B-146527, SEP. 7, 1961

B-146527, SEP. 7, 1961

TO DR. JAMES W. RHEA:

YOUR LETTER OF JUNE 12, 1961, REQUESTS FURTHER CONSIDERATION OF YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $500 PLUS INTEREST IN CONNECTION WITH THE STUDENT LOAN YOU RECEIVED UNDER PUBLIC LAW 647, 77TH CONGRESS, 56 STAT. 576, WHILE ATTENDING THE NEW YORK MEDICAL COLLEGE.

IN YOUR LETTER OF JUNE 12, AS WELL AS IN PREVIOUS CORRESPONDENCE RECEIVED FROM YOU, YOU EXPRESS THE BELIEF THAT YOUR INDEBTEDNESS WAS CANCELLED BY REASON OF YOUR ENTRY INTO THE ACTIVE MILITARY SERVICE; AND THAT IF IT WERE NOT SO CANCELLED THE DEBT WAS, IN YOUR BELIEF, EXTINGUISHED BY THE RUNNING OF THE STATUTE OF LIMITATIONS.

REGARDING YOUR CONTENTION AS TO THE EFFECT OF STATUTES OF LIMITATIONS, IT HAS BEEN HELD THAT THE UNITED STATES IS NOT BOUND BY STATUTES OF LIMITATIONS UNLESS CONGRESS HAS CLEARLY MANIFESTED THAT IT SHOULD BE SO BOUND. GUARANTY TRUST COMPANY V. UNITED STATES, 304 U.S. 126. ALSO LACHES CANNOT BE IMPUTED TO THE GOVERNMENT. UNITED STATES V. THOMPSON, 98 U.S. 486.

THE RECORD CONTAINS A PROMISSORY NOTE EXECUTED BY YOU ON DECEMBER 7, 1942, TO SECURE PAYMENT OF A LOAN IN THE AMOUNT OF $500 WHICH YOU OBTAINED PURSUANT TO THE PROVISIONS OF TITLE II OF THE STATUTE CITED ABOVE. THAT ACT PROVIDES IN PERTINENT PART AS FOLLOWS:

"LOANS HEREUNDER SHALL BE MADE IN AMOUNTS NOT EXCEEDING TUITION AND FEES PLUS $25 PER MONTH AND NOT EXCEEDING A TOTAL OF $500 TO ANY ONE STUDENT DURING ANY TWELVE-MONTH PERIOD, SAID LOANS TO BE EVIDENCED BY NOTES EXECUTED BY SUCH STUDENTS PAYABLE TO THE TREASURER OF THE UNITED STATES AT A RATE OF INTEREST AT 2 1/2 PERCENTUM PER ANNUM. REPAYMENTS OF SUCH LOANS SHALL BE MADE THROUGH THE COLLEGES, UNIVERSITIES, OR OTHER AGENCIES NEGOTIATING THE LOANS AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS:

PROVIDED, THAT INDEBTEDNESS OF STUDENTS WHO, BEFORE COMPLETING THEIR COURSES, ARE ORDERED INTO MILITARY SERVICE DURING THE PRESENT WARS UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, OR WHO SUFFER TOTAL AND PERMANENT DISABILITY OR DEATH, SHALL BE CANCELED. THE FOREGOING LOAN PROGRAM SHALL BE ADMINISTERED IN ACCORDANCE WITH REGULATIONS PROMULGATED BY THE COMMISSIONER OF EDUCATION WITH THE APPROVAL OF THE CHAIRMAN OF THE WAR MANPOWER COMMISSION.'

