Source: https://supreme.justia.com/cases/federal/us/329/654/
Timestamp: 2019-04-23 15:57:50+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 329 › United States v. N.Y. Rayon Importing Co., Inc.
1. The Court of Claims is precluded by § 177(a) of the Judicial Code from awarding interest on claims for refunds of customs duties, even though the claims were based upon preexisting judgments of the Customs Court, and even assuming that the General Accounting Office had unreasonably delayed the determination of ownership of the funds. P. 329 U. S. 658.
2. Apart from constitutional requirements, interest can be recovered against the United States only if express consent to such a recovery has been given by Congress. P. 329 U. S. 658.
3. The consent of Congress to recovery of interest against the United States may be given, as indicated by § 177(a), only by (1) a specific provision for the payment of interest in a statute, or (2) an express stipulation for the payment of interest in a contract duly entered into by agents of the United States. P. 329 U. S. 659.
4. Since there is no contractual stipulation involved in this case, and since the appropriation statutes which cover the refunds here in issue contain no provision for the recovery of interest, the traditional immunity of the United States, as codified in § 177(a), applies. P. 329 U. S. 659.
5. That an award of interest on a claim against the United States would be just or equitable does not empower the Court of Claims to make it. Pp. 329 U. S. 659-660.
6. Assuming that officials of the General Accounting Office unreasonably delayed determination of the ownership of the funds, this could not operate as a consent on the part of the United States to imposition of interest. P. 329 U. S. 660.
7. The immunity established by § 177(a) embraces claims arising out of preexisting judgments. P. 329 U. S. 661.
8. The Act of March 3, 1875, as amended by the Act of March 3, 1933 (31 U.S.C. § 227), relates solely to cases where the Government asserts a set-off against a judgment creditor, and is inapplicable in the circumstances here. P. 329 U. S. 662.
9. Courts lack the power to award interest against the United States on the basis of what they may consider to be sound policy. P. 329 U. S. 663.
105 Ct.Cl. 606, 64 F.Supp. 684, reversed in part.
From a judgment of the Court of Claims which included an award of interest, 105 Ct.Cl. 606, 64 F.Supp. 684, the United States and the claimants sought review on cross-petitions for certiorari, which this Court granted. 329 U.S. 699. In No. 94, the judgment is reversed so far as it includes interest. In No. 96, the writ of certiorari is dismissed. P. 329 U. S. 663.
This case involves another impact of § 177(a) of the Judicial Code [Footnote 1] on the power of the Court of Claims to award interest in a judgment against the United States.
The N.Y. Rayon Importing Co., Inc., (Rayon #1) and the Nyrayco Importing & Converting Corporation (Nyrayco) were engaged in the importation of rayon yarn. Between 1925 and 1929, they paid customs duties on such importations which they claimed were erroneous. Prior to March 1, 1930, they filed protests with the Collector of Customs in accordance with applicable Tariff Act provisions, which resulted in the institution of actions in the United States Customs Court.
On March 1, 1930, the N.Y. Rayon Importing Co., Inc., (Rayon #2) was incorporated for the purpose of acquiring all the assets and assuming all the liabilities of Rayon #1, Nyrayco, and two other corporations in the rayon business. As a part of this reorganization, Rayon #1 was dissolved as of March 1, 1930, the New York Secretary of State issuing a certificate of dissolution on that date.
Rayon #2 was voluntarily dissolved on January 9, 1931, in accordance with New York law. Nyrayco was dissolved on December 16, 1935, by proclamation for nonpayment of New York franchise taxes.
as among the three dissolved corporations, Rayon #2 was the owner of these customs refunds or the proceeds thereof. [Footnote 3] But the General Accounting Office refused to make payment when confronted with this decree. Thereafter, on February 26, 1943, attorneys for the three dissolved corporations suggested to the Comptroller General that the money be released to Rayon #1 and Nyrayco with the consent of Rayon #2, each corporation being represented by its director or directors as trustees in liquidation. The Comptroller General rejected this proposal and stated that payment would be permitted only upon final judgment by a court of competent jurisdiction concluding the issue of ownership. He suggested that a suit be brought for this purpose in the Court of Claims.
We issued a writ of certiorari in No. 94, on petition of the United States, to review the action of the Court of Claims in awarding such interest. At the same time, we issued a writ of certiorari, 329 U.S. 699, in No. 96 on a cross-petition of Rayon #2 and its liquidating directors and trustees urging that interest should have been allowed from the time of the issuance of the refund checks in 1937 and 1938, rather than from April 19, 1941.
"No interest shall be allowed on any claim up to the time of the rendition of judgment by the Court of Claims, unless upon a contract expressly stipulating for the payment of interest. . . ."
States only if express consent to such a recovery has been given by Congress. And Congress has indicated in § 177(a) that its consent can take only two forms: (1) A specific provision for the payment of interest in a statute; (2) an express stipulation for the payment of interest in a contract duly entered into by agents of the United States. Thus, there can be no consent by implication or by use of ambiguous language. Nor can an intent on the part of the framers of a statute or contract to permit the recovery of interest suffice where the intent is not translated into affirmative statutory or contractual terms. The consent necessary to waive the traditional immunity must be express, and it must be strictly construed. Tillson v. United States, 100 U. S. 43; United States v. Thayer-West Point Hotel Co., supra.
Tested by those standards, the award of interest in this case cannot be sustained. There is obviously no contractual stipulation involved. And the appropriation statutes which cover the refunds here in issue contain no provision whatever for the recovery of interest. Act of May 14, 1937, 50 Stat. 137, 142; Act of June 25, 1938, 52 Stat. 1114, 1149. The traditional immunity of the United States as codified in § 177(a), accordingly applies.
