B-206860.OM, JUN 7, 1982

B-206860.OM: Jun 7, 1982

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HE IS ALSO REQUESTING THAT WE INCLUDE INTEREST ON THE JUDGMENT. YOU HAVE ASKED US TO ADVISE YOU ON WHETHER YOU COULD CERTIFY THE JUDGMENT AND INTEREST AS REQUESTED OR WHETHER THE PANAMA CANAL COMMISSION SHOULD PAY THE JUDGMENT AND INTEREST. ALSO AT THE TIME OF YOUR REQUEST YOU INDICATED THAT YOU HAD SPOKEN WITH THE JUDGMENT CREDITOR'S ATTORNEY AND THAT SHE SAID THAT IF THE PLAINTIFFS WERE NOT PAID WITHIN A SHORT TIME. PROVIDED THAT ADVICE WITH THE UNDERSTANDING THAT WE WOULD SUBSEQUENTLY PROVIDE YOU WITH A FORMAL MEMORANDUM ON THE PROPER SOURCE OF PAYMENT OF COMPANY JUDGMENTS AND THAT GAO WOULD SEEK REIMBURSEMENT FROM THE COMMISSION IF WE ULTIMATELY CONCLUDED THAT IT WAS LIABLE. THE COMPANY WAS DISSOLVED ON OCTOBER 1.

B-206860.OM, JUN 7, 1982

SUBJECT: Z-2837560; SUN LINE GREECE SPECIAL SHIPPING COMPANY, INC. AS OWNER OF THE S/S "STELLA SOLARIS" V. PANAMA CANAL COMPANY; B-206860-O.M.

CHIEF PAYMENT BRANCH, AFMD/CLAIMS - SHARON S. GREEN:

THE UNITED STATES ATTORNEY, DISTRICT OF CANAL ZONE, ASKED US TO CERTIFY THE JUDGMENT IN SUN LINE GREECE SPECIAL SHIPPING COMPANY, INC. AS OWNER OF THE S/S "STELLA SOLARIS" V. PANAMA CANAL COMPANY (CIVIL NO. 79-0375-B) FOR PAYMENT FROM THE PERMANENT INDEFINITE APPROPRIATION ESTABLISHED BY 31 U.S.C. SEC. 724A, THE SO-CALLED "JUDGMENT FUND." HE IS ALSO REQUESTING THAT WE INCLUDE INTEREST ON THE JUDGMENT. YOU HAVE ASKED US TO ADVISE YOU ON WHETHER YOU COULD CERTIFY THE JUDGMENT AND INTEREST AS REQUESTED OR WHETHER THE PANAMA CANAL COMMISSION SHOULD PAY THE JUDGMENT AND INTEREST. ALSO AT THE TIME OF YOUR REQUEST YOU INDICATED THAT YOU HAD SPOKEN WITH THE JUDGMENT CREDITOR'S ATTORNEY AND THAT SHE SAID THAT IF THE PLAINTIFFS WERE NOT PAID WITHIN A SHORT TIME, SHE WOULD BRING AN ACTION TO COLLECT THE JUDGMENT. ACCORDINGLY, WE ADVISED YOU THAT IN ORDER TO AVOID THE COURT ACTION YOU COULD APPROVE PAYMENT OF THE JUDGMENT IMMEDIATELY. PROVIDED THAT ADVICE WITH THE UNDERSTANDING THAT WE WOULD SUBSEQUENTLY PROVIDE YOU WITH A FORMAL MEMORANDUM ON THE PROPER SOURCE OF PAYMENT OF COMPANY JUDGMENTS AND THAT GAO WOULD SEEK REIMBURSEMENT FROM THE COMMISSION IF WE ULTIMATELY CONCLUDED THAT IT WAS LIABLE. AS EXPLAINED BELOW, THE JUDGMENT SHOULD BE SATISFIED FROM THE COMMISSION'S AVAILABLE FUNDS, NOT FROM THE JUDGMENT FUND. THE COMMISSION SHOULD PAY THE INTEREST AS WELL.

FACTS

THE JUDGMENT RESOLVES A VESSEL OWNER'S LAWSUIT FOR DAMAGES ATTRIBUTABLE TO THE COMPANY'S NEGLIGENCE. THE COMPANY WAS DISSOLVED ON OCTOBER 1, 1979, BY SECTION 3303(A) OF THE PANAMA CANAL ACT OF 1979 AND REPLACED BY THE COMMISSION FOR THE PURPOSE OF OPERATING THE CANAL. THE ACCIDENT GIVING RISE TO THE DAMAGES OCCURRED BEFORE THE COMPANY'S DISSOLUTION AS DID THE FILING OF THE LAWSUIT.

