B-131933, JUN. 25, 1957

B-131933, JUN. 25, 1957

TO MR. ELWOOD N. WORKMAN:

WE HAVE A LETTER DATED APRIL 29, 1957, FROM MR. THOMAS W. DALEY, ATTORNEY, WRITTEN ON YOUR BEHALF CONCERNING YOUR INDEBTEDNESS TO THE UNITED STATES.

THE RECORD SHOWS THAT ADJUSTED SERVICE CERTIFICATE NO. 3356253 HAVING A FACE VALUE OF $1,031 WAS ISSUED TO AND RECEIVED BY YOU. ON APRIL 6, 1931, A LOAN IN THE AMOUNT OF $500 WAS GRANTED TO YOU ON THE SECURITY OF THIS CERTIFICATE. WHEN YOU APPLIED FOR FINAL SETTLEMENT IN MAY 1936, IN ACCORDANCE WITH THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT. 1099, THE LOAN WITH INTEREST THROUGH SEPTEMBER 30, 1931, $510.88 WAS DEDUCTED FROM THE FACE VALUE OF THE CERTIFICATE AND THE BALANCE, $520.12 CERTIFIED FOR PAYMENT IN ADJUSTED SERVICE BONDS AND A CHECK FOR $20.12. YOU PRESENTED THE BONDS FOR PAYMENT AND A CHECK WAS ISSUED JULY 2, 1936. ON MARCH 14, 1945, THE DEPARTMENT OF THE ARMY CERTIFIED A NEW ADJUSTED SERVICE CREDIT FOR THE REASON THAT YOU HAD ERRONEOUSLY BEEN GIVEN CREDIT FOR YOUR ENTIRE PERIOD OF SERVICE FROM OCTOBER 3, 1917 TO JANUARY 20, 1919, BUT YOU WERE NOT ENTITLED TO CREDIT FROM MAY 10, 1918 TO JANUARY 7, 1919, WHILE ON AN INDEFINITE FURLOUGH. THE FACE VALUE OF THE ADJUSTED SERVICE CERTIFICATE WAS THEREFORE REDUCED TO $432. THIS AMOUNT WAS APPLIED TO YOUR LOAN INDEBTEDNESS OF $510.88 LEAVING A BALANCE OF $78.88 OVERPAID UPON WHICH, UNDER THE NOTE SPECIFIED BY YOU TO SECURE THE LOAN, INTEREST IS ACCRUING. NO INTEREST WAS DEMANDED ON THE AMOUNT OF $520.12 PAID IN FINAL SETTLEMENT OF THE CERTIFICATE. YOU WERE INFORMED OF THE OVERPAYMENT IN 1945 AND HAVE SINCE BEEN CONTACTED AT VARIOUS TIMES CONCERNING YOUR INDEBTEDNESS. THE ONLY PAYMENT CREDITED TO YOUR INDEBTEDNESS TO DATE HAS BEEN THE AMOUNT OF UNITED STATES TREASURER CHECK NO. 92124 FOR $10, DATED APRIL 22, 1957.

THE LETTER WRITTEN ON YOUR BEHALF CONCERNS THE ACCRUAL OF INTEREST UPON THE AMOUNT OF $78.88 REPRESENTING THE EXCESS LOAN, AND IT IS URGED THAT SINCE NO FRAUD, MISREPRESENTATION, OR ACT OF OMISSION IS IMPUTABLE TO YOU, ASSESSMENT OF INTEREST IS NOT IN LINE WITH THE "LATEST" DECISIONS OF OUR OFFICE ON THE MATTER, REFERENCE BEING MADE TO 18 COMP. GEN. 996. IT IS FURTHER STATED IN YOUR ATTORNEY'S LETTER THAT IT HAS BEEN HELD BY THE COURTS THAT INTEREST IS NOT RECOVERABLE WHERE MONEY HAS BEEN RECEIVED AND PAID BY MISTAKE AND NEITHER FRAUD NOR SURPRISE IS IMPUTABLE TO EITHER PARTY, CITING IN SUPPORT THEREOF JACOBS V. ADAMS, 1 DALLAS (U.S.) 55. THAT CASE INVOLVED A MERE OVERPAYMENT, NO NOTE BEARING INTEREST, OR PRIOR DEMAND FOR PAYMENT BEING INVOLVED, AND IS NOT CONTROLLING HERE. ATTENTION IS INVITED TO UNITED STATES V. BENTLEY, 107 F.2D 382, AND UNITED STATES V. GUDEWICZ, 45 F.SUPP. 787, INVOLVING OVERPAYMENTS SUCH AS HERE INVOLVED, WHEREIN IT WAS HELD THAT THE GOVERNMENT WAS ENTITLED TO RECOVERY OF THE AMOUNTS OVERPAID, PLUS INTEREST.

