OCTOBER TERM, 1991
Syllabus
UNITED STATES
v. NORDIC VILLAGE, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH
CIRCUIT
No. 90-1629. Argued December 9, 1991-Decided February
25,1992
After respondent Nordic Village, Inc., filed a petition for
relief under Chapter 11 of the Bankruptcy Code, one of its officers
withdrew funds from the company's corporate account. He sent part
of the money to the Internal Revenue Service (IRS), directing it to
apply the funds against his individual tax liability, which it did.
In a subsequent adversary proceeding, the Bankruptcy Court
permitted Nordic Village's trustee to recover the transfer and
entered a monetary judgment against the IRS. The District Court
affirmed, as did the Court of Appeals, which rejected a
jurisdictional defense that sovereign immunity barred the
judgment.
Held:
1. Section 106(c) of the Code does not waive the United States'
sovereign immunity from an action seeking monetary recovery in
bankruptcy. Pp. 32-37.
(a)
Hoffman v.
Connecticut Dept. of Income
Maintenance, 492 U. S. 96, does not control this case, since
the plurality and the dissent therein were evenly divided over the
issue whether § 106(c) authorizes a monetary recovery against a
State, and since the deciding vote of the concurrence, denying
amenability to suit, rested upon the Eleventh Amendment, which is
applicable only to the States. However, the plurality's reasoning
is relevant and is relied on here. pp. 32-33.
(b) Section 106(c) does not "unequivocally express" a waiver of
the Government's immunity from actions for monetary relief, as is
necessary for such a waiver to be effective. See,
e. g.,
Irwin v.
Department of Veterans Affairs, 498 U. S. 89, 95. In
contrast to §§ 106(a) and (b), which plainly waive immunity with
regard to monetary relief as to specified claims, § 106(c) is
susceptible of at least two plausible interpretations that do
not authorize monetary relief. Legislative history has no
bearing on this point, for the "unequivocal expression" of waiver
must be an expression in statutory text.
Hoffman, supra, at
104. Pp. 33-37.
2. Respondent's several alternative grounds for affirming the
judgment below-that 28 U. S. C. § 1334(d)'s broad jurisdictional
grant provides the necessary waiver, that a bankruptcy court's
in rem jurisdiction overrides sovereign immunity, and that a
waiver of sovereign immunity is supported by trust law
principles-are unpersuasive. Pp. 37-39.
915 F.2d
1049, reversed.
31
SCALIA, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and WHITE, O'CONNOR, KENNEDY, SOUTER, and THOMAS,
JJ., joined. STEVENS, J., filed a dissenting opinion, in which
BLACKMUN, J., joined,
post, p. 39.
Richard H. Seamon argued the cause for the United States. With
him on the briefs were Solicitor General Starr, Assistant Attorney
General Peterson, Deputy Solicitor General Roberts, Gary D. Gray,
and John A. Dudeck, Jr.
Marvin A. Sicherman argued the cause and filed a brief
for respondent. With him on the brief was
Michael D.
Zaverton.
JUSTICE SCALIA delivered the opinion of the Court.
This case presents a narrow question: Does § 106(c) of the
Bankruptcy Code waive the sovereign immunity of the United States
from an action seeking monetary recovery in bankruptcy?
I
Respondent Nordic Village, Inc., filed a petition for relief
under Chapter 11 of the Bankruptcy Code in March 1984. About four
months later, Josef Lah, an officer and shareholder of Nordic
Village, drew a $26,000 check on the company's corporate account,
$20,000 of which was used to obtain a cashier's check in that
amount payable to the Internal Revenue Service (IRS). Lah delivered
this check to the IRS and directed it to apply the funds against
his individual tax liability, which it did.
In December 1984, the trustee appointed for Nordic Village
commenced an adversary proceeding in the Bankruptcy Court for the
Northern District of Ohio, seeking to recover, among other
transfers, the $20,000 paid by Lah to the IRS. The Bankruptcy Court
permitted the recovery. The unauthorized, postpetition transfer,
the court determined, could be avoided under § 549(a) and recovered
from the IRS under § 550(a) of the Bankruptcy Code. It entered a
judgment against the IRS in the amount of $20,000, which the
District Court affirmed.
