United States v. Aetna Casualty Surety Co, s. 35

Decision Date12 December 1949
Docket NumberNos. 35,37 and 38,36,s. 35
Citation12 A.L.R.2d 444,338 U.S. 366,94 L.Ed. 171,70 S.Ct. 207
PartiesUNITED STATES v. AETNA CASUALTY & SURETY CO. and three other cases
CourtU.S. Supreme Court

Mr. Leavenworth Colby, Washington, D.C., for the United states.

Mr. William A. Hyman, New York City, for Aetna Casualty & Surety Co.

Mr. Jackson G. Akin, Albuquerque, N.M., pro hac vice, by special leave of court, for respondent World Fire & Marine Ins. Co.

Mr. Abraham Frankel, Asbury Park, N.J., for Yorkshire Ins. Co. and Home Ins. Co.

Mr. Chief Justice VINSON delivered the opinion of the Court.

These cases, here on certiorari, present this important question under the Federal Tort Claims Act:1 May an insurance company bring suit in its own name against the United States upon a claim to which it has become subrogated by payment to an insured who would have been able to bring such an action? That question, in turn, requires our consideration of R.S. § 3477, the 'anti-assignment' statute.2

Three cases, each presenting a slightly different aspect of the problem, were heard by the Court. In No. 35, the complaint alleges that an employee of the Federal Reserve Bank of New York was injured as a result of the negligence of an United States Post Office Department employee. Respondent insurance carrier had insured the Federal Reserve Bank against its liability for workmen's compensation, and duly paid the injured person's claim under the New York Workmen's Compensation Law, Consol.Laws, c. 67. The complaint further alleges that the injured person failed to commence any action against the United States within one year after the accident, and that his inaction operated, according to New York law,3 as an assignment to the insurer of his cause of action against the United States. The District Court dismissed the complaint, but the Court of Appeals for the Second Circuit reversed and remanded the cause for trial. 170 F.2d 469.

In No. 36, the Government's motion to dismiss the complaint was denied, and, after trial, it was found as fact that an employee of the United States Forest Service had negligently driven a Government vehicle into a vehicle owned by one Harding, causing damages of $1,484.50 that Harding was insured by the respondent insurance carrier and, pursuant to the terms of the policy, had been paid $784.50 by the insurer, to which it was now subrogated. Judgment was thereupon entered against the United States in favor of Harding for $700 and in favor of respondent insurance company for $784.50. The Court of Appeals for the Tenth Circuit affirmed.

Nos. 37 and 38 present the situation in which two insurance companies, each of which has paid part of a claim of loss occasioned by the negligence of an employee of the United States, bring suits in their own names, each asking recovery of the amount it has paid to the assured. The District Court dismissed the complaints on motion of the Government, but the Court of Appeals for the Third Circuit reversed and remanded the causes. 171 F.2d 374. We granted certiorari in these cases, 336 U.S. 960, 69 S.Ct. 890, because of a conflict of decisions in the circuits4 and the manifest importance of the question.

The Federal Tort Claims Act provides in pertinent part that '* * * the United States district court for the district wherein the plaintiff is resident or wherein the act or omission complained of occurred, * * * sitting without a jury, shall have exclusive jurisdiction to hear, determine, and render judgment on any claim against the United States, for money only, * * * on account of damage to or loss of property or on account of personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant for such damage, loss, injury, or death in accordance with the law of the place where the act or omission occurred. Subject to the provisions of this chapter, the United States shall be liable in respect of such claims, to the same claimants, in the same manner, and to the same extent, as a private individual under like circumstances * * *.'5

While the language of the Act indicates a congressional purpose that the United States be treated as if it were a private person in respect of torts committed by its employees, except for certain specific exceptions enumerated in the Act,6 neither the terms of the Act nor its legislative history precludes the application of R.S. § 3477 in this situation.

