B-149410, AUG. 16, 1962

B-149410: Aug 16, 1962

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WHILE YOUR LETTERS DO NOT INDICATE THE BASIS ON WHICH OUR OFFICE HAS BEEN REQUESTED TO RELEASE SUCH A LIEN IT IS PRESUMED THAT YOU HAVE REFERENCE TO THE PROVISIONS CONTAINED IN 28 U.S.C. 2410 (D). YOU REPORT THAT A JUDGMENT WAS OBTAINED IN THE AMOUNT OF $219.52 AGAINST VIRGIL J. JUDGMENT WAS TAKEN ON SEPTEMBER 30. THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF NEW HAVEN IS THE HOLDER OF A VETERANS ADMINISTRATION GUARANTEED LOAN ON PROPERTY PURCHASED BY THE VETERAN HAMILTON ON WHICH LOAN THE VETERAN IS IN DEFAULT. YOU STATE THAT FORECLOSURE COSTS AND ATTORNEYS FEES ARE ESTIMATED AT $750 AND IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO ACCEPT A DEED IN LIEU OF FORECLOSURE IF THE HAMILTONS COULD DELIVER A MERCHANTABLE TITLE.

B-149410, AUG. 16, 1962

TO MR. A. J. HASTINGS, ASSISTANT CHIEF, LOAN SERVICE AND CLAIMS SECTION, VETERANS ADMINISTRATION REGIONAL OFFICE:

YOUR LETTERS OF JUNE 15 AND JULY 24, 1962, ADDRESSED TO THE CLAIMS DIVISION OF THIS OFFICE REQUESTED THIS OFFICE TO RELEASE A LIEN ON CERTAIN REAL PROPERTY IN WHICH THE VETERANS ADMINISTRATION HAS AN INTEREST. WHILE YOUR LETTERS DO NOT INDICATE THE BASIS ON WHICH OUR OFFICE HAS BEEN REQUESTED TO RELEASE SUCH A LIEN IT IS PRESUMED THAT YOU HAVE REFERENCE TO THE PROVISIONS CONTAINED IN 28 U.S.C. 2410 (D).

IN YOUR LETTER OF JUNE 15, 1962, YOU REPORT THAT A JUDGMENT WAS OBTAINED IN THE AMOUNT OF $219.52 AGAINST VIRGIL J. HAMILTON IN FAVOR OF THE UNITED STATES OF AMERICA IN THE DISTRICT COURT OF THE UNITED STATES, SPRINGFIELD, ILLINOIS, CASE NO. 2801, FOR THE OVERPAYMENT OF ACCRUED LEAVE. JUDGMENT WAS TAKEN ON SEPTEMBER 30, 1960.

THE FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF NEW HAVEN IS THE HOLDER OF A VETERANS ADMINISTRATION GUARANTEED LOAN ON PROPERTY PURCHASED BY THE VETERAN HAMILTON ON WHICH LOAN THE VETERAN IS IN DEFAULT. YOU STATE THAT FORECLOSURE COSTS AND ATTORNEYS FEES ARE ESTIMATED AT $750 AND IT WAS DETERMINED TO BE IN THE BEST INTERESTS OF THE GOVERNMENT TO ACCEPT A DEED IN LIEU OF FORECLOSURE IF THE HAMILTONS COULD DELIVER A MERCHANTABLE TITLE. YOU STATE THAT UNLESS RELEASED, THE LIEN PRECLUDES SUCH ACCEPTANCE BY YOU. YOUR PROPOSAL TO OBTAIN TITLE WITHOUT FORECLOSURE PROCEEDINGS IS PREDICATED UPON A SAVINGS OF $750 FOR FORECLOSURE COSTS PLUS FIFTEEN MONTHS OF ADDITIONAL INTEREST WHICH WOULD BE REQUIRED TO BE ABSORBED IN THE EVENT FORECLOSURE PROCEEDINGS WERE RESORTED TO.

THE JUDGMENT REFERRED TO ABOVE WAS OBTAINED IN THE UNITED STATES DISTRICT COURT FOR THE OVERPAYMENT OF LEAVE AND TRAVEL ALLOWANCES WHILE MR. HAMILTON WAS IN THE ARMED SERVICES. UNDER ILLINOIS LAW A JUDGMENT LIEN IS CREATED ON THE REAL ESTATE OF THE JUDGMENT DEBTOR IN FAVOR OF THE JUDGMENT CREDITOR UPON SATISFACTION OF THE PROCEDURAL REQUIREMENTS OF THE LAW. SEE THE PROVISIONS IN CHAPTER 77, SECTION 69A, SMITH HURD ILLINOIS ANNOTATED STATUTES. IT IS THIS STATUTORY LIEN FROM WHICH YOU REQUEST A RELEASE UNDER THE PROVISIONS IN 28 U.S.C. 2410 (D).