32
A divided panel of the United States Court of Appeals for the
Sixth Circuit affirmed.
915 F.2d
1049 (1990). It upheld the reasoning of the lower courts and
rejected a jurisdictional defense (raised for the first time on
appeal) that sovereign immunity barred the judgment entered against
the Government. We granted certiorari. 501 U. S. 1216 (1991).
II
Section 106 of the Bankruptcy Code provides:
"(a) A governmental unit is deemed to have waived sovereign
immunity with respect to any claim against such governmental unit
that is property of the estate and that arose out of the same
transaction or occurrence out of which such governmental unit's
claim arose.
"(b) There shall be offset against an allowed claim or interest
of a governmental unit any claim against such governmental unit
that is property of the estate.
"(c) Except as provided in subsections (a) and (b) of this
section and notwithstanding any assertion of sovereign
immunity-
"(1) a provision of this title that contains 'creditor,'
'entity,' or 'governmental unit' applies to governmental units;
and
"(2) a determination by the court of an issue arising under such
a provision binds governmental units." 11 U. S. C. § 106.
Three Terms ago we construed this provision in
Hoffman v.
Connecticut Dept. of Income Maintenance, 492 U. S. 96 (1989). The
issue there was whether § 106(c) authorizes a monetary recovery
against a State. We held that it does not, though the Justices
supporting that judgment failed to agree as to why. A plurality of
the Court determined that § 106(c) does not permit a bankruptcy
court to issue mone-
33
tary relief against a State.
Id., at 102 (WHITE, J.,
joined by REHNQUIST, C. J., and O'CONNOR and KENNEDY, JJ.). That
conclusion, the plurality said, was compelled by the language of §
106(c), the relationship between that subsection and the rest of
the statute, and the requirement that congressional abrogation of
the States' Eleventh Amendment immunity be clearly expressed. The
concurrence found it unnecessary to construe the statute,
concluding that Congress lacks authority under the Bankruptcy
Clause to abrogate the States' immunity from money-damages actions.
Id., at 105 (SCALIA, J., concurring in judgment). Like the
Court of Appeals here, a dissent determined that the language of §
106(c), particularly that of paragraph (c)(l), supplies the
necessary waiver.
Id., at 106 (Marshall, J., joined by
Brennan, BLACKMUN, and STEVENS, JJ.).
Contrary to the Government's suggestion,
Hoffman does not
control today's decision. It is true, to be sure, that Congress
made clear in § 106 that (insofar as is within Congress' power)
state and federal sovereigns are to be treated the same for
immunity purposes. See 11 U. S. C. § 101(27) (1982 ed., Supp. II)
(" 'governmental unit' means United States [and] State"). Since,
however, the Court in
Hoffman was evenly divided over what
that treatment
was as to the States; and since the deciding
vote of the concurrence, denying amenability to suit, rested upon a
ground (the Eleventh Amendment) applicable only to the States and
not to the Federal Government, see
Federal Housing Authority
v.
Burr, 309
U. S. 242, 244 (1940); the holding in
Hoffman has no
binding force here. The separate opinions dealing with the
statutory question are relevant, however, and we shall in fact rely
on the reasoning of the plurality.
III
Waivers of the Government's sovereign immunity, to be effective,
must be "'unequivocally expressed.'"
Irwin v.
34
Department of Veterans Affairs, 498 U. S. 89, 95 (1990)
(quoting
United States v.
Mitchell, 445 U. S. 535, 538
(1980), and
United States v.
King, 395 U. S. 1, 4 (1969)).
Contrary to respondent's suggestion, moreover, they are not
generally to be "liberally construed." We have on occasion narrowly
construed exceptions to waivers of sovereign immunity where that
was consistent with Congress' clear intent, as in the context of
the "sweeping language" of the Federal Tort Claims Act,
United
States v.
