A-89979, DECEMBER 22, 1937, 17 COMP. GEN. 526

A-89979: Dec 22, 1937

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INTEREST - DISTINCTION AS TO CLAIMS BY AND AGAINST THE UNITED STATES UNDER THE GENERAL RULE THAT THE UNITED STATES IS NOT LIABLE FOR INTEREST ON ITS OBLIGATIONS EXCEPT WHEN INTEREST IS STIPULATED FOR IN LEGAL AND PROPER CONTRACTS OR WHERE THE ALLOWANCE OF INTEREST IS SPECIFICALLY DIRECTED BY STATUTE. AMOUNT OTHERWISE PAYABLE TO CLAIMANT UNDER CONTRACTS WITH THE AGRICULTURAL ADJUSTMENT ADMINISTRATION WAS PROPERLY APPLIED WITHOUT ANY CREDIT FOR INTEREST THEREON. WAS APPLIED IN PARTIAL LIQUIDATION OF YOUR INDEBTEDNESS TO THE UNITED STATES (FARM CREDIT ADMINISTRATION) ON A SEED. IT WAS REPORTED THAT THERE WAS THEN DUE AND PAYABLE A PRINCIPAL SUM OF $335.83. IT WAS REQUESTED THAT COLLECTION BE MADE BY APPLYING AGAINST YOUR INDEBTEDNESS AMOUNTS OTHERWISE PAYABLE TO YOU IN CONNECTION WITH THE AGRICULTURAL ADJUSTMENT ADMINISTRATION PROGRAM.

A-89979, DECEMBER 22, 1937, 17 COMP. GEN. 526

INTEREST - DISTINCTION AS TO CLAIMS BY AND AGAINST THE UNITED STATES UNDER THE GENERAL RULE THAT THE UNITED STATES IS NOT LIABLE FOR INTEREST ON ITS OBLIGATIONS EXCEPT WHEN INTEREST IS STIPULATED FOR IN LEGAL AND PROPER CONTRACTS OR WHERE THE ALLOWANCE OF INTEREST IS SPECIFICALLY DIRECTED BY STATUTE, AMOUNT OTHERWISE PAYABLE TO CLAIMANT UNDER CONTRACTS WITH THE AGRICULTURAL ADJUSTMENT ADMINISTRATION WAS PROPERLY APPLIED WITHOUT ANY CREDIT FOR INTEREST THEREON, AGAINST HIS INDEBTEDNESS TO THE GOVERNMENT ON ACCOUNT OF PRINCIPAL AND INTEREST EXPRESSLY PROVIDED FOR BY A FARM CREDIT ADMINISTRATION LOAN AGREEMENT, AND DELAY BY THE GOVERNMENT IN EFFECTING COLLECTION OF THE LOAN DID NOT ENTITLE CLAIMANT TO INTEREST ON AMOUNTS OTHERWISE PAYABLE TO HIM, OR RELIEVE HIM OF THE CONTRACTUAL OBLIGATION TO PAY INTEREST UNTIL REPAYMENT OF THE LOAN BY SET-OFF OR OTHERWISE.

ACTING COMPTROLLER GENERAL ELLIOTT TO OLIVER S. OGLE, DECEMBER 22, 1937:

YOUR LETTER OF OCTOBER 7, 1937, REQUESTS REVIEW OF SETTLEMENT NO. 0454824, DATED JULY 22, 1937, WHEREBY $302.22, OTHERWISE PAYABLE TO YOU UNDER 1935 CORN-HOG CONTRACT NO. 32-077-2181, 1935 WHEAT CONTRACT NO. 32- 077-176, AND 1936 WHEAT CONTRACT NO. 32-077-91, WAS APPLIED IN PARTIAL LIQUIDATION OF YOUR INDEBTEDNESS TO THE UNITED STATES (FARM CREDIT ADMINISTRATION) ON A SEED, FEED, AND FERTILIZER LOAN MADE UNDER THE ACT OF MARCH 3, 1930, 46 STAT. 78, 79, AS EVIDENCED BY YOUR PROMISSORY NOTE DATED APRIL 16, 1930, IN THE AMOUNT OF $440, PAYABLE ON OR BEFORE OCTOBER 1, 1930, WITH INTEREST AT THE RATE OF 5 PERCENT PER ANNUM UNTIL PAID, AND SECURED BY A MORTGAGE ON ALL CROPS GROWING OR TO BE GROWN AND PRODUCED DURING THE YEAR 1930 UPON CERTAIN LANDS DESCRIBED THEREIN.

