A-80282, FEBRUARY 2, 1937, 16 COMP. GEN. 713

A-80282: Feb 2, 1937

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NOTWITHSTANDING THE MONEY WAS DERIVED FROM A SALE OF THE DEBTOR'S CATTLE INVOLVED IN THE LIEN. THE REMITTANCE WAS BECAUSE OF THE DEBTOR'S MISUNDERSTANDING IN THE MATTER. THAT THE SAID AMOUNT OF $45 WAS PART OF THE PROCEEDS OF THE SALE OF CERTAIN OF WESTER'S CATTLE ON WHICH YOU HELD A CHATTEL MORTGAGE AND THAT THE REMITTANCE BY HIM TO THE GOVERNMENT WAS THE RESULT OF AN ERROR ON HIS PART AS TO THE PRIORITY OF RIGHTS TO SUCH PROCEEDS OF SALE. THERE WAS RECEIVED IN THE EMERGENCY CROP AND FEED LOAN OFFICE. THE AMOUNT OF THE CHECK WAS CREDITED TO HIS ACCOUNT AND DEPOSITED AND COVERED INTO THE TREASURY OF THE UNITED STATES AS A LOAN COLLECTION. THE GOVERNMENT WAS NOT RESPONSIBLE IN ANY WAY FOR WESTER'S ALLEGED MISUNDERSTANDING OF THE NATURE OF THE NONDISTURBANCE AGREEMENT EXECUTED BY YOU.

A-80282, FEBRUARY 2, 1937, 16 COMP. GEN. 713

UNSECURED GOVERNMENT LOANS - REPAYMENT FROM SALE OF CATTLE - PRIVATE LIENHOLDER'S PRIORITY OF PAYMENT A LIENHOLDER HAS NO LEGAL CLAIM AGAINST THE UNITED STATES FOR MONEY PAID BY A GOVERNMENT DEBTOR IN PART LIQUIDATION OF AN UNSECURED LOAN TO ENABLE THE PURCHASE OF CATTLE FEED, ACCEPTED IN GOOD FAITH BY THE GOVERNMENT WITHOUT KNOWLEDGE OF ITS SOURCE AND CREDITED TO THE LOAN ACCOUNT, NOTWITHSTANDING THE MONEY WAS DERIVED FROM A SALE OF THE DEBTOR'S CATTLE INVOLVED IN THE LIEN, AND THE REMITTANCE WAS BECAUSE OF THE DEBTOR'S MISUNDERSTANDING IN THE MATTER.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE FARMERS NATIONAL BANK, FEBRUARY 2, 1937:

YOUR LETTER OF AUGUST 3, 1936, REQUESTS REVIEW OF SETTLEMENT NO. 0577136, DATED JULY 31, 1936, WHICH DISALLOWED YOUR CLAIM FOR $45 REPRESENTING AN AMOUNT REMITTED TO THE EMERGENCY CROP AND FEED LOAN OFFICE, FARM CREDIT ADMINISTRATION, WICHITA, KANS., BY JOHN O. WESTER, ROUTE 3, ERICK, KLA., TO APPLY ON HIS DROUGHT-LOAN ACCOUNT NO. 34-D 304050.

AS A BASIS FOR YOUR CLAIM YOU ALLEGE, IN SUBSTANCE, THAT THE SAID AMOUNT OF $45 WAS PART OF THE PROCEEDS OF THE SALE OF CERTAIN OF WESTER'S CATTLE ON WHICH YOU HELD A CHATTEL MORTGAGE AND THAT THE REMITTANCE BY HIM TO THE GOVERNMENT WAS THE RESULT OF AN ERROR ON HIS PART AS TO THE PRIORITY OF RIGHTS TO SUCH PROCEEDS OF SALE.

UNDER THE PROVISIONS OF THE EMERGENCY APPROPRIATION ACT, FISCAL YEAR 1935, (48 STAT. 1055, 1056), THE FARM CREDIT ADMINISTRATION MADE AN UNSECURED DROUGHT LOAN TO WESTER TO ENABLE HIM TO PURCHASE FEED FOR CERTAIN CATTLE AND OTHER LIVESTOCK WHICH HE OWNED. AS MORTGAGES OF CERTAIN CATTLE YOU EXECUTED A NONDISTURBANCE AGREEMENT AGREEING NOT TO DISTURB THE BORROWER IN PEACEFUL POSSESSION OF THE ANIMALS UNTIL JANUARY 1, 1936.

