Federal Land Bank of New Orleans v. Tatum

• Decision Date: 25 November 1935
• Docket Number: 31952
• Court: Mississippi Supreme Court
• Parties: FEDERAL LAND BANK OF NEW ORLEANS et al. v. TATUM et al

164 So. 319

174 Miss. 264

FEDERAL LAND BANK OF NEW ORLEANS et al. v. TATUM et al

No. 31952

Supreme Court of Mississippi

November 25, 1935

Division B

BANKS AND BANKING.

Under State Moratorium Law which by its terms did not apply to mortgages held by agency of United States, landowners held precluded from enjoining foreclosure of trust deed given to Federal Land Bank covering their lands, since land bank was agent of federal government (Federal Farm Loan Act, sections 6, 26, 12 U.S.C. A., sections 701, 931; Laws 1934, chapter 247, section 14).

HON. R W. CUTRER, Chancellor.

APPEAL from the chancery court of Amite county HON. R. W. CUTRER Chancellor.

Suit by W. L. Tatum and others against the Federal Land Bank of New Orleans and another. Judgment for plaintiff, and named defendant appeals. Reversed and rendered.

Reversed and rendered.

J. M. Thomas, T. H. Hedgepeth and W. L. Pack, Jr., all of New Orleans, La., and J. T. Lowrey, of Gloster, for Appellants.

The bill expressly prays for a preliminary injunction "without bond" and the chancellor expressly stipulated in his fiat that no bond should be required. This clearly indicates that the bill was regarded by both the appellees and the chancellor as being based on the Moratorium Law, because a preliminary injunction without bond is unknown to Mississippi jurisprudence, aside from the Moratorium Law.

Griffith's Mississippi Chancery Practice, sec. 448.

If we are correct in our contention that the bank is, as a matter of law, an agency of the United States, the allegation in the bill to the contrary is immaterial, because it is elementary that a demurrer does not admit conclusions of law.

Griffith's Mississippi Chancery Practice, sec. 288.

Federal land banks were appointed financial agents of the government and the mortgages executed to them are expressly declared by the act to be instrumentalities of the government of the United States.

12 U.S.C. A., sec. 651, et seq.; Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 65 L.Ed. 577, 41 S.Ct. 243; Federal Land Bank of New Orleans v. Crosland, 261 U.S. 374, 67 L.Ed. 703; Federal Land Bank of Columbia v. Gaines, 290 U.S. 247, 54 S.Ct. 168, 78 L.Ed. 298; Krauthoff v. Kansas City Joint Stock Land Bank, 23 F.2d 71; Smith v. Kansas City Title Co., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577; Federal Land Bank of Columbia v. State Highway Commission, 172 S.C. 174, 173 S.E. 284; Dallas Joint Stock Land Bank v. Ballard, 74 S.W.2d 297; Travellers' Ins. Co. v. Marshall, 76 S.W.2d 1007, 96 A.L.R. 802; Federal Land Bank of St. Louis v. Priddy, 79 L.Ed. 709.

We desire to call the court's attention to certain legislation enacted by Congress during the past three or four years which shows the great extent to which the federal government has gone in its supervision and control over federal land banks, and how the government is financially interested in the banks.

12 U.S.C. A., 1934 Pocket Part Supplement, secs. 698, 781-tenth, 771-twelfth, 678-680, and pages 124-126; Farm Credit Act of 1935.

The Moratorium Law itself shows that the Legislature had federal land banks in mind in exempting federal agencies.

Sections 3 and 14, chap. 247, Laws of 1934; Millsaps College v. City of Jackson, 136 Miss. 795, 101 So. 574, 275 U.S. 129, 48 S.Ct. 94, 72 L.Ed. 196.

There is still another reason why the statute should be construed so as to exempt mortgages held by federal land banks, and that is that any other construction would render the statute unconstitutional as applied to such mortgages, in that the effect of the statute would be to hamper, impede and interfere with instrumentalities of the federal government.

Staple Cotton Co-op. Association v. Hemphill, 142 Miss. 298, 107 So. 24; Miller v. Sherrard, 157 Miss. 124, 126 So. 903; 12 C. J., page 787, sec. 220.

If the statute does not exempt mortgages held by federal land banks, it is, as applied to such mortgages, in contravention of the Federal Constitution and laws and therefore invalid.

12 U.S.C. A., sec. 931; Federal Land Bank of New Orleans v. Crosland, 261 U.S. 374, 67 L.Ed. 703; McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579; Farmers' & Mechanics' Savings Bank v. Minnesota, 232 U.S. 516, 58 L.Ed. 706; Johnson v. Maryland, 254 U.S. 51, 65 L.Ed. 126; Gillespie v. Oklahoma, 257 U.S. 505, 42 S.Ct. 171, 66 L.Ed. 338; Panhandle Oil Co. v. Mississippi, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857; Dallas Joint Stock Land Bank v. Ballard, 74 S.W.2d 297.

Fred A. Anderson, Jr., of Gloster, for appellees.

The appellees have alleged in their bill of complaint below that the Federal Land Bank of New Orleans was not an agency, bureau, department, board or commission of the United States and by the demurrer of the appellants they have admitted this fact to be true, as every demurrer admits the facts which are alleged in the bill or declaration to be true, and having so admitted this to be true as a matter of law and fact the appellants by this demurrer did bring themselves clearly within the purview and limits of chapter 247 of the Laws of 1934, said chapter of act being commonly known as the Moratorium Law; and are estopped to deny then that they are not an agency, bureau, department, board or commission of the United State.

The Federal Land Bank is not an agency of the federal government or an instrumentality thereof.

Even though these mortgages which are made to the Federal Land Bank might be instrumentalities of the federal government insofar as to be exempt from local taxation does not make them agents, or instrumentalities of the federal government for all purposes or preclude them from reasonable regulations which might be placed thereupon by the sovereign states for the common welfare and good of the people within their state; this act of the Mississippi Legislature does not so impede or interfere with an instrumentality of the federal government.

In the case of Manhattan Bank & Trust Co. v. Ellda Corporation et al., 265 N.Y.S. 115, an injunction was granted preventing the mortgagee from foreclosing on a mortgage which they had on an apartment hotel, Justice SCHMUCK rendering the opinion which was in part as follows: "In normal times the question proposed would occasion little difficulty and would evoke instant response. But in this hour of grave economic distress a new element obtrudes itself, bringing forth a situation embarrassing, not so much in the legalistic, as from the practical aspects. . . . Regardless of whether the property be rural, urban the courts are seeking to circumscribe the effect of foreclosure. In recognition of the change which has made security insecurity, and prosperity indigence, the result usually following a foreclosure suit is now regarded askance and sought to be avoided."

Suring State Bank v. Giest et al., 246 N.W. 556; Graselli Chemical Co. v. Aetna Explosives Co., 252 F. 456.

As to the power of a court of equity in judicial and foreclosure sales the court's attention is called to the case of Northern Pacific Ry. Co. v. Boyd, 228 U.S. 482, 57 L.Ed. 931, 33 S.Ct. 554.

Argued orally by W. L. Pack, Jr., and T. H. Hedgepeth, for appellant.

OPINION

Ethridge, P. J.

The appellees were complainants in the court below and filed a bill against the Federal Land Bank of New Orleans and J. T Lowrey, trustee, seeking to enjoin the sale of lands conveyed to the appellant under a trust deed to secure an indebtedness of one thousand one hundred dollars, given to appellant by B. L. Randall and wife, who...