B-124480, AUG. 17, 1955

B-124480, AUG. 17, 1955

TO MASTER SERGEANT ROBERT F. ALLEN, RA 33 408 715:

BY LETTER DATED APRIL 26, 1955, THE SETTLEMENTS DIVISION, FINANCE CENTER, U.S. ARMY, INDIANAPOLIS 49, INDIANA, FORWARDED A STATEMENT EXECUTED BY YOU, DATED MARCH 18, 1955, RELATIVE TO YOUR INDEBTEDNESS TO THE UNITED STATES IN THE AMOUNT OF $1,370.19, PLUS INTEREST AT FOUR PERCENT PER ANNUM ON $1,145.33 FROM SEPTEMBER 16, 1954, UNTIL PAID. ALSO FORWARDED WERE PHOTOSTATIC COPIES OF "AGREEMENT FOR DISSOLUTION OF PARTNERSHIP AND SALE OF BUSINESS TO REMAINING PARTNER" AND "AFFIDAVIT OF PUBLICATION OF "NOTICE OF DISSOLUTION OF PARTNERSHIP.'"

AS WAS INDICATED IN OUR LETTER DATED OCTOBER 5, 1954, TO THE COMMANDING GENERAL, FINANCE CENTER, U.S. ARMY, YOUR INDEBTEDNESS REPRESENTS THE AMOUNT DUE THE UNITED STATES BY REASON OF THE DEFAULT ON A LOAN MADE TO YOU AND JAMES A. DYE WHICH HAD BEEN GUARANTEED BY THE VETERANS ADMINISTRATION. FOLLOWING THE DEFAULT, THE BALANCE REMAINING DUE ON THE LOAN WAS PAID TO THE BANK OF AMERICA, NATIONAL TRUST AND SAVINGS ASSOCIATION, 650 SOUTH SPRING STREET, LOS ANGELES, CALIFORNIA, BY THE VETERANS ADMINISTRATION PURSUANT TO TITLE III OF THE ACT OF JUNE 22, 1944, 58 STAT. 291, AS AMENDED. THE UNITED STATES THEN BECAME SUBROGATED TO ALL THE RIGHTS OF THE BANK AS AGAINST DYE AND YOURSELF. DYE, HOWEVER, WAS DISCHARGED IN BANKRUPTCY ON JUNE 1, 1949, AND SUCH DISCHARGE CONSTITUTES A LEGAL DEFENSE INSOFAR AS HIS LIABILITY TO THE UNITED STATES IN THIS MATTER IS CONCERNED.

IT APPEARS THAT THE FUNDS IN QUESTION WERE BORROWED FOR USE IN A RESTAURANT BUSINESS WHICH WAS OPERATED BY YOU AND DYE UNTIL THE DISSOLUTION OF YOUR PARTNERSHIP IN 1947. IT FURTHER APPEARS FROM THE PHOTOSTATIC COPY OF THE DISSOLUTION AGREEMENT FURNISHED BY YOU THAT DYE "ASSUMED ALL INDEBTEDNESSES AND LIABILITIES" OF THE PARTNERSHIP. YOU CONTEND, IN EFFECT, THAT THE ASSUMPTION BY DYE OF THE INDEBTEDNESS OF THE PARTNERSHIP SHOULD OPERATE TO RELIEVE YOU OF YOUR OBLIGATION AS TO THE LOAN IN QUESTION HERE.

INASMUCH AS IT APPEARS THAT YOU AND DYE WERE JOINTLY AND SEVERALLY LIABLE ON THE LOAN, UPON DEFAULT THE BANK OR ITS SUBROGEE, THE UNITED STATES, BECAME ENTITLED TO LOOK TO EITHER OR BOTH OF YOU FOR REPAYMENT. SINCE RECOURSE TO DYE HAS BEEN FORECLOSED BY HIS DISCHARGE IN BANKRUPTCY, THE UNITED STATES IS ENTITLED TO LOOK TO YOU ALONE FOR REPAYMENT OF THE ENTIRE DEBT. FURTHER, IT IS CLEAR AS A MATTER OF LAW THAT THE VESTED RIGHTS OF THE UNITED STATES MAY NOT BE AFFECTED BY A PRIVATE AGREEMENT BETWEEN YOU AND DYE. IN OTHER WORDS, THE ASSUMPTION BY DYE OF THE DEBT, TO WHICH ASSUMPTION NEITHER THE BANK NOR THE UNITED STATES AGREED, MAY HAVE OPERATED TO CREATE A PERSONAL OBLIGATION ON HIS PART TO YOU, BUT IT COULD NOT HAVE OPERATED TO RELIEVE YOU OF YOUR OBLIGATION TO THE BANK OR ITS SUBROGEE.

SECTION 15036 OF THE CALIFORNIA CORPORATIONS CODE PROVIDES IN PART AS FOLLOWS:

"/1) THE DISSOLUTION OF THE PARTNERSHIP DOES NOT OF ITSELF DISCHARGE THE EXISTING LIABILITY OF ANY PARTNER.

"/3) WHERE A PERSON AGREES TO ASSUME THE EXISTING OBLIGATIONS OF A DISSOLVED PARTNERSHIP, THE PARTNERS WHOSE OBLIGATIONS HAVE BEEN ASSUMED SHALL BE DISCHARGED FROM ANY LIABILITY TO ANY CREDITOR OF THE PARTNERSHIP WHO, KNOWING OF THE AGREEMENT, CONSENTS TO A MATERIAL ALTERATION IN THE NATURE OR TIME OF PAYMENT OF SUCH OBLIGATIONS.'

WHILE THE PRESENT RECORD INDICATES THAT THE LOAN WAS MADE TO YOU AND DYE AS INDIVIDUALS RATHER THAN AS A PARTNERSHIP, IT IS EVIDENT FROM THE ABOVE- QUOTED STATUTE THAT EVEN IF THE LOAN HAD BEEN MADE TO THE PARTNERSHIP THE ASSUMPTION OF THE DEBT BY DYE COULD NOT DISCHARGE YOU WITHOUT THE CONSENT OF THE CREDITOR. THERE IS NO EVIDENCE OF RECORD THAT SUCH CONSENT WAS GRANTED. NEITHER DOES IT APPEAR THAT THERE WAS ANY REASON FOR THE CREDITOR TO CONSENT TO YOUR RELEASE.

ACCORDINGLY, YOU ARE REQUESTED TO MAKE ARRANGEMENTS FOR THE PAYMENT OF YOUR INDEBTEDNESS WITHOUT FURTHER DELAY.