE IN ISSUE IS NOT APPARENT.

POINT 6 TAKES UP THE MATTER OF THE DISPOSITION OF THE DELINQUENT PROPERTIES BY THE UNITED STATES SHIPPING BOARD UNDER AN OPTIONAL SALE AGREEMENT TO THE BROOKLAWN HOUSING CORPORATION AND THE BASIS FOR THE CONCLUSION REACHED BY YOU THAT YOUR RIGHTS IN THE INVOLVED PROPERTY WERE EXTINGUISHED AS OF NOVEMBER 24, 1931. IN THIS CONNECTION YOU INVITE ATTENTION TO A LETTER DATED NOVEMBER 7, 1931, FROM THE UNITED STATES SHIPPING BOARD MERCHANT FLEET CORPORATION, TO YOU, AS FOLLOWS:

THE UNITED STATES SHIPPING BOARD HAS ENTERED INTO AN AGREEMENT DATED NOVEMBER 4, 1931, FOR THE SALE OF ALL OF ITS HOUSING PROPERTIES AND MORTGAGES AT BROOKLAWN, N.J., TO THE BROOKLAWN HOUSING CORPORATION.

UNDER THE TERMS OF THIS AGREEMENT YOU MAY HAVE CERTAIN RIGHTS, WHICH MUST BE ACTED UPON WITHIN 20 DAYS FROM NOVEMBER 4, 1931. IF YOU ARE INTERESTED YOU SHOULD COMMUNICATE WITH THE BROOKLAWN HOUSING CORPORATION, WHOSE PRINCIPAL OFFICE IS AT 128 MARKET STREET, NEWARK, N.J. WE HAVE BEEN INFORMED THAT IT ALSO HAS AN OFFICE AT 413 NEW BROADWAY, BROOKLAWN.

FOR YOUR INFORMATION WE ENCLOSE HEREWITH A COPY OF CLAUSE XXXII OF THE SAID AGREEMENT.

CLAUSE XXXII OF THE AGREEMENT REFERRED TO IN THE QUOTED LETTER IS AS FOLLOWS:

