B-31053, FEBRUARY 4, 1943, 22 COMP. GEN. 740

B-31053, FEBRUARY 4, 1943, 22 COMP. GEN. 740

INSURANCE - TORT LIABILITY - REIMBURSEMENT OF PREMIUMS PAID BY LOCAL HOUSING AGENCY COOPERATING WITH FEDERAL AGENCY A LOCAL HOUSING AGENCY MAY BE REIMBURSED AMOUNTS PAID AS PREMIUMS ON INSURANCE WHICH IT HAS TAKEN OUT TO PROTECT ITSELF AGAINST POSSIBLE TORT LIABILITY--- TO WHICH IT HAS BEEN SUBJECTED BY APPLICABLE STATE LAW--- IN CONNECTION WITH THE PERFORMANCE OF ITS SERVICES AS AGENT OF THE PUBLIC HOUSING AUTHORITY OF THE NATIONAL HOUSING AGENCY IN THE DEVELOPMENT OF DEFENSE HOUSING PROJECTS AUTHORIZED BY THE ACT OF OCTOBER 14, 1940, AS AMENDED. 19 COMP. GEN. 798, DISTINGUISHED.

COMPTROLLER GENERAL WARREN TO THE NATIONAL HOUSING ADMINISTRATOR, FEBRUARY 4, 1943:

THE UNITED STATES HOUSING AUTHORITY (PRESENTLY ADMINISTERED AS THE FEDERAL PUBLIC HOUSING AUTHORITY, NATIONAL HOUSING AGENCY, PURSUANT TO THE PROVISIONS OF EXECUTIVE ORDER NO. 9070, DATED FEBRUARY 24, 1942) SUBMITTED TO YOUR OFFICE FOR PREAUDIT BUREAU VOUCHER NO. HD-30022-34, IN THE AMOUNT OF $1643.19, FOR PAYMENT TO THE NEW YORK CITY HOUSING AUTHORITY AS "REIMBURSEMENT FOR EXPENDITURES INCURRED AND PAID FOR RELOCATION OF TENANTS AND PREMIUMS ON LIABILITY INSURANCE * * *" OF WHICH AMOUNT $620.00 WAS DISALLOWED ON PREAUDIT DIFFERENCE STATEMENT DATED FEBRUARY 26, 1942, WITH THE EXPLANATION THAT:

"THERE IS NO AUTHORITY FOR PAYMENT FROM FEDERAL FUNDS OF CONTINGENT LIABILITY INSURANCE COVERING PERSONAL INJURIES UNDER THE FOUNDATION AND SUPERSTRUCTURE CONTRACT. SEE 19 COMP. GEN. 798 AND DECISIONS CITED THEREIN.'

THE LIABILITY INSURANCE IN QUESTION IS THAT WHICH THE NEW YORK CITY HOUSING AUTHORITY PURCHASED TO PROTECT ITSELF WHILE PERFORMING SERVICES FOR THE ADMINISTRATOR OF THE FEDERAL WORKS AGENCY IN ACCORDANCE WITH AN AGREEMENT TO DEVELOP DEFENSE HOUSING PROJECTS AUTHORIZED BY SECTION 305 OF THE LANHAM ACT, AS AMENDED (COPY ATTACHED), WHICH PROVIDES IN PART AS FOLLOWS:

"IN CARRYING OUT THE PROVISIONS OF THIS ACT THE ADMINISTRATOR IS AUTHORIZED TO UTILIZE AND ACT THROUGH THE FEDERAL WORKS AGENCY AND OTHER FEDERAL AGENCIES AND ANY LOCAL PUBLIC AGENCY, WITH THE CONSENT OF SUCH AGENCY, AND ANY FUNDS APPROPRIATED PURSUANT TO THIS ACT SHALL BE AVAILABLE FOR TRANSFER TO ANY SUCH AGENCY IN REIMBURSEMENT THEREFOR.'

