Availability of the Judgment Fund for the Payment of Judgments or Settlements in Suits Brought Against the Commodity Credit Corporation Under the Federal Tort Claims Act

• Court: Department of Justice Office of Legal Counsel
• Decided: December 5, 1989
• Status: Published

Opinion

Availability of the Judgment Fund for the Payment o f Judgments or Settlements in Suits Brought Against the Commodity Credit Corporation Under the Federal Tort Claims Act

The Judgment Fund, the permanent appropriation established pursuant to 31 U.S.C. § 1304, is n ot available fo r the payment o f judgm ents or settlements in suits brought against the Com m odity Credit Corporation under the Federal Tort Claims Act.

December 5, 1989

M em orandum O p in io n for the G eneral C oun sel D epartm ent of A g r ic u l t u r e

This memorandum responds to your office’s request of February 9,1989 (“February 9 Letter”), for the opinion of this Office concerning the avail­ ability o f the permanent appropriation established pursuant to 31 U.S.C. § 1304 (“Judgment Fund”) for the payment o f judgments or settlements of suits under the Federal Tort Claims Act (“FTCA”), 28 U.S.C. §§ 2671-2680, brought against the Commodity Credit Corporation (“CCC”), 15 U.S.C. § 714. For the reasons set forth below, we conclude that the Judgment Fund is not available for the payment o f such judgments and settlements.

I. Background

This question arose from a settlement reached in the case of First National Bank o f Rochester v. United States, in the United States District Court, District o f Minnesota, Third Division, Civil No. 3-87-571. In that case, you believed that the settlement should be paid from the Judgment Fund, but the General Accounting Office opined that the Judgment Fund could not be used. See Letter for Mary E. Carlson, Assistant United States Attorney, from Kenneth R. Schutt, Judgment Group Manager, General Accounting Office (May 24,1988). Although we understand that this com­ promise settlement was ultimately paid out o f CCC funds, your office has requested that we provide an opinion on the availability o f the Judgment Fund generally to the CCC for payment o f judgments or settlements that arise under the FTCA. The Automatic Payment o f Judgments Act (the “Judgments Act” or “Judgment Fund statute”), ch. 748, § 1302, 70 Stat. 678, 694-95 (1956) 362 (codified as amended at 31 U.S.C. § 1304), creates a permanent appropri­ ation for the payment of certain types o f judgments and settlements obtained against the United States. Before passage of the permanent appropriation, most judgments against the United States required specif­ ic appropriations. See 66 Comp. Gen. 157, 159 (1986). Judgments obtained under the FTCA or the Suits in Admiralty Act, 46 U.S.C. §§ 741-752, for example, required a submission to Congress for appropriation. This cumbersome process led to undue delay in payment, resulting in excess charges for interest. Congress enacted the permanent Judgment Fund to provide a simpler payment mechanism. See 66 Comp. Gen. at 159. Section 1304 provides in pertinent part:

(a) Necessary amounts are appropriated to pay final judgments, awards, compromise settlements, and interest and costs specified in the judgments or otherwise autho­ rized by law when —

(1) payment is not otherwise provided for;

(2) payment is certified by the Comptroller General; and

(3) the judgment, award, or settlement is payable —

(A) under section 2414, 2517, 2672, or 2677 o f title 28;

(B) under section 3723 of this title; ....

31 U.S.C. § 1304(a). Section 1304(a) thus imposes three requirements — all o f which must be met — before a judgment or settlement may be paid out o f the Judgment Fund. First, the payment must not be “otherwise pro­ vided for.” Second, the Comptroller General must certify payment. And finally, the judgment must be payable pursuant to one o f a number of specified sections in the United States Code. The second requirement — the necessity for certification by the Comptroller General — does not appear to impose any additional substan­ tive requirements on access to the Judgment Fund. The Comptroller General’s certification follows from satisfaction o f the other two require­ ments and completion of the necessary paperwork.1 Thus, we need deter­

1 The General Accounting Office itself takes this position, stating that the requirement o f certification by the Comptroller General “is an essentially ministerial function and does not contemplate review o f the mer­ its o f a particular judgment." General Accounting Office, Principles o f Federal Appropriations Law 12-2 (1982) ( “GAO Manual”) (quoting B-129227, December 22,1960) See also 22 Comp Dec. 520 (1916); 8 Comp. Gen 603, 605 (1929). In this case, however, GAO appears to have gone beyond its ministerial role by inter­ preting the law as it applies to the executive branch. Because we conclude that the “not otherwise provided for" requirement is not met in this case and the Judgment Fund is not available in any event, we need not address the senous constitutional questions raised by any GAO attempt to impose on the executive branch its own view o f the Judgment Fund’s availability. See Bowslier v Synar, 478 U.S 714 (1986) (Congress can­ not constitutionally assign to the Comptroller General, an arm o f Congress, a role in executing the laws).

