A-88485, AUGUST 31, 1937, 17 COMP. GEN. 205

A-88485: Aug 31, 1937

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1937: I HAVE YOUR LETTER OF AUGUST 18. 000.00 WAS MADE TO JEANNIE E. THE LOAN BEARS INTEREST AT THE RATE OF 5 1/2 PERCENT PER ANNUM AND WAS SECURED BY A CROP LIEN AND CHATTEL MORTGAGE COVERING ALL CROPS GROWING OR TO BE GROWN. EACH SUCCEEDING YEAR THEREAFTER UNTIL THE INDEBTEDNESS SECURED IS REPAID IN FULL. THESE MORTGAGES HAVE BEEN DULY PLACED OF RECORD. THE FIRST TWO NOTES HAVE BEEN PAID IN FULL. THERE IS STILL DUE $688.49 ON THE PRINCIPAL OF THE THIRD NOTE AND THE FULL AMOUNT OF $800.00 ON THE PRINCIPAL OF THE FOURTH NOTE. 000.00 ON THE REAL PROPERTY LATER MORTGAGED TO SECURE THE LOAN AND DISCLOSES THAT AT THAT TIME A FIRST MORTGAGE ON THE PROPERTY WAS OUTSTANDING IN FAVOR OF MRS. THE NOTICE WAS APPARENTLY ISSUED IN ACCORDANCE WITH SECTION 999 (136-145).

A-88485, AUGUST 31, 1937, 17 COMP. GEN. 205

APPROPRIATIONS - FARM CREDIT ADMINISTRATION - AVAILABILITY FOR PAYMENT OF STATE TAXES ON LAND MORTGAGED TO UNITED STATES THE PROVISION IN THE FARM CREDIT ADMINISTRATION APPROPRIATION ACT OF 1938, 50 STAT. 434, RELATING TO EXPENDITURES FOR "COLLECTION OF MONEYS DUE THE UNITED STATES ON ACCOUNT OF LOANS MADE UNDER THE PROVISIONS OF" CERTAIN STATUTES, DOES NOT AUTHORIZE PAYMENT OF STATE TAXES ON LAND COVERED BY SECOND MORTGAGE EXECUTED IN FAVOR OF THE GOVERNMENT TO SECURE LOAN, NOTWITHSTANDING A STATE STATUTE PERMITS A MORTGAGEE TO ADVANCE TAXES DUE AND UNPAID AND GIVES PRIORITY IN FORECLOSURE PROCEEDINGS FOR THE AMOUNT OF THE TAXES SO ADVANCED, THERE APPEARING NO IMMEDIATE OR DIRECT CONNECTION BETWEEN SUCH PAYMENT OF TAXES AND THE ACTUAL "COLLECTION OF MONEYS DUE THE UNITED STATES ON ACCOUNT OF LOANS.'

ACTING COMPTROLLER GENERAL ELLIOTT TO THE GOVERNOR, FARM CREDIT ADMINISTRATION, AUGUST 31, 1937:

I HAVE YOUR LETTER OF AUGUST 18, 1937, AS FOLLOWS:

UNDER THE ACT OF CONGRESS APPROVED JUNE 19, 1934 (48 STAT. 1056), A LOAN IN THE AMOUNT OF $2,000.00 WAS MADE TO JEANNIE E. AND J. T. STALLINGS, BOX 283, WINTER HAVEN, POLK COUNTY, FLORIDA, EVIDENCED BY FOUR PROMISSORY NOTES, ONE FOR $100.00 DUE APRIL 1, 1936; ONE FOR $400.00 DUE APRIL 1, 1937; AND ONE FOR $700.00 DUE APRIL 1, 1938; AND ONE FOR $800.00 DUE APRIL 1, 1939. THE LOAN BEARS INTEREST AT THE RATE OF 5 1/2 PERCENT PER ANNUM AND WAS SECURED BY A CROP LIEN AND CHATTEL MORTGAGE COVERING ALL CROPS GROWING OR TO BE GROWN, PLANTED, OR HARVESTED BY THE BORROWERS, THEIR AGENT OR AGENTS, IN THE YEARS 1935-1939, INCLUSIVE, AND EACH SUCCEEDING YEAR THEREAFTER UNTIL THE INDEBTEDNESS SECURED IS REPAID IN FULL, UPON THE FOLLOWING DESCRIBED LANDS IN LAKE COUNTY, LORIDA:

W 1/2 OF NE 1/4 OF SE 1/4; NW 1/4 OF NE 1/4 OF SE 1/4;

EAST 2/3 OF WEST 3/4 OF SE 1/4 OF SE 1/4; OF E 1/4 OF

NW 1/4 OF SE 1/4 ALL IN SECTION 8, TOWNSHIP 19 SOUTH,

RANGE 24 EAST;

AND BY A SECOND MORTGAGE ON THE LAND ITSELF. THESE MORTGAGES HAVE BEEN DULY PLACED OF RECORD.