Yellow Cab Co., 340 U. S. 543, 547
(1951), see,
e. g., id., at 554-555,
Block v.
Neal, 460 U.
S. 289, 298 (1983),
United States v.
Aetna
Casualty &
Surety Co., 338 U. S. 366, 383
(1949), or as in the context of equally broad "sue and be sued"
clauses, see,
e. g., Franchise Tax Bd. of California v.
United States Postal Service, 467 U. S. 512, 517-519
(1984),
FHA v.
Burr, supra, at 245. These cases do
not, however, eradicate the traditional principle that the
Government's consent to be sued "must be 'construed strictly in
favor of the sovereign,'
McMahon v.
United States,
342 U. S. 25, 27 (1951), and not 'enlarge[d] ... beyond what
the language requires,'"
Ruckelshaus v.
Sierra Club,
463 U. S. 680, 685 (1983) (quoting
Eastern Transportation
Co. v.
United States, 272 U. S. 675, 686
(1927)), a rule of construction that we have had occasion to
reaffirm once already this Term, see
Ardestani v.
INS, 502 U. S.
129, 137 (1991).
Subsections (a) and (b) of § 106 meet this "unequivocal
expression" requirement with respect to monetary liability.
Addressing "claim[s]," which the Code defines as "right[s] to
payment," § 101(4)(A), they plainly waive sovereign immunity with
regard to monetary relief in two settings: compulsory counterclaims
to governmental claims, § 106(a); and permissive counterclaims to
governmental claims capped by a setoff limitation, § 106(b). Next
to these models of clarity stands subsection (c). Though it, too,
waives sovereign immunity, it fails to establish unambiguously that
the waiver extends to monetary claims. I t is susceptible of at
least two interpretations that do
not authorize monetary
relief.
35
Under one interpretation, § 106(c) permits the bankruptcy court
to issue "declaratory and injunctive"-though not monetary-relief
against the Government.
Hoffman, 492 U. S., at 102. This
conclusion is reached by reading the two paragraphs of subsection
(c) as complementary rather than independent: The first paragraph
identifies the subject matter of disputes that courts may entertain
under the subsection and the second paragraph describes the relief
that courts may grant in such disputes. That is to say, the second
paragraph specifies the
manner in which there shall be
applied to governmental units the provisions identified by the
first paragraph, i.
e., a manner that permits declaratory or
injunctive relief but not an affirmative monetary recovery.
Several factors favor this construction. The distinction it
establishes-between suits for monetary claims and suits for other
relief-is a familiar one, and is suggested by the contrasting
language used in subsections (a) and (b) ("claim[s]") and in
subsection (c) ("determination[s]" of "issue[s]"),
Hoffman,
492 U. S., at 102. It also avoids eclipsing the carefully drawn
limitations placed on the waivers in subsections (a) and (b). The
principal provision of the Code permitting the assertion of claims
against persons other than the estate itself is § 542(b), which
provides that "an entity that owes a debt that is property of the
estate and that is matured, payable on demand, or payable on order,
shall pay such debt to, or on the order of, the trustee." If the
first paragraph of § 106(c) means that, by reason of use of the
trigger word "entity," this provision applies
in all
respects to governmental units, then the Government may be sued
on all alleged debts, despite the prior specification in
subsections (a) and (b) that claims against the Government will lie
only when the Government has filed a proof of claim, and even then
only as a setoff unless the claim is a compulsory counterclaim.
Those earlier limitations are reduced to trivial application if
paragraph (c)(l) stands on its own. See
id., at 101-102.
This construction also attaches practical consequences to para-
36
graph (c)(2), whereas respondent's interpretation violates the
settled rule that a statute must, if possible, be construed in such
fashion that every word has some operative effect. See
id.,
at 103;
United States v.