ON NOVEMBER 25, 1935, THERE WAS RECEIVED IN THE EMERGENCY CROP AND FEED LOAN OFFICE, WICHITA, KANS., A CASHIER'S CHECK IN THE AMOUNT OF $45 TO APPLY ON WESTER'S LOAN ACCOUNT. THE AMOUNT OF THE CHECK WAS CREDITED TO HIS ACCOUNT AND DEPOSITED AND COVERED INTO THE TREASURY OF THE UNITED STATES AS A LOAN COLLECTION. THEREAFTER, THE BORROWER IN AFFIDAVITS, DATED FEBRUARY 24 AND APRIL 11, 1936, STATED THAT THE AMOUNT OF $45 REPRESENTED PART OF THE PROCEEDS OF SOME OF HIS CATTLE WHICH HAD BEEN SOLD DURING THE FALL OF 1935, THAT YOU HELD A FIRST LIEN ON SUCH CATTLE, AND THAT THE REMITTANCE HAD BEEN MADE TO THE GOVERNMENT BECAUSE OF HIS MISUNDERSTANDING OF THE NATURE OF THE ABOVE MENTIONED NONDISTURBANCE AGREEMENT, WHICH HE BELIEVED AT THE TIME OF ITS EXECUTION BY YOU--- AND UNTIL AFTER HE MADE THE REMITTANCE TO THE GOVERNMENT--- TO BE A SUBORDINATION AGREEMENT.

SO FAR AS THE RECORD SHOWS, THE GOVERNMENT NOT ONLY HAD NOTHING TO DO WITH AND HAD NO KNOWLEDGE OF THE SALE OF WESTER'S CATTLE, BUT IT ACCEPTED IN GOOD FAITH AND CREDITED TO THE BORROWER'S LOAN ACCOUNT THE REMITTANCE RECEIVED NOVEMBER 25, 1935, WITHOUT ANY KNOWLEDGE THAT, AS LATER ALLEGED, THE MONEY HAD BEEN OBTAINED BY SUCH SALE; AND THE GOVERNMENT WAS NOT RESPONSIBLE IN ANY WAY FOR WESTER'S ALLEGED MISUNDERSTANDING OF THE NATURE OF THE NONDISTURBANCE AGREEMENT EXECUTED BY YOU.

FURTHERMORE, IT DOES NOT APPEAR THAT THE EXECUTION OF THE NONDISTURBANCE AGREEMENT DEPRIVED YOU OF ANY RIGHTS YOU MAY HAVE HAD UNDER YOUR MORTGAGE TO INTERVENE BEFORE THE SALE OR BEFORE THE DISTRIBUTION OF THE PROCEEDS TO PROTECT THE MORTGAGE LIEN WHICH YOU HELD ON THE CATTLE. YOU DID NOT SO INTERVENE, AND YOUR LIEN COULD NOT ATTACH TO THE FUNDS NOW IN THE TREASURY OF THE UNITED STATES, AND WHICH HAD BEEN RECEIVED AND DEPOSITED WITHOUT NOTICE EVEN IF IT COULD BE ESTABLISHED CONCLUSIVELY THAT SUCH FUNDS WERE DERIVED FROM THE SALE OF THE MORTGAGED CATTLE.

THERE WAS NO ERROR ON THE PART OF THE GOVERNMENT IN ACCEPTING THE REMITTANCE OF $45, THE ONLY ERROR CLAIMED BEING ADMITTEDLY ON THE PART OF WESTER AND CONSISTING OF A MISUNDERSTANDING ON HIS PART AS TO THE EFFECT OF THE NONDISTURBANCE AGREEMENT.

UNDER THE FACTS AND CIRCUMSTANCES ABOVE SET FORTH, AND REGARDLESS OF ANY RIGHTS YOU MAY HAVE HAD AS AGAINST WESTER OR THE PURCHASER OF THE CATTLE, IT WOULD APPEAR THAT YOU HAVE NO LEGAL CLAIM AGAINST THE UNITED STATES ARISING OUT OF THE SALE OF THE CATTLE AND THE PAYMENT TO THE GOVERNMENT WITHOUT SATISFACTION OF YOUR MORTGAGE.

ACCORDINGLY, THE SETTLEMENT OF JULY 31, 1936, DISALLOWING YOUR CLAIM, MUST BE AND IS SUSTAINED.