United States v. Shaw, Administrator De Bonis Non
309 U.S. 495 (1940)
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Rule of Law:
When the United States initiates a suit in a state court, it does not waive its sovereign immunity from an affirmative judgment on a cross-claim that exceeds the amount of its own claim. Any cross-claim is limited to a defensive set-off, and no judgment for an excess amount can be rendered against the government without specific congressional consent.
Facts:
- In 1918, Sydney C. McLouth contracted with the U.S. Shipping Board Emergency Fleet Corporation to build tugs.
- In 1920, the contract was cancelled and a settlement was reached where McLouth would hold certain government materials as a bailee and the Fleet Corporation would assume some of McLouth's commitments.
- One commitment the Fleet Corporation assumed was McLouth's contract to buy lumber from the Ingram-Day Lumber Company.
- McLouth died in 1923.
- The Fleet Corporation failed to honor the commitment to Ingram-Day Lumber Company, leading to a judgment against McLouth's estate for breach of that contract.
- Separately, the United States determined that McLouth had converted the materials left with him as a bailee, creating a debt owed by his estate to the government.
Procedural Posture:
- Ingram-Day Lumber Company obtained a judgment against McLouth's estate.
- The United States obtained a separate judgment against McLouth's estate.
- Both claims were filed in the probate court of St. Clair County, Michigan, for settlement of the estate.
- The estate's administrator sought to set off the Ingram-Day judgment (which the U.S. had assumed) against the government's judgment.
- The probate court initially denied the set-off.
- The Michigan Supreme Court, on appeal, reversed the probate court and allowed the set-off.
- The administrator then petitioned the probate court for a judgment for the balance due the estate, as the estate's claim was larger than the government's.
- The probate court entered a judgment against the United States for the difference, amounting to $23,628.97.
- The Michigan Supreme Court affirmed this affirmative judgment against the United States.
- The United States petitioned the U.S. Supreme Court for a writ of certiorari, which was granted.
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Issue:
Does the United States, by filing a claim against a decedent's estate in a state probate court, consent to the court's jurisdiction to enter a binding affirmative judgment against the government on a cross-claim that exceeds the government's claim?
Opinions:
Majority - Mr. Justice Reed
No. By filing a claim in a state court, the United States does not subject itself to a binding affirmative judgment on a cross-claim. The doctrine of sovereign immunity dictates that no suit may be brought against the United States without specific statutory consent, and this immunity is not waived for affirmative judgments merely because the government initiates litigation. While existing statutes permit a defendant to plead a set-off against a government claim to reduce or extinguish it, they do not authorize a court to render an affirmative judgment against the government for any balance in the defendant's favor. The Court distinguished prior cases like The Thekla, noting they were specific to admiralty collision law where a single, indivisible liability must be determined, a situation not present in probate claims. Ultimately, jurisdiction to enter a judgment against the United States, whether in an original action or as a counterclaim, depends entirely on specific congressional authorization, which is absent here.
Analysis:
This case strongly reaffirms the principle of sovereign immunity and clarifies its application when the government acts as a plaintiff. The Court establishes a clear distinction between a defensive set-off, which is permissible, and an affirmative judgment on a counterclaim, which is not, absent express congressional waiver. This decision prevents state courts from imposing monetary liability on the federal government beyond the scope of the government's initial claim, thereby protecting the federal treasury from judgments in forums not explicitly authorized by Congress. It solidifies the rule that the government's entry into court as a plaintiff is a limited waiver of immunity, only extending as far as defeating its own claim.
