United States Supreme Court Cases & Opinions

U.S. Supreme Court

Royal Indemnity Co. v. United States, 313 U.S. 289 (1941)

Royal Indemnity Co. v. United States

No. 817

Argued May 7, 1941

Decided May 26, 1941

313 U.S. 289

Syllabus

1. Collectors of Internal Revenue are subordinate officers charged with the ministerial duty of collecting taxes, and, in the absence of any statute granting the authority, they cannot release a bond to the Government of the United States securing payment of a tax. Only the Commissioner of Internal Revenue, with the consent of the Secretary of the Treasury, is authorized to compromise a tax deficiency for a sum less than the amount lawfully due. P. 313 U. S. 294.

2. The rule against allowing interest as damages for delay in paying interest alone is inapplicable to an action to enforce a surety's agreement to pay a tax with interest found due to the Government under the revenue laws. P. 313 U. S. 295.

3. A suit upon a contractual obligation to pay money at a fixed or ascertainable time is a suit to recover damage for its breach, including both the principal amount and interest by way of damage for delay in payment of the principal, after the due date. And, in the absence of any controlling statutory regulation, the trial court is as competent to determine the amount of interest for delay as any other item of damage. P. 313 U. S. 295.

4. In the absence of an applicable federal statute, it is for the federal courts to determine, according to their own criteria, the appropriate measure of damage, expressed in terms of interest, for delayed payment of a contractual obligation of the United States. P. 313 U. S. 296.

5. In an action at law by the United States to recover an amount due and owing from a taxpayer's surety, equitable rules governing interest recoverable in suits for an accounting or for recovery on quasi-contractual obligations are inapplicable, and interest upon the principal sum from the date of default at a fair rate is an appropriate measure of damage for the delay in payment. P. 313 U. S. 296.

6. In the circumstances of this case, a suitable rate of interest is that prevailing in New York, the State where the obligation was contracted and to be performed. P. 313 U. S. 297.

116 F.2d 247 affirmed.

Page 313 U. S. 290

Certiorari, post, p. 552, to review a judgment affirming with modification a recovery by the United States in an action against the surety on a taxpayer's bond.

Page 313 U. S. 292