Opinion ID: 232285
Heading Depth: 1
Heading Rank: 2

Heading: Hirsch's Appeal:

Text: 4 1. Hirsch argues that the deposit was not in accord with the Declaration-of-Taking Act, 40 U.S.C.A. § 258a. 6 We agree, since the deposit was made after judgment. But we consider that contention of no significance. For we have here the ordinary case where, without recourse to a statute, a judgment-debtor tenders, by a deposit in court, with leave of the court, for the benefit of the judgment-creditor, all or part of the amount due under the judgment, at the same time appealing. The deposit, whether or not the judgment-creditor draws it down, is deemed payment pro tanto. If a judgment is reversed on appeal, the judgment-debtor becomes entitled to restitution of money he paid on the judgment; he has that right whether or not he asserted that he had when he paid the money. See Restatement of Restitution § 74. 5 2. Hirsch contends, however, that the deposit here was not an effective tender because it was neither required by law nor permitted by statute within the meaning of Fed.Rules Civ.Proc. rule 71A(j), 28 U.S.C.A. 7 We think a reading of that Rule shows that it did not intend to apply to anything except a deposit before judgment and that therefore it had no application here. 6 3. Hirsch also urges that the deposit was ineffective because it was a tender of the principal of the judgment, leaving the accrued interest unpaid. But, as we think the trial judge indicated in his opinion on Hirsch's motion, the deposit applied first to such accrued interest, and the balance went to pay a part of the principal. Interest on that part of the principal ceased to accrue from the date of the deposit. 7 4. Finally, Hirsch argues that, for the following reasons, the deposit did not serve as an effective tender because it was coupled with an explicit reservation of a right to restitution, if the government should win on appeal from the judgment: 8 An owner in the position of Hirsch runs undue risk if he withdraws a deposit of $1,090,000, in the teeth of the government's claim that he is not entitled to a penny of it, with the obligation of returning it with 6% interest. No investment of the money which might yield 6% will be both safe from depreciation of principal and at all times available for liquidation on short notice. This is one of the reasons why Hirsch has not and cannot move for withdrawal of the deposit. The other is that if he should make a withdrawal and invest the money in any but property `similar or related in service or use' (Sec. 112(F) (3) (B), I.R.C. [26 U.S.C.A. § 112(f) (3) (B)]) to that in litigation, he will be subjected to a heavy penalty in income taxes, since the full amount of the award would be capital gain. To avoid such taxation Hirsch must invest in such `similar' property within the limited time fixed by law (Sec. 112(F) (3) (B) (i), I.R.C.) namely, within `one year after the close of the first taxable year in which any part of the gain    is realized.   ' Such a tax could amount to 26% of the award. It would be unreasonable to suggest that he might buy similar property, and be ready to liquidate it at any time to satisfy a judgment with 6% interest. We see no merit in those arguments. Many a judgment-creditor to whom a tender is made by his judgment-debtor faces a similar perplexity if the debtor appeals. The chief cause of the perplexity lies in the Revenue Code. Perhaps Congress can be induced to remove the difficulty by amending the Code. The courts lack power to do so. 8 Affirmed on the government's appeal and on Hirsch's appeal.