Menasche, 348 U. S. 528, 538-539
(1955). Respondent has suggested no function to be performed by
paragraph (2) if paragraph (1) operates to treat the Government
like any other "entity" or "creditor," regardless of the type of
relief authorized by an applicable Code provision.
Under this interpretation, § 106(c), though not authorizing
claims for monetary relief, would nevertheless perform a
significant function. It would permit a bankruptcy court to
determine the amount and discharge ability of an estate's liability
to the Government, such as unpaid federal taxes, see 11 U. S. C. §
505(a)(1) (permitting the court to
"determine the amount or
legality of any tax") (emphasis added), whether or not the
Government filed a proof of claim. See 492 U. S., at 102-103. Cf.
Neavear v.
Schweiker, 674 F.2d
1201, 12031204 (CA7 1982) (holding that under § 106(c) a
bankruptcy court could discharge a debt owed to the Social Security
Administration). The Government had repeatedly objected, on grounds
of sovereign immunity, to being bound by such determinations before
§ 106(c) was enacted in 1978. See,
e. g.,
McKenzie v.
United States, 536
F.2d 726, 728-729 (CA7
1976); Bostwick v.
United
States, 521 F.2d
741, 742-744 (CA8
1975); Gwilliam v.
United
States, 519 F.2d
407, 410 (CA9
1975); In re Durensky, 377 F. Supp. 798,
799-800 (ND Tex. 1974), appeal dism'd,
519 F.2d
1024 (CA5 1975).
Subsection (c) is also susceptible of another construction that
would not permit recovery here. If the two paragraphs of § 106(c)
are read as being independent, rather than the second as limiting
the first, then, pursuant to the first paragraph, Code provisions
using the triggering words enumerated in paragraph (c)(l) would
apply fully to governmental units. But that application of those
provisions would be limited by the requirements of subsections (a)
and (b), in accord-
37
ance with the phrase that introduces subsection (c) ("Except as
provided in subsections (a) and (b) of this section"). This
exception, in other words, could be read to mean that the rules
established in subsections (a) and (b) for waiver of Government
"claim[sJ" that are "property of the estate" are exclusive, and
preclude any resort to subsection (c) for that purpose. That
reading would bar the present suit, since the right to recover a
postpetition transfer under § 550 is clearly a "claim" (defined in
§ 101(4)(A)) and is "property of the estate" (defined in §
541(a)(3)). (The dissent appears to read paragraphs (c)(l) and
(c)(2) as being independent but provides no explanation of what the
textual exception could mean under that reading.)
The foregoing are assuredly not the only readings of subsection
(c), but they are plausible ones-which is enough to establish that
a reading imposing monetary liability on the Government is not
"unambiguous" and therefore should not be adopted. Contrary to
respondent's suggestion, legislative history has no bearing on the
ambiguity point. As in the Eleventh Amendment context, see
Hoffman, supra, at 104, the "unequivocal expression" of
elimination of sovereign immunity that we insist upon is an
expression in statutory text. If clarity does not exist there, it
cannot be supplied by a committee report. Cf.
Dellmuth v.
Muth, 491 U.
S. 223, 228-229 (1989).
IV
Respondent proposes several alternative grounds for affirming
the judgment below, all unpersuasive. First, it claims that the
necessary waiver can be found in 28 U. S. C. § 1334(d), which
grants the district court in which a bankruptcy case is initiated
"exclusive jurisdiction of all of the property, wherever located,
of the debtor as of the commencement of such case, and of property
of the estate." Respondent urges us to construe this language as
empowering a bankruptcy court to compel the United States or a
State to return any property, including money, that passes into
the
38
estate upon commencement of the bankruptcy proceeding. Under
this theory, a sovereign's exposure to suit would not be governed
by the specific language of § 106, but would be concealed in the
broad jurisdictional grant of § 1334(d). Besides being
unprecedented and running afoul of the unequivocal-expression
requirement, this theory closely resembles an argument we rejected
just last Term. In
Blatchford v.
Native Village of
Noatak, 501 U. S.