XXXII. THE PARTY OF THE SECOND PART AGREES THAT IF ANY OWNER OR TENANT OF THE PRIVATE DWELLINGS COVERED BY ANY OF THE BONDS AND MORTGAGES REFERRED TO IN "SCHEDULE B" AND "SCHEDULE C," HERETO ATTACHED, SUBMITTED A BID TO THE UNITED STATES SHIPPING BOARD, EITHER DIRECTLY OR THROUGH AN AGENT, FOR THE PURCHASE OF SUCH BOND AND MORTGAGE WHEN SUCH BIDS WERE OPENED BY SAID BOARD ON SEPTEMBER 22, 1931, AND WHICH BID AMOUNTED TO 60 PERCENT OR MORE OF THE AMOUNT NOW DUE AS PRINCIPAL UPON SUCH BOND AND MORTGAGE, DELIVERS TO THE PARTY OF THE SECOND PART, WITHIN TWENTY DAYS FROM THE DATE OF THIS AGREEMENT, AN OFFER IN WRITING TO PURCHASE FOR CASH SAID BOND AND MORTGAGE FOR THE AMOUNT OF HIS OR HER BID, MADE AS AFORESAID ON SEPTEMBER 22, 1931, SAID PARTY OF THE SECOND PART WILL ASSIGN SUCH BOND AND MORTGAGE TO SUCH OWNER OR TENANT CONCURRENTLY WITH THE ASSIGNMENT TO THE PARTY OF THE SECOND PART BY THE PARTIES OF THE FIRST PART HEREIN OF SUCH BOND AND MORTGAGE, PROVIDED, FURTHER, THAT SUCH OWNER OR TENANT PAY THE TAXES, ASSESSMENTS AND WATER CHARGES ASSESSED AGAINST SUCH PROPERTY AND OF WHICH THE PAYMENT WAS ABOVE GUARANTEED BY THE PARTY OF THE SECOND PART, CONCURRENTLY WITH SUCH ASSIGNMENT, AND THE PARTY OF THE SECOND PART AGREES FURTHER TO EXTEND THE SAME PRIVILEGE (SUBJECT TO PRIOR PRIVILEGE OF OWNER OR TENANT) TO ANY OTHER PARTY OR PARTIES WHO ARE OBLIGORS ON THE BOND ACCOMPANYING ANY MORTGAGE OR MORTGAGES ON A PRIVATE DWELLING OR DWELLINGS, FOR WHICH THEY SUBMITTED A BID OR BIDS, EITHER DIRECTLY OR THROUGH AN AGENT, WHICH BID OR BIDS AMOUNTED TO 60 PERCENT OR MORE OF THE AMOUNT NOW DUE AS PRINCIPAL UPON SAID BOND AND MORTGAGE, OR BONDS AND MORTGAGES, BID FOR: IT BEING FURTHER AGREED THAT IF ANY OWNER OR TENANT OF ANY SUCH PRIVATE DWELLING DID, ON SEPTEMBER 22, 1931, BID LESS THAN 60 PERCENT OF THE AMOUNT NOW DUE AS PRINCIPAL UPON A BOND AND MORTGAGE, HE OR SHE SHALL HAVE A SIMILAR PRIVILEGE TO PURCHASE SUCH BOND AND MORTGAGE SUBJECT TO THE SAME TERMS AND PROVISIONS AS ABOVE PROVIDED FOR AN OWNER OR TENANT WHO BID 60 PERCENT OR MORE, EXCEPT THAT THE SALE PRICE TO SUCH OWNER OR TENANT SHALL BE 60 PERCENT OF THE PRINCIPAL AMOUNT OWING ON SUCH BOND AND MORTGAGE.

THE PETITION STATES THAT THE CLEAR IMPLICATION FROM THE LETTER OF NOVEMBER 7, 1931, SUPRA, AND CLAUSE XXXII OF THE REFERRED-TO AGREEMENT, WAS THAT THE COLE PROPERTY (108 NORTH WILSON AVENUE) HAD BEEN SOLD AND THAT IF YOU WISHED TO REDEEM IT YOU WOULD HAVE TO ACT PRIOR TO NOVEMBER 24, 1931. I AM UNABLE TO DRAW ANY SUCH IMPLICATION OR INFERENCE FROM SAID DOCUMENTS. CLEARLY PARAGRAPH XXXII WAS PLACED IN THE CONTRACT PRIMARILY FOR THE BENEFIT OF BIDDERS ON SEPTEMBER 22, 1931, AND SIMPLY PROVIDED AS TO SUCH BIDDERS THAT THEY SHOULD HAVE THE PRIVILEGE FOR A PERIOD OF 20 DAYS FROM THE DATE OF THE CONTRACT OF PURCHASING THE MORTGAGES COVERING THEIR PROPERTIES FROM THE BROOKLAWN HOUSING CORPORATION AT THE AMOUNTS OF THEIR BIDS, IF SUCH BIDS EQUALLED 60PERCENT OR MORE OF THE PRINCIPAL AMOUNTS OF THEIR MORTGAGES, OR AT 60 PERCENT OF SUCH PRINCIPAL AMOUNTS IF THEIR BIDS WERE BELOW THAT FIGURE, WITH PROVISIONS AS TO THE PAYMENT OF TAXES, ETC., AND THAT ASSIGNMENTS OF THE BONDS AND MORTGAGES WOULD BE MADE CONCURRENTLY WITH THEIR ASSIGNMENTS BY THE SHIPPING BOARD. OBVIOUSLY, THE TIME LIMITATION WAS PLACED IN THE CONTRACT FOR THE REASON THAT THE HOUSING CORPORATION COULD NOT BE EXPECTED TO GRANT SUCH PRIVILEGES FOR AN INDEFINITE PERIOD. THEREFORE, THE SOLE PURPOSE OF THE FLEET CORPORATION'S LETTER TO YOU APPEARS TO HAVE BEEN TO FURNISH YOU WITH THE INFORMATION NECESSARY TO ENABLE YOU TO TAKE ADVANTAGE OF THE OPPORTUNITY TO PURCHASE YOUR MORTGAGE FROM THE BROOKLAWN HOUSING CORPORATION AT 60 PERCENT OF ITS PRINCIPAL AMOUNT IF YOU CARED TO DO SO. IT FOLLOWS, THEREFORE, THAT SINCE YOU FAILED TO AVAIL YOURSELF OF THE OPPORTUNITY THE RIGHT SO GIVEN YOU BY THE CONTRACT CEASED.

