B-143537, AUG. 10, 1960

B-143537, AUG. 10, 1960

TO LIEUTENANT COLONEL PAUL E. BRUEHL:

ON JULY 6, 1960, YOU WROTE TO THE GENERAL ACCOUNTING OFFICE REQUESTING RECONSIDERATION OF OUR ACTION OF JUNE 27, 1960, IN WHICH WE DISALLOWED YOUR CLAIM FOR THE RECOVERY OF MORTGAGE INSURANCE PREMIUM PAYMENTS AMOUNTING TO $176.65. THESE PAYMENTS WERE PAID BY THE DEPARTMENT OF THE ARMY TO THE FEDERAL HOUSING ADMINISTRATION PURSUANT TO SECTION 124 OF THE HOUSING ACT OF 1954, 68 STAT. 603.

PRIOR TO AUGUST 30, 1956, SUCH PAYMENTS WERE PROPERLY MADE BY THE DEPARTMENT OF THE ARMY ON A FEDERAL HOUSING ADMINISTRATION (FHA) INSURED MORTGAGE ON PROPERTY WHICH WAS BEING PURCHASED BY YOU AND LOCATED AT 6719 CHAMBERLAIN AVENUE, UNIVERSITY CITY, MISSOURI. ON AUGUST 30, 1956, YOU SOLD THIS PROPERTY TO INDIVIDUALS NOT ENTITLED TO HAVE SUCH PAYMENTS MADE BY THE ARMY IN THEIR BEHALF, BUT FAILED TO NOTIFY THE DEPARTMENT OF THE ARMY OF THE CONVEYANCE. CONSEQUENTLY, THE ARMY CONTINUED MAKING PAYMENTS UNTIL THE CONVEYANCE OF AUGUST 30 WAS DISCOVERED. THE FINANCE CENTER OF THE DEPARTMENT OF THE ARMY ISSUED A PAY ADJUSTMENT AUTHORIZATION AGAINST YOUR ACCOUNT AND THE $175.65 WAS RECOVERED FROM YOU.

OUR DISALLOWANCE WAS BASED UPON ARMY REGULATIONS IN EFFECT AT THE TIME OF THE CONVEYANCE WHICH PROVIDED FOR TERMINATION OF THE SERVICE MEMBER'S ELIGIBILITY FOR PAYMENTS OF MORTGAGE INSURANCE PREMIUMS BY THE ARMY WHEN HIS OWNERSHIP OF THE PROPERTY COVERED BY THE MORTGAGE CEASED. THE REGULATIONS FURTHER PROVIDED THAT WHEN IT WAS DETERMINED THAT A SERVICE MEMBER HAD TERMINATED OWNERSHIP OF PROPERTY COVERED BY THE ABOVE-CITED ACT AND HAD NOT REPORTED SUCH TERMINATION, A REPORT SHOULD BE MADE TO THE ARMY FINANCE CENTER TO ENABLE COLLECTION FROM THE MEMBER FOR MORTGAGE INSURANCE PREMIUMS PAID AFTER THE TERMINATION OF ELIGIBILITY. SEE PARAGRAPHS 8 AND 9, ARMY REGULATIONS NO. 608-8, DATED NOVEMBER 15, 1954. THESE REGULATIONS ALSO REQUIRED THAT AT THE TIME OF THE ISSUANCE OF THE CERTIFICATE OF ELIGIBILITY (FOR MORTGAGE INSURANCE) TO THE MEMBER HE BE IMPRESSED WITH HIS RESPONSIBILITY FOR NOTIFYING THE ARMY WHEN HIS ELIGIBILITY FOR PAYMENT OF THE MORTGAGE INSURANCE PREMIUM BY THE ARMY TERMINATED. ALSO, IN OUR DISALLOWANCE, WE SUGGESTED THAT THE MATTER OF MORTGAGE INSURANCE PREMIUM PAYMENTS INVOLVED HERE WAS FOR ADJUSTMENT BETWEEN YOU AND THE PERSONS TO WHOM YOU SOLD THE PROPERTY IN QUESTION.

YOUR REQUEST FOR REVIEW IS BASED ON THE PROPOSITION THAT YOU DID NOT KNOW OF THE EXISTENCE OF THE ABOVE-CITED REGULATIONS AND THEREFORE SHOULD NOT BE PENALIZED FOR YOUR FAILURE TO COMPLY. ALSO, YOU SAY YOU HAVE NO LEGAL BASIS FOR ACTION AGAINST THE PURCHASERS OF THE PROPERTY, SINCE THE MORTGAGE INSURANCE PREMIUMS PAID IN YOUR BEHALF COULD NOT BE USED FOR THE BENEFIT OF THE PURCHASERS INASMUCH AS THEY DID NOT QUALIFY FOR ARMY PAYMENT OF SUCH INSURANCE.

