A-82302, AUGUST 23, 1937, 17 COMP. GEN. 180

A-82302: Aug 23, 1937

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AUTHORIZES ISSUANCE OF SUCH CERTIFICATE ONLY WHILE THE CONDITIONS STIPULATED IN THE ACT ARE IN EXISTENCE AND DOES NOT INCLUDE AUTHORITY FOR ISSUANCE WHERE THE APPLICANT FOR THE RELEASE BECOMES THE OWNER OF THE PROPERTY BEFORE SUCH ISSUANCE BY VIRTUE OF A FORECLOSURE SALE UNDER A SENIOR LIEN. 1937: REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 10. THE REQUEST FOR A RELEASE WAS MADE PURSUANT TO SECTION 5 OF THE ACT OF MARCH 4. AS FOLLOWS: IF ANY PERSON SHALL HAVE A LIEN UPON ANY REAL OR PERSONAL PROPERTY. DULY FILED OF RECORD IN THE JURISDICTION IN WHICH THE PROPERTY IS LOCATED. TO HAVE THE SAME EXTINGUISHED. THE FEDERAL FARM MORTGAGE CORPORATION'S REQUEST FOR A CERTIFICATE OF RELEASE WAS NOT TRANSMITTED TO THIS OFFICE WITH YOUR LETTER OF DECEMBER 10.

A-82302, AUGUST 23, 1937, 17 COMP. GEN. 180

LIENS - CERTIFICATES OF RELEASE - GENERAL ACCOUNTING OFFICE AUTHORITY THE ACT OF MARCH 4, 1931, 46 STAT. 1529, WHICH PROVIDES THAT THE COMPTROLLER GENERAL MAY ISSUE A CERTIFICATE OF RELEASE OF A GOVERNMENT JUNIOR LIEN ON PROPERTY, UNDER CERTAIN CONDITIONS, AUTHORIZES ISSUANCE OF SUCH CERTIFICATE ONLY WHILE THE CONDITIONS STIPULATED IN THE ACT ARE IN EXISTENCE AND DOES NOT INCLUDE AUTHORITY FOR ISSUANCE WHERE THE APPLICANT FOR THE RELEASE BECOMES THE OWNER OF THE PROPERTY BEFORE SUCH ISSUANCE BY VIRTUE OF A FORECLOSURE SALE UNDER A SENIOR LIEN.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE GOVERNOR, FARM CREDIT ADMINISTRATION, AUGUST 23, 1937:

REFERENCE IS MADE TO YOUR LETTERS OF DECEMBER 10, 1936, JANUARY 29, APRIL 22, MAY 11, AND JULY 16, 1937, CONCERNING THE REQUEST OF THE FEDERAL FARM MORTGAGE CORPORATION FOR A CERTIFICATE OF RELEASE OF THE GOVERNMENT'S JUNIOR MORTGAGE LIENS ON CERTAIN LAND OF THOMAS J. BARNES, JR., ET ., IN LEE COUNTY, FLA. THE REQUEST FOR A RELEASE WAS MADE PURSUANT TO SECTION 5 OF THE ACT OF MARCH 4, 1931, 46 STAT. 1529 (SEC. 905, TITLE 28, UNITED STATES CODE), AS FOLLOWS:

