B-141888, MAR. 4, 1960
Highlights
AS YOU HAVE BEEN INFORMED BY THE CIVIL SERVICE COMMISSION. ANY AMOUNT IN THE RETIREMENT FUND OF A FORMER EMPLOYEE OF THE UNITED STATES IS AVAILABLE FOR SETOFF AGAINST THE DEBTS OF SUCH PERSON TO THE UNITED STATES. IF THE WHOLE AMOUNT IS SUBJECT TO PAYMENT UPON DEMAND. IT IS ALSO SUBJECT TO SETOFF AT ANY TIME. THE RIGHT OF SUCH SETOFF IS WELL SUPPORTED BY DECISIONS OF OUR OFFICE AND THE COURTS. SPARRENBERGER NOW CONTENDS THAT UNDER THE INDIAN RULE OF TENANCIES BY THE ENTIRETIES THE SUMS DUE YOU FROM THE GOVERNMENT ARE NOT AVAILABLE FOR SETOFF AGAINST YOUR DEBT TO THE VETERANS ADMINISTRATION. UNDER INDIANA STATUTES REAL PROPERTY CONVEYED TO A HUSBAND AND WIFE IS HELD BY THEM AS TENANTS BY THE ENTIRETIES UNLESS THE DEED STATES OTHERWISE OR OTHERWISE MANIFESTLY INDICATES THAT A TENANCY IN COMMON IS INTENDED.
B-141888, MAR. 4, 1960
TO MRS. HARRIET A. PRESLEY:
ON JANUARY 20, 1960, MR. WILLIAM H. SPARRENBERGER OF SPARRENBERGER, DUVALL AND SULLIVAN, ATTORNEYS AT LAW OF INDIANAPOLIS, INDIANA, PROTESTED, ON YOUR BEHALF, THE SETOFF BY THE CIVIL SERVICE COMMISSION OF THE AMOUNT IN YOUR RETIREMENT FUND AGAINST YOUR INDEBTEDNESS TO THE VETERANS ADMINISTRATION ARISING FROM A DEFICIENCY JUDGMENT ENTERED AGAINST YOUR HUSBAND, J. PAUL PRESLEY AND YOURSELF ON DECEMBER 8, 1949, IN A FORECLOSURE OF MORTGAGED PREMISES HELD BY YOU AND MR. PRESLEY.
AS YOU HAVE BEEN INFORMED BY THE CIVIL SERVICE COMMISSION, ANY AMOUNT IN THE RETIREMENT FUND OF A FORMER EMPLOYEE OF THE UNITED STATES IS AVAILABLE FOR SETOFF AGAINST THE DEBTS OF SUCH PERSON TO THE UNITED STATES, AND, IF THE WHOLE AMOUNT IS SUBJECT TO PAYMENT UPON DEMAND, IT IS ALSO SUBJECT TO SETOFF AT ANY TIME. THE RIGHT OF SUCH SETOFF IS WELL SUPPORTED BY DECISIONS OF OUR OFFICE AND THE COURTS. SEE 21 COMP. GEN. 1000, COPY ENCLOSED, AND DECISIONS CITED THEREIN.
MR. SPARRENBERGER NOW CONTENDS THAT UNDER THE INDIAN RULE OF TENANCIES BY THE ENTIRETIES THE SUMS DUE YOU FROM THE GOVERNMENT ARE NOT AVAILABLE FOR SETOFF AGAINST YOUR DEBT TO THE VETERANS ADMINISTRATION. UNDER INDIANA STATUTES REAL PROPERTY CONVEYED TO A HUSBAND AND WIFE IS HELD BY THEM AS TENANTS BY THE ENTIRETIES UNLESS THE DEED STATES OTHERWISE OR OTHERWISE MANIFESTLY INDICATES THAT A TENANCY IN COMMON IS INTENDED. SECTION 56-901 BURNS INDIANA STATUTES. THE STATUTES FURTHER PROVIDE THAT IN A FORECLOSURE AGAINST MORTGAGED PROPERTY WHEN THERE IS A PROMISE TO PAY THE SUM OF MONEY INVOLVED A PERSONAL JUDGMENT MUST BE ENTERED AGAINST THE MORTGAGE-DEBTORS. THAT JUDGMENT IS SATISFIED FIRST FROM THE PROCEEDS OF THE FORECLOSURE SALE AND THEN AGAINST THE OTHER PROPERTY OF THE DEBTORS. SECTIONS 3.1814 AND 3.1815 BURNS INDIANA STATUTES.