775, 786 (1991), the argument was made that Alaska's Eleventh
Amendment immunity to suit was abrogated by 28 U. S. C. § 1362, a
jurisdictional grant, akin to § 1334(d), that gives district courts
jurisdiction over "all civil actions, brought by any Indian tribe
... aris[ing] under the Constitution, laws, or treaties of the
United States." Rejecting that contention, we observed: "The fact
that Congress grants
jurisdiction to hear a claim does not
suffice to show Congress has abrogated all
defenses to that
claim. The issues are wholly distinct."
Id., at 787, n.
4.
Equally unpersuasive is respondent's related argument that a
bankruptcy court's
in rem jurisdiction overrides sovereign
immunity. As an initial matter, the premise for that argument is
missing here, since respondent did not invoke, and the Bankruptcy
Court did not purport to exercise,
in rem jurisdiction.
Respondent sought to recover a sum of money, not "particular
dollars," cf.
Begier v.
IRS, 496 U. S. 53, 62 (1990)
(emphasis deleted), so there was no
res to which the court's
in rem jurisdiction could have attached, see
Pennsylvania
Turnpike Comm'n v.
McGinnes, 268 F.2d
65, 66-67 (CA3), cert. denied, 361 U. S. 829 (1959). In any
event, we have never applied an
in rem exception to the
sovereignimmunity bar against monetary recovery, and have suggested
that no such exception exists, see
United States v.
Shaw, 309 U.
S. 495,502-503 (1940). Nor does
United States v.
Whiting Pools, Inc., 462 U. S. 198 (1983),
establish such an exception, or otherwise permit the relief
requested here. That case upheld a Bankruptcy Court order that the
IRS
39
turn over tangible property of the debtor it had seized before
the debtor filed for bankruptcy protection. A suit for payment of
funds from the Treasury is quite different from a suit for the
return of tangible property in which the debtor retained ownership.
The Court's opinion in
Whiting Pools contains no discussion
of § 106(c), and nothing in it suggests that an order granting
monetary recovery from the United States would be proper.
Resort to the principles of trust law is also of no help to
respondent. Most of the trust decisions respondent cites are
irrelevant, since they involve private entities, not the
Government. The one that does involve the Government,
Bull
v.
United States, 295 U. S. 247 (1935),
concerns equitable recoupment, a doctrine that has been
substantially narrowed by later cases, see
United States v.
Dalm, 494 U.
S. 596, 608 (1990), and has no application here.
***
Neither § 106(c) nor any other provision of law establishes an
unequivocal textual waiver of the Government's immunity from a
bankruptcy trustee's claims for monetary relief. Since Congress has
not empowered a bankruptcy court to order a recovery of money from
the United States, the judgment of the Court of Appeals must be
reversed.
It is so ordered.
JUSTICE STEVENS, with whom JUSTICE BLACKMUN joins,
dissenting.
The injustice that the Court condones today demonstrates that it
is time to reexamine the wisdom of the judge-made rules that drive
its decision.
An officer of an insolvent corporation appropriated corporate
funds and used them to discharge a personal tax obligation. Because
the Federal Government was the ultimate recipient of the stolen
property, the Court holds that the
40
bankruptcy trustee cannot avoid the transfer. The interest in a
rigid interpretation of the doctrine of sovereign immunity
outweighs the interest in equitable treatment of general creditors
and shareholders of the corporate debtor. This result is neither
necessary nor just.
It is not necessary because both the text and the legislative
history of the Bankruptcy Code support a contrary result. It is not
just because nothing more than a misguided interest in adherence to
obsolete judge-made rules is at stake. I shall comment first on the
laws enacted by Congress and then on the rules that the Court
itself has ordained.
I
The text of § 106 is straightforward. Because the case does not
involve either a counterclaim or an offset, subsections (a) and (b)
are not applicable. Subsection (c) provides:
"(c) Except as provided in subsections (a) and (b) of this
section and notwithstanding any assertion of sovereign
immunity-
"(1) a provision of this title that contains 'creditor,'
'entity,' or 'governmental unit' applies to governmental units;
and
"(2) a determination by the court of an issue arising under such
a provision binds governmental units." 11 U. S. C. § 106(c).
