B-134886, MAR. 7, 1958

B-134886, MAR. 7, 1958

TO MR. F. L. STIMPSON, AUTHORIZED CERTIFYING OFFICER, DEPARTMENT OF AGRICULTURE:

YOUR LETTER OF JANUARY 9, 1958 (TOGETHER WITH ENCLOSURES) REQUESTS A DECISION AS TO THE PROPER PERSON TO RECEIVE THE PROCEEDS OF AN INDEMNITY CLAIM UNDER THE FACTS AND CIRCUMSTANCES SET FORTH BELOW.

THE CLAIM INVOLVES SIX HEAD OF CATTLE DETERMINED TO BE BRUCELLOSIS REACTORS WHICH WERE SLAUGHTERED UNDER THE PROGRAM CONDUCTED BY THE ANIMAL DISEASE ERADICATION BRANCH OF THE AGRICULTURAL RESEARCH SERVICE. APPEARS THAT UNDER THIS PROGRAM THE OWNER OF THE CATTLE MAY CLAIM BETWEEN THE APPRAISED VALUE AND THE SALVAGE DIVIDED THREE WAYS. THE UNITED STATES PAYS ONE-THIRD OF THE DIFFERENCE (UP TO A CERTAIN MAXIMUM), THE STATE PAYS ONE-THIRD AND THE OWNER BEARS THE OTHER ONE-THIRD. YOU SAY THAT IN MANY INSTANCES THERE IS A MORTGAGE AGAINST A SPECIFIC HERD AND IN SUCH CASES UPON AN EXECUTED STATEMENT REGARDING MORTGAGED CATTLE ATTACHED TO THE CLAIM A CHECK IS DRAWN IN FAVOR OF THE MORTGAGOR, AND SENT IN CARE OF THE MORTGAGEE, IF SUCH AN AGREEMENT IS MUTUALLY AGREED UPON. THE COPY OF THE CLAIM FOR INDEMNITY FOR THE SLAUGHTERED CATTLE DISCLOSES THAT MR. A. J. BROWN CERTIFIED THAT HE OWNED THE SLAUGHTERED CATTLE AND THAT THE CATTLE WERE MORTGAGED, ALTHOUGH THE NAME "AMERICAN STATE BANK" IS TYPED OVER THE CAPTION "NAME OF OWNER-CLAIMANT" APPEARING AT THE TOP OF THE CLAIM FORM.

THE AMERICAN STATE BANK APPARENTLY HELD A CHATTEL MORTGAGE ON ALL OR MR. BROWN'S CATTLE AND EQUIPMENT, INCLUDING THE SIX REACTORS AND MR. BROWN COULD NOT MEET HIS OBLIGATION UNDER THE MORTGAGE. IT APPEARS THAT MR. BROWN (PRESUMABLY SUBSEQUENT TO THE DATE THE SIX CATTLE WERE SLAUGHTERED) SIGNED AN AGREEMENT WITH THE BANK TO HOLD A SALE AND APPLY THE PROCEEDS TO THE BALANCE OWING ON THE MORTGAGE. AFTER APPLYING THE PROCEEDS OF THE SALE THERE WAS STILL A BALANCE OF $2,497.83 DUE ON THE MORTGAGE. THE BANK ALLEGES THAT MR. BROWN AGREED TO CONFESS JUDGMENT IN THIS AMOUNT BUT THEREAFTER REFUSED TO DO SO. THE BANK THEN COMMENCED PROCEEDINGS AGAINST MR. BROWN FOR THE $2,497.83, BUT PRIOR TO THE CASE COMING TO TRIAL, MR. BROWN FILED A PETITION IN BANKRUPTCY AND NAMED THE BANK AS ONE OF HIS CREDITORS. SUBSEQUENTLY MR. BROWN'S DEBTS WERE APPARENTLY DISCHARGED IN BANKRUPTCY AND THE BANKRUPTCY CASE CLOSED.

A FORM ENTITLED "STATEMENT REGARDING MORTGAGED CATTLE" EXECUTED SEPTEMBER 30, 1957, DISCLOSES THAT THE MORGAGOR (BROWN) AND THE MORTGAGES (THE BANK) AGREED THAT THE CHECK FOR THE FEDERAL INDEMNITY SHOULD BE DRAWN IN FAVOR OF THE MORTGAGOR AND MAILED IN CARE OF THE MORTGAGEE. THE CHECK, IN THE AMOUNT OF $189.97, WAS MADE PAYABLE TO--

"A. J. BROWN

C/O AMERICAN STATE BANK

(A. J. BROWN--- BANKRUPT)

WATERTOWN, MINNESOTA.'

