Hillesland v. Federal Land Bank Ass'n of Grand Forks, 11225

• Decision Date: 28 May 1987
• Docket Number: No. 11225,11225
• Citation: 407 N.W.2d 206
• Parties: Elmer HILLESLAND, Plaintiff and Appellant, v. FEDERAL LAND BANK ASSOCIATION OF GRAND FORKS and Federal Land Bank of St. Paul, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 206

407 N.W.2d 206

2 Indiv.Empl.Rts.Cas. 321

Elmer HILLESLAND, Plaintiff and Appellant, v. FEDERAL LAND BANK ASSOCIATION OF GRAND FORKS and Federal

Land Bank of St. Paul, Defendants and Appellees.

Civ. No. 11225.

Supreme Court of North Dakota.

May 28, 1987.

Solberg, Stewart, Boulger & Miller, Fargo, for plaintiff and appellant, argued by Wayne O. Solberg.

Oppenheimer, Wolff, Foster, Shepard & Donnelly, Minneapolis, Minn. and Vogel, Brantner, Kelly, Knutson, Weir & Bye, Fargo, for defendants and appellees, argued by Robert R. Reinhart, Jr.

ERICKSTAD, Chief Justice.

Elmer Hillesland appeals from a district court summary judgment dismissing his action against the Federal Land Bank Association of Grand Forks [the Association] and the Federal Land Bank of St. Paul [the Bank]. We affirm.

Hillesland began working at the Association in 1956. He received several promotions and in 1972 was named Chief Executive Officer. He held that position until his discharge on June 15, 1983.

Through his position with the Association Hillesland in early 1983 learned that Ray and Eva Westby, customers of the Association, were experiencing financial difficulties. He also learned that they had received an offer to purchase their farm from another Association customer. Hillesland contacted the Westbys to offer financial counseling. They responded by expressing their desire to sell the farm. Although the parties dispute whether Hillesland initiated the discussions of sale of the property, it is undisputed that these discussions eventually led to an offer to purchase the Westby farm by Hillesland's sons, David and Don.

In accordance with standard Association procedure, Hillesland submitted details of the proposed transaction on a "Prohibited Acts Report and Action" form to the Association board of directors for approval. After meeting in a closed session with the Westbys, the board approved the transaction. Hillesland then submitted the matter to the Bank's Review Committee in St. Paul. In its report, the Review Committee stated that it was "not in a position to disapprove" the transaction, but it did express concern over the appearance of a conflict of interest and prohibited any further direct involvement in the transaction by Hillesland. The sale of the land to Hillesland's sons was completed shortly thereafter.

The Bank subsequently launched an investigation into the matter. On June 15, 1983, two representatives of the Bank appeared at a meeting of the Association Hillesland commenced this action against the Association and the Bank alleging violation of provisions of the Farm Credit Act, breach of contract, age discrimination, and tortious interference by the Bank with Hillesland's employment contract with the Association. The district court granted summary judgment dismissing Hillesland's action, and he appeals.

board of directors in Grand Forks and advised Hillesland that he was being discharged from his employment with the Association. The Bank's rationale for Hillesland's termination was that he had violated written standards of conduct, had damaged the image and reputation of the Association and the Bank, and had exercised poor business judgment.

The following issues are dispositive of the appeal:

1) Is there an implied private right of action for wrongful discharge under the Farm Credit Act?

2) Did the trial court err in dismissing Hillesland's breach of contract claim?

3) Is there an implied covenant of good faith and fair dealing in employment contracts under North Dakota law?

4) Did the trial court err in dismissing Hillesland's age discrimination claim?

5) Did the trial court err in dismissing Hillesland's tortious interference with contract claim?

IMPLIED PRIVATE RIGHT OF ACTION

Hillesland contends that the trial court erred in concluding that there is no implied private right of action for wrongful discharge under the Farm Credit Act. Hillesland contends that termination of Farm Credit System employees without cause is prohibited by 12 U.S.C. Sec. 2227(a)(3), which provides in pertinent part:

"Appointments, promotions, and separations so made shall be based on merit and efficiency and no political test or qualification shall be permitted or given consideration."

The four-part test first enunciated in Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26, 36 (1975), governs the determination of whether or not to imply a private right of action:

"In determining whether a private remedy is implicit in a statute not expressly providing one, several factors are relevant. First, is the plaintiff 'one of the class for whose especial benefit the statute was enacted,' ... (emphasis supplied)--that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? ... Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? ... And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?" [Citations omitted.]