The United States is a "governmental unit," 1 and therefore any
provision of the Bankruptcy Code that contains one of the "trigger
words" listed in paragraph (c)(l) applies to the United States.
Section 550(a) is undoubtedly one such pro-
1 Section 101(27) defines the term "governmental unit" to
include the "United States [and any] department, agency, or
instrumentality of the United States." 11 U. S. C. § 101(27) (1988
ed., Supp. II).
41
vision.2 Thus, "notwithstanding any assertion of sovereign
immunity," paragraph (c)(l) provides that § 550(a) "applies" to the
United States, and paragraph (c)(2) provides that the Government is
bound by the court's determination of the issues arising under that
provision. The literal text of the Act unquestionably forecloses
the defense of sovereign immunity.
The legislative history unambiguously demonstrates that Congress
intended the statute to be read literally. The immediate purpose of
§ 106(c) was to enable the bankruptcy court to determine the amount
and the dischargeability of the debtor's tax liabilities, but the
sponsors of the amendment clearly stated that it covered "other
matters as well," specifically including the avoidance of
preferential transfers. 124 Congo Rec. 32394 (1978) (statement of
Rep. Edwards);
id., at 33993 (statement of Sen. DeConcini).3
The congressional purpose to waive sovereign immunity is pellucidly
clear.
The Court evades this conclusion by hypothesizing "plausible"
alternative constructions of the statute,4 by refusing to consider
its legislative history,5 and by reiterating the
2 Section 550(a) provides:
"(a) Except as otherwise provided in this section, to the extent
that a transfer is avoided under section 544, 545, 547, 548, 549,
553(b), or 724(a) of this title, the trustee may recover, for the
benefit of the estate, the property transferred, or, if the court
so orders, the value of such property, from-
"(1) the initial transferee of such transfer or the entity for
whose benefit such transfer was made; or
"(2) any immediate or mediate transferee of such initial
transferee."
3 See also the material summarized and quoted in my dissenting
opinion in
Hoffman v.
Connecticut Dept. of Income
Maintenance, 492
U. S. 96, 111-114 (1989). Particularly note the sponsors'
comment that '''§ 106(c) permits a trustee or debtor in possession
to assert avoiding powers under Title 11 against a governmental
unit,' "
id., at 112, and the comment that as a result of §
106(c) "'the government is subject to avoidance of preferential
transfers,'"
id., at 113.
4 Ante, at 34-37.
5 Ante, at 37.
42
Court's view that waivers of sovereign immunity must be strictly
construed.6 I shall not comment on the plausible alternatives
except to note that they are obviously less satisfactory-both as a
matter of sound bankruptcy policy and as a principled
interpretation of the English language-than a literal reading of
the statute. I shall, however, add a few words about the Court's
love affair with the doctrine of sovereign immunity.
II
Despite its ancient lineage, the doctrine of sovereign immunity
is nothing but a judge-made rule that is sometimes favored 7 and
sometimes disfavored.8 Its original reliance on the notion that a
divinely ordained monarch "can do no wrong"9 is, of course,
thoroughly discredited.lO Moreover,
6 Ante, at 34.
7 See,
e. g., Library of Congress v.
Shaw,
478 U. S. 310,318
(1986) ('''The consent necessary to waive the traditional immunity
must be express, and it must be strictly construed''') (quoting
United States v.
N. Y.
Rayon Importing Co.,
329 U. S. 654,
659 (1947));
Ruckelshaus v.
Sierra Club, 463 U. S.
680, 685 (1983) ("Waivers of immunity must be 'construed strictly
in favor of the sovereign,' ... and not 'enlarge[d] ... beyond what
the language requires' ");
United States v.
Sherwood,
312 U. S. 584,
590 (1941) (Because "a relinquishment of a sovereign immunity ...
must be strictly interpreted," we construe the statutory language
with "conservatism").
