B-159310, JULY 28, 1966, 46 COMP. GEN. 98

B-159310: Jul 28, 1966

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1966: THIS IS IN REFERENCE TO YOUR LETTER OF MAY 27. SUCH PAYMENTS OR ADVANCES WOULD BE MADE PURSUANT TO A COURT ORDER AS A CONDITION FOR THE APPOINTMENT OF A RECEIVER OR HIS CONTINUANCE IN OFFICE WHERE THE ASSETS OF THE ESTATE ARE INSUFFICIENT OR OF UNCERTAIN VALUE. A LICENSEE OR ANY OTHER PERSON HAS ENGAGED OR IS ABOUT TO ENGAGE IN ANY ACTS OR PRACTICES WHICH CONSTITUTE OR WILL CONSTITUTE A VIOLATION OF ANY PROVISION OF THIS ACT. SUCH COURTS SHALL HAVE JURISDICTION OF SUCH ACTIONS AND. UPON A SHOWING BY THE ADMINISTRATION THAT SUCH LICENSEE OR OTHER PERSON HAS ENGAGED OR IS ABOUT TO ENGAGE IN ANY SUCH ACTS OR PRACTICES. THE COURT SHALL HAVE JURISDICTION IN ANY SUCH PROCEEDING TO APPOINT A TRUSTEE OR RECEIVER TO HOLD OR ADMINISTER UNDER THE DIRECTION OF THE COURT THE ASSETS SO POSSESSED.

B-159310, JULY 28, 1966, 46 COMP. GEN. 98

COURTS - COSTS - AGENCIES OTHER THAN JUSTICE DEPARTMENT. NOTWITHSTANDING THE ATTORNEY GENERAL AS CHIEF LAW OFFICER OF THE GOVERNMENT HAS THE DUTY TO INSTITUTE, PROSECUTE AND DEFEND ACTIONS ON BEHALF OF THE UNITED STATES IN MATTERS INVOLVING COURT PROCEEDINGS, DEFRAYING EXPENSES FROM DEPARTMENT OF JUSTICE APPROPRIATIONS, THE SMALL BUSINESS ADMINISTRATION HAVING BEEN AUTHORIZED PURSUANT TO 15 U.S.C. 634/B) TO RESORT TO LITIGATION IN THE COURTS IN THE PERFORMANCE OF ITS DUTIES, MAY ASSUME THE EXPENSES OF LITIGATION REQUIRED INCIDENT TO EXERCISING THE RESPONSIBILITIES IMPOSED BY THE SMALL BUSINESS INVESTMENT ACT, 15 U.S.C. 687C/B), INCLUDING THE FEES AND EXPENSES OF APPOINTING A RECEIVER, THE EXPENSES TO BE PAID FROM FUNDS OR APPROPRIATIONS AVAILABLE FOR THE EXPENSES OF THE ADMINISTRATION.

TO THE ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION, JULY 28, 1966:

THIS IS IN REFERENCE TO YOUR LETTER OF MAY 27, 1966, REQUESTING A DECISION AS TO WHETHER THE SMALL BUSINESS ADMINISTRATION (SBA) HAS AUTHORITY TO PAY COSTS, FEES AND EXPENSES OF A RECEIVER APPOINTED UNDER SECTION 311/B) OR THE SMALL BUSINESS INVESTMENT ACT OF 1958, AS ADDED BY THE SMALL BUSINESS INVESTMENT AMENDMENTS OF 1961, PUBLIC LAW 87-341, 75 STAT. 752, 15 U.S.C. 687C/B). SUCH PAYMENTS OR ADVANCES WOULD BE MADE PURSUANT TO A COURT ORDER AS A CONDITION FOR THE APPOINTMENT OF A RECEIVER OR HIS CONTINUANCE IN OFFICE WHERE THE ASSETS OF THE ESTATE ARE INSUFFICIENT OR OF UNCERTAIN VALUE.

SECTION 311, 15 U.S.C. 687C, PROVIDES:

SEC. 311. (A) WHENEVER, IN THE JUDGEMENT OF THE ADMINISTRATION, A LICENSEE OR ANY OTHER PERSON HAS ENGAGED OR IS ABOUT TO ENGAGE IN ANY ACTS OR PRACTICES WHICH CONSTITUTE OR WILL CONSTITUTE A VIOLATION OF ANY PROVISION OF THIS ACT, OR OF ANY RULE OR REGULATION UNDER THIS ACT, OR OF ANY ORDER ISSUED UNDER THIS ACT, THE ADMINISTRATION MAY MAKE APPLICATION TO THE PROPER DISTRICT COURT OF THE UNITED STATES OR A UNITED STATES COURT OF ANY PLACE SUBJECT TO THE JURISDICTION OF THE UNITED STATES FOR AN ORDER ENJOINING SUCH ACTS OR PRACTICES, OR FOR AN ORDER ENFORCING COMPLIANCE WITH SUCH PROVISION, RULE, REGULATION, OR ORDER, AND SUCH COURTS SHALL HAVE JURISDICTION OF SUCH ACTIONS AND, UPON A SHOWING BY THE ADMINISTRATION THAT SUCH LICENSEE OR OTHER PERSON HAS ENGAGED OR IS ABOUT TO ENGAGE IN ANY SUCH ACTS OR PRACTICES, A PERMANENT OR TEMPORARY INJUNCTION, RESTRAINING ORDER, OR OTHER ORDER, SHALL BE GRANTED WITHOUT BOND. THE PROCEEDINGS IN SUCH A CASE SHALL BE MADE A PREFERRED CAUSE AND SHALL BE EXPEDITED IN EVERY WAY.

