306 U.S. 381 (1939), 364, Keifer & Keifer v. Reconstruction Finance Corp.

Docket Nº:No. 364
Citation:306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784
Party Name:Keifer & Keifer v. Reconstruction Finance Corp.
Case Date:February 27, 1939
Court:United States Supreme Court

Page 381

306 U.S. 381 (1939)

59 S.Ct. 516, 83 L.Ed. 784

Keifer & Keifer


Reconstruction Finance Corp.

No. 364

United States Supreme Court

Feb. 27, 1939

        and Regional Agricultural Credit Corp.

        Argued January 31, 1939, February 1, 1939




        1. A Regional Agricultural Credit Corporation, chartered by the Reconstruction Finance Corporation by authority of § 201(e) of the Emergency Relief and Construction Act of 1932, and which, under that statute, is government-financed and managed and empowered to make loans to farmers and stockmen for agricultural purposes or for raising and marketing livestock held subject to suit. Pp. 392 et seq.

        Neither the statute nor the charter explicitly rendered the Credit Corporation amenable to suit, but, among the corporate powers granted the Finance Corporation by the Act creating it was authority "to sue and be sued, to complain and to defend, in any court of competent jurisdiction, state or federal."

        2. Whether a governmental corporation is endowed with the Government's immunity from suit depends upon the congressional purpose in creating it. P. 388.

        Immunity is not necessarily to be inferred from the fact that the corporation is doing the Government's work, or from the omission of the conventional sue-and-be-sued clause from its charter.

        3. Liability to suit of Regional Agricultural Credit Corporations, chartered through the Reconstruction Finance Corporation, is to be inferred from the numerous instances in which Congress, when creating other corporations for purposes not relevantly different from those of the Credit Corporations, has expressly included authority to sue and be sued. This uniform practice reveals a

Page 382

definite policy which should be given hospitable scope. Failure to include express authority to sue and be sue in the exceptional case of the Credit Corporations is explained by an assumption on the part of Congress that that authority would pass to them from the Reconstruction Corporation already endowed with it. P. 390.

        4. Recovery against a Regional Agricultural Credit Corporation for damages resulting from its negligence in failing to provide proper care for livestock delivered to it under a contract of bailment may be had in contract. P. 394.

        5. In the light of recent congressional legislation, liability of a government corporation empowered generally "to sue and be sued" is not confined to suits sounding only in contract. P. 396.

        97 F.2d 812 reversed.

        Certiorari, 305 U.S. 588, to review the affirmance of a judgment of the District Court (22 F.Supp. 918) dismissing on demurrer an action for damages against the two federal corporations above named. The question brought up by the certiorari concerns only the claim advanced for the Regional Agricultural Credit Corporation that it is immune from suit.

Page 387

        FRANKFURTER, J., lead opinion

        MR. JUSTICE FRANKFURTER delivered the opinion of the Court.

        The Court took this case for review because an important question of federal law called for settlement, particularly in view of a conflict between the court below and the Supreme Court of Minnesota. Casper v. Regional Agricultural Credit Corporation, 202 Minn. 433, 278 N.W. 896. The question is whether a Regional Agricultural Credit Corporation, in the circumstances presently to be stated, is immune from suit.

        On July 21, 1932, Congress enlarged the powers of the Reconstruction Finance Corporation (hereafter called "Reconstruction") established early that year, Act of January 22, 1932, c. 8, 47 Stat. 5, by authorizing it, among other things, to create regional agricultural credit corporations "in any of the twelve Federal land-bank districts." Emergency Relief and Construction Act of 1932, § 201(e), c. 520, 47 Stat. 709, 713. Each corporation was to have a paid-up capital of not less than $3,000,000 to be subscribed for by Reconstruction, was to be managed by appointees of Reconstruction, and was empowered to make loans to farmers and stockmen for agricultural purposes or for raising and marketing livestock. Accordingly, on September 10, 1932, Reconstruction chartered the Regional Agricultural Credit Corporation of Sioux City, Iowa (hereafter called "Regional"). Regional, in due exercise of its powers, entered into so-called cattle feeding contracts, whereby it undertook to provide sufficient feed and water for livestock with appropriate security for rendering these services. Failure through negligence to provide proper care for cattle delivered under this arrangement, with resulting damage to the livestock, is the basis of this suit brought by petitioner, plaintiff below, against Reconstruction and Regional. Both defendants

Page 388

demurred on several grounds, of which challenge to the jurisdiction of the court is alone pertinent here. The District Court sustained the demurrers and dismissed the suit. 22 F.Supp. 918. The Circuit Court of Appeals affirmed, holding for Reconstruction because its control of Regional had been transferred by Executive Order (No. 6084, dated March 27, 1933, effective May 27, 1933) to the Farm Credit Administration prior to the alleged cause of action, and for Regional because it was found immune from suit. 97 F.2d 812. Certiorari was granted directed solely to the latter issue. 305 U.S. 588.

        The starting point of inquiry is the immunity from unconsented suit of the government itself. As to the states, legal irresponsibility was written into the Eleventh Amendment; as to the United States, it is derived by implication. Principality of Monaco v. Mississippi, 292 U.S. 313, 321. For present purposes, it is academic to consider whether this exceptional freedom from legal responsibility rests on the theory that the United States is deemed the institutional descendant of the Crown, enjoying its immunity but not its historic prerogatives, cf. Langford v. United States, 101 U.S. 341, 343, or on a metaphysical doctrine "that there can be no legal right as against the authority that makes the law on which the right depends." Kawananakoa v. Polyblank, 205 U.S. 349, 353. But because the doctrine gives the government a privileged position, it has been appropriately confined.1

        Therefore, the government does not become the conduit of its immunity in suits against its agents or instrumentalities merely because they do its work. United States v. Lee, 106 U.S. 196, 213, 221; Sloan Shipyards

Page 389

v. U.S. Fleet Corp., 258 U.S. 549, 567. For more than a hundred years, corporations have been used as agencies for doing work of the government. Congress may create them

as appropriate means of executing the powers of government, as, for instance, . . . a railroad corporation, for the purpose of promoting commerce among the [59 S.Ct. 518] states.

        Luxton v. North River Bridge Co., 153 U.S. 525, 529. But this would not confer on such corporations legal immunity even if the conventional "to sue and be sued" clause were omitted. In the context of modern thought and practice regarding the use of corporate facilities, such a clause is not a ritualistic formula which alone can engender liability like unto indispensable words of early common law, such as "warrantizo" or "to A and his heirs," for which there were no substitutes and without which desired legal consequences could not be wrought. Littleton, Tenures (Wambaugh ed.) §§ 1, 733.

        Congress may, of course, endow a governmental corporation with the government's immunity. But always the question is: has it done so? Federal Land Bank v. Priddy, 295 U.S. 229, 231. Cf. Helvering v. Gerhardt, 304 U.S. 405, 411-412n. This is our present problem. Has Congress endowed Regional with immunity in the circumstances which enveloped its creation? It is not a textual problem, for Congress has not expressed its will in words. Congress may not even have had any consciousness of intention. The Congressional will must be divined, and by a process of interpretation which, in effect, is the ascertainment of policy immanent not merely in the single statute...

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