United States v. Rayon Importing Co Rayon Importing Co v. United States

• Decision Date: 03 February 1947
• Docket Number: Nos. 94 and 96,No. 2,2,s. 94 and 96
• Parties: UNITED STATES v. N.Y. RAYON IMPORTING CO., Inc. (), et al. N.Y. RAYON IMPORTING CO., () et al. v. UNITED STATES
• Court: U.S. Supreme Court

329 U.S. 654

67 S.Ct. 601

91 L.Ed. 577

UNITED STATES

v N.Y. RAYON IMPORTING CO., Inc. (No. 2), et al.

N.Y. RAYON IMPORTING CO., (No. 2) et al.

v. UNITED STATES.

Nos. 94 and 96.

Argued Jan. 8, 1947.

Decided Feb. 3, 1947.

Mr.Joseph M. Proskauer, of New York City, for N.Y. Rayon Importing co.

Mr. Samuel D. Slade, of Washington, D.C., for the United States.

Mr. Justice MURPHY delivered the opinion of the Court.

This case involves another impact of § 177(a) of the Judicial Code¹ on the power of the Court of Claims to award interest i 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, 19 U.S.C.A. § 1001 et seq., 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.

In 1937, long after these three corporations were dissolved, the Customs Court rendered decisions sustaining the protests which Rayon #1 and Nyrayco had filed in connection with the duties on rayon yarn imported between 1925 and 1929. A reliquidation of the customs entries was directed. On reliquidation, the Collector of Customs ascertained that a refund of $362,482.71 was payable to Rayon #1 and $30,809.75 to Nyrayco. Checks payable to those corporations were drawn, but since the corporations had been dissolved the Collector caused the checks to be transmitted to the General Accounting Office 'for lawful disposition.' Representatives of Rayon #2 thereafter requested the General Accounting Office to deliver these checks to them; this request was denied and the Comptroller General deposited the proceeds of the checks in the Treasury in a trust fund entitled 'Outstanding Liabilities 1938', pursuant to law.²

Several unsuccessful attempts were made by the representives of the three dissolved corporations to obtain the money in the trust fund. First, a consent decree was entered in a declaratory judgment proceeding in the Supreme Court of the State of New York adjudicating that as among the three dissolved corporations, Rayon #2 was the owner of these customs refunds or the proceeds thereof.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.

Rayon #2 and its liquidating directors and trustees then brought this suit in the Court of Claims, claiming that Rayon #2 continued to exist for the purpose of collecting and distributing its assets and that it was the owner of the funds in issue. Rayon #1 and Nyrayco also brought suits in the Court of Claims; they claimed the amounts of their respective refunds and alleged that ownership remained in them. After consideration of all three claims,⁴ the court held that he rights of Rayon #1 and Nyrayco had been taken over by Rayon #2 and its liquidating directors and trustees, who were thus entitled to recover the amounts held in trust by the United States. D.C., 64 F.Supp. 684. As a part of its judgment, however, the Court of Claims awarded 6% interest on the total fund, such interest to run from April 19, 1941, the date of an amendment to the New York Tax Law which retroactively clarified the capacity to sue of involuntarily dissolved corporations.⁵

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, 67 S.Ct. 43, 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.

In our opinion, § 177(a) of the Judicial Code prohibits the award of any interest under the circumstances of this case. Section 177(a) provides that '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, * * *.' As we recently pointed out in United States v. Thayer-West Point Hotel Co., 329 U.S. 585, 67 S.Ct. 398, this provision codifies the traditional rule regarding the immunity of the United States from liability for interest on unpaid accounts or claims. In other words, in the absence of constitutional requirements, interest can be recovered against the United 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, 25 L.Ed. 543; 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.

The Court of Cla ms (64 F.Supp. 684, 687), without making a reference to § 177(a), sought to justify its award of interest on what it thought 'would be right or just.' It felt that the officials of the General Accounting Office had delayed too long in determining the ownership of the refund claims and that, at the very least, they could have suggested at an earlier date that a suit in the Court of Claims was necessary. Inasmuch as it was known since the time of the Customs Court's decisions in 1937 that the money did not belong to the Government, the Court of Claims believed that it was only fair that the true owners get interest from the time when all defects and uncertainties were removed in New York as to the capacity of dissolved corporations to maintain suits or to be sued.⁶

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.

By the same token, if we assume that the officials of the General Accounting Office unreasonably delayed the determination of ownership of the funds, such action or inaction could not operate as a consent on the part of the United States. Tillson v. United States, supra. It has long been settled that officers of the United States possess no power through their actions to waive an immunity of the United States or to confer jurisdiction on a court in the absence of some express provision by Congress. Carr v. United States, 98 U.S. 433, 25 L.Ed. 209; Stanley v. Schwalby, 162 U.S. 255, 16 S.Ct. 754, 40 L.Ed. 960; State of Minnesota v. United States, 305 U.S. 382, 59 S.Ct. 292, 83 L.Ed. 235; United States v. Shaw, 309 U.S. 495, 60 S.Ct. 659, 84 L.Ed. 888. The same rule applies here. Only Congress can take the necessary steps to waive the immunity of the United States from liability for interest on...