THE JUDGMENT, HOWEVER, WAS ENTERED AFTER THE COMPANY WAS DISSOLVED. THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF THE CANAL ZONE ENTERED A JUDGMENT TOTALING $1,541,832.22 AGAINST THE COMPANY ON MARCH 5, 1981. THE COURT OF APPEALS FOR THE FIFTH CIRCUIT AFFIRMED THE JUDGMENT ON SEPTEMBER 24, 1981. THE SOLICITOR GENERAL DECIDED NOT TO SEEK A WRIT OF CERTIORARI FROM THE SUPREME COURT ON JANUARY 18, 1982. THE UNITED STATES ATTORNEY NOTIFIED THE (ILLEGIBLE) SOLICITOR GENERAL'S DECISION AND REQUESTED, (ILLEGIBLE) WE CERTIFY PAYMENT UNDER 31 U.S.C. SEC. 724A.

PAYMENT OF THE JUDGMENT

THE FUNDS APPROPRIATED BY 31 U.S.C. SEC. 724A MAY NOT BE USED TO SATISFY A JUDGMENT AGAINST A GOVERNMENT AGENCY IF OTHER FEDERAL FUNDS ARE AVAILABLE, THAT IS, IF PAYMENT IS "OTHERWISE PROVIDED FOR". THE PANAMA COMMISSION FUND IS AVAILABLE TO SATISFY THE JUDGMENT IN THIS CASE; THEREFORE CERTIFICATION OF PAYMENT FROM THE JUDGMENT FUND IS IMPROPER.

THE PANAMA CANAL COMPANY, AS A FEDERALLY-CHARTERED GOVERNMENT CORPORATION ESTABLISHED TO MAINTAIN AND OPERATE THE PANAMA CANAL, PAID ITS OWN JUDGMENTS WHEN IT WAS IN EXISTENCE. THE COMPANY HAD AUTHORITY TO "SUE AND BE SUED IN ITS CORPORATE NAME." 22 CZC SEC. 65(A)(3). PURSUANT TO THIS AUTHORITY, THE COMPANY PAID ITS OWN JUDGMENTS AS DO OTHER GOVERNMENT CORPORATIONS THAT HAVE THE SAME GRANT OF POWER. SEE B-164879, DECEMBER 5, 1973. THE JUDGMENTS WERE PAID FROM THE PANAMA CANAL COMPANY FUND. GENERAL, THE FUND WAS A REVOLVING FUND CONSISTING OF THE NET INCOME DERIVED FROM THE COMPANY'S OPERATIONS AND SPECIFIC APPROPRIATIONS BY CONGRESS TO COVER EXTRAORDINARY LOSSES. ACCORDINGLY, PAYMENT WOULD HAVE BEEN MADE FROM THE PANAMA CANAL COMPANY FUND IF THE COMPANY HAD NOT BEEN DISSOLVED BY THE TIME THE JUDGMENT BECAME FINAL.

THE COMMISSION AS SUCCESSOR TO THE COMPANY IS NOW RESPONSIBLE FOR THE JUDGMENTS AGAINST IT. IN ORDER TO IMPLEMENT THE PANAMA CANAL TREATY OF 1977, THE COMPANY WAS DISSOLVED (ALONG WITH THE CANAL ZONE GOVERNMENT) UNDER THE PROVISIONS OF THE PANAMA CANAL ACT OF 1979 (ACT) AND THE PANAMA CANAL COMMISSION WAS ESTABLISHED AS A GOVERNMENT AGENCY. SECTION 1501 OF THE ACT (22 U.S.C. SEC. 3781) PROVIDES THAT THE UNITED STATES WILL ASSUME THE COMPANY'S OUTSTANDING LIABILITIES. UNDER SECTION 1302 (22 U.S.C. SEC. 3712), THE PANAMA CANAL COMPANY FUND WAS TERMINATED ON THE EFFECTIVE DATE OF THE ACT (OCTOBER 1, 1979), AND ANY UNEXPENDED BALANCES WERE COVERED INTO THE NEWLY-CREATED PANAMA CANAL COMMISSION FUND. ACCORDINGLY, THE FUND WHICH WOULD HAVE BEEN USED TO PAY THE JUDGMENT BEFORE THE COMPANY'S DISSOLUTION STILL EXISTS AND IS NOW WITHIN THE COMMISSION'S CONTROL. MOREOVER, JUDGMENTS FOR VESSEL DAMAGE OBTAINED AGAINST THE COMMISSION ARE TO BE PAID OUT OF MONEYS APPROPRIATED OR ALLOTTED FOR THE MAINTENANCE AND OPERATION OF THE PANAMA CANAL. 22 U.S.C. SEC. 3776. IN LIGHT OF THE ABOVE, WE CONCLUDE THAT THE SUN LINE JUDGMENT SHOULD BE PAID FROM FUNDS AVAILABLE TO THE COMMISSION, NOT FROM THE JUDGMENT FUND.