SECTION 3.8 (D) OF THE REGULATIONS, PROMULGATED BY THE COMMISSIONER OF EDUCATION WITH THE APPROVAL OF THE CHAIRMAN OF THE WAR MANPOWER COMMISSION PURSUANT TO THE FOREGOING PROVISION OF LAW AND PUBLISHED ON AUGUST 26, 1942 (7 F.R. 6747, 6748), PROVIDES:

"CANCELLATION OF LOANS. IF ANY BORROWER BEFORE COMPLETING HIS COURSE OF STUDY IS ORDERED INTO MILITARY SERVICE DURING THE PRESENT WARS UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, THE TOTAL UNPAID PRINCIPAL AMOUNT OF HIS LOANS AND INTEREST SHALL BE CANCELLED. IF ANY BORROWER SUFFERS TOTAL AND PERMANENT DISABILITY OR DEATH THE UNPAID PRINCIPAL AMOUNT OF HIS LOANS AND INTEREST THEREON SHALL BE CANCELLED. THE INSTITUTION OR AGENCY SHALL REPORT TO THE COMMISSIONER ALL STUDENTS ENTITLED TO SUCH CANCELLATION.'

IN AN UNDATED MEMORANDUM, WHICH WE UNDERSTAND WAS ISSUED BY THE OFFICE OF EDUCATION ON MARCH 17, 1943, IT WAS STATED:

"IT SHOULD BE ESPECIALLY NOTED THAT STUDENTS WHO ENTERED ANY RESERVE PROGRAM OF THE ARMY OR NAVY PRIOR TO THEIR ACCEPTANCE OF A STUDENT WAR LOAN AND ARE SUBSEQUENTLY CALLED TO ACTIVE DUTY ARE DEEMED TO HAVE ENTERED THE SERVICE VOLUNTARILY AND ARE THEREFORE ENTITLED ONLY TO DEFERMENT OF THEIR OBLIGATIONS. IN THE SAME MANNER STUDENTS WHO ENTERED A RESERVE PROGRAM AFTER ACCEPTANCE OF A LOAN AND WHO ARE CALLED TO ACTIVE DUTY ARE ENTITLED ONLY TO DEFERMENT. LIKEWISE, STUDENTS WHO VOLUNTEER FOR INDUCTION IN ORDER TO ENTER OFFICERS CANDIDATE SCHOOLS OR OTHER PROGRAMS ARE ENTITLED ONLY TO DEFERMENT. ONLY STUDENTS WHO ARE INDUCTED (DRAFTED) UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940 BEFORE COMPLETING THEIR COURSES OR WHO SUFFER DEATH OR PERMANENT DISABILITY AT ANY TIME ARE UNDER THE LAW ENTITLED TO CANCELLATION OF THEIR OBLIGATIONS. * * *"

THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, BY LETTER OF NOVEMBER 14, 1957, INFORMED US THAT---

"IT WAS FELT, ON THE BASIS OF THE LEGISLATIVE HISTORY OF THE PROGRAM, THAT THE CONGRESS DID NOT INTEND TO CANCEL THE LOANS OF THOSE WHO VOLUNTARILY ENLISTED IN THE RESERVE CORPS, THROUGH WHICH THEY WERE SUBJECT TO CALL TO ACTIVE DUTY AT ANY TIME, OR ADVANCED THE DATE OF THEIR INDUCTION BY VOLUNTEERING. OTHERWISE, A STUDENT COULD REAP ALL OF THE BENEFITS OF THE PROGRAM BUT INTENTIONALLY EVADE REPAYMENT OF HIS LOAN BY VOLUNTARILY ENTERING THE ARMED FORCES JUST BEFORE HIS COURSE WAS COMPLETED.'