YOU ADVISE THAT THE CHECK HAS BEEN RETURNED TO YOU BY THE BANK WITH A STATEMENT TO THE EFFECT THAT MR. BROWN HAD REFUSED TO ENDORSE IT AND A REQUEST THAT THE CHECK BE REISSUED PAYABLE DIRECTLY TO THE BANK. YOU REQUEST A DECISION AS TO WHETHER YOU SHOULD CANCEL THE CHECK AND HAVE A NEW ONE PREPARED IN FAVOR OF THE BANK, OMITTING ANY REFERENCE TO MR. A. J. BROWN AS PAYEE, OTHER THAN TO IDENTIFY THE PAYMENT, OR WHETHER WE WILL AUTHORIZE THE PRESENT CHECK TO BE CASHED BY THE BANK WITHOUT THE NECESSITY FOR ENDORSEMENT BY MR. BROWN.

ORDINARILY, A CERTIFYING OFFICER IS NOT ENTITLED TO AN ADVANCE DECISION EXCEPT UPON PRESENTATION OF A VOUCHER BEFORE HIM FOR CERTIFICATION INVOLVING THE QUESTION PRESENTED. 26 COMP. GEN. 797. HOWEVER, SINCE IT APPEARS THAT A CLAIM HAS, IN EFFECT, BEEN SUBMITTED TO YOU BY THE BANK, AND WITH THE UNDERSTANDING THAT PROPERLY PREPARED VOUCHERS WILL BE SUBMITTED IN THE FUTURE WITH REQUESTS FOR DECISION, THE REQUIREMENT FOR A VOUCHER IN THIS PARTICULAR INSTANCE WILL BE WAIVED.

THE RIGHT TO INDEMNITY IN THIS CASE ARISES SOLELY FROM THE REGULATIONS (9 C.F.R. 51.2) OF THE SECRETARY OF AGRICULTURE ISSUED PURSUANT TO LAW. THESE REGULATIONS PROVIDE, IN PERTINENT PART, AS FOLLOWS (9 C.F.R. 51.8):

"SEC. 51.8 CLAIMS FOR INDEMNITY. CLAIMS FOR INDEMNITY FOR CATTLE DESTROYED, BECAUSE OF BRUCELLOSIS, TUBERCULOSIS, OR PARATUBERCULOSIS, SHALL BE PRESENTED ON TE FORM 23 ON WHICH THE OWNER OF THE CATTLE SHALL CERTIFY THAT THE ANIMALS COVERED THEREBY, ARE, OR ARE NOT, SUBJECT TO ANY MORTGAGE AS DEFINED IN THIS PART. IF THE OWNER STATES THERE IS A MORTGAGE, TE FORM 25 SHALL BE SIGNED BY THE OWNER AND BY EACH PERSON HOLDING A MORTGAGE ON THE ANIMALS, CONSENTING TO THE PAYMENT OF ANY INDEMNITY ALLOWED TO THE PERSON SPECIFIED THEREON. * * *"

PURSUANT TO THIS REGULATION MR. BROWN (MORTGAGOR) AND THE BANK (MORTGAGEE) MUTUALLY AGREED AND CONSENTED TO THE PAYMENT OF THE INDEMNITY TO MR. BROWN (THE CHECK TO BE SENT IN CARE OF THE BANK). HENCE, THERE IS NO AUTHORITY FOR YOU TO CANCEL THE CHECK AND ISSUE ANOTHER ONE PAYABLE TO THE BANK OR FOR US TO AUTHORIZE THE PRESENT CHECK TO BE CASHED BY THE BANK WITHOUT THE NECESSITY FOR ENDORSEMENT BY MR. BROWN. THEREFORE, AND IN VIEW OF THE AGREEMENT BETWEEN MR. BROWN AND THE BANK, IT APPEARS THAT THE CHECK SHOULD BE RETURNED TO THE BANK WITH THE ADVICE THAT THE MATTER IS NOW ONE FOR SETTLEMENT BETWEEN THE PARTIES.