IT IS STATED, ALSO, UNDER THIS POINT OF THE PETITION, THAT YOU TURNED THE PROPERTY IN QUESTION BACK TO THE SHIPPING BOARD AND THAT THE SAID BOARD HAD MADE THE STATEMENT THAT IT HAD SOLD THE PROPERTY TO THE BROOKLAWN HOUSING CORPORATION. THE DEPARTMENT DENIES THESE STATED FACTS, AND CONTENDS THAT THE GOVERNMENT'S RELATION TO THE PROPERTY SINCE ITS CONVEYANCE TO MR. COLE FOLLOWING THE AUCTION SALE IN 1923 HAS BEEN SOLELY THAT OF MORTGAGEE, EXCEPT AS AFFECTED BY THE ASSIGNMENT AGREEMENTS HEREINBEFORE REFERRED TO. UPON DISPUTED QUESTIONS OF FACT BETWEEN A CLAIMANT AND THE ADMINISTRATIVE OFFICERS OF THE GOVERNMENT THE UNBROKEN RULE OF THE ACCOUNTING OFFICERS IS TO ACCEPT THE STATEMENT OF FACTS FURNISHED BY ADMINISTRATIVE OFFICERS. WITH RESPECT TO YOUR CONTENTION THAT AN INCONSISTENCY EXISTS BETWEEN THE LETTER TO YOU, ABOVE QUOTED, AND THE CLAIM FOR INTEREST AS ASSERTED BY THE SHIPPING BOARD BUREAU, IT WOULD APPEAR THAT SUCH CONTENTION IS UNTENABLE, FOR, AS HEREINBEFORE STATED, THE SHIPPING BOARD EXTINGUISHED NO RIGHTS BELONGING TO YOU NOR DOES IT APPEAR THAT SAID BOARD, BY IMPLICATION OR OTHERWISE, TOLD YOU THAT THE PROPERTY IN QUESTION HAD BEEN SOLD OR THAT IT HAD RELEASED YOU OF ANY OBLIGATION WHICH YOU HAD EXPRESSLY ASSUMED. THE STATEMENTS ATTRIBUTED TO ONE WILLIAM H. BURTON--- WHO FOR SEVERAL YEARS, IT IS REPORTED, WAS THE BOARD'S AGENT AT BROOKLAWN FOR THE COLLECTION OF RENTS AND INTEREST, ETC.--- RELATIVE TO ANY PURPORTED RELEASE OF YOUR OBLIGATION TO PAY INTEREST IN THE MATTER MAY NOT IN ANY MANNER BE ACCEPTED AS CONTROLLING IN THIS MATTER FOR THE REASON THAT HE IS REPORTED TO HAVE BEEN WITHOUT AUTHORITY TO MAKE SUCH STATEMENTS AND, OF COURSE, COULD NOT THEREBY BIND THE UNITED STATES IN THE MATTER, THERE BEING A WELL-KNOWN DISTINCTION BETWEEN THE LIABILITY OF INDIVIDUALS AND THE GOVERNMENT WITH RESPECT TO THEIR AGENTS IN THAT THE FORMER ARE LIABLE TO THE EXTENT OF THE POWER THEY HAVE APPARENTLY GIVEN THEIR AGENTS, WHILE THE GOVERNMENT IS LIABLE ONLY TO THE EXTENT OF THE POWER IT HAS ACTUALLY GIVEN ITS AGENTS BY LAW, AND THE UNAUTHORIZED ACTS OF SUCH AGENTS CANNOT ESTOP THE GOVERNMENT FROM ASSERTING THEIR INVALIDITY.