Hillesland has failed to cite a single decision holding that there is an implied private right of action under the Farm Credit Act, 12 U.S.C. Secs. 2001-2259. In fact, it appears that every court which has considered the issue has held that there is no implied right of action under the Act under the Cort test. See Bowling v. Block, 785 F.2d 556, 557 (6th Cir.), cert. denied, --- U.S. ----, 107 S.Ct. 112, 93 L.Ed.2d 60 (1986); Smith v. Russellville Production Credit Association, 777 F.2d 1544, 1546-1548 (11th Cir.1985); Brekke v. Volcker, 652 F.Supp. 651, 654 (D.Mont.1987); Schroder v. Volcker, 646 F.Supp. 132, 134-135 (D.Colo.1986); Creech v. Federal Land Bank of Wichita, 647 F.Supp. 1097, 1101 (D.Colo.1986); Aberdeen Production Credit Association v. Jarrett Ranches, Inc., 638 F.Supp. 534, 537 (D.S.D.1986); Farmer v. Wilkinson, No. 4-85-1448 (D.Minn.1986); Corum v. Farm Credit Services, 628 F.Supp. 707, 719-720 (D.Minn.1986); Spring Water Dairy, Inc. v. Federal Intermediate Credit Bank of St. Paul, 625 F.Supp. 713, 717-720 (D.Minn.1986); Apple v. Miami Valley Production Credit Association, 614 F.Supp. 119, 122 (S.D.Ohio 1985), aff'd on other grounds, 804 F.2d 917 (6th Cir.1986); Hartman v. Farmers Production Credit Association of Scottsburg, 628 F.Supp. 218, 222 (S.D.Ind.1983); Production Hillesland raises two distinctions between this case and those decisions which have refused to imply a private cause of action under the Act. First, Hillesland notes that most of those decisions involved actions by borrowers or customers of the Farm Credit System, whereas his claim is for wrongful discharge pursuant to provisions added in the 1959 amendments to the Farm Credit Act. Hillesland contends that those amendments were intended solely to benefit Farm Credit System employees and that an implied right of action under the amendments is appropriate.

Credit Association of Worthington v. Van Iperen, 396 N.W.2d 35, 37 (Minn.Ct.App.1986); Johansen v. Production Credit Association of Marshall-Ivanhoe, 378 N.W.2d 59, 62 (Minn.Ct.App.1985). See also Federal Land Bank of Saint Paul v. Overboe, 404 N.W.2d 445, 448 (N.D.1987), and Federal Land Bank of St. Paul v. Halverson, 392 N.W.2d 77, 83 (N.D.1986) (recognizing that federal courts have "unanimously" concluded that there is no private cause of action against entities of the Farm Credit System under the Farm Credit Act and regulations).

Although the 1959 amendments did include some provisions dealing with employment considerations, there were a number of other provisions. The preamble to the 1959 enactment states that it is an act "To amend the Federal Farm Loan Act to transfer responsibility for making appraisals from the Farm Credit Administration to the Federal land banks, and for other purposes." Farm Credit Act of 1959, Pub.L. No. 86-168, 73 Stat. 384. Furthermore, the legislative history of the 1959 enactment indicates that its intent was to effectuate fully the express policy of the Farm Credit Act of 1953 to encourage and facilitate borrower participation in the management, control, and ownership of the Farm Credit System. See, e.g., H.R.Rep. No. 287, 86th Cong., 1st Sess., reprinted in 1959 U.S.Code Cong. & Ad.News 2123. Hillesland has failed to identify any legislative history to support his contention that the 1959 enactment was primarily an "employees' rights" bill, and we can find no evidence of Congressional intent to create a private right of action on behalf of Farm Credit System employees. We also note that the one federal court which has addressed the issue has held that Farm Credit System employees do not have an implied private right of action for wrongful discharge under the Farm Credit Act. See Corum v. Farm Credit Services, supra, 628 F.Supp. at 719-720.

Hillesland also contends that the legislative history of the 1985 amendments to the Farm Credit Act suggests that Congress did intend to create a private remedy under the Act. In particular, Hillesland cites the comments of Representative De la Garza in floor debate of the Farm Credit Amendments Act of 1985, Pub.L. No. 99-205, 99 Stat. 1678:

"[A] major section of this bill does establish a set of borrowers' rights, and it would be my understanding that the rights of applicants and member-borrowers as set forth in this act and in the regulations of the Farm Credit Administration shall be enforceable in courts of law." 131 Cong.Rec. H11519 (daily ed. Dec. 10, 1985).

Initially we note that Representative De la Garza spoke only of enforcement of rights of applicants and member-borrowers. We also agree with those federal courts which have held that Representative De la Garza's statements concerning the 1985 amendments are irrelevant to a...