OUR CONCLUSION IS IN ACCORD WITH B-197052, APRIL 22, 1980. IN THAT DECISION WE HELD THAT THE COMMISSION HAS THE AUTHORITY TO SETTLE AND PAY THE ADMINISTRATIVE CLAIMS PRESENTED TO THE COMPANY WHICH HAD NOT BEEN DISPOSED OF PRIOR TO ITS DISSOLUTION. AS NOTED ABOVE, THE COMPANY PAID ITS OWN JUDGMENTS AS WELL AS ADMINISTRATIVE CLAIMS. THUS, THE DISTINCTION BETWEEN CLAIMS AND JUDGMENTS WHICH WOULD NORMALLY BE RELEVANT IN DETERMING THE LIABILITY OF A REGULAR GOVERNMENT AGENCY DOES NOT APPLY. SINCE THE COMMISSION HAS SUCCEEDED BY STATUTE TO THE COMPANY'S FUND, IT IS A LOGICAL APPLICATION OF THIS DECISION THAT THE COMMISSION SHOULD ALSO SUCCEED TO ALL OF THE COMPANY'S LIABILITIES WHICH WOULD HAVE BEEN PAYABLE FROM THAT FUND.

INTEREST

THE SUBJECT JUDGMENT DOES NOT EXPRESSLY AWARD POST-JUDGMENT INTEREST. HOWEVER, SECTION 511 OF TITLE 5 OF THE CANAL ZONE CODE (IN EFFECT BY VIRTUE OF SECTION 2101 OF THE PANAMA CANAL ACT OF 1979) PROVIDES THAT JUDGMENTS SHALL BEAR INTEREST AT THE RATE OF 6 PERCENT PER ANNUM FROM THE DATE OF ENTRY. GENERALLY, FEDERAL AGENCIES WOULD NOT BE LIABLE FOR INTEREST UNDER SECTION 511. HOWEVER, THE PANAMA CANAL COMPANY, AS A WHOLLY OWNED GOVERNMENT CORPORATION EMPOWERED TO SUE AND BE SUED, WOULD HAVE BEEN LIABLE FOR INTEREST UNDER SECTION 511 IF THE SUN LINES JUDGMENT HAD BECOME FINAL PRIOR TO THE COMPANY'S DISSOLUTION. THE COMMISSION IS THE SUCCESSOR TO THE COMPANY'S LIABILITIES RESULTING FROM VESSEL DAMAGE AND TO ITS FUNDS AS EXPLAINED ABOVE. ACCORDINGLY, THE COMMISSION SHOULD PAY THE INTEREST AS WELL. BY DOING SO, IT IS NOT PAYING AN AWARD OF INTEREST AGAINST THE UNITED STATES, BUT MERELY ASSUMING THE FULL AMOUNT OF THE COMPANY'S LIABILITY UNDER THE JUDGMENT.

CONCLUSION

IN VIEW OF THE FOREGOING, WE RECOMMEND THAT YOU SEEK REIMBURSEMENT FROM COMMISSION FUNDS. WE UNDERSTAND THAT THIS MAY BE ACCOMPLISHED THROUGH THE DEPARTMENT OF THE TREASURY BY A CHARGE TO THE COMMISSION ACCOUNT AND A CORRESPONDING CREDIT TO THE JUDGMENT FUND ACCOUNT AND THAT SUCH "ADJUSTMENTS" ARE COMMON. THE COMMISSION'S GENERAL COUNSEL INDICATED TO US INFORMALLY THAT HE HAD BEEN EXPECTING THAT REIMBURSEMENT WOULD OCCUR IN THE WAY SUGGESTED AND THAT IT IS AGREEABLE TO HIM.