SECTION 2410 (D), TITLE 28, U.S.C. PROVIDES AS FOLLOWS:

"WHENEVER ANY PERSON HAS A LIEN UPON ANY REAL OR PERSONAL PROPERTY, DULY RECORDED IN THE JURISDICTION IN WHICH THE PROPERTY IS LOCATED, AND A JUNIOR LIEN, OTHER THAN A TAX LIEN, IN FAVOR OF THE UNITED STATES ATTACHES TO SUCH PROPERTY, SUCH PERSON MAY MAKE A WRITTEN REQUEST TO THE OFFICER CHARGED WITH THE ADMINISTRATION OF THE LAWS IN RESPECT OF WHICH THE LIEN OF THE UNITED STATES ARISES, TO HAVE THE SAME EXTINGUISHED. IF AFTER APPROPRIATE INVESTIGATION, IT APPEARS TO SUCH OFFICER THAT THE PROCEEDS FROM THE SALE OF THE PROPERTY WOULD BE INSUFFICIENT TO WHOLLY OR PARTLY SATISFY THE LIEN OF THE UNITED STATES, OR THAT THE CLAIM OF THE UNITED STATES HAS BEEN SATISFIED OR BY LAPSE OF TIME OR OTHERWISE HAS BECOME UNENFORCEABLE, SUCH OFFICER SHALL SO REPORT TO THE COMPTROLLER GENERAL WHO MAY ISSUE A CERTIFICATE RELEASING THE PROPERTY FROM SUCH LIEN.'

THE PROVISION OF LAW QUOTED ABOVE REQUIRES AS CONDITION FOR THE EXECUTION OF A CERTIFICATE OF RELEASE BY THE COMPTROLLER GENERAL (1) THAT A WRITTEN APPLICATION THEREFOR BY THE SENIOR LIENHOLDER BE MADE TO THE OFFICER CHARGED WITH THE ADMINISTRATION OF THE LAWS IN RESPECT OF WHICH THE LIEN OF THE UNITED STATES ARISES, (2) THAT THE LIEN OF THE UNITED STATES ON SUCH PROPERTY BE JUNIOR AND OTHER THAN A TAX LIEN, AND (3) THAT A FINDING AND A REPORT THEREOF BE MADE BY THE OFFICER TO WHOM THE APPLICATION IS MADE THAT THE PROCEEDS FROM THE SALE OF THE PROPERTY WOULD BE INSUFFICIENT TO WHOLLY OR PARTLY SATISFY THE LIEN OF THE UNITED STATES, OR THAT THE CLAIM OF THE UNITED STATES HAS BEEN SATISFIED OR BY LAPSE OF TIME OR OTHERWISE HAS BECOME UNENFORCEABLE.

IT IS APPARENT FROM THE FACTS IN THE INSTANT CASE THAT THE CONDITIONS SET FORTH ABOVE HAVE NOT BEEN MET IN THE INSTANT CASE. WE HAVE CONTINUOUSLY REQUIRED ADHERENCE TO ALL SUCH CONDITIONS BEFORE A RELEASE MAY BE EXECUTED UNDER THE PROVISIONS OF LAW QUOTED. THEREFORE, UPON THE BASIS OF THE PRESENT RECORD, WE ARE UNABLE TO ASSIST YOUR AGENCY IN REGARD TO A RELEASE UNDER THE ABOVE-QUOTED STATUTE.

IT IS NOT CLEAR TO US, HOWEVER, THAT THE RELEASE OF THE PROPERTY UNDER THE ABOVE-MENTIONED STATUTE IS NECESSARY TO PROCEED IN THE MANNER SUGGESTED BY YOU. INSOFAR AS THE CONTINUING EFFECT OF THIS LIEN ON THE PROPERTY AFTER TITLE IS TAKEN IN THE NAME OF THE UNITED STATES, WHERE THE UNITED STATES IS ALSO THE BENEFICIAL LIENOR UNDER THE JUDGMENT LIEN, WE CALL TO YOUR ATTENTION THE GENERAL RULE HOLDING UNDER THE EQUITABLE DOCTRINE OF MERGER THAT THE ACQUISITION OF THE FEE IN THE LAND BY THE OWNER OF THE LIEN THEREON RESULTS IN A MERGER EXTINGUISHING THE LIEN. SEE IN RE MAY, 10 F.SUPP. 829. THUS UPON TITLE TO THIS PROPERTY VESTING IN THE UNITED STATES IT MAY WELL BE THAT ALL LIENS ON SUCH PROPERTY BY THE UNITED STATES WOULD BE EXTINGUISHED UNDER THE RULE STATED ABOVE.