THE ORIGINAL STUDENT WAR LOAN PROGRAM PROPOSED TO THE CONGRESS BY THE BUREAU OF THE BUDGET CONTAINED A VERY BROAD CANCELLATION PROVISION. THE HOUSE COMMITTEE ON APPROPRIATIONS REJECTED THE ENTIRE STUDENT WAR LOAN PROGRAM, ONE OF THE REASONS GIVEN BEING THAT THE PROGRAM WAS MORE OF A GIFT THAN A LOAN PROGRAM. HOUSE REPORT 2200, 77TH CONGRESS, P. 18. THE COMMITTEE REPORT STATED ,IT IS EXTREMELY DOUBTFUL WHETHER ANY OF THE SO- CALLED LOANS WOULD EVER BE REPAID AS EACH STUDENT WOULD BE ABLE TO SECURE CANCELLATION OF HIS NOTE BY ENTERING THE ARMED FORCES OR ACCEPTING CERTAIN TYPES OF EMPLOYMENT.' ALSO, SEE CONGRESSMAN HARE'S STATEMENT IN 88 CONG.REC. 5806 THAT ,THE OTHER REASON ADVANCED WAS THAT MUCH OF THE MONEY PROBABLY WOULD NOT BE REPAID.' A MODIFIED VERSION OF THE ORIGINAL LANGUAGE WAS INTRODUCED BY SENATOR MCCARRAN ON THE FLOOR OF THE SENATE DURING CONSIDERATION OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1943, WHICH CONTAINED THE CANCELLATION PROVISION AS FINALLY ENACTED. EXPLAINING THE CANCELLATION PROVISION ON THE SENATE FLOOR, SENATOR MCCARRAN STATED "IF THE STUDENT IS CALLED INTO THE MILITARY SERVICE OF THE UNITED STATES, THE OBLIGATION WILL BE ENTIRELY LIQUIDATED.' 88 CONG.REC. 5599. AFTER THIS PROVISION PASSED THE SENATE AND DURING ITS CONSIDERATION ON THE FLOOR OF THE HOUSE, CONGRESSMAN HARE STATED ,AND LET ME SAY THAT UNDER THIS NO LOAN WILL BE CANCELED UNLESS THE MAN IS CALLED INTO THE SERVICE BEFORE HE COMPLETES HIS COURSE IN MEDICINE, ENGINEERING, PHARMACY, AND SO FORTH; THAT IS THE ONLY CONDITION UPON WHICH HIS LOAN WILL BE CANCELED.' 88 CONG.REC. 5807. HE SUBSEQUENTLY STATED FURTHER "THE ONLY TIME HIS OBLIGATION IS CANCELED IS IF HE HAS PURSUED HIS COURSE 1 OR 2 YEARS AND HAS NOT COMPLETED HIS COURSE AND HE IS CARRIED INTO THE SERVICE, THEN HIS NOTE IS CANCELED.' 88 CONG.REC. 5808. WITH THIS UNDERSTANDING, THE HOUSE OF REPRESENTATIVES FINALLY AGREED TO A MODIFIED STUDENT LOAN PROGRAM.

IT THUS IS CLEAR THAT THE CONGRESS INTENDED TO PERMIT CANCELLATION OF A STUDENT WAR LOAN ONLY WHERE THE STUDENT WAS ORDERED INTO THE MILITARY SERVICE UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, OR SUFFERED TOTAL AND PERMANENT DISABILITY OR DEATH. CONSIDERING THE LEGISLATIVE HISTORY AS A WHOLE AND THAT, IF THE LAW WAS OTHERWISE CONSTRUED, A STUDENT COULD INTENTIONALLY EVADE REPAYMENT OF HIS LOAN BY VOLUNTARILY ENTERING THE MILITARY SERVICE BEFORE COMPLETING HIS COURSE, WE FEEL THAT THE ADMINISTRATIVE INTERPRETATION OF THE LAW AND THE REGULATIONS THEREUNDER ARE PROPER.

WE ARE ADVISED THAT YOU WERE LISTED AS AN INACTIVE ENLISTED RESERVIST ON SPECIAL ORDERS NO. 176 DATED JUNE 25, 1943. PURSUANT TO THESE SPECIAL ORDERS YOU WERE ORDERED TO ACTIVE DUTY WITH THE 3214TH SERVICES COMMAND SERVICE UNIT.