IN ACCORDANCE WITH THE INTENT OF THE CONGRESS, AS INDICATED IN THIS AUTHORIZATION, IT HAS BEEN THE POLICY FIRST OF FWA AND NOW OF THIS AGENCY TO ACT THROUGH AND UTILIZE THE SERVICES OF LOCAL PUBLIC AGENCIES WHEREVER BEST SUITED FOR THE EFFECTUATION OF THE PURPOSES OF THE LANHAM ACT. THE CASE OF THE CONTRACT WITH THE NEW YORK HOUSING AUTHORITY, AS IN THE CASE OF SIMILAR CONTRACTS WITH ALL OTHER LOCAL PUBLIC AGENCIES, THE AGREEMENT OF THE GOVERNMENT IS TO REIMBURSE THE LOCAL PUBLIC AGENCY FOR ALL PROPER ADMINISTRATIVE EXPENSES INCURRED, AND NO FEE OR OTHER COMPENSATION IS INVOLVED.

THE PUBLIC HOUSING LAW OF THE STATE OF NEW YORK PROVIDES IN PARAGRAPH 2 OF SECTION 157 ( CHAPTER 808, LAWS OF 1939, APPROVED JUNE 8, 1939) AS FOLLOWS:

"2. AN ACTION AGAINST AN AUTHORITY, ACCRUING AFTER THE ENACTMENT OF THIS CHAPTER FOR DAMAGES FOR INJURIES TO REAL OR PERSONAL PROPERTY, OR FOR THE DESTRUCTION THEREOF, OR FOR DAMAGES FOR PERSONAL INJURIES, ALLEGED TO HAVE BEEN SUSTAINED BY REASON OF THE NEGLIGENCE OF, OR BY THE CREATION OR MAINTENANCE OF A NUISANCE BY, SAID AUTHORITY, OR ANY MEMBER, OFFICER, AGENT OR EMPLOYEE THEREOF, SHALL BE COMMENCED WITHIN ONE YEAR AFTER THE CAUSE OF ACTION THEREFOR SHALL HAVE ACCRUED, PROVIDED THAT A NOTICE OF THE INTENTION TO COMMENCE SUCH ACTION AND OF THE TIME WHEN AND PLACE WHERE THE DAMAGES WERE INCURRED OR THE INJURIES WERE RECEIVED, TOGETHER WITH A VERIFIED STATEMENT SHOWING IN DETAIL THE PROPERTY ALLEGED TO HAVE BEEN DAMAGED OR DESTROYED OR THE INJURIES ALLEGED TO HAVE BEEN RECEIVED, AND THE VALUE OF THE DAMAGES CLAIMED THEREFOR, SHALL HAVE BEEN FILED WITH THE AUTHORITY WITHIN SIX MONTHS AFTER SUCH CAUSE OF ACTION SHALL HAVE ACCRUED.'

THE NEW YORK CITY HOUSING AUTHORITY CONTENDED THAT UNDER THE ABOVE LAW IT IS SUBJECT TO DAMAGES FOR ANY PERSONAL INJURIES ALLEGED TO HAVE BEEN SUSTAINED BY REASON OF THE NEGLIGENCE OF, OR BY THE CREATION OR MAINTENANCE OF A NUISANCE BY IT, OR ANY OF ITS MEMBERS, OFFICERS, OR EMPLOYEES AND, SINCE IT WAS IN EFFECT DONATING ITS SERVICES, INSISTED UPON THE PURCHASE OF CONTINGENT LIABILITY INSURANCE FOR ITS PROTECTION IF ITS SERVICES WERE TO BE UTILIZED, AND UPON REIMBURSEMENT FOR THE COST THEREOF. THE SAME VIEW HAS BEEN TAKEN BY OTHER LOCAL PUBLIC AGENCIES.

AN EXAMINATION OF YOUR DECISION IN 19 COMP. GEN. 798 (1940), CITED IN THE PREAUDIT DIFFERENCE STATEMENT, DOES NOT SEEM TO APPLY, IN VIEW OF THE FACTS ABOVE RELATED. IN THAT DECISION, HOLDING THAT THE ADMINISTRATOR OF THE FEDERAL HOUSING ADMINISTRATION COULD NOT EXPEND MONEY OUT OF THE HOUSING FUND TO PROCURE INSURANCE AGAINST HIS TORT LIABILITY IN CONNECTION WITH PROPERTY ACQUIRED BY HIM, YOU STATED:

