B-130243, FEB. 28, 1957

B-130243, FEB. 28, 1957

TO MR. SIMON G. STIRLING:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 5, 1956, PROTESTING THE CHARGE OF $100 RAISED AGAINST YOUR ACCOUNT AS A RESULT OF THE ACTION TAKEN BY YOU IN STOPPING PAYMENT OF YOUR PERSONAL CHECK FOR THAT AMOUNT DATED MARCH 1, 1954, DRAWN IN FAVOR OF THE UNITED STATES AND DELIVERED TO THE PUBLIC HOUSING ADMINISTRATION.

THIS TRANSACTION AROSE IN CONNECTION WITH YOUR OFFER TO PURCHASE ONE OF FOUR HOUSES LISTED IN CONTRACT NO. 130, AND LOCATED IN HOUSING PROJECT NO. MD-18085, SILVER SPRING, MARYLAND, AT A MINIMUM PRICE OF $1,260. AFTER ACCEPTANCE OF THE OFFER, WHICH WAS ACCOMPANIED BY A DEPOSIT IN THE FORM OF THE ABOVE-MENTIONED CHECK, YOU NOTIFIED THE ADMINISTRATIVE OFFICE UNDER DATE OF MARCH 12, 1954, THAT YOU WERE UNABLE TO MAKE THE NECESSARY FINANCIAL ARRANGEMENTS TO RELOCATE THE DWELLING ON ANOTHER SITE, AND THEREFORE, YOU REQUESTED TO BE RELIEVED OF YOUR CONTRACT OBLIGATIONS. YOU WERE NOTIFIED THAT THE HOUSE WOULD AGAIN BE PLACED ON THE MARKET FOR RESALE AND THAT DISPOSITION OF YOUR DEPOSIT WOULD BE MADE AFTER SALE THEREOF WAS ACCOMPLISHED. SUBSEQUENTLY THE HOUSE WAS SOLD TO ANOTHER PURCHASER FOR $650, REPRESENTING A DIFFERENCE OF $610. IN ADDITION TO YOUR BREACHING THE CONTRACT, WHICH RESULTED IN A LOSS TO THE GOVERNMENT OF $610, YOU STOPPED PAYMENT ON THE DEPOSIT CHECK FOR $100.

ORDINARILY, UNDER SUCH CIRCUMSTANCES, THE BASIC MEASURE OF DAMAGES IS THE DIFFERENCE BETWEEN THE PRICE OFFERED BY THE DEFAULTING PURCHASER AND THE AMOUNT RECEIVED UPON RESALE BY THE DAMAGED PARTY. HOWEVER, IN DECISION OF MARCH 30, 1956, B-127147, INVOLVING A SIMILAR SITUATION, WE HELD THAT UNDER THE TERMS OF THE SALES AGREEMENT, THE GOVERNMENT'S LEGAL RECOURSE, IN THE EVENT OF DEFAULT, WAS LIMITED TO THE $100 DEPOSIT REQUIRED TO BE PLEDGED AS LIQUIDATED DAMAGES, REGARDLESS OF THE ACTUAL LOSS SUSTAINED BECAUSE OF DEFAULT ON THE PART OF THE ORIGINAL CONTRACTOR.

YOUR CONTENTIONS THAT THE GOVERNMENT, BY ENFORCEMENT OF YOUR ABOVE OBLIGATION, WOULD BE RECEIVING PAYMENT FROM TWO PARTIES FOR THE SAME PROPERTY, AND THAT THE VALIDITY OF THE GOVERNMENT'S CLAIM FOR PAYMENT OF THE DEPOSIT ORIGINALLY PLEDGED IS DEPENDENT UPON SOME CONSIDERATION PASSING TO YOU, IS WITHOUT MERIT. HAD YOU COMPLIED WITH THE TERMS OF YOUR PURCHASE AGREEMENT, THE UNITED STATES WOULD HAVE RECEIVED A MINIMUM OF $1,260 FOR ANY ONE OF THE FOUR HOUSES IN QUESTION INSTEAD OF $650 REALIZED FROM THE RESALE OF THE DWELLING REPORTED TO HAVE BEEN SOLD FOR YOUR ACCOUNT. THE APPLICATION OF YOUR DEPOSIT AGAINST THE TRANSACTION WOULD ONLY SERVE TO REDUCE THE LOSS SUSTAINED BY THE PUBLIC HOUSING ADMINISTRATION BY $100, LEAVING A NET LOSS OF $510. THE DEMAND MADE AGAINST YOU IS PREDICATED UPON THE CLEAR TERMS OF PARAGRAPH 12 (G) OF THE CONTRACT, AS WELL AS YOUR LEGAL OBLIGATION TO RESPOND IN DAMAGES FOR BREACH OF CONTRACT. HENCE, YOUR CONTENTION THAT THE CLAIM IS OF DOUBTFUL VALIDITY FOR LACK OF CONSIDERATION CLEARLY IS UNTENABLE.

THE REPRESENTATIONS ALLEGED TO HAVE BEEN MADE TO YOU BY THE DISPOSAL OFFICER REGARDING YOUR ABILITY TO OBTAIN THE NECESSARY FINANCING ARE IMMATERIAL SINCE ANY ACT OR COMMITMENT BY AN OFFICIAL OR EMPLOYEE OF THE GOVERNMENT BEYOND THE SCOPE OF HIS AUTHORITY, SUCH AS THE ALLEGATIONS REFERRED TO ARE NOT BINDING ON THE UNITED STATES. ALSO, SINCE THERE WAS NO LEGAL OR CONTRACTUAL OBLIGATION IMPOSED UPON THE FEDERAL HOUSING ADMINISTRATION TO PROTECT THE PROPERTY WHICH YOU PURCHASED PRIOR TO ITS REMOVAL, THAT SAME PRINCIPLE IS FOR APPLICATION WHERE THE PROMISE OF SUCH PROTECTION IS ALLEGED TO HAVE BEEN MADE BY THE DISPOSAL OFFICER.

IN VIEW OF THE FOREGOING, THERE IS NO LEGAL BASIS FOR RELIEVING YOU OF THE CHARGES PROPERLY RAISED AGAINST YOUR ACCOUNT, AND THEREFORE ARRANGEMENTS SHOULD BE MADE PROMPTLY WITH THE CLAIMS DIVISION OF OUR OFFICE TO LIQUIDATE THE INDEBTEDNESS.