IN THE SEVENTH POINT IT IS STATED THAT FROM INVESTIGATION THE FOLLOWING FACTS ARE APPARENT:

(A) THAT THE BROOKLAWN HOUSING CORPORATION ENTERED INTO AGREEMENT, WITH THE UNITED STATES SHIPPING BOARD, TO EXERCISE ITS RIGHT TO BUY ANY OF THE PROPERTIES OR MORTGAGES WITHIN ONE YEAR FROM NOVEMBER 4, 1931. IF THIS CLAIMANT WAS LEGALLY OR MORALLY LIABLE, THEN IT WAS PREJUDICIAL TO CLAIMANT'S RIGHT TO GRANT BROOKLAWN HOUSING CORPORATION ANY EXTENSION OF TIME. HOWEVER, SUCH EXTENSIONS HAVE BEEN CONTINUOUSLY GRANTED FROM YEAR TO YEAR.

(B) THAT DURING THE YEAR 1936 BROOKLAWN HOUSING CORPORATION HAS EXERCISED ITS OPTION AND TAKEN OVER THE LAST OF THE PROPERTIES OR MORTGAGES AND THAT THE COLE HOUSE WAS IN THE LAST GROUP TAKEN.

(C)THAT NO EFFORT HAS BEEN MADE BY THE UNITED STATES SHIPPING BOARD TO COLLECT INTEREST FROM ANY OF THE ORIGINAL OWNERS OF THESE HOUSES AND THAT IF THIS PETITION IS DENIED THIS CLAIMANT WILL BE THE ONLY ONE OF THE TOTAL NUMBER OF 335 TO PAY.

(D)THAT THE BROOKLAWN HOUSING CORPORATION HAS BEEN PAYING SIX PERCENT INTEREST ON TWENTY-SEVEN AND ONE-HALF PERCENT OF THE FACE OF THE MORTGAGE SINCE NOVEMBER 4, 1931.

THESE MATTERS WERE REFERRED TO THE DEPARTMENT FOR VERIFICATION AND REPORT, AND UNDER DATE OF SEPTEMBER 18, 1936, THE FOLLOWING REPLY WAS RECEIVED, IN CORRESPONDINGLY DESIGNATED PARAGRAPHS:

(A) IN SO FAR AS THE CLAIMANT IS CONCERNED, AN EARLY EXECUTION AND DELIVERY OF ASSIGNMENT OF THE MORTGAGE TO BROOKLAWN HOUSING CORPORATION WOULD NOT HAVE LESSENED THE LIABILITY WHICH THE CLAIMANT AND WIFE PERSONALLY ASSUMED TO PAY THE MORTGAGE DEBT, BUT WOULD HAVE MERELY SUBSTITUTED THE BROOKLAWN HOUSING CORPORATION AS PAYEE. NEITHER THE UNITED STATES NOR THE BROOKLAWN HOUSING CORPORATION OWES THE CLAIMANT ANY DUTY TO EFFECT PROMPT FORECLOSURE PROCEEDINGS. OF COURSE, THE CLAIMANT COULD, AT ANY TIME, HAVE PAID THE MORTGAGE DEBT. NOTWITHSTANDING CLAIMANT'S ALLEGED ABANDONMENT OF THE PROPERTY, HE IS STILL THE OWNER THEREOF. THIS DEPARTMENT HAS RECENTLY BEEN ADVISED THAT THE BOROUGH OF BROOKLAWN IS NOW COLLECTING RENT ON THIS PROPERTY. THE RENT SO COLLECTED IS NO DOUBT BEING APPLIED BY THE BOROUGH TO PAYMENTS OF TAXES ON THE PROPERTY, WHICH IS IN THE CLAIMANT'S INTEREST.