IT APPEARS THAT YOU VOLUNTARILY ENLISTED IN THE RESERVE CORPS. THE RECORD DOES NOT ESTABLISH THAT YOU WERE INVOLUNTARILY ORDERED (DRAFTED) INTO THE MILITARY SERVICE PURSUANT TO THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, WHICH WOULD PERMIT THE CANCELLATION OF YOUR LOAN.

REGARDING THE RUNNING OF INTEREST ON THE LOAN, THE ABOVE-QUOTED ACT, REGULATIONS AND THE NOTE EXECUTED BY YOU CLEARLY PROVIDE FOR CHARGING INTEREST AT THE RATE OF 2 1/2 PERCENT PER ANNUM. WHILE PROVISION (2) OF THE PROMISSORY NOTE PROVIDES THAT PERIODS OF MILITARY SERVICE BY THE BORROWER DURING WORLD WAR II ARE TO BE "EXCLUDED IN THE COMPUTATION OF THE TIMES OF MATURITY" OF THE FOUR ANNUAL PAYMENTS REQUIRED, SUCH PROVISION AFFECTS ONLY THE DATES SUCH PAYMENTS ARE DUE, AND HAS NO EFFECT WHATSOEVER UPON THE RUNNING OF INTEREST. IN OTHER WORDS, THE TIME OF PAYMENT IS DEFERRED BUT THE RUNNING OF INTEREST FOR THE DEFERRED PERIOD IS NOT WAIVED.

CONCERNING YOUR QUESTION AS WHEN DID THE REPAYMENT OF THE LOAN BECOME UNDEFERRED, YOUR APPLICATION FOR DEFERMENT OF SUCH REPAYMENT STATES: "AS OF JULY 1, 1943, FOR PERIOD OF SERVICE IN ARMED FORCES OR FOR DURATION OF PRESENT EMERGENCY WHICHEVER IS THE LESSER.'

REGARDING YOUR REQUEST FOR A HEARING, OUR DECISIONS ARE BASED SOLELY UPON THE WRITTEN RECORD PRESENTED TO US AND TO AFFORD YOU A HEARING IN THE MATTER WOULD NOT APPEAR TO SERVE ANY USEFUL PURPOSE OR JUSTIFY YOUR TRAVELING EXPENSES INVOLVED. HOWEVER, IF YOU SO DESIRE, WE WILL BE GLAD UPON YOUR REQUEST TO HAVE ONE OF OUR ATTORNEYS DISCUSS THE MATTER WITH YOU AT ANY TIME DURING REGULAR OFFICE HOURS.

REGARDING THE MATTER OF ADJUSTMENT OR ARBITRATION EXPRESSED IN YOUR CORRESPONDENCE, WHILE OUR OFFICE HAS NO AUTHORITY OTHER THAN TO ACCEPT THE FULL AMOUNT OF THE INDEBTEDNESS DUE TO THE UNITED STATES, WE WILL, IN VIEW OF THE CIRCUMSTANCES, SUBMIT ANY SUBSTANTIAL OFFER IN COMPROMISE YOU MAY WISH TO MAKE TO THE DEPARTMENT OF JUSTICE FOR THAT AGENCY'S CONSIDERATION.

YOU ARE ADVISED, HOWEVER, THAT SUCH AN OFFER MUST BE REASONABLE AND ACCOMPANIED BY YOUR CHECK OR MONEY ORDERS FOR AT LEAST A SUBSTANTIAL AMOUNT OF THE INDEBTEDNESS.

IN THE EVENT THAT YOU DO NOT MAKE ANY EFFORT TO SATISFY THIS INDEBTEDNESS WITHIN 30 DAYS FROM THE DATE OF THIS LETTER, WE WILL HAVE NO ALTERNATIVE BUT TO REFER THE MATTER TO THE DEPARTMENT OF JUSTICE FOR INSTITUTION OF LEGAL PROCEEDINGS.