UNDER DATE OF OCTOBER 29, 1935, THE FARM CREDIT ADMINISTRATION REPORTED TO THIS OFFICE THAT IT HAD BEEN UNABLE TO COLLECT FROM THE MORTGAGED CROPS THE FULL AMOUNT OF THE LOAN INDEBTEDNESS AND THAT ALL CROPS COVERED BY THE MORTGAGE GIVEN TO SECURE THE LOAN HAD BEEN DISPOSED OF. IT WAS REPORTED THAT THERE WAS THEN DUE AND PAYABLE A PRINCIPAL SUM OF $335.83, WITH SIMPLE INTEREST AT THE RATE OF 5 PERCENT PER ANNUM FROM MAY 19, 1932, UNTIL PAID, AND IT WAS REQUESTED THAT COLLECTION BE MADE BY APPLYING AGAINST YOUR INDEBTEDNESS AMOUNTS OTHERWISE PAYABLE TO YOU IN CONNECTION WITH THE AGRICULTURAL ADJUSTMENT ADMINISTRATION PROGRAM. TO EFFECT COLLECTION OF THIS REPORTED INDEBTEDNESS THE AGRICULTURAL ADJUSTMENT ADMINISTRATION WAS REQUESTED, UNDER DATE OF NOVEMBER 11, 1935, TO TRANSMIT TO THIS OFFICE VOUCHERS OR CHECKS COVERING PAYMENTS OTHERWISE DUE YOU. NOVEMBER 25, 1935, THE FARM CREDIT ADMINISTRATION REPORTED THAT A PAYMENT ON YOUR NOTE HAD REDUCED YOUR INDEBTEDNESS TO $265.64, PLUS SIMPLE INTEREST ON THIS AMOUNT AT THE RATE OF 5 PERCENT PER ANNUM FROM JUNE 30, 1932, UNTIL PAID. ON APRIL 6, 1937, THIS OFFICE RECEIVED FROM THE AGRICULTURAL ADJUSTMENT ADMINISTRATION VOUCHERS IN YOUR FAVOR TOTALING $302.22. THE FARM CREDIT ADMINISTRATION REPORTED UNDER DATE OF JULY 9, 1937, THAT NO FURTHER REPAYMENTS HAD BEEN RECEIVED ON THE LOAN AND BY SETTLEMENT NO. 0454824, DATED JULY 22, 1937, THIS OFFICE APPLIED THE SAID AMOUNT OF $302.22 TO YOUR REPORTED INDEBTEDNESS OF $265.64, PLUS SIMPLE INTEREST AT THE RATE OF 5 PERCENT PER ANNUM FROM JUNE 30, 1932, UNTIL JULY 16, 1937, BY REDUCING THE PRINCIPAL IN THE SUM OF $241.33--- THE BALANCE OF $60.89 BEING APPLIED IN PAYMENT OF THE INTEREST FROM JUNE 30, 1932, TO JULY 16, 1937--- LEAVING A BALANCE OF $24.31 DUE THE UNITED STATES AS PRINCIPAL ON YOUR LOAN, PLUS INTEREST THEREON FROM JUNE 30, 1932.

THE SUBSTANCE OF YOUR REQUEST FOR A REVIEW OF THE SETTLEMENT IS THAT NO INTEREST SHOULD BE CHARGED ON YOUR SEED LOAN FOR THE PERIOD AFTER THERE MIGHT OTHERWISE HAVE BEEN PAID TO YOU THE AMOUNTS DUE UNDER THE AGRICULTURAL ADJUSTMENT ADMINISTRATION PROGRAM, OR, CONVERSELY, THAT THE GOVERNMENT SHOULD HAVE ALLOWED YOU INTEREST ON THE AGRICULTURAL ADJUSTMENT ADMINISTRATION PAYMENTS FROM THE TIME THEY WERE OTHERWISE PAYABLE TO YOU UNTIL THEY WERE SET OFF AGAINST YOUR LOAN INDEBTEDNESS.

THE GENERAL RULE IS THAT INTEREST IS NOT RECOVERABLE FROM THE UNITED STATES, AND THE COMMON LAW RULE THAT DELAY OR DEFAULT IN PAYMENT (UPON WHICH, IN THE ABSENCE OF EXPRESS AGREEMENT, THE RIGHT TO RECOVER INTEREST RESTS) CANNOT BE ATTRIBUTED TO THE SOVEREIGN HAS BEEN ADOPTED BY THE CONGRESS. UNITED STATES V. NORTH CAROLINA, 136 U.S. 211, 216; SHECKLES V. DISTRICT OF COLUMBIA, 246 U.S. 338; UNITED STATES V. NORTH AMERICAN TRANSPORTATION AND TRADING COMPANY, 253 U.S. 330. IT IS SETTLED THAT THE UNITED STATES IS NOT LIABLE FOR INTEREST ON ITS OBLIGATIONS EXCEPT WHEN INTEREST IS STIPULATED FOR IN LEGAL AND PROPER CONTRACTS OR WHERE THE ALLOWANCE OF INTEREST IS SPECIFICALLY DIRECTED BY STATUTE. ANGARICA V. BAYARD, 127 U.S. 251; SEABOARD AIR LINE RY. CO. V. UNITED STATES, 261 U.S. 299.