(B) THE BROOKLAWN HOUSING CORPORATION HAS NOT TAKEN AN ASSIGNMENT OF THE MORTGAGE COVERING THE PROPERTY NO. 108 NORTH WILSON AVENUE.

(C) THE UNITED STATES HAS MADE LITTLE EFFORT TO COLLECT INTEREST FROM ANY OF THE OWNERS OF THESE VARIOUS PROPERTIES UNDER MORTGAGE TO THE UNITED STATES SINCE THE EXECUTION OF THE SAID AGREEMENT OF NOVEMBER 4, 1931, WITH THE BROOKLAWN HOUSING CORPORATION FOR THE REASON THAT IT WAS FOUND THAT THE ONLY MEANS BY WHICH THIS COULD BE DONE WAS BY FORECLOSURE PROCEEDINGS. THIS FACT, HOWEVER, DOES NOT IN ANY WAY LESSEN THE RIGHT OF THE UNITED STATES UNDER THE AGREEMENT WITH BROOKLAWN HOUSING CORPORATION TO COLLECT AND RETAIN ALL INTEREST PAYMENTS DUE UNDER THE MORTGAGE PRIOR TO ASSIGNMENT THEREOF TO THE BROOKLAWN HOUSING CORPORATION. THIS BEING TRUE, THE UNITED STATES HAS A CLEAR RIGHT TO COLLECT THIS INTEREST UP TO THE PRESENT TIME, AND IT HAS, IN THIS CASE, A MEANS READY AT HAND WHEREBY IT CAN COLLECT TO THE EXTENT OF THE PAYMENT TO WHICH CLAIMANT IS ENTITLED UNDER THESE LAWS FOR THE RELIEF OF CERTAIN PURCHASERS OF BROOKLAWN PROPERTIES. IT APPEARS, THEREFORE, THAT NOT ONLY DOES THE UNITED STATES HAVE THE RIGHT TO MAKE THIS OFFSET, BUT THAT IT IS THE DUTY OF THIS DEPARTMENT UNDER THE LAW TO INSIST THAT SAME BE EFFECTED.

(D) THE BROOKLAWN HOUSING CORPORATION HAS PAID NO INTEREST ON THE MORTGAGE COVERING THE PROPERTY NO. 108 NORTH WILSON AVENUE. IF AND WHEN IT TAKES AN ASSIGNMENT OF THE MORTGAGE IT WILL BE CHARGEABLE WITH INTEREST ON THE PURCHASE PRICE THEREOF ($906.71) FROM NOVEMBER 4, 1932, AT 6 PERCENT.

THIS OFFICE IS IN AGREEMENT WITH THE DEPARTMENT'S LEGAL CONCLUSIONS STATED IN THE REPORT JUST QUOTED WITH REFERENCE TO THE MATTERS RAISED IN THIS POINT OF YOUR PETITION.

THE EIGHTH POINT OF YOUR PETITION QUESTIONS THE RIGHT OF THIS OFFICE "TO WITHHOLD, OR SET OFF ANY ALLEGED INDEBTEDNESS" AGAINST ANY AMOUNT FOUND DUE UNDER THE ACTS OF CONGRESS, SUPRA,"UNLESS REDUCED TO A JUDGMENT. OTHERWISE, THE WILL OF CONGRESS TO MAKE SUCH REFUND WOULD BE TROVERTED.'