IF ANY PERSON SHALL HAVE A LIEN UPON ANY REAL OR PERSONAL PROPERTY, DULY FILED OF RECORD IN THE JURISDICTION IN WHICH THE PROPERTY IS LOCATED, AND A JUNIOR LIEN (OTHER THAN A LIEN FOR ANY TAX) IN FAVOR OF THE UNITED STATES ATTACHES TO SUCH PROPERTY, SUCH PERSON MAY MAKE A WRITTEN REQUEST TO THE OFFICER OF THE UNITED STATES CHARGED WITH THE ADMINISTRATION OF THE LAWS IN RESPECT OF WHICH THE LIEN OF THE UNITED STATES ARISES, TO HAVE THE SAME EXTINGUISHED. IF, AFTER APPROPRIATE INVESTIGATION, IT APPEARS TO SUCH OFFICER THAT THE PROCEEDS FROM THE SALE OF THE PROPERTY WOULD BE INSUFFICIENT TO SATISFY, IN WHOLE OR IN PART, THE LIEN OF THE UNITED STATES, OR THAT THE CLAIM OF THE UNITED STATES HAS BEEN SATISFIED, OR BY LAPSE OF TIME OR OTHERWISE HAS BECOME UNENFORCEABLE, SUCH OFFICER SHALL SO REPORT TO THE COMPTROLLER GENERAL WHO THEREUPON MAY ISSUE A CERTIFICATE OF RELEASE, WHICH SHALL OPERATE TO RELEASE THE PROPERTY FROM SUCH LIEN.

THE FEDERAL FARM MORTGAGE CORPORATION'S REQUEST FOR A CERTIFICATE OF RELEASE WAS NOT TRANSMITTED TO THIS OFFICE WITH YOUR LETTER OF DECEMBER 10, 1936, REPORTING ON THE MATTER, AND IT APPEARS THAT PRIOR TO THE RECEIPT OF SUCH REQUEST--- TRANSMITTED WITH YOUR LETTER OF JANUARY 29, 1937--- THE PROPERTY IN QUESTION WAS BOUGHT IN BY THE SAID FEDERAL FARM MORTGAGE CORPORATION AT A JUDICIAL SALE JANUARY 4, 1937, IN A FORECLOSURE SUIT BROUGHT BY THE CORPORATION ON ITS SENIOR MORTGAGE. IT APPEARS FURTHER THAT THE SALE TO THE CORPORATION WAS CONFIRMED BY THE COURT ON JANUARY 6, 1937, AND THAT TITLE TO THE LAND IS NOW VESTED IN THE SAID FEDERAL FARM MORTGAGE CORPORATION. SUPPOSEDLY THE GOVERNMENT'S JUNIOR LIENS ON THE LAND WERE EXTINGUISHED BY THE FORECLOSURE SALE, BUT, NEVERTHELESS, IT APPEARS THAT A CERTIFICATE OF RELEASE OF SUCH LIENS IS STILL SOUGHT BY THE CORPORATION. THE PURPOSE IS APPARENTLY TO TOLL ANY RIGHT OF REDEMPTION WHICH THE GOVERNMENT MAY HAVE UNDER SECTION 4 OF THE SAID ACT OF MARCH 4, 1931, 46 STAT. 1529, IN PART AS FOLLOWS:

* * * AND PROVIDED FURTHER, THAT WHERE A SALE IS MADE TO SATISFY A LIEN PRIOR TO THAT OF THE UNITED STATES, THE UNITED STATES SHALL HAVE ONE YEAR FROM THE DATE OF SALE WITHIN WHICH TO REDEEM. * * *

YOUR LETTER OF APRIL 22, 1937, RESPECTING THE MATTER OF ISSUING A CERTIFICATE OF RELEASE UNDER SECTION 5 OF THE ACT, QUOTED SUPRA, WHERE THE APPLICANT HAS BECOME THE OWNER OF THE PROPERTY, OR IS NO LONGER A LIENOR, IS AS FOLLOWS:

RE: RELEASE OF LIENS ON PROPERTY, THOMAS J. BARNES, JR., ET AL., LEE COUNTY, FLORIDA.

I AM ADVISED THAT A REPRESENTATIVE OF YOUR OFFICE RECENTLY TELEPHONED TO OUR LEGAL DIVISION IN REGARD TO THE ABOVE ENTITLED CASE, INQUIRING WHETHER OR NOT A SALE HAD ACTUALLY BEEN MADE UNDER THE DECREE IN FORECLOSURE.