"IT IS A SETTLED POLICY OF THE UNITED STATES TO ASSUME ITS OWN RISKS AND THE ESTABLISHED RULE IS THAT, UNLESS EXPRESSLY PROVIDED BY STATUTE, FUNDS FOR THE SUPPORT OF GOVERNMENT ACTIVITIES ARE NOT CONSIDERED APPLICABLE GENERALLY FOR THE PURCHASE OF INSURANCE TO COVER LOSS OF OR DAMAGE TO GOVERNMENT PROPERTY. 13 COMP. DEC. 779; 14 ID. 836; 23 ID. 269; ID. 297; 4 COMP. GEN. 690; 7 ID. 105; AND 17 ID. 55.' AND "* * * AS TO THIS POLICY OF THE GOVERNMENT TO ASSUME ITS OWN RISKS NO MATERIAL DISTINCTION IS APPARENT BETWEEN ASSUMPTION OF RISK FOR PROPERTY DAMAGE AND ASSUMPTION OF RISK FOR TORT LIABILITY * * *" ( ITALICS SUPPLIED.)

THE DECISION WOULD NOT APPEAR TO BE PERTINENT TO THE FACTS OF THE PRESENT CASE, AS IT PERTAINS TO INSURANCE COVERING THE RISKS OF THE GOVERNMENT AND NOT TO INSURANCE PURCHASED TO PROTECT RISKS WHICH ARE NOT BORNE BY THE GOVERNMENT.

THE CONGRESS, IN AUTHORIZING THE UTILIZATION OF LOCAL PUBLIC HOUSING AUTHORITIES, COULD NOT HAVE INTENDED THAT SUCH AGENCIES WHOSE SERVICES ARE FURNISHED WITHOUT PROFIT INCUR RISKS, ARISING FROM SUCH SERVICES, FOR THE BENEFIT OF THE GOVERNMENT. ALSO, SUCH AN IMPLICATION WOULD RENDER IT IMPOSSIBLE TO OBTAIN THEIR NECESSARY COOPERATION IN CONNECTION WITH THE WAR HOUSING PROGRAM. THE CONCLUSION IS FORCED THAT THE CONGRESS INTENDED THAT THERE BE REIMBURSEMENT TO THOSE PUBLIC BODIES OF ALL REASONABLE EXPENSES ARISING OUT OF, OR NECESSARY TO SECURE, THEIR SERVICES IN CARRYING OUT THE PROVISIONS AND PURPOSES OF THE LANHAM ACT, INCLUDING, IF NECESSARY, CONTINGENT LIABILITY INSURANCE.

THE SITUATION APPEARS TO BE ANALOGOUS TO THAT OF A COST-PLUS-A-FIXED FEE CONTRACTOR FOR THE GOVERNMENT WHO MAY BE REIMBURSED ALL PROPER ADMINISTRATIVE EXPENSES WHICH YOU HAVE RULED INCLUDE THE COST OF CONTINGENT LIABILITY INSURANCE. SEE 21 COMP. GEN. 149 (1941).

I WOULD APPRECIATE IT, THEREFORE, IF YOU WOULD RECONSIDER THE ACTION TAKEN BY THE AUDIT DIVISION OF YOUR OFFICE, WITH A VIEW OF AUTHORIZING PAYMENT OF THE AFORESAID DISALLOWANCE, IN ORDER THAT LOCAL HOUSING AUTHORITIES MAY BE REIMBURSED FOR PREMIUMS ON CONTINGENT LIABILITY INSURANCE POLICIES PROTECTING THEM AGAINST POSSIBLE LIABILITY RESULTING FROM SERVICES PROVIDED BY THEM AT COST TO THE GOVERNMENT.

IT APPEARS FROM THE RECORD THAT THE INSURANCE REFERRED TO WAS TAKEN OUT BY THE NEW YORK CITY HOUSING AUTHORITY AND WHILE IT APPEARS THAT THE FEDERAL WORKS AGENCY, OR THE FEDERAL WORKS ADMINISTRATOR, AND THE UNITED STATES HOUSING AUTHORITY ALSO WERE INCLUDED AS NAMED ASSURED PARTIES, IT FURTHER APPEARS FROM THE RECORD THAT THE INCLUSION OF THESE FEDERAL AGENCIES IN THE POLICY RESULTED IN NO INCREASE IN THE PREMIUM FOR THE POLICY OVER WHAT THE CHARGE FOR THE PREMIUM WOULD HAVE BEEN HAD THE NEW YORK CITY HOUSING AUTHORITY BEEN THE SOLE NAMED ASSURED.