8 See,
e. g., Block v.
Neal, 460 U. S. 289, 298 (1983)
(" 'The exemption of the sovereign from suit involves hardship
enough where consent has been withheld. We are not to add to its
rigor by refinement of construction where consent has been
announced''') (quoting
Anderson v.
Hayes Constr. Co.,
243 N. Y. 140, 147, 153 N. E. 28, 29-30 (1926) (Cardozo, J.));
Indian Towing Co. v.
United States, 350 U. S. 61, 69 (1955)
(Frankfurter, J.) (Court should not be "a self-constituted guardian
of the Treasury [and] import immunity back into a statute designed
to limit it");
Canadian Aviator, Ltd. v.
United
States, 324 U. S.
215, 222 (1945) (Court should not thwart the "broad statutory
language authorizing suit" against the United States with "an
unduly restrictive interpretation").
9 See 1 W. Blackstone, Commentaries *246.
10 See,
e. g., Nevada v.
Hall, 440 U. S. 410, 415 (1979)
(the fiction that the king could do no wrong "was rejected by the
colonists when they declared
43
its persistent threat to the impartial administration of justice
has been repeatedly acknowledged and recognized.ll Thus, in
Federal Housing Authority v.
Burr, 309 U. S. 242, 245
(1940), we remarked on "the current disfavor of the doctrine of
governmental immunity from suit." 12
Time after time Congress has taken action to ameliorate the
hardship of the doctrine. A half century ago this Court
observed:
"A sense of justice has brought a progressive relaxation by
legislative enactments of the rigor of the immunity rule. As
representative governments attempt to ameliorate inequalities as
necessities permit, prerogatives of the government yield to the
needs of the citizen .... When authority is given, it is liberally
construed." United States v. Shaw, 309 U. S. 495, 501
(1940).
In the bankruptcy context, the Court has noted that there is no
reason why the Federal Government should be treated
their independence from the Crown");
Langford v.
United States, 101 U. S. 341, 343 (1880)
("We do not understand that ... the English maxim [that the king
can do no wrong] has an existence in this country").
11 See,
e. g., Davis, Sovereign Immunity Must Go,
22 Admin. L. Rev. 383, 383-384, 389-393 (1969); Pugh, Historical
Approach to the Doctrine of Sovereign Immunity, 13 La. L. Rev. 476,
492 (1953); Borchard, Government Liability in Tort, 34 Yale L. J.
1, 1-2, 31, 33 (1924).
12 Many legal scholars have been similarly critical of the
doctrine. See,
e. g., Comment, Sovereign Immunity-An
Anathema to the "Constitutional Tort," 12 Santa Clara Law. 543,
553, and n. 60 (1972) (collecting authorities); Cramton,
Nonstatutory Review of Federal Administrative Action: The Need for
Statutory Reform of Sovereign Immunity, Subject Matter
Jurisdiction, and Parties Defendant, 68 Mich. L. Rev. 387,418-419
(1970); Davis,
supra n. 11; Pugh,
supra n. 11, at
494.
Recognizing the lack of current justification for and the
inequities caused by this judicially created doctrine, several
state courts have abrogated or limited the immunity of state and
local governments. See Note, Rethinking Sovereign Immunity after
Bivens, 57 N. Y. U. L. Rev. 597,603, and n. 26 (1982)
(collecting cases).
44
differently from any other secured creditorP Its interests are
adequately protected by specific statutory provisions governing
discharges and priorities. As the Commission on the Bankruptcy Laws
of the United States observed, unanimously, in 1973:
"The Commission also recommends that unpaid taxes entitled to
priority be reduced from those accruing within three years prior to
bankruptcy to those accruing within one year prior to bankruptcy
and that the government be given no other priority for taxes in a
bankruptcy proceeding (including those secured by a 'tax lien').
