B-133791, OCT. 30, 1957

B-133791: Oct 30, 1957

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SMALL BUSINESS ADMINISTRATION: WE HAVE CONSIDERED THE QUESTION SUBMITTED IN YOUR LETTER OF SEPTEMBER 13. IS APPLICABLE TO LEGAL NOTICES PUBLISHED IN NEWSPAPERS. IS NOT A MATTER WITHIN YOUR DISCRETION. IN THE MAJORITY OF CASES THE ADVERTISING IS PLACED BY A SHERIFF. THE ADVERTISING COSTS ARE AN EXPENSE OF FORECLOSURE AND ARE PAYABLE FROM THE FUNDS RECEIVED FROM THE SALE. WHERE THE SMALL BUSINESS ADMINISTRATION IS THE HIGHEST BIDDER. IT IS NECESSARY FOR THE SMALL BUSINESS ADMINISTRATION TO ADVANCE THE FUNDS TO PAY THE EXPENSES OF THE SALE. WHICH ARE RECOVERABLE FROM THE DEBTOR. WERE NOT APPLICABLE WHERE THE ADVERTISING OF SURPLUS PROPERTY FOR SALE WAS PLACED PURSUANT TO STATUTORY AUTHORITY AND NO DISCRETION WAS VESTED IN THE AGENCY AS TO WHETHER OR NOT THERE SHOULD BE ADVERTISING.

B-133791, OCT. 30, 1957

TO HONORABLE WENDELL B. BARNES, ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION:

WE HAVE CONSIDERED THE QUESTION SUBMITTED IN YOUR LETTER OF SEPTEMBER 13, 1957, WHETHER SECTION 3828 OF THE REVISED STATUTES, 44 U.S.C. 324, WHICH REQUIRES ADVANCE WRITTEN APPROVAL BY THE HEAD OF A DEPARTMENT FOR NEWSPAPER ADVERTISING, IS APPLICABLE TO LEGAL NOTICES PUBLISHED IN NEWSPAPERS, PURSUANT TO STATE LAW OR RULES OF STATE OR FEDERAL COURTS, IN THE FORECLOSURE OF REAL ESTATE AND CHATTEL MORTGAGES OR OTHER TYPES OF COLLATERAL HELD IN CONNECTION WITH THE SMALL BUSINESS ADMINISTRATION'S LOAN PROGRAM.

YOUR LETTER POINTS OUT THAT THE ADVERTISING UNDER CONSIDERATION, REQUIRED BY STATUTE OR RULE OF COURT IN A FORECLOSURE PROCEEDING, IS NOT A MATTER WITHIN YOUR DISCRETION. IN THE MAJORITY OF CASES THE ADVERTISING IS PLACED BY A SHERIFF, UNITED STATES MARSHAL, OR A TRUSTEE FORECLOSING UNDER POWER OF SALE PURSUANT TO STATE LAW. THE ADVERTISING COSTS ARE AN EXPENSE OF FORECLOSURE AND ARE PAYABLE FROM THE FUNDS RECEIVED FROM THE SALE. HOWEVER, WHERE THE SMALL BUSINESS ADMINISTRATION IS THE HIGHEST BIDDER, THE DEBT BEING USED FOR THE BID, IT IS NECESSARY FOR THE SMALL BUSINESS ADMINISTRATION TO ADVANCE THE FUNDS TO PAY THE EXPENSES OF THE SALE, INCLUDING THOSE OF ADVERTISING, WHICH ARE RECOVERABLE FROM THE DEBTOR.

IN OUR DECISION OF JULY 31, 1947, TO THE SECRETARY OF WAR, 27 COMP. GEN. 48, TO WHICH YOU REFER, WE HELD THAT THE PROVISIONS OF SECTION 3828, REVISED STATUTES, WERE NOT APPLICABLE WHERE THE ADVERTISING OF SURPLUS PROPERTY FOR SALE WAS PLACED PURSUANT TO STATUTORY AUTHORITY AND NO DISCRETION WAS VESTED IN THE AGENCY AS TO WHETHER OR NOT THERE SHOULD BE ADVERTISING. THE RATIONALE OF THAT DECISION IS CONSIDERED PARTICULARLY PERTINENT HERE. ACCORDINGLY, YOU ARE ADVISED THAT WE DEEM THE PROVISIONS OF SECTION 3828 NOT APPLICABLE TO THE LEGAL ADVERTISING REQUIRED BY LAW OR RULE OF COURT FOR THE FORECLOSURE OF REAL ESTATE AND CHATTEL MORTGAGES AND OTHER TYPES OF COLLATERAL HELD IN CONNECTION WITH THE SMALL BUSINESS ADMINISTRATION'S LOAN PROGRAM. SEE 5 LAWRENCE, COMP. DEC., 389, 390; COMPARE 17 COMP. GEN. 693.