(B) IN ANY SUCH PROCEEDING THE COURT AS A COURT OF EQUITY MAY, TO SUCH EXTENT AS IT DEEMS NECESSARY, TAKE EXCLUSIVE JURISDICTION OF THE LICENSEE OR LICENSEES AND THE ASSETS THEREOF, WHEREVER LOCATED; AND THE COURT SHALL HAVE JURISDICTION IN ANY SUCH PROCEEDING TO APPOINT A TRUSTEE OR RECEIVER TO HOLD OR ADMINISTER UNDER THE DIRECTION OF THE COURT THE ASSETS SO POSSESSED.

IT IS STATED IN YOUR LETTER THAT PROCEEDINGS ARE INSTITUTED BY SBA UNDER SECTION 311 AFTER CLEARANCE FROM THE DEPARTMENT OF JUSTICE AND IN THIS CONNECTION IT IS SAID THAT THE CONDUCT OF LITIGATION BY SBA'S ATTORNEYS IS COORDINATED WITH THE DEPARTMENT PURSUANT TO AN UNDERSTANDING REACHED IN EXCHANGE OF CORRESPONDENCE WITH THE DEPUTY ATTORNEY GENERAL. WE NOTE THE STATEMENT IN SUCH CORRESPONDENCE THAT "NONE OF THE ABOVE IS TO QUALIFY THE RIGHT OF SBA ATTORNEYS TO GO INTO COURT AND CONDUCT LITIGATION ARISING UNDER THE SMALL BUSINESS INVESTMENT ACT, ALTHOUGH JUSTICE BELIEVES THAT THERE MAY BE A FEW VERY UNUSUAL CASES WHICH IT WILL DESIRE TO HANDLE ITSELF;, IN ADDITION TO THE AUTHORITY OF SECTION 311, QUOTED ABOVE, REFERENCE IS MADE IN YOUR LETTER TO SECTION 5/B) OF THE SMALL BUSINESS ACT, 15 U.S.C. 634/B), WHICH AUTHORIZES THE ADMINISTRATOR TO SUE IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION, AND CONFERS ON HIM BROAD LIQUIDATION POWERS IN REALIZING PAYMENT ON SBA LOANS.

IT IS THE JUDGEMENT OF SBA, AS STATED IN YOUR LETTER, THAT THE AUTHORITY UNDER SECTION 5/B) OF THE SMALL BUSINESS ACT AND SECTION 311 OF THE SMALL BUSINESS INVESTMENT ACT OF 1958 TO INSTITUTE COURT PROCEEDINGS IN CONNECTION WITH THE PROPER EXERCISE OF ITS STATUTORY RESPONSIBILITIES, EMBRACES AUTHORITY TO DEFRAY NECESSARY LITIGATION EXPENSES, INCLUDING RECEIVER'S FEES AND EXPENSES, WHERE THE COURT DETERMINES THAT AN AGREEMENT ASSURING PAYMENT IS AN EQUITABLE REQUIREMENT, AND YOU ASK FOR OUR CONFIRMATION OF YOUR VIEWS IN THIS MATTER.

IT HAS BEEN HELD THAT FEES OF REFEREES OR SPECIAL MASTERS AND THE COSTS OF OTHER SPECIAL PROCEEDINGS LEGALLY ALLOWED BY A COURT ARE EXPENSES INCIDENT TO THE ACTION AND PAYABLE FROM APPROPRIATED FUNDS. SEE 8 COMP. GEN. 554. 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 ACTIONS 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 INVOLVED IN THE PROCEEDINGS. SEE 44 COMP. GEN. 463. SINCE THE SBA HAS STATUTORY AUTHORITY TO RESORT TO LITIGATION IN THE COURTS IN THE PERFORMANCE OF ITS DUTIES, AND THE INITIATION OF ACTIONS SUCH AS REFERRED TO IN YOUR LETTER IS NOT UNDER THE DIRECT CONTROL OF THE DEPARTMENT OF JUSTICE, IT WOULD BE WITHIN THE EXCEPTION TO THE GENERAL RULE AND THE EXPENSES INCIDENT THERETO, INCLUDING THE FEES OF A RECEIVER WHEN ORDERED BY THE COURT TO BE PAID, MAY BE DEFRAYED FROM FUNDS OR APPROPRIATIONS AVAILABLE FOR EXPENSES OF THE SBA. SEE 15 COMP. GEN. 81; 19 ID. 551.