Dallas Joint Stock Land Bank v. AMERICAN E. INS. CO.

• Decision Date: 21 December 1940
• Docket Number: No. 363.,363.
• Parties: DALLAS JOINT STOCK LAND BANK v. AMERICAN EMPLOYERS' INS. CO.
• Court: U.S. District Court — Northern District of Texas

35 F. Supp. 927

DALLAS JOINT STOCK LAND BANK v. AMERICAN EMPLOYERS' INS. CO.

No. 363.

District Court, N. D. Texas, Dallas Division.

December 21, 1940.

W. B. Handley, of Dallas, Tex., for the motion.

Chrestman, Brundidge, Fountain, Elliott & Bateman, of Dallas, Tex., opposed.

ATWELL, District Judge.

The suit is brought in this court on the allegation that the plaintiff is a corporation organized under the Federal Farm Loan Act, 12 U.S.C.A. § 641 et seq., with its office and place of business in Dallas, Texas, and that it is, therefore, a resident of said state. The defendant is an artificial citizen of the state of Massachusetts. The defendant claims that such a situation does not satisfy the diversity requirement.

It claims that plaintiff is an artificial citizen of the United States by reason of its incorporation under the federal statute, but that it is not a citizen of any particular state. That a charter authorizes it to transact business in the state of Texas and in the contiguous state of Oklahoma.

The plaintiff answers that it stands on its right to enter the national court by reason of diversity, and that since it is a Joint Stock Land Bank, it comes under the provision of the statute which makes all "commercial banking" institutions citizens of the state in which operation and domicile is had.

Plaintiff also suggests that since the wording of subdivision 16 of 28 U.S.C.A. § 41, is as follows: "All national banking associations established under the laws of the United States shall, for the purposes of all other actions by or against them, * * * be deemed citizens of the States in which they are respectively located," and since Joint Stock Land Banks are obviously associations and are designated "banks," that they are banking associations established under the laws of the United States, and shall come within the broad language just quoted.

Section 811, Title 12 U.S.C.A., authorizes the incorporation of Joint Stock Land Banks, for carrying on the business of lending on farm mortgage security and issuing farm land bonds. Act July 17, 1916, § 16. Such organizations are subject to the requirements and conditions set forth in previous Sections 671-683 of the same chapter. Section 671 gives the Farm Credit Administration the authority to divide continental United States, excluding Alaska, into districts which shall be known as Federal Land Bank districts. Said districts shall be apportioned with due regard to the farm loan needs of the country, but no such district shall contain a fractional part of any state.

Another provision requires it to carry in its title the name of the city in which located. Section 672.

It may sue and be sued as fully as natural persons. Section 676. A Joint Stock Land Bank, however, may not, as do the other banks in the chapter, have any portion of its stock purchased or subscribed by the United States, and its farm loan bonds shall be so engraved as to be readily distinguished in form and color from farm loan bonds issued by Federal Land Banks. Sections 813, 817, 12 U.S.C.A.

Its loans may not be made out of the state in which it has its principal office, or, within some one state contiguous to such state. 12 U.S.C.A. § 818. There is no statute fixing the citizenship of such institution in the state in which it operates.

Later on in the same chapter, Section 1021, Title 12 U.S.C.A., there is a provision for Federal Intermediate Credit Banks. There are to be twelve of such institutions. They have many of the functions of a commercial bank which are not permitted to Joint Stock Land Banks. Such Federal Intermediate Credit Banks have been classified in Federal Intermediate Credit Bank of Columbia v. Mitchell, 277 U.S. 213, 48 S. Ct. 449, 72 L.Ed. 854. That case definitely shows that such Intermediate Bank is given citizenship in the state in which it operates. In the reasoning it is pointed out that the government owns stock to the extent of more than one-half of its capital, and it, therefore, comes under Section 12 of the Act of February 13, 1925, 28 U.S.C.A. § 42.

Such domiciling has not been attempted by Congress for the benefit of the Joint Stock Land Bank.

There are two trial court cases which seem to be well reasoned. First Carolinas Joint Stock Land Bank v. New York Title & Mortgage Company, D.C., 59 F.2d 350, and First Carolina Joint Stock Land Bank v. Page, D.C., 2 F.Supp. 529. Both of these cases decline to fix a state citizenship to...