363 mine only whether FTCA judgments or settlements against the CCC satisfy both o f the two substantive requirements for Judgment Fund availability.2

II. The CCC

By Executive Order No. 6340 President Roosevelt established the CCC in 1933 pursuant to the National Industrial Recovery Act, ch. 90, 48 Stat. 195 (1933). At its inception, the CCC was incorporated in Delaware, with its office and principal place of business in Washington. Although the United States owned all the capital stock o f the CCC and the members o f the board o f directors, selected by the President, were officers in the federal government, the CCC operated as a private corporation. See Exec. Order No. 6340 (1933). The original articles of incorporation expressly state that the CCC would be treated like any other corporation under the laws o f the State o f Delaware.3 Under the 1935 Corporations Code in Delaware, as under current law, corporations could sue and be sued, Del. Code. ch. 65, art. 1, § 2 (1935), and the corporate entity, rather than the directors or shareholders, was liable for judgments against the corporation unless the execution o f such a judgment could not be satisfied. Id. § 51.4 The underlying liability of the corporation for judgments and settle­ ments did not change as the CCC evolved from a presidentially-created, privately-incorporated entity to a statutory corporation. Between 1933 and 1948, when the CCC was reincorporated by statute, see the Commodity Credit Corporation Charter Act, ch. 704, 62 Stat. 1070 (1948) (codified as amended at 15 U.S.C §§ 714-714p) (“CCC Charter Act”), Congress enacted a series of laws “to continue the Commodity Credit Corporation as an agency of the United States, to revise the basis o f annu­ al appraisal o f its assets, and for other purposes.” S. Rep. No. 631, 78th Cong., 2d Sess. 1 (1944).5These laws enabled Congress to determine the econom ic viability o f the CCC through commercial-type audits and

2 Because we conclude that the FTCA actions brought against the CCC fail to meet the “not otherwise provided for” requirement, we express no opinion whether such actions meet the section 1304(a)(3) requirement o f the Judgment Fund statute, which contains a specific reference to the Federal Tort Claims Act, 28 U.S C §§ 2672 & 2677. 3Article Third (m), Certificate o f Incorporation, Commodity Credit Corporation, provides: (m ) In general, to have and to exercise all the powers and privileges conferred by the General Corporation laws o f Delaware upon corporations, and to do all and everything necessary, suitable and proper for the accomplishment o f any o f the purposes or for the attainment of any o f the objects or for the furtherance o f any o f the powers herein set forth, either alone or in association with other corporations, firms, agencies or individuals, and to do every other act or thing lawfully incident or appurtenant to or growing out o f or connected with any o f the aforesaid objects, purposes and/or powers. 4 These provisions o f the 1935 Delaware Corporations Code were identical to those in force in 1933 through other laws. See 35 Del. Laws 220 (1927); 1915 Del Corporations Code 1965. 6 See, e.g., Act o f Jan. 26, 1937, ch. 6, 50 Stat. 5 (1937); Act o f Mar. 4, 1939, ch. 5, 53 Stat. 510 (1939); Act o f July 1, 1941, ch. 270, 55 Stat. 498(1941); Act o f July 16, 1943, ch 241, 57 Stat. 566 (1943), Act o f Dec 23, 1943, ch 381, 57 Stat. 643 (1943); Act o f Feb. 28, 1944, ch. 71, 58 Stat. 105 (1944), Act o f Apr 12, 1945, ch. 54, 59 Stat. 50 (1945), Act o f June 30, 1947, ch 164, 61 Stat. 201 (1947)

