B-137311, NOVEMBER 3, 1958, 38 COMP. GEN. 343

B-137311: Nov 3, 1958

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ARE FOR PAYMENT FROM FUNDS AVAILABLE TO THE FEDERAL HOUSING ADMINISTRATION RATHER THAN FROM APPROPRIATIONS AVAILABLE TO THE DEPARTMENT OF JUSTICE FOR LITIGATION. AS FOLLOWS: THESE EXPENSES WERE INCURRED INCIDENT TO FORECLOSURE PROCEEDINGS INSTITUTED BY THE DEPARTMENT OF JUSTICE IN CONNECTION WITH TWO MULTIFAMILY TYPE PROJECTS INSURED BY THIS ADMINISTRATION. WE HAVE BEEN INFORMALLY ADVISED THAT IN THE INSTANT CASES THE UNITED STATES ATTORNEY. WAS ORDERED BY THE COURT TO SELL THE PROPERTIES. ADVERTISEMENTS WERE PLACED IN A NUMBER OF NEWSPAPERS. THE QUESTION NOW ARISES AS TO WHETHER THE CHARGES OF THE AUCTIONEER FOR SERVICES AND THE COST OF ADVERTISING THE RESPECTIVE SALES PROPERLY ARE FOR PAYMENT BY THE FEDERAL HOUSING ADMINISTRATION.

B-137311, NOVEMBER 3, 1958, 38 COMP. GEN. 343

APPROPRIATIONS - LITIGATION BY DEPARTMENT OF JUSTICE FOR OTHER AGENCIES EXPENSES - JUSTICE V. AGENCY FUNDS AUCTIONEER'S FEES AND ADVERTISING EXPENSES INCIDENT TO HOUSING PROJECT FORECLOSURE PROCEEDINGS UNDERTAKEN BY THE DEPARTMENT OF JUSTICE AT THE REQUEST OF THE FEDERAL HOUSING ADMINISTRATION, AS A RESULT OF THE DEFAULT OF LOANS INSURED UNDER THE NATIONAL HOUSING ACT, ARE FOR PAYMENT FROM FUNDS AVAILABLE TO THE FEDERAL HOUSING ADMINISTRATION RATHER THAN FROM APPROPRIATIONS AVAILABLE TO THE DEPARTMENT OF JUSTICE FOR LITIGATION, IN VIEW OF THE BROAD AUTHORITY VESTED IN THE HOUSING COMMISSION OR UNDER SECTION 1 OF THE NATIONAL HOUSING ACT, 12 U.S.C. 1702, TO SUE AND BE SUED AND TO MAKE NECESSARY EXPENDITURES, AND THE SPECIFIC AUTHORITY IN SECTION 207 (K) OF THE ACT, 12 U.S.C. 1713 (K), FOR EXPENDITURES FOR LEGAL SERVICES NECESSARY FOR FORECLOSURE PROCEEDINGS INSTITUTED BY THE COMMISSIONER.

TO LESTER H. THOMPSON, FEDERAL HOUSING ADMINISTRATION, NOVEMBER 3, 1958:

YOUR LETTER OF SEPTEMBER 5, 1958, REFERENCE FB-HS, REQUESTS OUR DECISION WHETHER YOU MAY CERTIFY FOR PAYMENT THE ENCLOSED VOUCHER AND SCHEDULE OF PAYMENTS ( BUREAU SCHEDULE NO. 940 AND BUREAU VOUCHERS NOS. 10,083 THROUGH 10,086) IN THE AMOUNT OF $5,527.79, REPRESENTING CLAIMS FOR THE COST OF AUCTIONEER'S FEES AND ADVERTISING.

YOUR LETTER STATES, IN PART, AS FOLLOWS:

THESE EXPENSES WERE INCURRED INCIDENT TO FORECLOSURE PROCEEDINGS INSTITUTED BY THE DEPARTMENT OF JUSTICE IN CONNECTION WITH TWO MULTIFAMILY TYPE PROJECTS INSURED BY THIS ADMINISTRATION, NAMELY PROJECT NO. 1000- 30174--- BOOKER T. HOMES, INC., SECTION IV--- AND PROJECT NO. 1000-42132-- - ANDALUSIA APARTMENTS, INC.

