B-122149, JUL. 8, 1955

B-122149: Jul 8, 1955

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HOUSING AND HOME FINANCE AGENCY: REFERENCE IS MADE TO LETTER DATED AUGUST 10. IN OUR LETTER OF DECEMBER 15 IT WAS STATED THAT THE CLAIM WOULD BE FILED WITHOUT FURTHER ACTION BECAUSE THE CASE APPEARED TO BE SIMILAR TO THE ABANDONMENT-OF-PLANS CASES COVERED BY OUR LETTER OF APRIL 20. IT WAS EXPLAINED THEREIN THAT THE DEPARTMENT OF JUSTICE HAS CLOSED ITS FILES IN SUCH CASES FOR THE REASON THAT. SINCE THE PLANS ACTUALLY WERE COMPLETED. HE STATES FURTHER THAT THE GOVERNMENT'S CLAIM IN THIS CASE IS BASED UPON THE APPLICANT'S FAILURE TO UNDERTAKE CONSTRUCTION WITHIN "THE FIRST THREE POST-WAR YEARS" AS REPRESENTED TO THE REGIONAL ENGINEER. IN THE COMMUNICATION SIGNED BY THE PRESIDENT OF THE DISTRICT IT WAS STATED THAT: "/1) WE WISH TO ADVISE THAT A USEFUL UNIT OF THE PROJECT WILL BE CONSTRUCTED WITHIN THE FIRST THREE POST-WAR YEARS. "/2) THE FENTON WATER DISTRICT WOULD REPAY TO THE FEDERAL GOVERNMENT THE FULL AMOUNT OF THE ADVANCE WHENEVER THE FIRST UNIT IS PLACED UNDER CONSTRUCTION.'.

B-122149, JUL. 8, 1955

TO HONORABLE ALBERT M. COLE, ADMINISTRATOR, HOUSING AND HOME FINANCE AGENCY:

REFERENCE IS MADE TO LETTER DATED AUGUST 10, 1954, FROM HARRY J. MCNERNEY, ASSISTANT GENERAL COUNSEL, HOUSING AND HOME FINANCE AGENCY, IN REPLY TO OUR LETTER OF DECEMBER 15, 1953, TO YOU, CONCERNING THE GOVERNMENT'S CLAIM AGAINST THE FENTON PUBLIC WATER SUPPLY DISTRICT NO. 4 OF ST. LOUIS COUNTY, MISSOURI, FOR $3,570, UNDER WATER FACILITIES ADVANCE PLANNING PROJECT NO. 23-P-146.

IN OUR LETTER OF DECEMBER 15 IT WAS STATED THAT THE CLAIM WOULD BE FILED WITHOUT FURTHER ACTION BECAUSE THE CASE APPEARED TO BE SIMILAR TO THE ABANDONMENT-OF-PLANS CASES COVERED BY OUR LETTER OF APRIL 20, 1953, B- 106900, TO YOU. IT WAS EXPLAINED THEREIN THAT THE DEPARTMENT OF JUSTICE HAS CLOSED ITS FILES IN SUCH CASES FOR THE REASON THAT, WHILE THE GOVERNMENT MIGHT BE ABLE TO ESTABLISH A TECHNICAL BREACH OF CONTRACT, NO RESULTANT DAMAGES COULD BE SHOWN BY THE GOVERNMENT.

MR. MCNERNEY STATES IN HIS LETTER THAT HE DOES NOT CONSIDER THIS TO BE AN ABANDONMENT-OF-PLANS CASE OF THE TYPE REFERRED TO IN OUR LETTER OF APRIL 20, 1953, SINCE THE PLANS ACTUALLY WERE COMPLETED. HE STATES FURTHER THAT THE GOVERNMENT'S CLAIM IN THIS CASE IS BASED UPON THE APPLICANT'S FAILURE TO UNDERTAKE CONSTRUCTION WITHIN "THE FIRST THREE POST-WAR YEARS" AS REPRESENTED TO THE REGIONAL ENGINEER, UPON WHICH REPRESENTATION THE REGIONAL ENGINEER RELIED IN RECOMMENDING APPROVAL OF THE APPLICATION FOR THE LOAN. HE REQUESTS A REVIEW OF THE CLAIM IN THE LIGHT OF SUCH INFORMATION.

IN THE COMMUNICATION SIGNED BY THE PRESIDENT OF THE DISTRICT IT WAS STATED THAT:

"/1) WE WISH TO ADVISE THAT A USEFUL UNIT OF THE PROJECT WILL BE CONSTRUCTED WITHIN THE FIRST THREE POST-WAR YEARS.

"/2) THE FENTON WATER DISTRICT WOULD REPAY TO THE FEDERAL GOVERNMENT THE FULL AMOUNT OF THE ADVANCE WHENEVER THE FIRST UNIT IS PLACED UNDER CONSTRUCTION.'

WE FEEL THAT THE ABOVE-QUOTED STATEMENTS OF THE PRESIDENT OF THE DISTRICT ARE MERE EXPRESSIONS OF WHAT THE DISTRICT INTENDED OR EXPECTED TO DO UNDER THE PROGRAM BUT, EVEN ASSUMING THAT THERE RESULTED A FIRM CONTRACTUAL OBLIGATION ON THE DISTRICT'S PART TO UNDERTAKE CONSTRUCTION, HERE ALSO IT DOES NOT APPEAR THAT ANY RESULTANT DAMAGES COULD BE SHOWN FOR THE BREACH, ESPECIALLY SINCE SECTION 501 (C) OF THE WAR MOBILIZATION AND RECONVERSION ACT OF 1944, 58 STAT. 791, REQUIRES REPAYMENT OF AN ADVANCE ONLY "IF AND WHEN" CONSTRUCTION OF PUBLIC WORKS IS UNDERTAKEN.

HOWEVER, IN VIEW OF THE POSITION TAKEN BY YOUR AGENCY, UNDER DATE OF MAY 23, 1955, WE REFERRED THE CASE TO THE DEPARTMENT OF JUSTICE FOR THEIR VIEWS AS TO THE DISTRICT'S LIABILITY WITH PARTICULAR REGARD TO THE PROBABILITY OF THE GOVERNMENT SUCCESSFULLY PROSECUTING THE CASE TO JUDGMENT.

BY REPLY DATE OF JUNE 3, 1955, THE DEPARTMENT OF JUSTICE ADVISED US THAT THEY SHARED OUR VIEWS IN THE MATTER AND THAT ACCORDINGLY THEIR FILE WAS BEING CLOSED. UNDER THE CIRCUMSTANCES, NO FURTHER ACTION WILL BE TAKEN HERE IN THE MATTER.