SECTION 236, REVISED STATUTES, AS AMENDED BY SECTION 305 OF THE BUDGET AND ACCOUNTING ACT OF JUNE 10, 1921, 42 STAT. 24, PROVIDES:

ALL CLAIMS AND DEMANDS WHATEVER BY THE GOVERNMENT OF THE UNITED STATES OR AGAINST IT, AND ALL ACCOUNTS WHATEVER IN WHICH THE GOVERNMENT OF THE UNITED STATES IS CONCERNED, EITHER AS DEBTOR OR CREDITOR, SHALL BE SETTLED AND ADJUSTED IN THE GENERAL ACCOUNTING OFFICE.

WHERE A PERSON IS BOTH DEBTOR AND CREDITOR OF THE GOVERNMENT IN ANY FORM, THE ACCOUNTING OFFICERS, PURSUANT TO THE STATUTE, SUPRA, ARE REQUIRED TO CONSIDER BOTH THE DEBITS AND CREDITS AND TO CERTIFY ONLY THE BALANCE. THIS CONNECTION THE COURT OF CLAIMS, IN THE TAGGART CASE, 17 CT.CLS. 323, AT PAGE 327, SAID:

WHERE A PERSON IS BOTH DEBTOR AND CREDITOR OF THE UNITED STATES, IN ANY FORM, THE OFFICERS OF THE TREASURY DEPARTMENT, IN SETTLING THE ACCOUNTS, NOT ONLY HAVE THE POWER, BUT ARE REQUIRED IN THE PROPER DISCHARGE OF THEIR DUTIES, TO SET OFF THE ONE INDEBTEDNESS AGAINST THE OTHER, AND TO ALLOW AND CERTIFY FOR PAYMENT ONLY THE BALANCE FUND DUE ON ONE SIDE OR THE OTHER. SECTION 1766 OF THE REVISED STATUTES SO PROVIDES, AND SPECIAL PROVISIONS ON THE SUBJECT, TO MEET THE CASE OF JUDGMENTS RECOVERED AGAINST THE UNITED STATES "OR OTHER CLAIM DULY ALLOWED BY LEGAL AUTHORITY," ARE MADE BY THE ACT OF MARCH 3, 1875, CH. 149 (1 SUPPLMT. TO R.S., P. 185). BUT THE RIGHT OF SET-OFF IN SUCH CASES EXISTS INDEPENDENTLY OF THOSE SPECIAL ENACTMENTS, AND IS FOUNDED UPON WHAT IS NOW SECTION 236 OF THE REVISED STATUTES, AS FOLLOWS:

"SEC. 236. ALL CLAIMS AND DEMANDS WHATEVER, BY THE UNITED STATES OR AGAINST THEM, AND ALL ACCOUNTS WHATEVER IN WHICH THE UNITED STATES ARE CONCERNED, EITHER AS DEBTORS OR CREDITORS, SHALL BE SETTLED AND ADJUSTED IN THE DEPARTMENT OF THE TREASURY.'

THE DUTY OF THE ACCOUNTING OFFICERS IN MATTERS OF SET-OFF HAS FREQUENTLY BEEN RECOGNIZED BY THE COURTS. (MCKNIGHT'S CASE, 13 C.CLS.R., 306, AFFIRMED ON APPEAL; BONNAFON'S CASE, 14 C.CLS.R., 489.) * * *

SINCE THE REPORTED FACTS CLEARLY SHOW THAT YOU ARE INDEBTED TO THE UNITED STATES FOR INTEREST ON THE MORTGAGE IN QUESTION, THE SETTLEMENT DIRECTING THE APPLICATION OF THE AMOUNT OTHERWISE FOUND DUE YOU, UNDER THE ACT, AGAINST YOUR REPORTED INDEBTEDNESS TO THE GOVERNMENT AS LIQUIDATION THEREOF, PRO TANTO WAS CORRECT AND PROPER. ACCORDINGLY, SAID SETTLEMENT MUST BE AND IS SUSTAINED.