Prato v. HOME OWNERS'LOAN CORPORATION

• Decision Date: 21 September 1938
• Docket Number: No. 6693.,6693.
• Citation: 24 F. Supp. 844
• Parties: PRATO v. HOME OWNERS' LOAN CORPORATION.
• Court: U.S. District Court — District of Massachusetts

24 F. Supp. 844

PRATO v. HOME OWNERS' LOAN CORPORATION.

No. 6693.

District Court, D. Massachusetts.

September 21, 1938.

Albert U. Rosa, of East Boston, Mass., and Albert L. Hyland, of Boston, Mass., for plaintiff.

Howard W. Cole and Brickley, Sears & Cole, all of Boston, Mass., for defendant.

FORD, District Judge.

The present action, removed to this Court from the Massachusetts State Court where the suit was begun, is one of tort to recover damages for personal injuries alleged to have been sustained in a fall upon an accumulation of ice and snow on the sidewalk in the front of premises upon which the defendant corporation foreclosed a mortgage and which it was in possession and control of at the time of the accident.

The defendant corporation filed a motion to dismiss alleging that the defendant was an instrumentality of the United States, wholly owned by the United States and as such could not be sued without the latter's consent, and that no consent had been given by the United States or Congress to an action in the nature of a tort such as the one described above.

The Home Owners' Loan Act (12 U.S.C.A. § 1461 et seq.) was created for the purpose of supplying direct relief to home owners. All of the stock was subscribed for by the Secretary of the Treasury on behalf of the United States. The corporation was authorized to issue bonds and these were guaranteed both as to interest and principal by the United States. The corporation was authorized to exchange bonds in limited amounts for mortgages on homes and to pay, within limits, any accrued taxes, assessments, necessary maintenance and repairs, and incidental costs in cash. Its lending period was authorized for a period of three years from June 13, 1933.

The act provided that it "shall be an instrumentality of the United States, which shall have authority to sue and to be sued in any court of competent jurisdiction, Federal or State." 12 U.S.C.A. § 1463.

Its franchise, capital, reserves and surplus, loans and income, were exempt from all taxation by any state, county, municipality, or local taxing authority. Its real estate was subject to taxation to the same extent as other real property.

It was said in the case of United States v. Kay, 2 Cir., 89 F.2d 19, at page 22:

"The national public purpose embodied in the Home Owners' Loan Act of 1933 is evident * * *, the act was intended to afford direct relief to home owners and in this way to supplement the home loan bank system which would continue as a reserve system for home-financing private institutions. * * * The purpose of the act was * * * to relieve the distress of foreclosure."

When this corporation was created a national emergency had arisen. Private banks and financial institutions were unable to carry the load and it was necessary, to save the homes of countless numbers of the American public, to pass some legislation of this character. There is no question of doubt that its passage was of vital importance to the national public welfare. It was not organized for profit, but had for its primary purpose the relieving of the needs of the home owners of the United States from the pressing and immediate danger of mortgage foreclosures. The demand for some such relief was national in scope. It had very little of the characteristics of private business corporations. It is difficult to distinguish this corporation, established by Congress as a convenient vehicle by which the Government could effect a purely governmental purpose, from the Government itself. It is plainly evident that the establishment of the Home Owners' Loan Corporation was within the scope of the Constitutional powers of Congress to tax, borrow, and make appropriations for the general or national welfare. United States v. Kay, supra.

In the case of Federal Land Bank v. Priddy, 295 U.S. 229, at page 231, 55 S. Ct. 705, 706, 79 L.Ed. 1408, it was decided that organizations such as Federal Land Banks, which were created for the relief of the farmer, and are similar in purpose to the Home Owners' Loan Corporation designed for the relief of the home owners, were instrumentalities of the Federal Government engaged in the performance of an important governmental function. See, also, Federal Land Bank v. Gaines, 290 U.S. 247, 54 S.Ct. 168, 78 L.Ed. 298. The Court in the Priddy Case, supra, further stated that the Federal Land Banks: "As such, so far as they partake of the sovereign character of the United States, Congress has full power to determine the extent to which they may be subjected to suit and judicial process." This case further said the whole question was one of Congressional intent. Eastern Transportation Co. v. United States, 272 U.S. 675, at page 677, 47 S.Ct. 289, 71 L.Ed. 472; The Lake Monroe, 250 U.S. 246, 249, 39 S.Ct. 460, 63 L.Ed. 962; Sloan Shipyards Corp. v. U. S. Shipping Board Emergency Fleet Corp., 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762. And it was further stated in the case of Federal Land Bank v. Priddy, supra, pages 231, 232, 55 S.Ct. page 706, that if the extent to which they were amenable to judicial process was not made plain by the words of the statute, that it was necessary to ascertain it by an examination of the purposes for which it was created.

It is fundamental that the United States cannot be sued in its Courts without its consent and in granting such consent Congress has an unqualified discretion to specify the cases and contingencies in which the liability of the Government is submitted to the Courts for its judicial determination. Schillinger v. United States, 155 U.S. 163, 166, 15 S.Ct. 85, 86, 39 L. Ed. 108, in which the Court said: "Beyond the letter of such consent, the...