Iowa-Des Moines Nat. Bank v. United States

• Decision Date: 16 June 1976
• Docket Number: Civ. No. 76-91-2.
• Citation: 414 F. Supp. 1393
• Parties: IOWA-DES MOINES NATIONAL BANK, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Southern District of Iowa

414 F. Supp. 1393

IOWA-DES MOINES NATIONAL BANK, Plaintiff, v. UNITED STATES of America, Defendant.

Civ. No. 76-91-2.

United States District Court, S. D. Iowa, C. D.

June 16, 1976.

Tobin B. Swanson, Watson & Swanson, P. C., Des Moines, Iowa, for plaintiff.

Allen L. Donielson, U. S. Atty., William D. Scherle, George H. Perry, Asst. U. S. Attys., Des Moines, Iowa, for defendant.

ORDER

HANSON, Chief Judge.

This case involves the issue of whether the United States Postal Service is immune from properly instituted state law garnishment proceedings. On February 9, 1976, plaintiff Iowa-Des Moines National Bank caused a notice of garnishment to be served upon the Des Moines office of the Postal Service. The garnishment proceedings were based upon a judgment in the amount of $1,029.03 obtained by the bank against Ronald and Vickie Strange. Because Vickie Strange is an employee of the Postal Service, the matter was removed to this Court pursuant to 28 U.S.C. § 1441 and § 1442. See Drs. Macht, Podore & Associates, Inc. v. Girton, 392 F.Supp. 66, 67-68 (S.D.Ohio 1975); Allen v. Allen, 291 F.Supp. 312, 313 (S.D.Iowa 1968); see also 42 U.S. C.A. § 409(a) (1976 supp.). The matter currently before the Court is defendant's motion to quash notice of garnishment. The essence of defendant's motion is the claim that the Postal Service (the garnishee) is immune from such proceedings absent explicit congressional consent authorizing garnishments.

The United States Postal Service was established by Congress in Public Law 91-375, 84 Stat. 720, effective July 1, 1971. See 39 U.S.C.A. § 101 et seq. (1976 supp.). First among the enumerated powers of the Postal Service is the power "to sue and be sued in its official name." 39 U.S.C.A. § 401(1). Notwithstanding this expansive consent to suit, the Government maintains that garnishment proceedings are excluded from the meaning of Section 401(1). While at least six different United States District Courts have accepted the Government's view of Section 401(1) in the context of a garnishment proceedings, one United States District Court and the United States Court of Appeals for the Seventh Circuit have held to the contrary. Compare Drs. Macht, Podore & Associates, Inc. v. Girton, supra; Nolan v. Woodruff, 68 F.R.D. 660 (D.D.C. 1975); Lawhorn v. Lawhorn, 351 F.Supp. 1399 (S.D.W.Va.1972); Detroit Window Cleaners Local 139 Ins. Fund v. Griffin, 345 F.Supp. 1343 (E.D.Mich.1972); Commerce Bank of Kansas City v. Fugate, No. 20470-2 (W.D.Mo.1973); and Bean, Phillips & Bean v. Moore, No. 6305 (E.D.Tenn.1972) with Standard Oil Division, American Oil Company v. Starks, 528 F.2d 201 (7th Cir. 1975), and Colonial Bank v. Broussard, 403 F.Supp. 686 (E.D.La.1975). It is the Court's conclusion that the views expressed by the Seventh Circuit Court of Appeals and the District Court for the Eastern District of Louisiana correctly state the current status of the Postal Service on the question of congressional consent to garnishment proceedings against the Service. Accordingly, defendant's motion to quash must be overruled.

In F.H.A. v. Burr, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724 (1940) the United States Supreme Court considered the question of whether congressional consent that the F.H.A. could "sue and be sued" encompassed garnishment proceedings. In holding that the F.H.A. is subject to garnishment for sums due to an employee, Justice Douglas made the following comments, which are fully applicable to the instant case:

Since consent to "sue and be sued" has been given by Congress, the problem here merely involves a determination of whether or not garnishment comes within the scope of that authorization. No question as to the power of Congress to waive the governmental immunity is present. For there can be no doubt that Congress has full power to endow the Federal Housing Administration with the government's immunity from suit or to determine the extent to which it may be subjected to the judicial process. Federal Land Bank v. Priddy, 295 U.S. 229 55 S.Ct. 705, 79 L.Ed. 1408; Keifer & Keifer v. Reconstruction Finance Corporation, 306 U.S. 381 59 S.Ct. 516, 83 L.Ed. 784.