WE HAVE HELD CONSISTENTLY THAT INTEREST IS CHARGEABLE ON ALL UNLAWFUL OR EXCESS LOANS ON THE BASIS OF THE NOTE OR NOTES ON WHICH MADE, UNTIL PAID, NOTWITHSTANDING FAILURE OF THE SECURITY, AND THAT SECTION 2 OF THE ADJUSTED COMPENSATION PAYMENT ACT, 1936, 49 STAT. 1100, IS WITHOUT EFFECT TO STOP THE RUNNING OF INTEREST ON SUCH LOANS AS OF SEPTEMBER 30, 1931, BECAUSE THE STATUTE RELATES ONLY TO INTEREST ON LOANS "MADE PURSUANT TO LAW.' YOU WILL NOTE THAT THE CORRECT AMOUNT DUE ON THE ADJUSTED SERVICE CERTIFICATE $432 WAS APPLIED AGAINST YOUR INDEBTEDNESS ON THE NOTE AS OF OCTOBER 31, 1931, $510.88, AND INTEREST WAS DEMANDED ON THE DIFFERENCE OF $78.88. THE RULE REFERRED TO IN THE FIRST SENTENCE OF THE PARAGRAPH IS EQUALLY APPLICABLE TO LOANS PROCURED THROUGH ACTS OF NEGLIGENCE, OMISSION, OR FRAUD IMPUTABLE TO THE VETERAN AND TO EXCESS LOANS MADE UNDER CIRCUMSTANCES SUCH AS INVOLVED IN YOUR CASE. CF. 16 COMP. GEN. 287, 17 ID. 99. THE RULE WAS RESTATED IN 18 COMP. GEN. 996, SPECIFIC REFERENCE BEING MADE THEREIN TO 16 COMP. GEN. 287 AND 17 COMP. GEN. 99, AND THERE APPLIED TO AN ILLEGAL LOAN IMPUTABLE TO THE VETERAN. APPLICATION OF THE RULE TO THE FACTS THERE CONSIDERED DID NOT, AS SUGGESTED BY YOUR ATTORNEY, AFFECT IN ANY WAY OUR DECISIONS CONCERNING INTEREST ON EXCESS LOANS SUCH AS HERE INVOLVED.

YOUR ATTORNEY, IN REVIEWING THE VARIOUS OPINIONS OF OUR OFFICE STATES THAT IT APPEARS THERE WAS ENACTED "A LITTLE ADMINISTRATIVE LEGISLATION" IN 17 COMP. GEN. 99 IN HOLDING THAT SECTION 2 OF THE ADJUSTED COMPENSATION ACT OF 1936, WAS WITHOUT EFFECT TO STOP THE RUNNING OF INTEREST "ON SUCH LOANS * * * BECAUSE IT RELATES ONLY TO INTEREST ON LOANS WHICH DO NOT EXCEED THE FACE VALUE OF THE ADJUSTED SERVICE CERTIFICATE ISSUED PURSUANT TO LAW.' HE TAKES EXCEPTION TO THE WORDS "LOANS WHICH DO NOT EXCEED" INASMUCH AS SUCH WORDS DO NOT APPEAR IN THE ACT, AND STATES THAT THE ACT REFERS ONLY TO THE "FACE VALUE OF SUCH CERTIFICATES.' IT APPEARS SUFFICIENT TO POINT OUT IN REPLY THERETO THAT SECTION 2 OF THE CITED ACT IS BY ITS TERMS APPLICABLE TO "EACH LOAN MADE PRIOR TO JANUARY 27, 1936, PURSUANT TO LAW.' SINCE THE EXCESS PORTION OF YOUR LOAN WAS NOT MADE PURSUANT TO LAW, NO BASIS EXISTS FOR APPLYING THE PROVISIONS OF SECTION 2 OF THE ACT.

IN VIEW OF THE FOREGOING, THE DEMAND FOR PAYMENT OF YOUR INDEBTEDNESS IN THE PRINCIPAL AMOUNTS OF $520.18 AND $78.88, PLUS INTEREST ON THE LATTER AMOUNT WHICH IS ACCRUING DAILY, IS SUSTAINED.

WHILE YOUR ATTORNEY INDICATES THAT YOUR FINANCIAL CONDITION IS SUCH THAT PAYMENT "IS OUT OF THE QUESTION" AND THAT ANY FURTHER VOLUNTARY DEDUCTIONS FROM YOUR PAY IS NOT AT ALL PRACTICABLE, INFORMATION AVAILABLE IN OUR OFFICE DOES NOT SUBSTANTIATE THIS CONTENTION. THE SUPPOSED HARDSHIP OF REFUNDING THE AMOUNT DUE THE UNITED STATES CANNOT STAND AGAINST THE INJUSTICE OF KEEPING WHAT NEVER RIGHTFULLY BELONGED TO YOU AT ALL. CF. UNITED STATES V. BENTLEY, SUPRA.

IN VIEW OF THE LENGTH OF TIME YOUR INDEBTEDNESS HAS BEEN PENDING AND AS INTEREST ON THE SUM OF $78.88 IS ACCRUING DAILY, PROMPT ARRANGEMENTS SHOULD BE MADE FOR SETTLEMENT THEREOF EITHER BY IMMEDIATE PAYMENT IN FULL OR THROUGH INSTALLMENTS BY VOLUNTARY DEDUCTIONS FROM YOUR PAY.