THE RECORD DISCLOSES THAT THE FEDERAL HOUSING ADMINISTRATION COMMISSIONER, AS MORTGAGEE OF THE AFOREMENTIONED PROJECTS, REQUESTED THE DEPARTMENT OF JUSTICE TO INSTITUTE AND PURSUE FORECLOSURE PROCEEDINGS BECAUSE OF THE CONTINUING DEFAULT OF THE MORTGAGORS. WE HAVE BEEN INFORMALLY ADVISED THAT IN THE INSTANT CASES THE UNITED STATES ATTORNEY, BALTIMORE, MARYLAND, ELECTED TO INSTITUTE COURT PROCEEDINGS TO FORECLOSE IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND, AND THE UNITED STATES MARSHAL, AS SUBSTITUTE TRUSTEE OF THE PROPERTIES, WAS ORDERED BY THE COURT TO SELL THE PROPERTIES. THE RECORD DISCLOSES FURTHER THAT THE UNITED STATES ATTORNEY THEN EMPLOYED AN AUCTIONEER TO HANDLE THE DETAILS OF THE FORECLOSURE SALES. IN ADDITION, IN COMPLIANCE WITH THE LAW OF THE STATE OF MARYLAND AND TO ANNOUNCE THE SALE, ADVERTISEMENTS WERE PLACED IN A NUMBER OF NEWSPAPERS. THE QUESTION NOW ARISES AS TO WHETHER THE CHARGES OF THE AUCTIONEER FOR SERVICES AND THE COST OF ADVERTISING THE RESPECTIVE SALES PROPERLY ARE FOR PAYMENT BY THE FEDERAL HOUSING ADMINISTRATION.

YOU ENCLOSED WITH YOUR LETTER OF SEPTEMBER 5 A COPY OF A LETTER DATED JULY 11, 1958, TO FEDERAL HOUSING ADMINISTRATION COMMISSIONER MASON FROM MR. S. A. ANDRETTA, ADMINISTRATIVE ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF JUSTICE, SETTING FORTH HIS VIEWS IN THE MATTER. HIS LETTER STATES, IN PART, AS FOLLOWS:

OUR VIEW IS THAT APPROPRIATIONS OR FUNDS AVAILABLE FOR LOANS ON A PROFIT- MAKING BASIS SHOULD BEAR THE SPECIALLY INCURRED EXPENSES OF LITIGATION, WITH THIS DEPARTMENT PROVIDING LEGAL AND PERSONAL SERVICES WITHOUT CHARGE. IN THIS LIGHT, THE AUCTIONEER'S FEES AND EXPENSES * * * WOULD BE PAID BY YOUR AGENCY. THE "COSTS"--- ATTORNEY'S DOCKET FEE, MARSHAL'S AND CLERK'S FEES--- WOULD NOT BE BILLED FOR PAYMENT, SINCE FOR THE MOST PART THEY CONSIST OF STATUTORY FEES FOR PERSONAL SERVICES OF FEDERAL EMPLOYEES. MARSHAL'S EXPENSES--- ACTUAL OUT-OF-POCKET PAYMENTS--- WOULD BE BILLED TO YOU.

REGARDING THE ABOVE-QUOTED VIEWS OF MR. ANDRETTA YOU SAY,"IT IS BELIEVED THAT PAYMENT OF AUCTIONEERS' FEES, ADVERTISING COSTS, AND OTHER OUT-OF- POCKET EXPENSES IN THESE AS WELL AS OTHER CASES INVOLVING EXPENSES OTHER THAN STATUTORY FEES FOR FEDERAL EMPLOYEES SHOULD BE MADE FROM FUNDS AVAILABLE TO THE FEDERAL HOUSING ADMINISTRATION.'

THE GENERAL RULE IS THAT, IN THE ABSENCE OF SPECIFIC AUTHORITY BY THE CONGRESS FOR DEPARTMENTS AND ESTABLISHMENTS OF THE GOVERNMENT TO RESORT TO LITIGATION IN THE COURTS IN THE PERFORMANCE OF THE DUTIES AND RESPONSIBILITIES WITH WHICH THEY ARE CHARGED, IT IS THE DUTY OF THE ATTORNEY GENERAL, AS CHIEF LAW OFFICER OF THE GOVERNMENT, TO INSTITUTE, PROSECUTE, AND DEFEND ACTION ON BEHALF OF THE UNITED STATES IN MATTERS INVOLVING COURT PROCEEDINGS, AND TO DEFRAY THE NECESSARY EXPENSES INCIDENT THERETO FROM APPROPRIATIONS OF THE DEPARTMENT OF JUSTICE RATHER THAN FROM APPROPRIATIONS OF THE ADMINISTRATIVE OFFICE WHICH MAY BE INVOLVED IN THE PROCEEDINGS. SEE 19 COMP. GEN. 551; 15 ID. 81.

SECTION 1 OF THE NATIONAL HOUSING ACT, AS AMENDED AND CONTAINED IN 12 U.S.C. 1702, PROVIDES:

THE COMMISSIONER SHALL, IN CARRYING OUT THE PROVISIONS OF THIS SUBCHAPTER AND SUBCHAPTERS II, III, VI-VIII, AND X OF THIS CHAPTER, BE AUTHORIZED, IN HIS OFFICIAL CAPACITY, TO SUE AND BE SUED IN ANY COURT OF COMPETENT JURISDICTION, STATE OR FEDERAL.