364 appraisals. As the Senate report to one o f these statutes notes, “[t]he Commodity Credit Corporation’s fiscal responsibility is vested in the Corporation and not in the individual fiscal agents. In other words, the fiscal agents are responsible to the Corporation, which in turn is liable to the Federal Government for the Government’s investment in the Corporation.” Id. at 2. In 1948, the CCC was re-established as a statutory corporation. See CCC Charter Act, ch. 704, 62 Stat. 1070 (1948) (codified as amended at 15 U.S.C. §§ 714-714p). The CCC was constituted as a “body corporate” which “shall be an agency and instrumentality o f the United States, with­ in the Department o f Agriculture.” CCC Charter Act § 2 (codified at 15 U.S.C. § 714). Section 4(c) provided that, among the general powers of the corporation, it “[m]ay sue and be sued, but no attachment, ir\junction, garnishment, or other similar process, mesne or final, shall be issued against the Corporation or its property.” Id. § 4(c) (codified at 15 U.S.C. § 714b(c)). Section 4(c) also provided for bench trials for suits brought against the CCC, and specified a statute of limitations for actions brought by or against the CCC. It specifically applied the FTCA to the CCC, including the 1-year statute o f limitations applicable to FTCA claims. See S. Rep. No. 1022, 80th Cong., 2d Sess. 11 (1948); H.R. Rep. No. 1790, 80th Cong., 2d Sess. 10 (1948). The CCC was also expressly provided with the authority to settle and pay its legal obligations. Section 4(j) granted the CCC the authority to “determine the character o f and the necessity for its obligations and expenditures and the manner in which they shall be incurred, allowed, and paid.” CCC Charter Act § 4(j) (codified at 15 U.S.C. § 714b(j)). Section 4(k) stated that the CCC “[s]hall have authority to make final and con­ clusive settlement and adjustment o f any claims by or against the Corporation or the accounts o f its fiscal officers.” CCC Charter Act § 4(k) (codified at 15 U.S.C. § 714b(k)). The Senate Report explained that the power conferred by section 4(k)

has been exercised by the Commodity Credit Corporation since its creation, and the power and its exercise were rec­ ognized by the Congress in the act o f February 28, 1944 (15 U.S.C., 1940 ed., Supp. V, 713), in which it was provided that the Corporation should “continue” to have authority to make adjustment and settlement o f its claims or the accounts o f its fiscal officers.... A corporation such as the Commodity Credit Corporation, engaged in a multitude of commercial transactions, must be able expeditiously to adjust, compromise, and settle its claims in order efficient­ ly to conduct its business.

S. Rep. No. 1022 at 12. 365 Moreover, just as the periodic pre-1948 evaluation and appraisal statutes reiterated the CCC’s fiscal responsibility to the federal govern­ ment, the 1948 statutory chartering o f the CCC retained the pre-existing bases o f the CCC’s liability. Section 16 o f the CCC Charter Act provided:

The rights, privileges, and powers, and the duties and lia­ bilities o f Commodity Credit Corporation, a Delaware cor­ poration, in respect to any contract, agreement, loan, account, or other obligation shall become the rights, privi­ leges, and powers, and the duties and liabilities, respective­ ly, o f the Corporation. The enforceable claims of or against the Commodity Credit Corporation, a Delaware corpora­ tion, shall become the claims o f or against, and may be enforced by or against, the Corporation.

CCC Charter Act § 16 (codified at 15 U.S.C. § 714n).

III. Analysis

The Automatic Payment of Judgments Act was not designed to shift lia­ bility to the United States Treasury from agencies that had specific and express statutory authority to pay judgments and settlements out o f their own assets and revenues,6 but rather to eliminate the need for Congress to pass specific appropriations bills for the payment o f judgments.7 The creation o f the Judgment Fund therefore did not disturb the prior prac­ tice, reflected in GAO decisions, that a government corporation would be required to pay judgments and settlements on personal iryury claims where it has express authority to apply its own corporate funds to dis­ charge such debts.8 Under the terms o f the Judgments Act, a corpora­

