B-4473, JULY 24, 1939, 19 COMP. GEN. 95

B-4473, JULY 24, 1939, 19 COMP. GEN. 95

INTEREST - TERMINATION DATE - PUBLIC LOANS REPAID BY BORROWER - PAYEE'S INDORSEMENT OF GOVERNMENT CHECK INDORSEMENT BY A GOVERNMENT BORROWER AND DELIVERY TO THE GOVERNMENT LENDING AGENCY OF A CHECK DRAWN ON THE TREASURER OF THE UNITED STATES PAYABLE TO THE BORROWER, THE LENDING AGENCY, AND OTHERS, CONSTITUTES PAYMENT ON THE BORROWER'S INDEBTEDNESS AS OF THE DATE OF SUCH INDORSEMENT AND DELIVERY, AND THE RUNNING OF INTEREST ON THE LOAN ACCOUNT IN THAT CONNECTION IS TO BE CONSIDERED AS TERMINATING AS OF SUCH DATE WHETHER THE ENTIRE PROCEEDS OF THE CHECK, OR ONLY A PORTION THEREOF, ARE APPLIED TO THE LOAN INDEBTEDNESS. 17 COMP. GEN. 526, IN WHICH ONLY MUTUAL CLAIMS ARE INVOLVED INSTEAD OF A CHECK PROPERLY INDORSED, DISTINGUISHED.

COMPTROLLER GENERAL BROWN TO THE SECRETARY OF AGRICULTURE, JULY 24, 1939:

REFERENCE IS MADE TO LETTER OF MAY 10, 1939, FROM THE ASSISTANT COMPTROLLER, FARM CREDIT ADMINISTRATION, AS FOLLOWS:

REFERENCE IS MADE TO YOUR CERTIFICATE OF SETTLEMENT NO. 10538984, ISSUED APRIL 29, 1939, IN FAVOR OF THE FIRST CITIZENS BANK, WILDROSE, NORTH DAKOTA, BY WHICH $105 OF THE PROCEEDS OF CHECK NO. 328,747, DRAWN ON THE TREASURER OF THE UNITED STATES, PAYABLE TO THE ORDER OF LEWIS DAHL, HENRY MORTINSON, L. R. BAIRD, RECEIVER, FIRST CITIZENS BANK, WILDROSE, NORTH DAKOTA, J. W. REEP, AND THE GOVERNOR OF THE FARM CREDIT ADMINISTRATION, IN THE AMOUNT OF $136, WAS TRANSFERRED AND COVERED INTO THE TREASURY OF THE UNITED STATES, IN PARTIAL LIQUIDATION OF THE INDEBTEDNESS OF LEWIS DAHL OF WHEELOCK, NORTH DAKOTA, ON ACCOUNT OF LOAN NO. 32F 53046. MY LETTER TO YOUR OFFICE, DATED OCTOBER 3, 1938, REQUESTED THAT $31 OF THE PROCEEDS OF THE CHECK BE PAID TO THE FIRST CITIZENS BANK OF WILDROSE, AND THAT THE REMAINDER OF THE PROCEEDS BE APPORTIONED BETWEEN PRINCIPAL AND INTEREST TOWARD THE PARTIAL LIQUIDATION OF THE LOAN INDEBTEDNESS OF MR. DAHL TO THE FARM CREDIT ADMINISTRATION, USING DECEMBER 15, 1934, THE DATE, OR APPROXIMATE DATE, THE CHECK WAS ENDORSED BY MR. DAHL, AS THE DATE OF PAYMENT FOR THE PURPOSE OF TERMINATING THE ACCRUAL OF INTEREST. THIS BASIS FOR CREDITING THE LOAN INDEBTEDNESS WAS IN ACCORDANCE WITH THE RULE APPLIED BY YOUR OFFICE IN THE SOMEWHAT SIMILAR CASE OF W. D. LEGGE, SAID RULE HAVING BEEN SET FORTH IN LETTER FROM YOUR OFFICE DATED AUGUST 4, 1937 ( MISC-0580613 10580614-LP).

IN EACH OF THESE CASES, THE CHECK WAS DRAWN ON THE TREASURER OF THE UNITED STATES, WAS PAYABLE TO OUR BORROWER AND THE FARM CREDIT ADMINISTRATION, AND OTHERS, AND THE ONLY BASIS FOR APPLYING A DIFFERENT RULE FOR THE TERMINATION OF INTEREST, SINCE BOTH OF THESE CHECKS WERE ENDORSED BY THE BORROWER PAYEES BEFORE THEY WERE DELIVERED TO THIS OFFICE, MAY BE THAT IN THE LEGGE CASE THE ENTIRE PROCEEDS OF THE CHECK WERE ULTIMATELY APPLIED TOWARD THE LIQUIDATION OF HIS LOAN INDEBTEDNESS, WHEREAS THE ULTIMATE ACTION ON THE LEWIS DAHL CHECK APPLIED ONLY A PORTION OF THE PROCEEDS TO HIS LOAN INDEBTEDNESS TO THE FARM CREDIT ADMINISTRATION.

IT IS REQUESTED THAT THE ACTION IN THESE TWO CASES BE REVIEWED, AND THAT A SPECIFIC RULING BY THE COMPTROLLER GENERAL BE ISSUED FOR THE GUIDANCE OF THE OFFICE IN OTHER SIMILAR CASES, AND THAT IN THE EVENT IT IS FOUND THAT THE RULE APPLIED IN THE LEGGE CASE SHOULD HAVE BEEN APPLIED IN THE DAHL CASE, ACTION BE TAKEN TO REVISE THE SETTLEMENT OF APRIL 29, 1939, ACCORDINGLY.

INDORSEMENT BY THE BORROWER AND DELIVERY TO THE FARM CREDIT ADMINISTRATION OF A CHECK DRAWN ON THE TREASURER OF THE UNITED STATES PAYABLE TO THE BORROWER, THE FARM CREDIT ADMINISTRATION, AND OTHERS, CONSTITUTES PAYMENT ON THE BORROWER'S INDEBTEDNESS IN AN AMOUNT EQUAL TO HIS INTEREST IN SAID CHECK, AND SUCH BORROWER IS ENTITLED TO CREDIT OF SUCH AMOUNT ON HIS INDEBTEDNESS AS OF THE DATE OF INDORSEMENT AND DELIVERY OF SUCH CHECK. IN A CASE SUCH AS THIS AND THE LEGGE CASE, REFERRED TO IN THE LETTER, SUPRA, WHERE THERE IS INVOLVED A CHECK PROPERLY INDORSED AS DISTINGUISHED FROM CASES IN WHICH ONLY MUTUAL CLAIMS ARE INVOLVED, SUCH AS IN 17 COMP. GEN. 526, THE RUNNING OF INTEREST MUST BE CONSIDERED AS TERMINATING UPON THE DATE THE CHECK IS INDORSED AND DELIVERED BY THE BORROWER TO THE LENDING AGENCY.

SETTLEMENT NO. 10538984, DATED APRIL 29, 1939, INSOFAR AS IT AFFECTS THE LOAN ACCOUNT OF LEWIS DAHL WILL BE REVISED ACCORDINGLY.