B-154746, OCT. 6, 1964

B-154746: Oct 6, 1964

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IS INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $536.90. THE ESTATE WAS CLOSED ON MARCH 4. THE FIRST NOTICE OF THE GOVERNMENT'S CLAIM WAS RECEIVED BY YOUR CLIENT. WHO WAS ADMINISTRATRIX OF THE ESTATE. YOUR MAIN CONTENTION IS THAT SINCE FINAL DISTRIBUTION OF THE ESTATE WAS MADE PRIOR TO NOTICE OF THE GOVERNMENT'S CLAIM. THE CLAIM IS BARRED UNDER THE CONTROLLING STATUTES OF THE STATE OF OHIO. AS WAS STATED IN THE LETTER OF JUNE 17: "IT HAS BEEN HELD THAT LACK OF NOTICE OF THE GOVERNMENT'S CLAIM AGAINST THE ESTATE PRIOR TO THE PROBATE COURT'S FINAL DECREE OF DISTRIBUTION AND DISCHARGE OF THE LEGAL REPRESENTATIVE OF THE ESTATE. IT ALSO HAS BEEN HELD THAT PERSONS OR HEIRS RECEIVING SUCH PAYMENTS ACQUIRE NO RIGHT TO THEM AND THE COURTS CONSISTENTLY HAVE HELD THAT THEY ARE BOUND IN EQUITY AND GOOD CONSCIENCE TO MAKE RESTITUTION.

B-154746, OCT. 6, 1964

TO MR. FRANK MANCINO:

BY LETTER OF JUNE 23, 1964, YOU FURTHER QUESTION THE POSITION TAKEN BY THE CLAIMS DIVISION OF THIS OFFICE IN LETTERS DATED MAY 20 AND JUNE 17, 1964, THAT YOUR CLIENT MRS. ETHEL W. ELSON, AS SOLE DISTRIBUTEE OF THE ESTATE OF MARIA WADEN, IS INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $536.90, CONSTITUTING NET OVERPAYMENTS OF SOCIAL SECURITY BENEFITS TO MRS. WADEN DURING HIS LIFETIME AND REMAINING UNCOLLECTED. THE ESTATE WAS CLOSED ON MARCH 4, 1963, AND THE FIRST NOTICE OF THE GOVERNMENT'S CLAIM WAS RECEIVED BY YOUR CLIENT, WHO WAS ADMINISTRATRIX OF THE ESTATE, THROUGH A LETTER DATED MARCH 5, 1963, FROM THE SOCIAL SECURITY ADMINISTRATION. YOUR MAIN CONTENTION IS THAT SINCE FINAL DISTRIBUTION OF THE ESTATE WAS MADE PRIOR TO NOTICE OF THE GOVERNMENT'S CLAIM, THE CLAIM IS BARRED UNDER THE CONTROLLING STATUTES OF THE STATE OF OHIO.

AS WAS STATED IN THE LETTER OF JUNE 17:

"IT HAS BEEN HELD THAT LACK OF NOTICE OF THE GOVERNMENT'S CLAIM AGAINST THE ESTATE PRIOR TO THE PROBATE COURT'S FINAL DECREE OF DISTRIBUTION AND DISCHARGE OF THE LEGAL REPRESENTATIVE OF THE ESTATE, DOES NOT PRECLUDE THE UNITED STATES FROM PURSUING ITS RIGHTS AGAINST THE HEIRS OR DISTRIBUTEES. SEE UNITED STATES V. ANDERSON, 66 F.SUPP. 870; UNITED STATES V. SUMMERLIN, 310 U.S. 414; UNITED STATES V. GIBSON, 101 F.SUPP. 225; UNITED STATES V. LUCE, 78 F.SUPP. 241; AND UNITED STATES V. SWANSON, 75 F.SUPP. 118. IT ALSO HAS BEEN HELD THAT PERSONS OR HEIRS RECEIVING SUCH PAYMENTS ACQUIRE NO RIGHT TO THEM AND THE COURTS CONSISTENTLY HAVE HELD THAT THEY ARE BOUND IN EQUITY AND GOOD CONSCIENCE TO MAKE RESTITUTION. SEE BARNES, ET AL. V. DISTRICT OF COLUMBIA, 22 C.CLS. 366; UNITED STATES V. BURCHARD, 125 U.S. 176; WISCONSIN CENTRAL RAILROAD V. UNITED STATES, 164 U.S. 190; AND THE CASES COLLECTED AND DISCUSSED IN UNITED STATES V. SUTTEN CHEMICAL COMPANY, 11 F.2ND AND 24, AND 63 A.L.R. 1346.'