6See 66 Comp. Gen 157, 160 (1986) (u[l]t was never the intent o f the judgment appropriation to shift the source o f funds for those types of judgments which could be paid from agency funds... [T]he judg­ ment appropriation was made available only where payment was ‘not otherwise provided fo r ’ 31 U S C § 1304(a)(1). If this were not the case, agencies would be in a position to avoid certain valid obligations by using the ‘back door’ o f the judgment appropriation, and to this extent their budget requests would present to the Congress an artificially low picture o f the true cost o f their activities to the taxpayer.”). 7 Congress viewed the previous method o f satisfying judgment claims by specific appropriations as inequitable to judgment claimants, who were often forced to wait an unduly long time before receiving the m oney the Government ow ed them. Furthermore, the procedure resulted in unnecessary adminis­ trative expenses and interest costs to the Government. See Hearings on Supplemental Appropriations Bill, 1957, Before Subcommittees of the House Comm on Appropriations, 84th C on g , 2d Sess. 883-84, 888-89 (1956) See also 99 Cong Rec. 8793, 8794 (1953) (statements o f Rep. Taber) (discussing a similar, unenacted proposal in title II o f the Supplemental Appropriations Act, 1954). 6See, e.g., 25 Comp Gen. 685 (1946) In this decision, the Comptroller General concluded that “as the Congress has recognized the corporate existence o f the Virgin Islands Company and the ordinance under which it was created, any judgment obtained against the company in a suit brought for damages arising out o f [a tort] .. would be payable from funds derived from the operation of the company ” 25 Comp Gen. at 686-87. A later decision by the Comptroller General confirmed that even if initially such judg­ ments were paid by the Treasury, “it is our view that judgments o f this nature should, at least ultimately, be paid from funds o f the Corporation "37 Comp. Gen 691, 695 (1958) (citing 25 Comp Gen 685(1946)).

366 tion’s authority to discharge its own liability means that a judgment against the corporation is “otherwise provided for” within the meaning of section 1304. Consequently, the Judgment Fund is not available to dis­ charge the liability. The history o f the CCC confirms that Congress intended it to enjoy the authority to discharge its debts from its own funds. For the first fifteen years of its existence, the CCC operated largely in a private manner, and was responsible to the government for its liabilities. Like similar govern­ mental corporations, it did not enjoy sovereign immunity, but was amenable to suit, including suits in tort. See, e.g., Keifer & Keifer v. Reconstruction Fin. Corp., 306 U.S. 381 (1939). When Congress passed the CCC Charter Act in 1948 to reincorporate the CCC, it expressly pro­ vided that the CCC would remain exposed to legal liability. See CCC Charter Act § 4(c) (codified at 15 U.S.C. § 714b(c)). Further, the 1948 rein­ corporation also provided that the CCC “[s]hall determine the character o f and the necessity for its obligations and expenditures and the manner in which they shall be incurred, allowed, and paid.” CCC Charter Act § 4(j) (codified at 15 U.S.C. § 714b(j))- This language demonstrates that the CCC may determine the manner of paying its own “obligations” — e.g., by sale o f assets, by borrowings, or from current revenues. The next section of the statute makes explicit that the “obligations” over which the CCC has such authority include judgment claims. See CCC Charter Act § 4(k) (codified at 15 U.S.C. § 714b(k)) (providing the CCC with “authority to make final and conclusive settlement and adjustment of any claims by or against the Corporation”). Since the CCC thus has the authority to apply its own funds to the payment o f “any” o f its judgment claims, it follows that the CCC’s obligations arising from FTCA claims may be paid from corporate funds. Accordingly, payment o f such FTCA judgments against the CCC is “otherwise provided for” within the meaning o f 31 U.S.C. § 1304(a)(1), and the Judgment Fund is not available for that purpose. We recognize that the CCC reincorporation statute explicitly permits FTCA suits to be brought against the CCC.9 Because the third requirement in the Judgment Fund statute, 31 U.S.C. § 1304(a)(3)(A), and the CCC Charter Act, 15 U.S.C. § 714b(c), both refer to the FTCA, Agriculture seems to argue that FTCA judgments against the CCC are payable out o f the Judgment Fund.10 That view is erroneous. We acknowledge that the third requirement o f the Judgment Fund statute is satisfied simply by virtue of the fact that the judgment or settlement at issue arises from an FTCA suit. Nothing in the statute, however, suggests that FTCA suits necessarily sat­

^See 15 U.S.C § 714b(c) 10 In the February 9 Letter, Agnculture stated “It is equally clear that Congress did not intend to exclude the CCC from the FTCA simply because it was given the authority to settle claims Such an inter­ pretation would read out o f the CCC Charter Act the express provision that the FTCA shall apply ” February 9 Letter at 5-6

