Opinion of the Court.

317 U.S.

accordance with the provisions of this Act." Immediately subsequent is the "provision of this Act" here in question: "Suits hereunder shall be brought within two years." This is as surely a provision of the Act in accordance with which the cases must be governed as is any other clause. The Suits in Admiralty Act thus prescribes a comprehensive procedural pattern designed fully to control the method by and the time within which obligations for damages inflicted by government operation of ships must be instituted and determined.

There is no question that under the Suits in Admiralty Act suits against the government for maritime torts committed by its vessels, when brought while the vessels are still in the possession of the government, are subject to the two-year limitation provision. Section 4 provides so closely related a method of permitting the government to meet its obligations on a maritime tort with economy and dispatch that we should be slow to construe any ambiguity in the statute to establish a separate and distinct period of limitation for it. The conclusion is inescapable that there is no practical difference between suits against the government as owner of the vessel and against the government as the party in interest when it voluntarily appears to defend its lately sold property against tort liability.

As has been noted, § 9 of the 1916 Act was incorporated in the 1920 Merchant Marine Act, passed three months after the Suits in Admiralty Act. It has been suggested, although not vigorously pressed, that even if the Suits in Admiralty Act was intended to bar actions such as this, it was modified by re-enactment of § 9. Congress did not, however, in passing the Merchant Marine Act, as it did in passage of the Suits in Admiralty Act, have its attention focused on this particular problem. Running through the Merchant Marine Act there appears repeated manifestation of a Congressional purpose to expedite transfer

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of government vessels into private hands, a purpose clearly compatible with the Suits in Admiralty Act which through its limitation provisions cut off lingering liens. There is nothing whatever in the 1920 Merchant Marine Act, nor, so far as has been pointed out to us, anything in its legislative history, indicating that Congress intended to repeal, alter, or amend the Suits in Admiralty Act in whole or in part. The 1920 re-enactment is not meaningless; it retains in the law that portion of the 1916 statute unaffected by the Suits in Admiralty Act. It remains an expression of the basic policy of waiver of immunity by the government for maritime torts of the sort within its scope.

We hold that when the government voluntarily appears in an action authorized by § 4 of the Suits in Admiralty Act, the proceedings are governed by § 5 with its limitation provisions.

Affirmed.

KIESELBACH ET UX. v. COMMISSIONER OF

INTERNAL REVENUE.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT.

No. 184. Argued December 11, 1942. Decided January 4, 1943. Title to real property in the City of New York was taken by the City, together with the possession and the right to all after-accruing rents, by a proceeding in condemnation under § 976 of the Greater New York Charter. Several months later, the final decree awarded the former owners, as just compensation, the value of the property on the day of taking, with interest thereon from that date till the date of payment. Held that the part of the award designated as "interest," although it was part of the "just compensation" that must be paid the owner to justify the taking, was not a part of the sale price of a capital asset under § 117 (a) of the Revenue Act of 1936 and was taxable as income under § 22 of that Act. P. 403.

127 F. 2d 359, affirmed.

* 41 Stat. 988, §§ 1, 5, 6, 7, 12, 19

CERTIORARI, post, p. 612, to review a judgment which reversed a decision of the Board of Tax Appeals, 44 B. T. A. 279, overruling a deficiency income tax assessment.

Mr. Harry Friedman for petitioners.

Mr. Arnold Raum, with whom Solicitor General Fahy, Assistant Attorney General Clark, and Messrs. Sewall Key, J. Louis Monarch, and Arthur A. Armstrong were on the brief, for respondent.

Mr. John Jay McKelvey filed a brief on behalf of Isaac G. Johnson & Co., as amicus curiae, in support of petitioners.

MR. JUSTICE REED delivered the opinion of the Court.

This writ of certiorari was granted limited to a single narrow point in the law of income taxes. The sum in question was received as part of the compensation in a condemnation proceeding instituted by the City of New York. Payment was made several years after the actual taking. The issue concerns the nature of that portion of the payment which is called "interest" by the Greater New York Charter and which the owner must receive, in addition to the value of the property fixed as of the time of the taking, to produce, when actually paid, the full equivalent of that value. Was this portion a capital gain or ordinary income?

The writ was granted because of conflict upon the point between this case below, Commissioner v. Kieselbach, 127 F. 2d 359 (C. C. A. 3), and Seaside Improvement Co. v. Commissioner, 105 F. 2d 990 (C. C. A. 2).

The taxpayers owned a piece of realty in the City of New York. In December, 1932, that city's Board of Estimate passed a resolution which directed that upon January 3, 1933, the title in fee to a large part of the parcel would vest in the city. The condemnation proceeding, of which the resolution was a part, was pursuant to § 976

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Opinion of the Court.

of the Greater New York Charter, which provides in part as follows:

"Upon the date of the entry of the order granting the application to condemn, or of the filing of the damage map in the proceeding, as the case may be, or upon such subsequent date as may be specified by resolution of said board, the city of New York shall become and be seized in fee of or of the easement, in, over, upon or under, the said real property described in the said order or damage map, as the board of estimate and apportionment may determine, the same to be held, appropriated, converted and used to and for such purpose accordingly. Interest at the legal rate upon the sum or sums to which the owners are justly entitled upon the date of the vesting of title in the city of New York, as aforesaid, from said date to the date of the final decree shall be awarded by the court as part of the compensation to which such owners are entitled."

The city took possession on the date named in the resolution and received all rents thereafter accruing. The Supreme Court of New York entered its final decree in the proceedings on March 31, 1937. It was for $73,246.57 and was stated to be the just compensation which the owners were entitled to receive. Payment was made on May 12, 1937. It has been stipulated that:

"The amount of said payment was computed by adding to the principal amount of $58,000.00, interest thereon as provided by Section 976 of the Greater New York Charter, in the sum of $15,246.57, computed at the rate of 6% per annum from January 3, 1933 to May 12, 1937, or a total of $73,246.57." 1

1 No question is raised involving the accuracy of this computation. While § 976 requires interest only to the date of the decree, § 981, Greater New York Charter, as amended by Laws of 1932, c. 391, requires interest on the decree. Matter of City of New York (Chrystie St.). 264 N. Y. 319, 190 N. E. 654.

We accept as a fact that the $58,000, principal amount just referred to, was, as petitioners allege, an award to them. We assume it was the value on January 3, 1933, of this property then taken by the city.

Section 22 of the Revenue Act of 1936, c. 690, 49 Stat. 1648, 1657, contains the general definition of gross income. It reads as follows:

"(a) General Definition.-'Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever.

The taxpayers' basis on the condemned property was around $42,000. In their original return the difference between the basis and the total sum received was treated as capital gain and only a percentage was returned as income pursuant to § 117.2 The Commissioner assessed a deficiency on the portion of the award computed as interest, on the ground that such portion was ordinary income.

2 Section 117 reads as follows:

"(a) General Rule.-In the case of a taxpayer, other than a corporation, only the following percentages of the gain or loss recognized upon the sale or exchange of a capital asset shall be taken into account in computing net income:

"40 per centum if the capital asset has been held for more than 5 years but not for more than 10 years;

"30 per centum if the capital asset has been held for more than 10 years.

"(b) Definition of Capital Assets.-For the purposes of this title, 'capital assets' means property held by the taxpayer (whether or not connected with his trade or business), . . ." 49 Stat. 1691.