But assuming that the equities of the situation all favor the owners of the refund claims, the Court of Claims did not thereby acquire power to carve out an implied exception to the plain words of § 177(a). Had Congress desired to permit the recovery of interest in situations where the Court of Claims felt it just or equitable, it could have so provided. The absence of such a provision is conclusive evidence that the court lacks any power of that nature. Indeed, any other conclusion would permit the Court of Claims to supply the consent which only Congress can give to the imposition of interest against the United States.
for interest on unpaid claims. Cf. Smyth v. United States, 302 U. S. 329, 302 U. S. 353.
The owners of the refund claims, however, seek to avoid the effect of § 177(a) by urging that it applies only to original claims which have not previously been reduced to judgment. This proceeding, it is said, is based upon the preexisting judgments of the Customs Court, thereby precluding the application of § 177(a). We do not pause here to inquire into the nature and effect of the decisions rendered by the Customs Court or the jurisdiction of the Court of Claims to entertain suits based upon preexisting judgments. It is enough to note that the traditional rule embodied in § 177(a) is a complete one covering all types of claims, including those arising out of preexisting judgments. As we have seen, any exception to that rule must be grounded upon an express provision in a statute or contract. It follows that any exception relating to preexisting judgments must be traced to specific language in a contract or some other statute. Section 177(a), by itself, warrants no such exception. Cf. 31 U.S.C. § 226.
Act directs the Comptroller General to withhold payment from a judgment creditor of the United States, if such creditor is indebted in turn to the United States, until the indebtedness is satisfied. The Comptroller General is to cause suit to be brought on the Government's cross-debt if the judgment creditor denies the indebtedness. The Act then expressly permits 6% interest to be paid to the judgment creditor for the period of the withholding if the Government fails to win its suit and to substantiate its asserted set-off. Thus, to that limited extent, the Act of March 3, 1875, marks an exception to the traditional rule set forth in § 177(a). See, for example, American Potash Co. v. United States, 80 Ct.Cl. 160, 8 F.Supp. 717; Stewart & Co. v. United States, 71 Ct.Cl. 126.
that Act in providing for the payment of interest where the withholding results from an erroneous belief in the existence of a cross-indebtedness applies with equal force where the withholding results from an attempt to determine ownership of a claim. But the immunity of the United States from liability for interest is not to be waived by policy arguments of this nature. Courts lack the power to award interest against the United States on the basis of what they think is or is not sound policy. We reiterate that only express language in a statute or contract can justify the imposition of such interest. Such language is absent in this instance.
We accordingly reverse the judgment of the Court of Claims in No. 94 to the extent that it includes an award of interest. And since it becomes unnecessary to consider the merits of the cross-claims, the writ of certiorari previously issued in No. 96 is dismissed.
* Together with No. 96, N.Y. Rayon Importing Co., Inc. (#2) et al. v. United States, also on certiorari to the Court of Claims.
Section 21 of the Act of June 26, 1934, c. 756, 48 Stat. 1235, 31 U.S.C. § 725t.
The three suits were consolidated. In all three cases, the Societe Pour Nouveaux Placements de Capitaux was impleaded as plaintiff. It filed a disclaimer of interest, and the Court of Claims dismissed "all claims of interest" which it had. Several other persons and companies were named by the United States as having possible claims, but none of them asserted any claims or filed any intervening petitions; the court dismissed "all claims of interest" as to them.
April 19, 1941, was the date when the Governor of New York approved an amendment to § 203-a of the New York Tax Law removing all possible question whether corporations which had previously and involuntarily been dissolved under the New York Tax Law for nonpayment of franchise taxes had the right to maintain suits. This had relevance, however, only to Nyrayco. Rayon #1 and Rayon #2 were voluntarily dissolved in accordance with § 105 of the New York Stock Corporation Law, Consol.Laws, c. 59. Their right to maintain suit to collect their assets was never questioned.
Rayon #2 and its liquidating directors and trustees claim that the date of April 19, 1941, has no relevance whatever to the claim of Rayon #1. See footnote 5 And they claim that this date has no proper relation to the Nyrayco claim since the Government made no objection to Nyrayco's capacity to sue until several years after the decisions of the Customs Court and after checks in its name had been drawn by the Government.
"When any final judgment recovered against the United States duly allowed by legal authority shall be presented to the Comptroller General of the United States for payment, and the plaintiff therein shall be indebted to the United States in any manner, whether as principal or surety, it shall be the duty of the Comptroller General of the United States to withhold payment of an amount of such judgment equal to the debt thus due to the United States, and if such plaintiff assents to such set-off, and discharges his judgment or an amount thereof equal to said debt, the Comptroller General of the United States shall execute a discharge of the debt due from the plaintiff to the United States. But if such plaintiff denies his indebtedness to the United States, or refuses to consent to the set-off, then the Comptroller General of the United States shall withhold payment of such further amount of such judgment as in his opinion will be sufficient to cover all legal charges and costs in prosecuting the debt of the United States to final judgment. And if such debt is not already in suit, it shall be the duty of the Comptroller General of the United States to cause legal proceedings to be immediately commenced to enforce the same, and to cause the same to be prosecuted to final judgment with all reasonable dispatch. And if in such action judgment shall be rendered against the United States, or the amount recovered for debt and costs shall be less than the amount so withheld as before provided, the balance shall then be paid over to such plaintiff by such Comptroller General of the United States with 6 percentum interest thereon for the time it has been withheld from the plaintiff."

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