United States v. Borcherling
Headline: Court upholds New Jersey court’s transfer of a U.S. Treasury payment to a state-appointed receiver, blocking the Treasury from paying the original creditor and protecting the receiver’s claim.
Holding: The Court ruled that a New Jersey court could transfer title to funds in the Treasury to a state-appointed receiver, and the Court of Claims can enforce that receiver’s right, preventing Treasury from paying the original creditor.
- Requires Treasury to respect state-court transfers of claim to funds
- Allows Court of Claims to enforce state-court determinations against the Treasury
- Prevents Treasury officers from unilaterally paying the original claimant over a state decree
Summary
Background
A creditor named Price had money held in the U.S. Treasury. A New Jersey court appointed a receiver, Borcherling, and under New Jersey law the court said the receiver owned Price’s claim to those funds. The United States argued it could pay Price directly because of sovereign control over how it pays debts.
Reasoning
The Court explained that Congress had created the Court of Claims to decide disputes about money owed by the United States, and that the government had not chosen to treat such claims as wholly immune from state-law processes. The Court relied on earlier decisions holding that state courts can determine who has title to debts due from the United States. It said Treasury officers could not ignore a lawful state-court decree and pay the original creditor without regard to the receiver’s title. An ex parte order from the Supreme Court of the District did not override the New Jersey decree.
Real world impact
The decision means state-court receivers appointed under state law can hold and pursue funds that the United States owes. The Court of Claims can enforce those state-court determinations against the Treasury. Treasury officers must respect valid state judgments about who has title to a federal payment rather than make unilateral payments to the original claimant.
Dissents or concurrances
Justice White dissented. Justice Harlan did not participate. The opinion does not include further detail about the dissenting view.
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