IN ITS REPORT TO US THE VETERANS ADMINISTRATION SAYS AS FOLLOWS:
"WHETHER OR NOT MR. AND MRS. PRESLEY OWNED THE REAL ESTATE IN QUESTION AS TENANTS BY THE ENTIRETY HAS NOTHING WHAT SO EVER TO DO AND IS NOT CONTROLLING ON THE RIGHT OF THE GOVERNMENT TO WITHHOLD OR OFF SET MRS. PRESLEY'S RETIREMENT FUND. IF A HUSBAND AND WIFE EXECUTE A NOTE AND MORTGAGE ON PROPERTY HELD BY THEM AS TENANTS BY THE ENTIRETY AND IF THEY FAILED TO PAY AND IF THE MORTGAGE IS FORECLOSED AND IF THE REAL ESTATE DOES NOT SELL FOR ENOUGH AT THE SHERIFF'S SALE TO PAY THE DEBT IN FULL, THERE IS AN AUTOMATIC DEFICIENCY JUDGMENT FOR THE UNPAID PORTION WITHOUT ANY FURTHER ACTION ON THE PART OF THE MORTGAGES. IN THIS CASE MR. AND MRS. PRESLEY WERE NOT THE MORTGAGORS BUT IN THE DEED FROM THE MORTGAGORS TO THEM, THE PRESLEYS ASSUMED AND AGREED TO PAY THE MORTGAGE AND UNDER INDIANA LAW THEY AUTOMATICALLY BECAME PERSONALLY LIABLE TO THE MORTGAGEE FOR THE UNPAID INDEBTEDNESS EXISTING ON THE NOTE AND MORTGAGE AS OF THE DATE THE DEED WAS EXECUTED AND DELIVERED TO THE PRESLEYS.
"IF A DEFICIENCY JUDGMENT EXISTS AFTER THE SHERIFF'S SALE, THE MORTGAGEE IN WHOSE FAVOR THE JUDGMENT WAS RENDERED MAY HAVE THE SHERIFF SELL OTHER PROPERTY OWNED BY THE JUDGMENT DEBTORS TO SATISFY THE DEFICIENCY JUDGMENT. REAL ESTATE HELD BY THE JUDGMENT DEBTORS AS TENANTS BY THE ENTIRETY MAY BE SOLD AND IN ADDITION, THE SEPARATE PROPERTY HELD BY EITHER OF THEM MAY BE SOLD IF NECESSARY TO PAY THE DEFICIENCY JUDGMENT. IN THIS CASE THE RETIREMENT FUND OF MRS. PRESLEY WAS APPLIED ON THE DEFICIENCY JUDGMENT AND THE GOVERNMENT HAD THE RIGHT TO DO SO AND THIS RIGHT EXISTED WHETHER THE REAL ESTATE WAS HELD BY MR. AND MRS. PRESLEY AS TENANTS BY THE ENTIRETY OR IF IT WERE IN THE NAME OF ONLY ONE OF THEM.'
SINCE YOUR INDEBTEDNESS RESULTED FROM A DEFICIENCY JUDGMENT ENTERED UPON FORECLOSURE PROCEEDINGS--- A PERSONAL JUDGMENT AGAINST ALL OBLIGORS, INCLUDING YOURSELF--- YOUR INDIVIDUAL PROPERTY IS AVAILABLE FOR PAYMENT OF THE DEBT. THEREFORE, THE COLLECTION OF $294.65 BY THE ARMY FINANCE CENTER AND $684.55 FROM YOUR RETIREMENT FUND BY SETOFF TO SATISFY THE DEBT DUE THE VETERANS ADMINISTRATION ($767.44, PRINCIPAL PLUS $247.54 INTEREST) WAS PROPER. THE VETERANS ADMINISTRATION REPORTS THE INTEREST BALANCE DUE IS $35.78.