As indicated in Keifer & Keifer v. Reconstruction Finance Corporation, supra, we start from the premise that such waivers by Congress of governmental immunity in case of such federal instrumentalities should be liberally construed. This policy is in line with the current disfavor of the doctrine of governmental immunity from suit, as evidenced by the increasing tendency of Congress to waive the immunity where federal governmental corporations are concerned. Keifer & Keifer v. Reconstruction Finance Corp., supra. Hence, when Congress establishes such an agency, authorizes it to engage in commercial and business transactions with the public, and permits it to "sue and be sued", it cannot be lightly assumed that restrictions on that authority are to be implied. Rather if the general authority to "sue and be sued" is to be delimited by implied exceptions, it must be clearly shown that certain types of suits are not consistent with the statutory or constitutional scheme, that an implied restriction of the general authority is necessary to avoid grave interference with the performance of a governmental function, or that for other reasons it was plainly the purpose of Congress to use the "sue and be sued" clause in a narrow sense. In the absence of such showing, it must be presumed that when Congress launched a governmental agency into the commercial world and endowed it with authority to "sue or be sued", that agency is not less amenable to judicial process than a private enterprise under like circumstances would be. 309 U.S. at 244-45, 60 S.Ct. at 490 (footnote omitted).

For the defendant to escape the clear implications of Burr, it must be shown either (1) that the Postal Service has not been "launched . . . into the commercial world" in the same manner the F.H.A. was; (2) that garnishment is inconsistent with the statutory scheme setting up the Postal Service; or (3) that "grave interference" with Postal Service operations would occur should garnishments be allowed. Further, defendant asserts that garnishments for commercial debts are expressly precluded by the recently-enacted 42 U.S.C.A. § 659 (1976 supp.), which provides as follows:

Consent by United States to garnishment and similar proceedings for enforcement of child support and alimony obligations

Notwithstanding any other provision of law, effective January 1, 1975, moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, the United States (including any agency or instrumentality thereof and any wholly owned Federal corporation) to any individual, including members of the armed services, shall be subject, in like manner and to the same extent as if the United States were a private person, to legal process brought for the enforcement, against such individual of his legal obligations to provide child support or make alimony payments.

In Standard Oil v. Starks, supra, the Seventh Circuit discussed whether any of the three "implied exceptions" to consent of F.H.A. v. Burr applied to garnishments of the Postal Service. This Court is in full agreement with the conclusion in Standard Oil that none of the implied exceptions of Burr remove garnishment proceedings from the Postal Service's consent "to sue and be sued." Congress established the Service to be an independent agency, and to engage in numerous endeavors, both "governmental" and "commercial," in an autonomous manner. 528 F.2d 201-04. The only statutory exceptions to the Service's consent to be sued appear to involve matters within the scope of the Federal Tort Claims Act and in regard to procedural rules applicable to suits against the United States. 39 U.S. C.A. § 409; See Standard Oil, supra, at 203; White v. Bloomberg, 501 F.2d 1379, 1386 (4th Cir. 1974). In light of these express limitations to the blanket consent of § 401(1), if Congress had intended garnishment proceedings to be similarly excluded it would have said so.¹ Cf. F.H.A. v. Burr, supra, at 247 n. 10. The statutory scheme setting up the Postal Service simply does not justify engrafting the "implied exceptions" of Burr upon the Service's general consent to suit. Standard Oil, supra; Colonial Bank v. Broussard, supra; see also White v. Bloomberg, supra, at 1385-86.

Remaining to be considered is the question of whether 42 U.S.C.A. § 659 (1976 supp.) bars the instant garnishment. The Government asserts that § 659 is fully applicable to the Postal Service, and that it allows garnishment for only two purposes: child support and alimony payments. Since this case involves a garnishment to collect upon a court judgment stemming from a commercial obligation, the Government asserts that § 659 bars the proceeding. The Court agrees with the...