Butte, Anaconda & Pacific Ry. Co. v. United States
Headline: Federal agency payments cannot be clawed back when an agency later changes its view; Court blocked the Government from recovering $487,116 paid to a railroad even if the agency misread “deficit.”
Holding: The Court held that the Government cannot recover money paid under an Interstate Commerce Commission certificate, even if the Commission misinterpreted the statute, because Congress authorized the agency to determine entitlement and provided no review.
- Protects recipients from having agency-authorized payments clawed back later.
- Limits the Government’s ability to recover payments after agency-issued certificates.
- Makes agency payment certifications effectively final when Congress provides no review.
Summary
Background
The United States sued a railway to recover $487,116 that the Treasury paid in 1925 after the Interstate Commerce Commission issued a certificate under §204 of the Transportation Act, 1920. The railway had accepted the payment and used it for dividends and operating expenses. Two years later the Commission reopened the matter, revoked the certificate, and the Treasury demanded repayment in 1928; repayment was refused and the Government sued in 1929. The lower courts entered judgment for the Government and the Circuit Court of Appeals affirmed before the Supreme Court took the case.
Reasoning
The central question was whether the Government could get back money paid under an agency certificate if the agency later had been wrong about the law. The Court said no. It explained that Congress gave the Commission a broad, quasi-judicial role to decide who was entitled to compensation and to certify amounts to the Treasury. Because the law left no method for later review, an error by the Commission — whether one of law or of fact — did not strip the agency of authority or allow the Government to reclaim the payment. The practical result is that the railway kept the money.
Real world impact
The ruling means payments made under final certificates from a statutorily authorized agency cannot be easily clawed back just because the agency later revises its view. The decision affects many carrier claims under §204 (hundreds filed and many certificates issued) and limits the Government’s ability to recover funds once Treasury payments are made on the agency’s certification. The Supreme Court reversed the lower-court judgment for the Government.
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