THE INQUIRY WAS MADE IN ORDER TO ENABLE YOUR OFFICE TO DETERMINE WHETHER THE FEDERAL FARM MORTGAGE CORPORATION WAS STILL A LIENOR OR WHETHER IT HAD LOST THAT STATUS PENDING THE CONSIDERATION BY YOUR OFFICE OF THE APPLICATION FOR RELEASE OF LIEN MADE TO YOU ON DECEMBER 10, 1936. THIS OFFICE IMMEDIATELY COMMUNICATED WITH THE GENERAL COUNSEL OF THE FARM CREDIT ADMINISTRATION AT COLUMBIA, SOUTH CAROLINA, REQUESTING THE DESIRED INFORMATION, AND RECENTLY WE HAVE RECEIVED A REPLY INDICATING THAT THE PROPERTY HAS BEEN SOLD, AND THAT UNDER THE LAWS OF THE STATE OF FLORIDA, A FORECLOSING MORTGAGEE CANNOT UNDER ANY THEORY BE REGARDED AS A LIENOR SUBSEQUENT TO SALE.

I SHOULD LIKE TO REQUEST YOUR CONSIDERATION OF THE PROVISIONS OF SECTION 905, CHAPTER 190, TITLE 28 OF THE U.S.C. AND YOUR CONSTRUCTION OF ITS PROVISIONS IN CONNECTION WITH A CASE OF THIS CHARACTER. THE GENERAL COUNSEL OF THE FARM CREDIT ADMINISTRATION HAS STATED IT TO BE HIS VIEW THAT THE LANGUAGE OF THIS SECTION INDICATES THAT IF A PERSON HAS A LIEN UPON ANY REAL OR PERSONAL PROPERTY AND MAKES A WRITTEN REQUEST FOR THE EXTINGUISHMENT OF A JUNIOR LIEN HELD BY THE UNITED STATES, THE CONDITIONS OF THE SECTION IN RESPECT TO THE STATUS OF THE APPLICANT ARE DETERMINED AT THE TIME THE REQUEST IS MADE; IN OTHER WORDS, IF THE APPLICANT IS A LIENOR AT THE TIME THE REQUEST FOR THE RELEASE OF THE GOVERNMENT'S JUNIOR LIEN IS MADE THE CONDITIONS OF THE STATUTE ARE SATISFIED AND A SUBSEQUENT CHANGE IN THE STATUS OF THE APPLICANT BY REASON OF THE PROGRESS OF A FORECLOSURE SUIT AND THE FACT THAT A JUDICIAL SALE HAS BEEN HELD IN THE COURSE OF THE FORECLOSURE SHOULD NOT MILITATE AGAINST THE RIGHT TO HAVE THE APPLICATION CONSIDERED. IT IS SUBMITTED THAT THIS CONSTRUCTION IS A FAIR AND REASONABLE ONE AND SEEMS TO BE IN ACCORD WITH THE LETTER AND IS NOT CONTRARY TO THE INTENT OF THE STATUTE.

FURTHERMORE, IF A SALE IS HELD PENDING THE CONSIDERATION OF THE APPLICATION, IT SHOULD BE LESS DIFFICULT TO DETERMINE WHETHER ONE OF THE CONDITIONS PRECEDENT CONTAINED IN THE STATUTE HAS BEEN MET. THE CONDITION TO WHICH I REFER IS THE ONE CONTAINED IN THE FIRST PART OF THE LAST SENTENCE OF SECTION 905, TO THE EFFECT THAT "IF AFTER APPROPRIATE INVESTIGATION, IT APPEARS TO SUCH OFFICER THAT THE PROCEEDS FROM THE SALE OF THE PROPERTY WOULD BE INSUFFICIENT TO SATISFY, IN WHOLE OR IN PART, THE LIEN OF THE UNITED STATES, * * * SUCH OFFICER SHALL SO REPORT TO THE COMPTROLLER GENERAL WHO THEREUPON MAY ISSUE A CERTIFICATE OF RELEASE * *

IT IS THE OPINION OF OUR GENERAL COUNSEL THAT AFTER SALE IT SHOULD BE TAKEN TO BE CONCLUSIVELY ESTABLISHED WHETHER OR NOT THE PROCEEDS OF THE SALE ARE INSUFFICIENT TO SATISFY IN WHOLE OR IN PART THE LIEN OF THE UNITED STATES.