IT IS A FACT, AND NOT DISPUTED BY YOU, THAT BY THE EXPRESS TERMS OF THE LOAN AGREEMENT YOU WERE TO PAY INTEREST ON THE UNPAID PRINCIPAL UNTIL YOUR INDEBTEDNESS TO THE UNITED STATES WAS SETTLED. THE FACT THAT THERE WERE MUTUAL CLAIMS IN THIS CASE--- THAT IS THAT YOU HAD A CLAIM AGAINST THE GOVERNMENT SEPARATE AND APART FROM YOUR INDEBTEDNESS TO IT--- DOES NOT CHANGE THE GENERAL RULE DENYING INTEREST ON CLAIMS AGAINST THE GOVERNMENT, NOR DOES THE DELAY BY THE GOVERNMENT, IF ANY, IN EFFECTING COLLECTION OF YOUR INDEBTEDNESS BY SET-OFF ENTITLE YOU TO INTEREST ON AMOUNTS OTHERWISE PAYABLE TO YOU OR RELIEVE YOU OF YOUR CONTRACTUAL OBLIGATION TO PAY INTEREST UNTIL REPAYMENT OF THE LOAN, WHETHER BY SET-OFF OR OTHERWISE. UNITED STATES V. VERDIER, 164 U.S. 213, INVOLVING IN PRINCIPLE A SIMILAR SITUATION, THE SUPREME COURT OF THE UNITED STATES SAID:

* * * THE WHOLE DIFFICULTY IN THE CASE, HOWEVER, ARISES FROM THE FACT THAT THERE WERE CLAIMS UPON BOTH SIDES. DID THE CASE OF THE GOVERNMENT STAND ALONE, THERE COULD BE NO DOUBT WHATEVER THAT VERDIER'S ESTATE WOULD BE PROPERLY CHARGEABLE WITH INTEREST. UPON THE OTHER HAND, IF HIS ACCOUNTS HAD BEEN SETTLED AND PAID AT THE EXPIRATION OF HIS TERM, AND A CLAIM WERE NOW MADE UNDER THE ACT OF 1883, IT WOULD NOT BE CLAIMED THAT THE GOVERNMENT WOULD BE CHARGEABLE WITH INTEREST. THE EQUITY OF PETITIONER'S CLAIM, IF THERE BE ANY, ARISES FROM THE FACT THAT WHILE INTEREST WAS RUNNING AGAINST HIM ON HIS JUDGMENT, THE GOVERNMENT WAS EQUITABLY HIS DEBTOR. WERE THE CASE BETWEEN PRIVATE INDIVIDUALS PERHAPS INTEREST WOULD BE CHARGEABLE TO BOTH PARTIES; BUT WE ARE UNABLE TO SEE HOW THE FACT THAT THERE WERE MUTUAL CLAIMS CAN AUTHORIZE US TO DISREGARD THE PLAIN LETTER OF THE STATUTES. THERE IS REALLY NO GREATER HARDSHIP IN DENYING THE PETITIONER INTEREST THAN THERE WOULD HAVE BEEN IF HE HAD NOT BEEN A JUDGMENT DEBTOR OF THE GOVERNMENT.

AN INHERENT VICE OF PETITIONER'S ARGUMENT IS IN THE ASSUMPTION THAT HE AND THE GOVERNMENT STAND UPON AN EQUALITY WITH RESPECT TO INTEREST. * *

IN UNITED STATES V. NORTH AMERICAN CO., 253 U.S. 330, 336, THE SUPREME COURT SAID:

* * * SO RIGOROUSLY IS THE RULE APPLIED, THAT, IN THE ADJUSTMENT OF MUTUAL CLAIMS BETWEEN AN INDIVIDUAL AND THE GOVERNMENT, THE LATTER HAS BEEN HELD ENTITLED TO INTEREST ON ITS CREDITS ALTHOUGH RELIEVED FROM THE PAYMENT OF INTEREST ON THE CHARGES AGAINST IT. * * *

SEE, ALSO BOSTON SAND COMPANY V. UNITED STATES, 278 U.S. 41, 49.

IN VIEW OF THESE ESTABLISHED PRINCIPLES GOVERNING THE MATTER, THERE APPEARS NO LEGAL BASIS FOR MODIFYING THE SETTLEMENT OF JULY 22, 1937, IN THIS CASE, AND, ACCORDINGLY, THE SETTLEMENT IS SUSTAINED.