Federal Intermediate Credit Bank v. Mitchell

• Decision Date: 05 July 1927
• Docket Number: No. 2591.,2591.
• Citation: 21 F.2d 51
• Parties: FEDERAL INTERMEDIATE CREDIT BANK OF COLUMBIA, S. C., v. MITCHELL et al.
• Court: U.S. Court of Appeals — Fourth Circuit

21 F.2d 51 (1927)

FEDERAL INTERMEDIATE CREDIT BANK OF COLUMBIA, S. C., v. MITCHELL et al.

No. 2591.

Circuit Court of Appeals, Fourth Circuit.

July 5, 1927.

D. W. Robinson, of Columbia, S. C. (Randolph Murdaugh, of Hampton, S. C., on the brief), for plaintiff in error.

George L. Buist, of Charleston, S. C. (Buist & Buist, of Charleston, S. C., and William J. Thomas, of Beaufort, S. C., on the brief), for defendants in error.

Before WADDILL, PARKER, and NORTHCOTT, Circuit Judges.

PARKER, Circuit Judge.

This was an action instituted by the Federal Intermediate Credit Bank of Columbia, S. C., in the United States District Court for the Eastern District of South Carolina, to recover judgment on certain promissory notes in an amount exceeding $3,000 exclusive of interest and costs. The action was dismissed for lack of jurisdiction, and the only question presented by the assignment of error is whether this ruling was correct.

The plaintiff is a corporation created under the Act of Congress of March 4, 1923 (42 Stat. 1454), all of its stock being owned by the government of the United States, and the contention in its behalf is that, because of the federal incorporation and government ownership of stock, the federal courts have jurisdiction of the action. The contention of defendants, on the other hand, is that plaintiff, by the very act under which it is created, is denied the right to invoke the jurisdiction of the federal courts on the ground of federal incorporation.

The District Courts of the United States are given original jurisdiction of actions where the matter in controversy exceeds, exclusive of interest and costs, the sum or value of $3,000, "and (a) arises under the Constitution or laws of the United States. * * *" Judicial Code, § 24, par. 1 (Comp. St. § 991). The universal construction of this clause, since its original enactment in 1875 (18 Stat. 470), has been that corporations organized under acts of Congress, when suing or being sued, where the jurisdictional amount is involved, have the right, on the ground that such suits arise under the laws of the United States, to invoke the jurisdiction of the federal courts, except where the particular suit is excluded from the federal jurisdiction by some specific enactment. Bankers' Trust Co. v. Tex. & Pac. R. Co., 241 U. S. 295, 306, 307, 36 S. Ct. 569, 60 L. Ed. 1010; American Bank & Trust Co. v. Federal Reserve Bank, 256 U. S. 350, 41 S. Ct. 499, 65 L. Ed. 983; Sowell v. Federal Reserve Bank, 268 U. S. 449, 45 S. Ct. 528, 69 L. Ed. 1041. Since, therefore, plaintiff is created under act of Congress, and this action involves the jurisdictional amount, the District Court had jurisdiction of the action, unless its jurisdiction has been excluded by some special act.

The question, then, narrows itself to this: Is there a special act excluding federal incorporation as a ground of federal jurisdiction in suits by or against Federal Intermediate Credit Banks? We think that there is. Section 201 (c) of the act under which these banks are created (42 Stat. 1454; U. S. C. tit. 12, § 1023; being Comp. St. § 9835¼) provides:

"(c) Each Federal Intermediate Credit Bank shall have all the usual powers of corporations, and shall have power to sue and be sued both in law and equity, and for purposes of jurisdiction shall be deemed a citizen of the state where it is located."

We are not left in doubt as to the meaning of the language "for purposes of jurisdiction shall be deemed a citizen of the state where it is located." Practically the same language is used in paragraph 16 of section 24 of the Judicial Code (Comp. St. § 991), which, after providing for jurisdiction in the federal courts in certain cases affecting national banking associations, continues:

"And all national banking associations established under the laws of the United States shall, for the purposes of all other actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the states in which they are respectively located." (Italics ours.)