WE ARE NOT INFORMED AS TO THE AMOUNT BID ON THE FORECLOSURE SALE IN THE ABOVE ENTITLED CASE, BUT WE ARE COMMUNICATING WITH THE GENERAL COUNSEL OF THE FARM CREDIT ADMINISTRATION AT COLUMBIA TO ASCERTAIN THIS FACT, AND WILL ADVISE YOU IN A SUPPLEMENTAL COMMUNICATION AS SOON AS WORD HAS BEEN RECEIVED. IN THE MEANTIME, IT WILL BE APPRECIATED IF YOUR OFFICE WILL GIVE CONSIDERATION TO THE CONSTRUCTION OF THE PROVISIONS OF SECTION 905 AND ADVISE US WHAT CONCLUSION IS REACHED AS TO THE EFFECT UPON AN APPLICATION FOR A RELEASE OF A SALE OF THE PROPERTY IN FORECLOSURE BEFORE A DETERMINATION IN REGARD TO THE RELEASE HAS BEEN MADE BY YOUR OFFICE.

THIS OFFICE HAS NO AUTHORITY, OF COURSE, TO ISSUE A CERTIFICATE OF RELEASE OF LIENS OF THE UNITED STATES EXCEPT UPON THE CONDITIONS EXPRESSLY STIPULATED IN THE STATUTE. THE STATUTE DOES NOT VEST IN APPLICANTS A RIGHT TO A CERTIFICATE OF RELEASE BUT PROVIDES THAT THE COMPTROLLER GENERAL "MAY" ISSUE SUCH A CERTIFICATE OF RELEASE UPON A SHOWING OF CERTAIN CONDITIONS. THE STATUTE WOULD SEEM CLEARLY TO CONTEMPLATE THAT SUCH CONDITIONS WILL CONTINUE TO EXIST DOWN TO THE TIME THE CERTIFICATE OF RELEASE IS ISSUED, AND IT MAY NOT BE VIEWED AS AUTHORIZING A RELEASE WHERE THE STIPULATED CONDITIONS CHANGE BEFORE A RELEASE IS ISSUED, SO THAT THE SITUATION WHICH THE STATUTE WAS INTENDED TO REMEDY NO LONGER EXISTS.

THE CONDITIONS EXPRESSLY STIPULATED IN THE STATUTE ARE, INTER ALIA, THAT THE APPLICANT "SHALL HAVE A LIEN" UPON THE PROPERTY, DULY FILED OF RECORD, AND THAT "A JUNIOR LIEN * * * IN FAVOR OF THE UNITED STATES ATTACHES TO SUCH PROPERTY.' WHERE, AS IN THE PRESENT CASE, THE APPLICANT BECOMES THE OWNER OF THE PROPERTY BEFORE THE ISSUANCE OF THE RELEASE, BY VIRTUE OF A FORECLOSURE SALE UNDER A SENIOR LIEN, THE APPLICANT NO LONGER HAS A LIEN UPON THE PROPERTY, BUT IS THE OWNER, AND, GENERALLY, ANY JUNIOR LIENS OF THE UNITED STATES ARE EXTINGUISHED BY THE FORECLOSURE UNDER THE SENIOR LIEN, AND NO LONGER ATTACH TO THE PROPERTY. IN THE PRESENT CASE THE CONDITIONS STIPULATED IN THE STATUTE NO LONGER EXIST, AND, IN THE ABSENCE OF SUCH CONDITIONS, THIS OFFICE IS WITHOUT AUTHORITY TO ISSUE A CERTIFICATE OF RELEASE.

FOR THESE REASONS, THE REQUEST OF THE FEDERAL FARM MORTGAGE CORPORATION FOR A CERTIFICATE OF RELEASE IN THIS CASE MUST BE, AND IS, DENIED.