Casper v. Regional Agr. Credit Corporation
| Citation | 202 Minn. 433,278 N.W. 896 |
| Decision Date | 08 April 1938 |
| Docket Number | No. 31561.,31561. |
| Parties | CASPER v. REGIONAL AGR. CREDIT CORPORATION OF MINNEAPOLIS. |
| Court | Supreme Court of Minnesota (US) |
Appeal from District Court, Hennepin County; Frank E. Reed, Judge.
Action by John Casper against the Regional Agricultural Credit Corporation of Minneapolis, Minnesota, for the alleged conversion by the defendant of chattels, which had been sold under chattel mortgage at foreclosure sale when defendant, as mortgagee, declared the mortgage debt due under an insecurity clause, wherein the plaintiff recovered a verdict. On defendant's motion in the alternative for judgment notwithstanding the verdict or for a new trial, the court granted the motion for judgment notwithstanding the verdict, exclusively on the ground that it appeared as a matter of law that defendant in good faith deemed itself insecure, and the plaintiff appeals.
Order granting judgment notwithstanding the verdict reversed without precluding reconsideration of motion for new trial.
Louis P. Johnson, of Mankato, for appellant.
Einar Hoidale and C. W. Lawrence, both of Minneapolis, for respondent.
On April 12, 1933, plaintiff obtained from defendant a so-called "barnyard loan" in the sum of $3,000, due one year after date, secured by a chattel mortgage covering certain livestock, feed, roughage, farm machinery, and equipment. The mortgage contained a provision that the property was to remain in the mortgagor's possession, but that, if the mortgagee should at any time deem the debt insecure or fear diminution or waste of the mortgaged property, it might declare the whole debt due and payable at once and take immediate possession of the property with right of entry on the mortgagor's premises for that purpose. Defendant declared the debt due under the insecurity clause, to which further reference will be made later, and caused the property to be sold on August 12, 1933, by the sheriff at chattel mortgage foreclosure sale. Plaintiff sued in conversion to recover $10,750, alleged to be the reasonable value of the mortgaged property. His contention was that the foreclosure was wrongful for the reason that defendant did not in good faith deem itself insecure. Plaintiff recovered a verdict of $6,559.65. On defendant's motion in the alternative for judgment notwithstanding or for a new trial, the court below granted the motion for judgment notwithstanding the verdict, exclusively on the ground that it appeared as a matter of law that defendant in good faith deemed itself insecure because plaintiff had abandoned the mortgaged property. A further statement of facts will be made in connection with particular issues to be discussed.
1. The defense, not urged at the trial and presented for the first time on the argument of the alternative motion, that the court did not have jurisdiction of defendant or the subject matter of the action because defendant is immune from suit as an instrumentality of the United States, will be noticed despite its tardiness. Suits against the United States can be maintained only by permission granted by act of Congress and no official has the power to waive immunity by appearance on behalf of the government. Munro v. United States, 58 S.Ct. 421, 82 L.Ed. ___, decided January 31, 1938; Minnesota v. Hitchcock, 185 U.S. 373, 385, 22 S.Ct. 650, 46 L.Ed. 954. If the point is well taken, defendant is entitled to judgment. Chicago, M. & St. P. Ry. Co. v. Sprague, 140 Minn. 1, 167 N.W. 124.
2. Defendant was "created" by the Reconstruction Finance Corporation pursuant to section 605b (e)* of the act under which the Reconstruction Finance Corporation was organized. 15 U.S.C.A. §§ 601-617.
Generally, the purposes of the Reconstruction Finance Corporation are declared to be to provide emergency financial facilities to financial corporations, to aid in financing agriculture, commerce, and industry, and other similar purposes. The act provides that the management of the corporation shall be vested in a board of directors consisting of the secretary of the treasury ex officio and six other members; that it shall have a capital stock of $500,000,000, subscribed by the United States, and its duration shall be for a period of ten years from the date of its enactment unless sooner dissolved by act of Congress. The scheme and purpose of the act was to provide financial aid in the respects mentioned during the period of the depression.
