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WAS SOLD BY JOHN L. IN OCTOBER 1959 THE VETERANS ADMINISTRATION WAS ADVISED THAT THE LOAN WAS IN DEFAULT. SERGEANT WEBB WAS NOTIFIED AND APPARENTLY MR. VEGH WAS ABLE TO WORK OUT A SCHEDULE IN PAYMENT OF THE LOAN. IN 1961 THE LOAN WAS AGAIN REPORTED AS DELINQUENT AND ON FEBRUARY 20. A FINAL DECREE OF FORECLOSURE AND SALE WAS ENTERED IN FAVOR OF WORCESTER FEDERAL SAVINGS AND LOAN ASSOCIATION AGAINST EUGENE S. SERGEANT WEBB'S LIABILITY WAS ESTABLISHED AS OF THE DATE OF THE FORECLOSURE SALE. THE BID AT THIS SALE WAS $10. 200 AND THIS AMOUNT WAS CREDITED TO HIS ACCOUNT BY THE VETERANS ADMINISTRATION. IT WAS DETERMINED THAT SERGEANT WEBB IS INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $1. YOUR LETTER SETS FORTH AS A DEFENSE TO THIS INDEBTEDNESS AN AGREEMENT ALLEGED TO HAVE BEEN MADE BETWEEN THE MORTGAGEE AND SERGEANT WEBB WHEREBY HE WAS TO BE NOTIFIED OF ANY DEFAULT SUBSEQUENT TO THE TIME HE SOLD THE HOUSE.

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B-154496, JUL. 9, 1964

TO MR. ROBERT H. SHERMAN:

YOUR LETTER OF MAY 28, 1964, PROTESTS THE FINDINGS OF OUR CLAIMS DIVISION SETTLEMENT DATED APRIL 15, 1964, RELATING TO THE INDEBTEDNESS OF YOUR CLIENT, TECHNICAL SERGEANT JACK L. WEBB, 509 W. 2ND STREET, PITTSBURG, KANSAS, IN THE AMOUNT OF $1,119.44, PLUS INTEREST.

THE RECORD DISCLOSES THAT SERGEANT WEBB OBTAINED GI HOME LOAN NO. LH 61417-FLA. JA., ON OCTOBER 20, 1955, IN THE AMOUNT OF $11,600, THE SELLING PRICE OF THE HOME. IN NOVEMBER 1957 THIS HOME, HAVING APPARENTLY BEEN SOLD BY SERGEANT WEBB, WAS SOLD BY JOHN L. BROOKS, TO EUGENE S. VEGH. IN OCTOBER 1959 THE VETERANS ADMINISTRATION WAS ADVISED THAT THE LOAN WAS IN DEFAULT. SERGEANT WEBB WAS NOTIFIED AND APPARENTLY MR. VEGH WAS ABLE TO WORK OUT A SCHEDULE IN PAYMENT OF THE LOAN. IN 1961 THE LOAN WAS AGAIN REPORTED AS DELINQUENT AND ON FEBRUARY 20, 1962, A FINAL DECREE OF FORECLOSURE AND SALE WAS ENTERED IN FAVOR OF WORCESTER FEDERAL SAVINGS AND LOAN ASSOCIATION AGAINST EUGENE S. VEGH AND MARGARET M. VEGH, DEFENDANTS, IN THE CIRCUIT COURT OF ORANGE COUNTY, CHANCERY CASE NO. 46481. SERGEANT WEBB'S LIABILITY WAS ESTABLISHED AS OF THE DATE OF THE FORECLOSURE SALE. THE BID AT THIS SALE WAS $10,200 AND THIS AMOUNT WAS CREDITED TO HIS ACCOUNT BY THE VETERANS ADMINISTRATION. TAKING INTO CONSIDERATION ALL CHARGES AND CREDITS, IT WAS DETERMINED THAT SERGEANT WEBB IS INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $1,119.44.

YOUR LETTER SETS FORTH AS A DEFENSE TO THIS INDEBTEDNESS AN AGREEMENT ALLEGED TO HAVE BEEN MADE BETWEEN THE MORTGAGEE AND SERGEANT WEBB WHEREBY HE WAS TO BE NOTIFIED OF ANY DEFAULT SUBSEQUENT TO THE TIME HE SOLD THE HOUSE. YOUR LETTER CONTENDS THAT SINCE HE WAS NOT NOTIFIED OF THE DEFAULT WHICH LED TO THE FORECLOSURE SALE HE CANNOT BE HELD LIABLE IN CONNECTION WITH THIS SALE.

SERGEANT WEBB'S OBLIGATION TO THE UNITED STATES DOES NOT ARISE SOLELY FROM THE SALE OF THE PROPERTY. IT ARISES BY REASON OF THE LOAN GUARANTY PAYMENT MADE BY THE VETERANS ADMINISTRATION TO THE WORCESTER FEDERAL SAVINGS AND LOAN ASSOCIATION AS A RESULT OF THE DEFAULT ON THE ABOVE LOAN. VETERANS ADMINISTRATION REGULATIONS, 38 CFR 36.4323 (E), ISSUED PURSUANT TO THE SERVICEMENS' READJUSTMENT ACT OF 1944, AS AMENDED, PROVIDE:

"SUBROGATION AND INDEMNITY.

"/E) ANY AMOUNTS PAID BY THE ADMINISTRATOR ON ACCOUNT OF LIABILITIES OF ANY VETERAN GUARANTEED OR INSURED UNDER THE PROVISIONS OF THE ACT SHALL CONSTITUTE A DEBT OWING TO THE UNITED STATES BY SUCH VETERAN.'

THE CLAIM AGAINST SERGEANT WEBB, THEREFORE, REPRESENTS AN INDEPENDENT DEBT WHICH IS OWED THE UNITED STATES UNDER THE PROVISIONS OF THE STATUTE AND REGULATIONS. THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA, IN THE CASE OF UNITED STATES V. HENDERSON, 121 F.SUPP. 343, 344, HAS SAID:

"THE LANGUAGE OF THE PROVISION (36.4323 (E) ( IS CLEAR AND THERE CAN BE NO QUESTION THEREFROM OF THE INTENT OF THE CONGRESS TO MAKE ANY PAYMENTS MADE BY THE GOVERNMENT UNDER THE GUARANTEE OF THE ACT AN ENFORCEABLE DEMAND UNTIL FULL SATISFACTION IS OBTAINED. * * * DEFENDANT'S LIABILITY, CREATED WHEN HIS LOAN APPLICATION WAS MADE OUT AND THE NOTE AND MORTGAGE EXECUTED, REMAINS A DIRECT AND SUBSISTING OBLIGATION UNTIL THE GOVERNMENT HAS BEEN REPAID. * * *"

ANY AGREEMENT YOUR CLIENT MAY HAVE HAD WITH THE BANK INVOLVED CANNOT, AS A PURELY PRIVATE AGREEMENT BETWEEN TWO PARTIES, AFFECT THE RIGHTS OF THE UNITED STATES.

IT IS REQUESTED THAT YOUR CLIENT BE ADVISED OF THE ABOVE AND THAT HE MAKE ARRANGEMENTS FOR THE PAYMENT OF HIS INDEBTEDNESS WITHOUT FURTHER DELAY.

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