Data submitted to the Commission by the Treasury Department
establishes that the total amount collected by the Federal
Government as a result of all of its liens and priorities in
bankruptcy proceedings is insignificant in the total federal
budget. It is the view of the Commission that it is unseemly for
the Federal Government to insist upon collecting its taxes at the
expense of other creditors of the taxpayer, and that the
13 In
United States v.
Whiting Pools, Inc.,
462 U. S. 198,
209 (1983), the Court first held that "the reorganization estate
includes property of the debtor that has been seized by a creditor
prior to the filing of a petition for reorganization." The Court
then explained:
"We see no reason why a different result should obtain when the
IRS is the creditor. The Service is bound by § 542(a) to the same
extent as any other secured creditor. The Bankruptcy Code expressly
states that the term 'entity,' used in § 542(a), includes a
governmental unit. § 101(14). See Tr. of Oral Arg. 16. Moreover,
Congress carefully considered the effect of the new Bankruptcy Code
on tax collection, see generally S. Rep. No. 95-1106 (1978) (Report
of Senate Finance Committee), and decided to provide protection to
tax collectors, such as the IRS, through grants of enhanced
priorities for unsecured tax claims, § 507(a)(6), and by the
nondischarge of tax liabilities, § 523(a)(1). S. Rep. No. 95-989,
pp. 14-15 (1978). Tax collectors also enjoy the generally
applicable right under § 363(e) to adequate protection for property
subject to their liens. Nothing in the Bankruptcy Code or its
legislative history indicates that Congress intended a special
exception for the tax collector in the form of an exclusion from
the estate of property seized to satisfy a tax lien."
Ibid.
45
only possible justification for this would be a plea of
necessity in order to keep the government functioning. As indicated
above, such a plea would be totally without foundation in fact.
" ... When the Federal Government enters into business
transactions, it should be prepared to deal upon a basis of
equality with other creditors of the bankrupt business." Report of
Commission on Bankruptcy Laws of the United States, H. R. Doc. No.
93-137, pt. 1, p. 22 (1973).
If these comments by the experts who played a major role in
formulating the policies embodied in the Bankruptcy Code are
sound-as I believe they are-one must ask what valid reason supports
a construction of the waiver in § 106(c) that is so "strict" that
the Court will not even examine its legislative history.
Surely the interest in requiring the Congress to draft its
legislation with greater clarity or precision does not justify a
refusal to make a good-faith effort to ascertain the actual meaning
of the message it tried to convey in a statutory provision that is
already on the books. The Court's stubborn insistence on "clear
statements" burdens the Congress with unnecessary reenactment of
provisions that were already plain enough when read literally.14
The cost to litigants, to
14 One scholar's comment on the countermajoritarian thrust of
the Court's fascination with clear statement rules is
illustrative:
"In
Dellmuth v.
Muth, [
491 U. S. 223 (1989),]
the Court held that the Education of the Handicapped Act (EHA) of
1975 did not abrogate state immunity. The Court reached this result
even though the law imposed substantive obligations directly on the
states, included the states in its jurisdictional grant, and
included legislative discussion assuming that the states could be
sued. After the Supreme Court changed the clear statement rule in
1985, Congress responded in 1986 with a broad textual abrogation of
state immunity for statutes protecting the disabled. Yet in
Dellmuth, the Court held not only that the EHA did not meet
the more stringent test for abrogation, but that the 1986 statute
made clear Congress' 'intent' not to abrogate state immunity in
lawsuits filed before
46
the legislature, and to the public at large of this sort of
judicial lawmaking is substantial and unfortunate. Its impact on
individual citizens engaged in litigation against the sovereign is
tragic.
The fact that Congress has ample power to correct the Court's
unfortunate error does not justify this refusal to obey its
command. I respectfully dissent.
1986. Congress overrode
Dellmuth in 1990. That Congress
had to pass the same statute three times to achieve its original
goal is quite striking." Eskridge, Overriding Supreme Court
Statutory Interpretation Decisions, 101 Yale L. J. 331, 409-410
(1991) (footnotes omitted).
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