The Reconstruction Finance Corporation is authorized to "create" a regional agricultural credit corporation in each of the twelve Federal Land Bank districts, with a paid-up capital of not less than $3,000,000 to be subscribed by the Reconstruction Finance Corporation and paid out of the unexpended balance of amounts allocated and made available to the Secretary of Agriculture. The act provided that the officers and agents shall be appointed by the Reconstruction Finance Corporation. This function was later transferred to the Governor of the Farm Credit Administration, pursuant to Executive Order No. 6084, dated March 27, 1933, effective on May 27, 1933. The same order transferred to the Governor of the Farm Credit Administration control of the funds allocated by the act to the Secretary of Agriculture.
The act in express terms declares that the Reconstruction Finance Corporation shall have capital stock, corporate organization, may sue and be sued, limited duration, and numerous powers and purposes. It provides that a regional agricultural credit corporation shall have capital (not capital stock), corporate organization, and power to make loans and advances for agricultural and livestock purposes as therein stated and to rediscount its paper. It does not in express terms declare that defendant may sue or be sued nor does it limit its duration.
The contention is that the United States cannot be sued without its consent and that its immunity as a sovereign extends to defendant as an instrumentality of the federal government. Defendant cites and relies on Keifer & Keifer v. Reconstruction Finance Corporation et al., 22 F.Supp. 918, decided August 5, 1937, by the United States District Court, District of Nebraska, holding that a regional agricultural credit corporation may not be sued without the consent of Congress and that Congress has not given such consent. With utmost deference to the court which decided that case, we refuse to follow it because we think congressional consent to suit has been given.
Of course it is fundamental that the United States cannot be sued without its permission. The Western Maid, 257 U.S. 419, 42 S.Ct. 159, 66 L.Ed. 299; North Dakota-Montana W. G. Ass'n v. U. S., 8 Cir., 66 F.2d 573, 92 A.L.R. 1484. This action is not against the United States as such and it may be brought against defendant unless it stands in the sovereign immunity of the United States. Congress has full power to determine to what extent instrumentalities of the federal government partake of its sovereign character and immunity from suit. Whether federal agencies are subject to suit and to what extent is a question of congressional intent. Federal Land Bank v. Priddy, 295 U.S. 229, 55 S.Ct. 705, 706, 79 L.Ed. 1408. The general rule is that the sovereign immunity of the United States does not extend to its agents, individual or corporate. Sloan Shipyards Corp. v. U. S. Fleet Corp., 258 U.S. 549, 42 S.Ct. 386, 388, 66 L.Ed. 762; United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171; Belknap v. Schild, 161 U.S. 10, 16 S.Ct. 443, 40 L.Ed. 599; 26 R.C.L. 1459, § 63, note 15; note, 15 Ann.Cas. 1109. No rule has been laid down by the Supreme Court of the United States by which the congressional intent may be determined in a particular case. Provision in a corporate charter that the corporation shall have power to sue and be sued is held to be an express waiver of immunity from suit. Federal Land Bank v. Priddy, supra. The rule has been applied in many cases. In Sloan Shipyards Corp. v. U. S. Fleet Corp., supra, the plaintiff sued the United States Fleet Corporation to set aside a contract which the parties entered into to take the place of a former contract and for an accounting on the basis of the provisions of the original contract. Plaintiff alleged that defendant failed to make payments under the original contract, unlawfully took possession of plaintiff's property, retained it, and had done a series of acts causing plaintiff great loss. Defendant claimed immunity from suit upon the ground that it was a governmental agency, a corporation organized by the United States Shipping Board under the general laws of the District of Columbia pursuant to authority by a statute of the United States, for the purpose of purchasing, contracting and operating merchant vessels in connection with the World War. It was formed in contemplation of the war and was to be dissolved five years after its conclusion. The capital stock was $50,000,000, of which the Shipping Board was to acquire not less than the majority. It was conceded that the defendant was an instrumentality of the United States and that its purposes were governmental. In denying to defendant the claim of sovereign immunity, the court pointed out that such a claim is a very dangerous departure from one of the first principles of our law, that, while the sovereign itself is immune from suit, every other person within the jurisdiction is always amenable to suit. This is true even though the person be an agent of the government. It was said that if the defendant were an individual instead of a corporation, it would be doubtful if anyone would make the claim of immunity. Mr. Justice Holmes speaking for the court said: ...
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