This section was before the Supreme Court in Herrmann v. Edwards, 238 U. S. 107, 35 S. Ct. 839, 59 L. Ed. 1224, and it was there held that the effect of the language used was to exclude federal incorporation as a ground of federal jurisdiction. In that case it was argued that there had been omitted from the section of the Judicial Code certain language contained in the act of 1888 (25 Stat. 433) relating to suits by and against national banks which provided that the federal courts should "not have jurisdiction other than such as they would have in cases between individual citizens of the same state," and that the effect of omitting this from the section of the Code was to restore jurisdiction in that class of cases. In denying this contention and holding that jurisdiction was excluded by the language of the Code above quoted, the court said:

"Section 4 of the act of 1888, as will be seen, opened with the provisions which excluded national banks from the federal jurisdiction which otherwise would have attached to controversies concerning them. This being done, the statute proceeded to provide that the exclusion previously specified should not include certain classes of controversies which it was deemed best should come under the federal jurisdiction, thus leaving those classes of cases under the general rule, since they were carved out by the last clause of the section from the provisions as to exclusion which were found in the first. In re-enacting these provisions of the act of 1888 in paragraph 16 of section 24 of the Judicial Code, obviously to make the purpose of the re-enacted statute clearer, just the opposite form of statement was resorted to, since paragraph 16 opens by conferring federal jurisdiction only in those classes of cases which were kept within that jurisdiction by the concluding clause of section 4 of the act of 1888, and hence no jurisdiction was given as to the other classes of cases which were excluded from such jurisdiction by the act of 1888. The re-enacted section in other words, instead of generally stating what was excluded from jurisdiction and then carving out exceptions, as was done in the act of 1888, gave jurisdiction only in the cases where it was intended to give it and then proceeded to declare that in all other cases within the contemplation of the section there should be no jurisdiction, thus making the lines clear and broad and leaving no room for controversy or doubt." (Italics ours.)

Counsel for plaintiff, in endeavoring to distinguish the case at bar from Herrmann v. Edwards, lay much stress on the reasoning of the Supreme Court in that case to the effect that an intention to change the rule prescribed by the statute of 1888 should not be indulged without a clear manifestation of such purpose. But, of course, whatever the reasoning by which the court arrived at the meaning of the statute, the interpretation once made became as much a part of the statute as the language of the statute itself, and when practically the same provision respecting jurisdiction was adopted as a part of the Intermediate Credit Bank Act, it carried with it the interpretation which the Supreme Court had placed thereon. Copper Queen Mining Co. v. Arizona Board, 206 U. S. 474, 27 S. Ct. 695, 51 L. Ed. 1143.

It is suggested that the purpose of Congress was not to exclude jurisdiction, but to provide for venue; but such interpretation would ignore the use of the word "jurisdiction" in the act itself, as well as the interpretation which the Supreme Court had placed upon the remainder of the language used. We must assume that Congress did not mean "venue" when it said "jurisdiction," or for an entirely different construction to be given the language here from that which the Supreme Court had given it in Herrmann v. Edwards. We think, therefore, that there can be no question that the effect of the quoted provision of the act of 1923 was to exclude federal incorporation as a ground of jurisdiction in this class of cases.

The only question which remains is whether jurisdiction of suits by or against Federal Intermediate Credit Banks has been affected by section 12 of the Act of February 13, 1925 (43 Stat. 941; U. S. C. tit. 28, § 42; Comp. St. § 991d). That section provides:

"Sec. 12. That no District Court shall have jurisdiction of any action or suit by or against any corporation upon the ground that it was incorporated by or under an act of Congress: Provided, that this section shall not apply to any suit, action, or proceeding brought by or against a corporation incorporated by or under an act of Congress wherein the government of the United States is the owner of more than one-half of its capital stock."

It is clear that, if section 201 (c) of the Act of March 4, 1923, were not in force, the section just quoted would not exclude jurisdiction in this case; for, as the United States owns all of the capital stock of the Intermediate Credit Banks, suits by or against them would fall within the exception. But that, of course, is not the situation. Section 201 (c) has not been repealed, and its effect, as we have seen, is to exclude jurisdiction in such cases. Now section 12 of the Act of February 13, 1925, is a general statute excluding federal incorporation as a ground of federal jurisdiction. The proviso of section 12 merely withdraws from the operation of that section corporations wherein the government of the United States is the owner of more than one-half of the capital stock. It does not attempt to restore jurisdiction in cases where jurisdiction has been excluded by other statutes, and in such cases the jurisdiction remains exactly as it was before the statute was enacted. To state the matter in another way, section 12 of the act of 1925 is a limitation upon the jurisdiction conferred generally by the act of 1875, now paragraph 1 of section 24 of the Judicial Code. The proviso is merely a...