THE FIRST TWO NOTES HAVE BEEN PAID IN FULL, AND THE AMOUNT OF $11.51 HAS BEEN PAID ON THE PRINCIPAL OF THE THIRD NOTE. THERE IS STILL DUE $688.49 ON THE PRINCIPAL OF THE THIRD NOTE AND THE FULL AMOUNT OF $800.00 ON THE PRINCIPAL OF THE FOURTH NOTE, WITH INTEREST ON BOTH NOTES AT THE RATE OF 5 1/2 PERCENT PER ANNUM FROM JUNE 25, 1935, UNTIL PAID.

NEITHER THE REAL ESTATE MORTGAGE NOR THE CROP LIEN AND CHATTEL MORTGAGE MAKES SPECIFIC PROVISION FOR THE ADVANCEMENT BY THE GOVERNMENT OF TAXES DUE AND UNPAID ON THE PROPERTY AND THE ADDING OF SAME TO THE LOAN INDEBTEDNESS. HOWEVER, SECTION 5750, COMPILED GENERAL LAWS OF FLORIDA, 1927, PERMITS A MORTGAGEE TO ADVANCE TAXES DUE AND UNPAID ON THE MORTGAGED PROPERTY AND GIVES PRIORITY IN FORECLOSURE PROCEEDINGS FOR THE AMOUNT OF THE TAXES SO ADVANCED.

THE LOAN APPLICATION SETS FORTH THAT THE APPLICANTS PLACED A VALUE OF $50,000.00 ON THE REAL PROPERTY LATER MORTGAGED TO SECURE THE LOAN AND DISCLOSES THAT AT THAT TIME A FIRST MORTGAGE ON THE PROPERTY WAS OUTSTANDING IN FAVOR OF MRS. IDA M. BOTTOMS, OF TEXARKANA, ARKANSAS, IN THE AMOUNT OF $26,500.00.

UNDER DATE OF JULY 14, 1937, GEORGE J. DYKES, A CLERK OF THE CIRCUIT COURT OF LAKE COUNTY, FLORIDA, ISSUED NOTICE OF APPLICATION FOR TAX DEED, SETTING FORTH THAT C. A. PORTER, HOLDER OF TAX CERTIFICATE ISSUED ON THE 2D DAY OF JULY 1934, EMBRACING THE MORTGAGED PROPERTY, HAS FILED SAID CERTIFICATE AND APPLIED FOR A TAX DEED TO BE ISSUED THEREON. THE NOTICE WAS APPARENTLY ISSUED IN ACCORDANCE WITH SECTION 999 (136-145), COMPILED GENERAL LAWS OF FLORIDA, PERMANENT SUPPLEMENT, VOLUME 1, AND SETS FORTH THAT UNLESS SAID TAX CERTIFICATE SHALL BE REDEEMED ACCORDING TO LAW BY THE PAYMENT TO HIS OFFICE OF THE SUM OF $914.07 ON OR BEFORE 11:00 A.M., SEPTEMBER 6, 1937, THE PROPERTY DESCRIBED THEREIN SHALL BE SOLD TO THE HIGHEST BIDDER AT THE COURT HOUSE DOOR ON THAT DATE.

THIS OFFICE HAS NO INFORMATION AS TO WHETHER OR NOT THE MORTGAGOR OR THE FIRST MORTGAGEE INTEND TO REDEEM THE TAXES BEFORE THE TIME FIXED FOR THE SALE AND DESIRES TO DETERMINE DEFINITELY AS FAR IN ADVANCE OF SEPTEMBER 6 NEXT AS POSSIBLE JUST WHAT ACTION IT MAY PROPERLY TAKE TO PROTECT THE INTERESTS OF THE UNITED STATES IN THE EVENT THERE IS NO REDEMPTION FROM EITHER OF THOSE SOURCES.

IN VIEW OF THE SPLENDID RECORD OF PAYMENT MADE ON THIS INDEBTEDNESS BY THE BORROWERS, IT APPEARS THAT IF THEY ARE PERMITTED TO RETAIN POSSESSION OF THE PROPERTY, THE BALANCE OF THE LOAN INDEBTEDNESS TO THE UNITED STATES WILL BE PAID PROMPTLY AND THAT IF THE TAXES WERE TO BE REDEEMED BY THE UNITED STATES, THE RECOVERY OF THE AMOUNT THUS PAID BY THE UNITED STATES WOULD BE ASSURED, TAKING INTO CONSIDERATION THE FACT THAT BY STATUTE IT WILL BECOME A FIRST LIEN ON THE REAL PROPERTY, THE VALUE OF WHICH IS MANY TIMES IN EXCESS OF THE AMOUNT INVOLVED.