UNDER ARMY REGULATIONS NO. 608-8, AN ARMY MEMBER WHO WISHED TO OBTAIN MORTGAGE INSURANCE UNDER SECTION 124 OF THE HOUSING ACT OF 1954, AS AMENDED, ON WHICH THE DEPARTMENT OF THE ARMY WOULD PAY THE PREMIUM WAS REQUIRED TO APPLY FOR A CERTIFICATE OF ELIGIBILITY. IT IS OBVIOUS THAT IF A MEMBER MAKES AN APPLICATION FOR, AND IS GRANTED A CERTIFICATE OF ELIGIBILITY AND OBTAINS AN FHA INSURED MORTGAGE LOAN, THE DEPARTMENT OF THE ARMY WILL CONTINUE TO PAY THE MORTGAGE INSURANCE PREMIUMS FOR AN OTHERWISE ELIGIBLE MEMBER UNTIL NOTIFIED BY THE MEMBER THAT HIS OWNERSHIP OF THE PROPERTY INVOLVED HAS TERMINATED OR THAT HE WISHES SUCH PAYMENTS DISCONTINUED. THUS, REGARDLESS OF ANY SPECIFIC ARMY REGULATIONS, IT IS CLEAR YOU HAD A DUTY TO NOTIFY THE DEPARTMENT OF THE ARMY THAT YOU WERE TERMINATING YOUR OWNERSHIP OF THE PROPERTY IN ORDER THAT THE ARMY COULD DISCONTINUE MAKING THE MORTGAGE INSURANCE PREMIUM PAYMENTS WHICH IT HAD BEEN MAKING UNDER THE CERTIFICATE OF ELIGIBILITY AND FHA INSURED MORTGAGE LOAN YOU HAD APPLIED FOR AND HAD BEEN GRANTED.

MOREOVER, THERE IS A RULE OF LONG STANDING THAT IGNORANCE OF THE LAW (OR REGULATIONS) EXCUSES NO ONE. BARLOW V. UNITED STATES, 7 PET. (U.S.) 404, 410. IN APPLYING THIS RULE, THE SUPREME COURT OF THE UNITED STATES IN UTERMEHLE V. NORMENT, 197 U.S. 40, AT PAGE 55, STATED:

"WE KNOW OF NOW CASE WHERE MORE IGNORANCE OF THE LAW, STANDING ALONE, CONSTITUTES ANY EXCUSE OR DEFENSE AGAINST ITS ENFORCEMENT. IT WOULD BE IMPOSSIBLE TO ADMINISTER THE LAW IF IGNORANCE OF ITS PROVISIONS WERE A DEFENSE THERETO.'

CONCERNING THE LEGAL BASIS FOR AN ACTION AGAINST THE PURCHASERS TO RECOVER THE AMOUNTS DEDUCTED FROM YOUR PAY FOR THE MORTGAGE INSURANCE PREMIUM PAYMENTS, THE RECORD DISCLOSES THAT THE PURCHASERS OF YOUR PROPERTY ASSUMED YOUR FHA INSURED MORTGAGE LOAN. GENERALLY, A MORTGAGOR WHO SELLS HIS PROPERTY TO A PURCHASER WHO ASSUMES THE MORTGAGE IS LIABLE ON THE MORTGAGE IN CASE OF A DEFAULT BY THE PURCHASER. THUS, SUBSEQUENT TO YOUR TERMINATION OF OWNERSHIP OF THE PROPERTY, WE PRESUME THAT IF THE PURCHASERS HAD BEEN REQUESTED BY THE MORTGAGEE TO PAY THE MORTGAGE INSURANCE PAYMENTS AND FAILED TO DO SO, YOU WOULD HAVE BEEN LIABLE FOR SUCH PAYMENTS. ALSO, YOU, BY THE DEDUCTIONS FROM YOUR PAY, HAVE REIMBURSED THE UNITED STATES THE AMOUNT OF SUCH PAYMENTS AND, IN EFFECT, HAVE PAID THE MORTGAGE INSURANCE PREMIUMS FOR THE PERIOD IN QUESTION. PRESUMABLY THE PURCHASERS WOULD HAVE BEEN REQUIRED TO MAKE TO THE MORTGAGEE THE PAYMENTS YOU REIMBURSED THE ARMY FOR, HAD YOU GIVEN THE REQUIRED NOTICE. HENCE, AS INDICATED IN OUR CLAIMS DIVISION SETTLEMENT OF JUNE 27, 1960, WHATEVER RIGHTS YOU MAY HAVE TO RECOVER THE MORTGAGE INSURANCE PREMIUM PAYMENTS INVOLVED HERE WOULD APPEAR TO BE FOR ASSERTING AGAINST THE PURCHASERS WHO BENEFITED FROM SUCH PAYMENTS. IN ANY EVENT, THE FACT THAT YOU MAY HAVE NO LEGAL BASIS FOR AN ACTION AGAINST THE PURCHASERS OF YOUR PROPERTY TO RECOVER THE AMOUNT OF THE MORTGAGE INSURANCE PREMIUMS IS NOT GROUNDS FOR ALLOWING YOUR CLAIM.

IN VIEW OF THE FOREGOING OUR PREVIOUS ACTION IN DISALLOWING YOUR CLAIM IS SUSTAINED.