367 isfy the separate requirement that the payment of the settlement or judg­ ment not be “otherwise provided for.” Moreover, Agriculture’s argument ignores the limited purpose served by including the FTCA reference in the CCC reincorporation statute. The legislative intent behind the statutory ref­ erence to the FTCA was merely to make it plain that such suits could con­ tinue to be brought against the reincorporated CCC,11 and to emphasize that the statute o f limitations for such actions would be the same for the CCC as for other governmental entities subject to FTCA suits.12 Furthermore, the statutory requirement that the CCC must “determine the character o f and necessity for its obligations and expenditures and the manner in which they shall be incurred, allowed, and paid,” CCC Charter Act § 4(j) (codified at 15 U.S.C. 714b(j)), would be anomalous if it gave the CCC a general responsibility for paying its legal liabilities out o f its own funds, except where those arose under FTCA. Nothing in the language o f the provision remotely suggests that the CCC would be required to defray its own liabilities on non-FTCA claims, but could look to the Judgment Fund to pay its liabilities under FTCA. Agriculture also advances the argument that because the FTCA con­ verts suits against government agencies and employees into suits against the United States, 28 U.S.C. § 2679(a), payment for CCC torts committed under the FTCA must be payable from general funds o f the United States rather than the CCC.13 But section 2679(a) merely creates a litigating con­ vention which requires tort cases to be brought against the CCC in the name o f the “United States” and subjects tort claims arising from CCC activities to the procedures, terms and conditions o f the FTCA.14 We do not believe that it shifts the source of funding FTCA liabilities from the CCC onto the United States Treasury.

11 As we noted above, even p n or to the enactment o f FTCA, government-owned corporations were gen­ erally held not to eryoy sovereign immunity even from tort actions, absent clear congressional indication to extend such immunity to them In the 1948 rechartering o f the CCC, Congress apparently wished to allay any suspicion that the CCC, as reconstituted, would thenceforward er\joy sovereign immunity. ,2The Senate report reveals no intention to alter the responsibility o f the CCC for judgments and other liabilities The report states in pertinent part: The 2-year limitation upon the nght to bring suit against the Corporation represents a length o f time believed fair to both the plaintiff and the Corporation In this connection, it is to be noted that the Federal Tort Claims Act recently passed by the Congress (60 Stat. 842) con­ tains a 1-year statute o f limitations .. Since the Federal Tort Claims Act is designed for uni­ form application to all Government agencies, including corporations, the applicability o f the act to the Corporation is preserved. Consequently, there would be a 1-year statute o f limita­ tions applicable to claims cognizable under that act S. Rep. No. 1022 at 11. 13Thus, Agnculture maintained in its request for our opinion: “CCC funds are not legally available to satisfy FTCA judgments or settlements arising out o f ... CCC programs because such judgments are as a result o f suits and claims brought against the United States ” February 9 Letter at 6. 14See, e g., United States v. Klecan, 859 F.2d 570 (8th Cir. 1988); United States v Johnson, 853 F.2d 619 (8th Cir 1988); United States v. Bisson, 839 F.2d 418 (8th Cir. 1988), United States v. Batson, 782 F2d 1307 (5th Cir.), cert denied, 477 U.S. 906 (1986). This convention was, o f course, followed in the litiga­ tion that gave rise to this request for an opinion, First National Bank o f Rochester v United States

368 Our conclusion that the Judgment Fund is not available to the CCC accords with the longstanding interpretation o f the GAO, which has taken the view that government corporations should pay judgments from their own funds rather than the Judgment Fund. GAO’s conclusion is “based in part on the ‘otherwise provided for’ reasoning and in part on the grounds that a judgment against a Government corporation is not really the same as a judgment against the United States.” GAO Manual at 12-21 (citing Waylyn Corp. v. United States, 231 F.2d 544 (1st Cir.), cert, denied, 352 U.S. 827 (1956)).15

IV. Conclusion

We conclude, therefore, that the Judgment Fund is unavailable for pay­ ment of judgments and settlements arising under the Federal Tort Claims Act against the Commodity Credit Corporation. The history and purpos­ es of the Judgment Fund suggest that Congress intended payments to be made out o f the permanent appropriation only when three requirements are met. In our view, the CCC may “otherwise” provide for payment o f its FTCA judgments, and thus fails to meet a requirement for payment o f a judgment out o f the permanent appropriation.

WILLIAM P. BARR Assistant Attorney General Office of Legal Counsel

15 Although the opinions o f the Comptroller General, an agent o f Congress, are not binding on the exec­ utive branch, we have recognized in a related context that in considering issues that “are directly perti­ nent to statutory restrictions on the use o f appropriated funds, we believe it appropriate to accord con ­ siderable deference to decisions o f the GAO ” Establishment of the President’s Council fo r International Youth Exchange, 6 Op. O L C 541, 547 (1982).