THE APPROPRIATION "SALARIES AND EXPENSES, FARM CREDIT ADMINISTRATION, 1938," PROVIDES SPECIFICALLY FOR ITS USE FOR THE COLLECTION OF MONIES DUE THE UNITED STATES ON ACCOUNT OF LOANS, SPECIFIC MENTION BEING MADE OF LOANS MADE UNDER THE ACT OF JUNE 19, 1934. IT WOULD APPEAR THAT THIS BROAD AUTHORITY WOULD PERMIT THE USE OF THIS APPROPRIATION FOR THE REDEMPTION OF TAXES ON THIS PROPERTY IN THE EVENT PRIOR TO THE DATE FIXED FOR THE SALE, THE MORTGAGOR OR THE FIRST MORTGAGEE DOES NOT REDEEM. HOWEVER, NOTICE HAS BEEN TAKEN OF YOUR DECISION OF MAY 25, 1937 (16 COMP. GEN. 1034), ADDRESSED TO THE ADMINISTRATOR, FEDERAL HOUSING ADMINISTRATION, WHICH FINDS THAT FEDERAL HOUSING ADMINISTRATION FUNDS ARE NOT AVAILABLE FOR THE PURCHASE OR DISCHARGE OF PRIOR LIENS UPON REAL OR PERSONAL PROPERTY ACQUIRED BY ASSIGNMENT FROM LENDING INSTITUTIONS UPON PAYMENT TO SUCH INSTITUTIONS OF INSURANCE ON DEFAULTED OBLIGATIONS SO SECURED. HOWEVER, IN VIEW OF THE POSSIBILITY THAT IT MAY BE DECIDEDLY TO THE BEST INTERESTS OF THE UNITED STATES TO REDEEM THESE TAXES, I SHALL APPRECIATE YOUR ADVANCE OPINION AS TO WHETHER OR NOT THE APPROPRIATION "SALARIES AND EXPENSES, FARM CREDIT ADMINISTRATION, 1938," MAY PROPERLY BE USED FOR THAT PURPOSE IN THE EVENT REDEMPTION IS NOT MADE BY OTHER PARTIES IN INTEREST ON OR BEFORE SEPTEMBER 6.

IN VIEW OF THE VERY SHORT TIME AVAILABLE BEFORE THE DATE FIXED FOR THE SALE, ANY ACTION YOU MAY BE ABLE TO TAKE TO EXPEDITE AN ANSWER TO THIS LETTER WILL BE GREATLY APPRECIATED.

PUBLIC, 173, DATED JUNE 29, 1937, 50 STAT. 395, 434, MAKING APPROPRIATIONS FOR THE DEPARTMENT OF AGRICULTURE AND FOR THE FARM CREDIT ADMINISTRATION FOR THE FISCAL YEAR 1938, PROVIDES, SO FAR AS HERE MATERIAL, FOR:

* * * COLLECTION OF MONEYS DUE THE UNITED STATES ON ACCOUNT OF LOANS MADE UNDER THE PROVISIONS OF THE ACTS OF * * * JUNE 19, 1934 (48 STAT. 1021) *

WHILE THE PAYMENT OF THE TAXES IN QUESTION MIGHT RESULT TO THE ADVANTAGE OF THE GOVERNMENT, THE QUESTION YOU PRESENT IS WHETHER SAID PAYMENT IS SUCH AS TO CONSTITUTE, WITHIN THE CONTEMPLATION OF THE APPROPRIATION ACT, AN EXPENSE OF "COLLECTION OF MONEYS DUE THE UNITED STATES ON ACCOUNT OF LOANS MADE UNDER THE PROVISIONS" OF THE LENDING ACTS. IT CANNOT BE SAID WITH CERTAINTY THAT THE USE OF THE FUNDS FOR THE REDEMPTION OF THE TAXES WOULD PER SE RESULT IN THE ACTUAL COLLECTION OF THE LOANS. SUCH A RESULT IS TOO CONJECTURAL AND SPECULATIVE TO ANTICIPATE. COMPARE A-86913 DATED JUNE 24, 1937, 16 COMP. GEN. 1110, TO YOU. SINCE THERE APPEARS NO IMMEDIATE OR DIRECT CONNECTION BETWEEN THE CONTEMPLATED EXPENDITURE AND THE ACTUAL "COLLECTION OF MONEYS DUE THE UNITED STATES ON ACCOUNT OF LOANS" MADE UNDER THE SEVERAL LENDING ACTS IT MUST BE HELD--- FOLLOWING THE PRINCIPLE STATED IN MY DECISION OF MAY 25, 1937, 16 COMP. GEN. 1034--- THAT THE SALARIES AND EXPENSES APPROPRIATION OF YOUR ADMINISTRATION IS NOT AVAILABLE FOR THE PAYMENT OF THE TAXES ON THE INVOLVED PROPERTY.