It is the Government's position that R.S. § 3477, which in terms makes 'All transfers and assignments * * * of any claim upon the United States, or of any part or share thereof, or interest therein * * * absolutely null and void * * *' except for assignments made after payment of the claim and in accordance with certain prescribed safeguards, includes assignments by operation of law and prohibits suit by the subrogee in its own name. Petitioner reads R.S. § 3477 not as prohibiting transfer of a claimant's substantive rights to an insurer-subrogee and ultimate recovery by the insurer but as a procedural requirement that the insurance carrier sue and recover judgment in the name of the original claimant. United States v. American Tobacco Co., 1897, 166 U.S. 468, 17 S.Ct. 619, 41 L.Ed. 1081. Its purpose in invoking the anti-assignment statute is said to be two-fold: '(1) to insure that the United States may avoid involvement in any litigation as to the existence or extent of subrogation or other assignment of such claims; and (2) to insure that the suits and any judgments against the United States will be in the names of the original claimants so that the United States will be able to avail itself of its statutory rights in respect of venue, and of counterclaim and offset on account of any cross-claims it may have against the original claimants.' It is pointed out that 'The provisions of the statute making void an assignment or power of attorney by a Government contractor are for the protection of the Government. Hobbs v. McLean, 117 U.S. 567, 576, 6 S.Ct. 870, 874, 29 L.Ed. 940; McGowan v. Parish, 237 U.S. 285, 294, 295, 35 S.Ct. 543 (547), 59 L.Ed. 955. In the absence of such a rule, the Government would be in danger of becoming embroiled in conflicting claims, with delay and embarrassment and the chance of multiple liability.' Martin v. National Surety Co., 1937, 300 U.S. 588, 594, 57 S.Ct. 531, 534, 81 L.Ed. 822. The Government contends that the inconvenience, administrative and accounting difficulties, and procedural problems which, it is apprehended, may involve the Government if subrogees are permitted to bring suits under the Tort Claims Act in their own names make this an apt situation for application of R.S. § 3477, and that that was the congressional intent.

It should be noted at the outset, however, that in the courts below and until argument in this Court (and even in its petition for certiorari) the Government contended that R.S. § 3477 was a complete bar to recovery by a subrogee. Only in brief and argument here was it suggested that the insurance carrier could recover if suit was brought in the name of the insured to the use of the insurer, citing for the first time United States v. American Tobacco Co., supra, a decision reflecting common-law procedure, upon which reliance is now placed.7 It is for that reason that the opinions below were focused upon whether R.S. § 3477 is an absolute bar to recovery by the subrogee rather than merely a bar to recovery in the name of the subrogee. We think, however, that even this limited, and somewhat anomalous,8 reliance upon R.S. § 3477 is untenable, first, because of the uniform interpretation given that statute by this Court for the past 75 years, and, second, because of many affirmative indications of congressional intent that subrogation claims should not be excluded from suit in the name of the subrogee under the Tort Claims Act.

R.S. § 3477 was enacted in 1853 as part of a statute entitled 'An Act to prevent frauds upon the Treasury of the United States.'9 Its primary purpose was undoubtedly to prevent persons of influence from buying up claims against the United States, which might then be improperly urged upon officers of the Government.10 Spofford v. Kirk, 1878, 97 U.S. 484, 490, 24 L.Ed. 1032. Another purpose, that upon which the Government now relies, has been inferred by this Court from the language of the statute. That purpose was to prevent possible multiple payment of claims, to make unnecessary the investigation of alleged assignments, and to enable the Government to deal only with the original claimant. Spofford v. Kirk, supra; Goodman v. Niblack, 1880, 102 U.S. 556, 560, 26 L.Ed. 229. Most of the early cases construed the statute strictly, holding that all assignments were included within the statute and that such assignments conferred no rights of any kind upon the assignee; that R.S. § 3477 'incapacitates every claimant upon the Government from creating an interest in the claim in any other than himself.' Spofford v. Kirk, supra, 97 U.S. at pages 488 489, 24 L.Ed. 1032. See also National Bank of Commerce v. Downie, 1910, 218 U.S. 345, 31 S.Ct. 89, 54 L.Ed. 1065, 20 Ann.Cas. 1116; Nutt v. Knut, 1906, 200 U.S. 12, 26 S.Ct. 216, 50 L.Ed. 348; St. Paul & Duluth R. Co. v. United States, 1885, 112 U.S. 733, 5 S.Ct. 366, 28 L.Ed. 861.

The rigor of this rule was very early relaxed in cases which were thought not to be productive of the evils which the statute was designed to obviate. And one of the first such exceptions was to transfers by operation of law. In United States v. Gillis, 1877, 95 U.S. 407, 24 L.Ed. 503, the Court held that a provision in the Act creating the Court of Claims that suits on assignments may be brought in the name of the assignee did not mean that R.S. § 3477 was inapplicable to suits in the Court of Claims,...

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