United States v. N. Y. Rayon Importing Co.

Background

Three companies that imported rayon yarn paid customs duties in the 1920s and later won refunds in the Customs Court in 1937. By then the original companies had been dissolved and a successor company had been formed, and checks for the refunds were sent to the General Accounting Office. The Comptroller General deposited the money in a Treasury trust fund and refused to pay without a final court decision about ownership. The Court of Claims decided the successor owned the funds and awarded 6% interest running from April 19, 1941.

Reasoning

The Supreme Court addressed whether interest could be charged against the United States under the governing statute, which forbids awarding interest on claims unless Congress has clearly consented in a law or there is an express contract. The Court said that rule protects the United States from liability for interest unless Congress says otherwise. No statute or contract here authorized interest, the limited statutory exception for government set-offs did not apply, and government officials’ delay could not count as consent. The Court therefore reversed the interest portion of the Court of Claims’ judgment and dismissed the cross-petition about an earlier interest start date as unnecessary.

Real world impact

The decision means people who win money from the United States cannot get interest unless Congress has plainly allowed it. Government officials’ delays do not create liability for interest. The ruling reversed the lower court only to the extent it awarded interest; the ownership and principal refund issues were not disturbed.