ALSO, THE FEDERAL HOUSING COMMISSIONER, BY THE PROVISIONS OF SECTION 1 OF THE NATIONAL HOUSING ACT, AS AMENDED (12 U.S.C. 1702), IS EMPOWERED TO "MAKE SUCH EXPENDITURES * * * AS ARE NECESSARY (TO CARRY OUT ITS PROGRAMS) * * * WITHOUT REGARD TO ANY OTHER PROVISIONS OF LAW GOVERNING THE EXPENDITURES OF PUBLIC FUNDS.' THE LATTER AUTHORITY USUALLY IS GRANTED ONLY WHERE THE ACTIVITY TO BE CARRIED ON IS COMPARABLE TO A PRIVATE BUSINESS ENTERPRISE AND ATTRIBUTES OF FLEXIBILITY AND FREEDOM FROM DETAILED REGULATION ARE NEEDED. IN EFFECT IT IS SOMEWHAT SIMILAR TO THE EXTRAORDINARY AUTHORITY TO DETERMINE AND PRESCRIBE OBLIGATIONS FOUND IN MANY GOVERNMENT CORPORATION CHARTERS, AND ALTHOUGH THE FEDERAL HOUSING ADMINISTRATION IS NOT SPECIFICALLY CHARTERED AS A CORPORATION, FOR THE PURPOSES OF THE GOVERNMENT CORPORATION CONTROL ACT IT IS DEFINED AS A "WHOLLY OWNED GOVERNMENT CORPORATION.'

IN B-3163, APRIL 24, 1939, REGARDING THE EXPENDITURE OF FUNDS BY THE FEDERAL HOUSING ADMINISTRATOR FOR LEGAL SERVICES NECESSARY FOR FORECLOSING A DEFAULTED MORTGAGE OR OTHERWISE REGAINING POSSESSION OF AND TITLE TO THE PROPERTY UNDER SECTION 204 (G) OF THE NATIONAL HOUSING ACT (12 U.S.C. 1710 (G) (, WE HELD THAT IN VIEW OF THE PROVISIONS OF SECTIONS 1 AND 204 (G) OF THE ACT THERE WOULD BE NO OBJECTION TO SUCH AN EXPENDITURE. HOWEVER, WE SUGGESTED THAT IN THE INTEREST OF ECONOMY, THE SERVICES OF THE UNITED STATES ATTORNEYS AND THEIR ASSISTANTS BE UTILIZED WHEN THAT IS POSSIBLE IN SUCH FORECLOSURE PROCEEDINGS.

SECTION 207 (K) OF THE NATIONAL HOUSING ACT, AS AMENDED (12 U.S.C. 1713 (K) (, PROVIDES IN PERTINENT PART, AS FOLLOWS:

* * * THE COMMISSIONER IS AUTHORIZED TO PAY FROM THE HOUSING FUND SUCH SUMS AS MAY BE NECESSARY TO DEFRAY SUCH TAXES, INSURANCE, COSTS, FEES, AND OTHER EXPENSES IN CONNECTION WITH THE ACQUISITION OR FORECLOSURE OF PROPERTY UNDER THIS SECTION. * * *

SECTIONS 213 (E), 12 U.S.C. 1715E, AND 608 (F), 12 U.S.C. 1743, OF THE ACT MAKE THE PROVISIONS OF SECTION 207 (K) APPLICABLE TO LOANS INSURED UNDER THOSE SECTIONS. THE BOOKER T. HOMES, INC., PROJECT WAS INSURED UNDER SECTION 213 OF THE ACT AND THE ANDALUSIA APARTMENTS, INC., PROJECT WAS INSURED UNDER SECTION 608 OF THE ACT. THUS, THE COMMISSIONER, UNDER SECTION 207 (K) OF THE NATIONAL HOUSING ACT, AS AMENDED (12 U.S.C. 1713 (K) (, IS EXPRESSLY AUTHORIZED TO PAY EXPENSES OF FORECLOSURE PROCEEDINGS OF PROPERTY INSURED UNDER SECTIONS 213 AND 608 OF THE ACT. FURTHERMORE, UNDER THE BROAD PROVISIONS OF SECTION 1 OF THE ACT IN CONJUNCTION WITH SECTION 207 (K) OF THE ACT THE EXPENDITURE OF FUNDS BY THE COMMISSIONER FOR LEGAL SERVICES NECESSARY FOR SUCH FORECLOSURE PROCEEDINGS WOULD BE AUTHORIZED IF SUCH PROCEEDINGS WERE INSTITUTED AND PURSUED BY THE COMMISSIONER. SEE B 46459, JANUARY 11, 1945. ACCORDINGLY, WHERE FOLLOWING THE SUGGESTION CONTAINED IN B-3163, APRIL 24, 1939, THE SERVICES OF THE UNITED STATES ATTORNEYS ARE UTILIZED, THE AUCTIONEERS' FEES AND ADVERTISING EXPENSES IN QUESTION WOULD APPEAR PROPERLY FOR PAYMENT BY THE FEDERAL HOUSING ADMINISTRATION.

THE VOUCHER AND SCHEDULE OF PAYMENTS ( BUREAU SCHEDULE NO. 940 AND BUREAU VOUCHERS NOS. 10,083 THROUGH 10,086) ARE RETURNED HEREWITH AND MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT.