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B-128824, JUN. 27, 1957

B-128824 Jun 27, 1957
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SIDNEY COHEN (FOR WHOM YOU HAVE BEEN AUTHORIZED TO ACT) IN WHICH $6. 257.06 IS CLAIMED. THE SAID AMOUNT IS REPORTED TO HAVE BEEN PAID TO THE GOVERNMENT BECAUSE OF OVERPAYMENTS MADE TO BROWN DECAMP EXPRESS COMPANY. IT IS STATED THAT $4. 057.06 WAS PAID OVER BY MR. 200 WAS PAID OVER BY THE KAPLAN TRUCKING COMPANY. IT IS URGED. THAT THE PAYMENTS MADE BY THE ABOVE-MENTIONED PERSONAL CHECKS WERE NOT AN ACKNOWLEDGEMENT OF MR. WAS ENTERED INTO ON FEBRUARY 1. THE CONTRACT OF SALE CONTAINS THE FOLLOWING PROVISION: "IT IS FURTHER AGREED BY AND ON BEHALF OF SELLERS (SIDNEY COHEN AND DORIS COHEN. OWNERS OF BROWN DECAMP) THAT THEY WILL CAUSE ALL OBLIGATIONS OF THE SAID CORPORATION TO BE PAID. THAT THEY WILL COLLECT ALL ACCOUNTS RECEIVABLE.

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B-128824, JUN. 27, 1957

TO MR. MERCER M. RICE:

CONSIDERATION HAS BEEN GIVEN TO A LETTER OF FEBRUARY 22, 1957, FROM MR. SIDNEY COHEN (FOR WHOM YOU HAVE BEEN AUTHORIZED TO ACT) IN WHICH $6,257.06 IS CLAIMED. THE SAID AMOUNT IS REPORTED TO HAVE BEEN PAID TO THE GOVERNMENT BECAUSE OF OVERPAYMENTS MADE TO BROWN DECAMP EXPRESS COMPANY, INC. OF THE AMOUNT CLAIMED, IT IS STATED THAT $4,057.06 WAS PAID OVER BY MR. COHEN'S PERSONAL CHECKS; THE REMAINING $2,200 WAS PAID OVER BY THE KAPLAN TRUCKING COMPANY, PURCHASER OF BROWN DECAMP EXPRESS COMPANY, INC., AND LATER COLLECTED FROM MR. COHEN BY SETOFF FROM SUMS OWED HIM BY THE KAPLAN TRUCKING COMPANY. YOU INQUIRE ABOUT THE STATUS OF THIS MATTER IN YOUR LETTER OF JUNE 21, 1957.

NO QUESTION HAS BEEN RAISED CONCERNING THE VALIDITY OF THE OVERPAYMENTS. IT IS URGED, HOWEVER, THAT ENTIRE INDEBTEDNESS SHOULD NOW BE COLLECTED, BY SUIT IF NECESSARY, FROM THE KAPLAN TRUCKING COMPANY, PURCHASER OF THE OPERATING RIGHTS AND OUTSTANDING SHARES OF STOCK IN BROWN DECAMP EXPRESS COMPANY, INC.; THAT THE PAYMENTS MADE BY THE ABOVE-MENTIONED PERSONAL CHECKS WERE NOT AN ACKNOWLEDGEMENT OF MR. COHEN'S PERSONAL LIABILITY AND SHOULD BE RETURNED TO HIM TOGETHER WITH THE $2,200 REFUNDED BY THE KAPLAN TRUCKING COMPANY AND LATER COLLECTED FROM MR. COHEN.

THE CONTRACT OF SALE BY WHICH SIDNEY COHEN AND DORIS COHEN, SOLE OWNERS OF THE OUTSTANDING SHARES OF STOCK IN BROWN DECAMP EXPRESS COMPANY, INC., SOLD THE COMPANY TO THE KAPLAN TRUCKING COMPANY, WAS ENTERED INTO ON FEBRUARY 1, 1951, AND THE INTERSTATE COMMERCE COMMISSION APPROVED THE SALE OF THE OPERATING RIGHTS IN FEBRUARY 1952. THE CONTRACT OF SALE CONTAINS THE FOLLOWING PROVISION:

"IT IS FURTHER AGREED BY AND ON BEHALF OF SELLERS (SIDNEY COHEN AND DORIS COHEN, OWNERS OF BROWN DECAMP) THAT THEY WILL CAUSE ALL OBLIGATIONS OF THE SAID CORPORATION TO BE PAID, THAT THEY WILL COLLECT ALL ACCOUNTS RECEIVABLE, AND THAT THEY WILL GUARANTEE TO PURCHASER (KAPLAN) THAT AT THE TIME THE STOCK IS TURNED OVER TO IT, THE CORPORATION WILL BE FREE AND CLEAR OF ALL OBLIGATIONS AND LIABILITIES AND WILL BE THE HOLDER OF THE ABOVE-DESCRIBED EQUIPMENT AND CERTIFICATE FREE AND CLEAR OF ALL ENCUMBRANCES.'