YOU STATE THAT THE DECISIONS CITED ARE NOT APPLICABLE. WE HAVE CAREFULLY CONSIDERED THE RULE OF LAW AS RELATED TO YOUR CLIENT'S SITUATION AND MUST AGAIN CONCLUDE THAT IT APPLIES. FOR A STATEMENT OF THE PRINCIPLES INVOLVED COVERING FACTS CLOSELY ANALOGOUS TO THOSE HEREIN CONSIDERED, SEE UNITED STATES V. SNYDER,207 F.SUPP. 189 (1962).

TWO OTHER QUESTIONS WHICH YOU RAISE WOULD APPEAR TO MERIT ADDITIONAL COMMENT. FIRST, YOU QUESTION OUR CONCLUSION THAT THE OVERPAYMENTS MADE TO MARIA WADEN DURING HER LIFETIME BECAME A PART OF HER ESTATE. IN THIS CONNECTION IT NEED ONLY BE SAID THAT SINCE THE ASSETS OF MARIA WADEN'S ESTATE EXCEEDED THE AMOUNT OF HER INDEBTEDNESS TO THE UNITED STATES, SUCH ASSETS WERE REQUIRED TO BE UTILIZED FIRST IN SATISFACTION OF THE GOVERNMENT'S CLAIM. SECTIONS 3466 AND 3467 OF THE REVISED STATUTES, 31 U.S.C. 191 AND 192, PROVIDE, IN PART, THAT:

"WHENEVER ANY PERSON INDEBTED TO THE UNITED STATES IS INSOLVENT, OR WHENEVER THE ESTATE OF ANY DECEASED DEBTOR, IN THE HANDS OF THE EXECUTORS OR ADMINISTRATORS, IS INSUFFICIENT TO PAY ALL THE DEBTS DUE FROM THE DECEASED, THE DEBTS DUE TO THE UNITED STATES SHALL BE FIRST SATISFIED * *

"EVERY EXECUTOR, ADMINISTRATOR, OR ASSIGNEE, OR OTHER PERSON, WHO PAYS, IN WHOLE OR IN PART, ANY DEBT DUE BY THE PERSON OR ESTATE FOR WHOM OR FOR WHICH HE ACTS BEFORE HE SATISFIES AND PAYS THE DEBTS DUE TO THE UNITED STATES FROM SUCH PERSON OR ESTATE,SHALL BECOME ANSWERABLE IN HIS OWN PERSON AND ESTATE TO THE EXTENT OF SUCH PAYMENTS FOR THE DEBTS SO DUE TO THE UNITED STATES, OR FOR SO MUCH THEREOF AS MAY REMAIN DUE AND UNPAID.'

TO THE EXTENT THAT MRS. ELSON RECEIVED ASSETS OF THE ESTATE EQUIVALENT TO THE AMOUNT OVERPAID TO MARIA WADEN, SHE RECEIVED MONEYS OF THE UNITED STATES AND IS HOLDING THEM IN TRUST FOR IT. THE COURT'S STATEMENT IN UNITED STATES V. ANDERSON, 66 F.SUPP. 870, 871, IS PARTICULARLY APPROPRIATE:

"THE GOVERNMENT HERE DOES NOT SEEK TO ENFORCE ITS RIGHTS AGAINST THE ESTATE. IT SEEKS TO ENFORCE A TRUST. IT CONTENDS THAT THE HEIR HOLDS AN AMOUNT EQUAL TO THE CLAIM IN TRUST FOR IT. * * *"

SECOND, YOU CONTEND THAT SINCE THESE PAYMENTS WERE MADE BY REASON OF AN INNOCENT ERROR, IT WOULD BE INEQUITABLE TO HOLD MARIA WADEN'S DAUGHTER LIABLE FOR ANY REFUND WHATSOEVER. IN THIS REGARD, WE FAIL TO SEE THE INEQUITY IN HOLDING MRS. ELSON LIABLE FOR AN AMOUNT WHICH, IN THE FIRST INSTANCE, SHOULD HAVE BEEN SATISFIED FROM ASSETS OF THE WADEN ESTATE AND WHICH PROPERLY WOULD NOT HAVE BEEN DISTRIBUTED TO HER BUT FOR THE FILING OF THE GOVERNMENT'S CLAIM AFTER THE CLOSE OF PROBATE PROCEEDINGS. AND IT IS A LONG-ESTABLISHED PRINCIPLE OF PUBLIC POLICY THAT LACHES IS NOT IMPUTABLE TO THE GOVERNMENT, AND THAT THE UNITED STATES IS NOT BOUND BY STATE STATUTES OF LIMITATIONS UNLESS CONGRESS HAS CLEARLY MANIFESTED THE INTENTION THAT IT SHOULD BE SO BOUND. SEE UNITED STATES V. SUMMERLIN, ABOVE.

ACCORDINGLY, WE MUST SUSTAIN OUR PRIOR DETERMINATION IN THE MATTER. AND WE MUST ADVISE THAT IF PAYMENT OF THE AMOUNT DUE IS NOT MADE WITHIN 30 DAYS, WE SHALL REFER THE GOVERNMENT'S CLAIM TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE ACTION.