THUS, THE MATTER AS PRESENTED BY YOUR LETTER DOES NOT INVOLVE THE QUESTION WHETHER THE UNITED STATES HOUSING AUTHORITY OR ITS SUCCESSOR, THE FEDERAL PUBLIC HOUSING AUTHORITY OF THE NATIONAL HOUSING AGENCY, MAY PROCURE LIABILITY INSURANCE SUCH AS HERE INVOLVED BUT RATHER WHETHER THE LOCAL HOUSING AGENCY--- THE NEW YORK CITY HOUSING AUTHORITY -- MAY BE REIMBURSED FOR THE COST OF PREMIUMS REPORTED TO HAVE BEEN PAID BY IT FOR LIABILITY INSURANCE TAKEN OUT BY IT TO PROTECT ITSELF AGAINST POSSIBLE TORT LIABILITY THAT MAY ARISE AGAINST IT IN CONNECTION WITH THE PERFORMANCE OF ITS SERVICES AS AGENT OF THE UNITED STATES HOUSING AUTHORITY FOR THE PROJECT REFERRED TO IN YOUR LETTER. THE CASE IS, THEREFORE, NOT COMPARABLE TO THAT CONSIDERED IN THE DECISION OF MARCH 20, 1940, TO THE FEDERAL HOUSING ADMINISTRATOR, 19 COMP. GEN. 798, WHEREIN IT WAS HELD THAT THERE WAS NO AUTHORITY IN THE FEDERAL HOUSING ADMINISTRATION FOR PROCURING INSURANCE AGAINST POSSIBLE TORT LIABILITY OF THE FEDERAL HOUSING ADMINISTRATOR AS OWNER OF HOUSES ACQUIRED BY HIM UNDER THE PROVISIONS OF THE NATIONAL HOUSING ACT.

IT APPEARS FROM WHAT IS STATED IN YOUR LETTER, PARTICULARLY THE STATE LAW QUOTED THEREIN, THAT THE NEW YORK CITY HOUSING AUTHORITY IS SUBJECT TO TORT LIABILITY FOR CERTAIN TYPES OF WRONGFUL ACTS AND THAT FOR THAT REASON IT INSISTED UPON OBTAINING AS A MATTER OF PROTECTION TO ITSELF THE LIABILITY INSURANCE REFERRED TO BEFORE UNDERTAKING TO ACT AS AGENT OF THE UNITED STATES HOUSING AUTHORITY IN THE MATTER. REGARDLESS OF WHETHER THE UNITED STATES HOUSING AUTHORITY OR ITS SUCCESSOR, THE FEDERAL PUBLIC HOUSING AUTHORITY, MAY OR MAY NOT BE SUBJECT TO TORT LIABILITY IN CONNECTION WITH THEIR AUTHORIZED ACTIVITIES--- AS TO WHICH, SEE 39 OP. ATTY. GEN. 559, AND CASES THERE CITED--- AN AGENT PERFORMING AUTHORIZED ACTIVITIES FOR THEM WOULD NOT BE IMMUNE FROM TORT LIABILITY ARISING FROM SUCH ACTS IF THE AGENT WERE OTHERWISE SUBJECT TO SUCH LIABILITY. SEE SLOAN SHIPYARDS V. UNITED STATES FLEET CORP., 258 U.S. 549, 568; KEIFER AND KEIFER V. RECONSTRUCTION FINANCE CORP. ET AL., 306 U.S. 381, 386.

IN VIEW OF THE FOREGOING AND THE FACTS AND CIRCUMSTANCES SET FORTH IN YOUR LETTER THIS OFFICE WILL NOT BE REQUIRED TO OBJECT TO REIMBURSEMENT OF THE NEW YORK CITY HOUSING AUTHORITY, UPON A PROPERLY STATED AND CERTIFIED VOUCHER, FOR THE INSURANCE PREMIUM OF $620 REFERRED TO, UPON THE SUBMISSION OF EVIDENCE SHOWING THAT IT HAS BEEN PAID BY THAT AGENCY TO THE INSURER.