IT SEEMS QUITE CLEAR FROM THIS PROVISION OF THE CONTRACT THAT SIDNEY COHEN AND DORIS COHEN, AS SELLERS, AGREED TO PAY PRE-EXISTING OBLIGATIONS OF BROWN DECAMP EXPRESS COMPANY, INC. WHILE IT IS POSSIBLE THAT GENERAL ACCOUNTING OFFICE NOTICES OF OVERPAYMENT WERE NOT RECEIVED UNTIL AFTER THIS CONTRACT WAS MADE, THE OBLIGATION TO REFUND OVERPAYMENTS FOR TRANSPORTATION FURNISHED PRIOR TO THIS CONTRACT OF SALE AROSE AT THE TIME BROWN DECAMP EXPRESS COMPANY, INC., RECEIVED THE OVERPAYMENTS, AND THUS EXISTED PRIOR TO THE CONTRACT. ACCORDINGLY, THE OVERPAYMENTS WERE SUCH OBLIGATIONS AS THE SELLERS AGREED UNDER THE CONTRACT TO PAY. CONSISTENT WITH THIS INTERPRETATION WAS THE COURSE OF CONDUCT PURSUED BY MR. COHEN WITH RESPECT TO THE INDEBTEDNESS. OUR RECORDS SHOW THAT ON JANUARY 5 AND 17, 1952, MR. E. F. MACMILLAN, THEN THE CARRIER'S WASHINGTON REPRESENTATIVE, CONFERRED WITH A REPRESENTATIVE OF OUR TRANSPORTATION DIVISION CONCERNING THE EBT; AT THE LATER MEETING MR. MACMILLAN STATED THAT MR. COHEN HAD ADVISED HIM THAT HE CONTROLLED BROWN DECAMP EXPRESS COMPANY, INC., WHICH HAD CHANGED HANDS SEVERAL TIMES, AND THAT HE WAS RESPONSIBLE FOR THE DEBT. SUBSEQUENTLY MR. COHEN ATTENDED A CONFERENCE HERE AND ARRANGED FOR LIQUIDATION OF THE INDEBTEDNESS BY MONTHLY INSTALLMENTS. ON MAY 1, 1952, HE RETURNED AND ASKED THAT THOSE ARRANGEMENTS BE MODIFIED, SINCE BROWN DECAMP EXPRESS COMPANY, INC., WAS A SMALL COMPANY, BUSINESS WAS OFF, AND HE COULD NO LONGER MAKE MONTHLY PAYMENTS AS LARGE AS THOSE TO WHICH HE WAS COMMITTED. OVER A YEAR LATER, ON AUGUST 6, 1953, ACCOMPANIED BY TWO ASSOCIATES, MR. COHEN AGAIN CONFERRED WITH REPRESENTATIVES OF OUR TRANSPORTATION DIVISION. AS A RESULT OF THIS CONFERENCE THE MONTHLY PAYMENTS WERE AGAIN REDUCED AND A STOP ORDER AGAINST PAYMENTS TO BROWN DECAMP EXPRESS COMPANY, INC., WAS REMOVED.

ALL OF THESE MEETINGS TOOK PLACE AFTER THE CONTRACT OF SALE HAD BEEN EXECUTED, BUT OUR RECORDS DO NOT SHOW THAT MR. COHEN EVER INFORMED THE TRANSPORTATION DIVISION REPRESENTATIVES OF THE SALE TO KAPLAN TRUCKING COMPANY. ON THE CONTRARY, HE HELD HIMSELF OUT, THROUGH HIS REPRESENTATIVES AND IN PERSON, AS THE GENERAL MANAGER OF BROWN DECAMP EXPRESS COMPANY, INC., AS THE PARTY IN CONTROL AND LIABLE FOR THE INDEBTEDNESS; AND, IN OCTOBER 1953, HE EVEN REQUESTED THAT ALL MAIL FOR BROWN DECAMP EXPRESS COMPANY, INC., BE MAILED TO BOX 395, PASSAIC, NEW JERSEY, ALTHOUGH THE COMBINED GENERAL OFFICES OF BROWN DECAMP AND THE KAPLAN TRUCKING COMPANY WERE IN CLEVELAND, OHIO. SO FAR AS OUR RECORD REFLECTS AT NO TIME DURING THE COURSE OF THE NEGOTIATIONS CONCERNING THE PAYMENT OF THIS INDEBTEDNESS DID MR. COHEN REPRESENT HIMSELF AS OTHER THAN THE PARTY LIABLE AND THERE IS NO SUGGESTION THAT HE WAS GRATUITOUSLY ANSWERING FOR THE DEBT OF ANOTHER.

MR. COHEN'S ACTIONS IN THIS MATTER SUGGEST THAT HE BECAME DISSATISFIED WITH THE CONSEQUENCES OF THE SALE TO THE KAPLAN TRUCKING COMPANY. THE INTEREST OF THE UNITED STATES, HOWEVER, IS IN THE PROPER ADJUSTMENT OF OVERPAYMENTS MADE TO THE BROWN DECAMP EXPRESS COMPANY, INC., AND THE EXISTING SITUATION AFFORDS NO LEGAL BASIS FOR REFUNDING TO MR. COHEN PAYMENTS WHICH, UNDER THE QUOTED SECTION OF THE CONTRACT, HE, AS ONE OF THE SELLERS, WAS APPARENTLY OBLIGATED TO MAKE. WHILE OUR RECORD CONTAINS NO EVIDENCE OF A SUBSEQUENT COLLECTION FROM MR. COHEN BY THE KAPLAN TRUCKING COMPANY OF $2,200 REFUNDED TO THE GOVERNMENT, THE SITUATION IS THE SAME AS THAT EXISTING WITH RESPECT TO THE SUMS REFUNDED TO THE GOVERNMENT BY HIS CHECKS. UNDER THE CIRCUMSTANCES THERE IS NO BASIS FOR MODIFYING THE ACTION TAKEN IN THIS MATTER.

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