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?
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.
Section 106 of the Bankruptcy Code provides:
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 monetary
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.
Waivers of the Government's sovereign immunity, to be effective, must be "`unequivocally expressed.' " Irwin v.
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. It is susceptible of at least two interpretations that do not authorize monetary relief.
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)(1) stands on its own. See id., at 101-102. This construction also attaches practical consequences to paragraph
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 dischargeability 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, 1203— 1204 (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)(1) would apply fully to governmental units. But that application of those provisions would be limited by the requirements of subsections (a) and (b), in accordance
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).
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
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
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
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.
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:
The United States is a "governmental unit,"
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 Cong. Rec. 32394 (1978) (statement of Rep. Edwards); id., at 33993 (statement of Sen. DeConcini).
The Court evades this conclusion by hypothesizing "plausible" alternative constructions of the statute,
Despite its ancient lineage, the doctrine of sovereign immunity is nothing but a judge-made rule that is sometimes favored
Time after time Congress has taken action to ameliorate the hardship of the doctrine. A half century ago this Court observed:
In the bankruptcy context, the Court has noted that there is no reason why the Federal Government should be treated
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.
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.
"(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."
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).
"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.
"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 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).