Union Nat. Bank of Clarksburg, W. Va. v. McDonald

• Decision Date: 09 December 1940
• Docket Number: Civ. A. No. 87-C.
• Citation: 36 F. Supp. 46
• Parties: UNION NAT. BANK OF CLARKSBURG, W. VA., v. McDONALD.
• Court: U.S. District Court — Northern District of West Virginia

36 F. Supp. 46

UNION NAT. BANK OF CLARKSBURG, W. VA., v. McDONALD.

Civ. A. No. 87-C.

District Court, N. D. West Virginia.

December 9, 1940.

James M. Guiher and William P. Nottingham, both of Clarksburg, W. Va. (Steptoe & Johnson, of Clarksburg, W. Va., on the brief), for plaintiff.

Joe V. Gibson, U. S. Atty., of Clarksburg, W. Va., for defendant.

HARRY E. WATKINS, District Judge.

This is an action by Union National Bank of Clarksburg, West Virginia, against Stewart McDonald in his official capacity as Federal Housing Administrator of the United States to collect the sum of $33,117.93, representing a loss incurred by plaintiff and insured by defendant upon a Federal Housing loan made to Pederson Glass Company.

After filing its answer, defendant moved to dismiss for lack of jurisdiction of the subject matter. Such defense is not waived by failure to include it in the answer. It may be raised by motion to dismiss after answer. Federal Rules of Civil Procedure, rule 12(b), 28 U.S.C.A. following section 723c.

Defendant says that, although this suit is nominally against the Federal Housing Administrator, it is, in fact, a suit against the United States, and, therefore, this court is without jurisdiction by reason of the fact that the amount demanded in the complaint is in excess of $10,000. It is urged that the action should have been brought in the Court of Claims. Defendant relies upon 28 U.S.C.A. § 41(20), which provides, in part, as follows:

"The district courts shall have original jurisdiction as follows: * * *

"(20) Suits against United States. * * * Concurrent with the Court of Claims, of all claims not exceeding $10,000 founded upon the Constitution of the United States or any law of Congress, or upon any regulation of an executive department, or upon any contract, express or implied, with the Government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort, in respect to which claims the party would be entitled to redress against the United States, either in a court of law, equity, or admiralty, if the United States were suable * * *".

The parallel section of the jurisdiction of the Court of Claims is found in Title 28 U.S.C.A. § 250, subdivision (1), as follows: "The Court of Claims shall have jurisdiction to hear and determine the following matters: (1) Claims against United States. * * * All claims (except for pensions) founded upon the Constitution of the United States or any law of Congress, upon any regulation of an executive department, upon any contract, express or implied, with the Government of the United States, or for damages, liquidated or unliquidated, in cases not sounding in tort, in respect of which claims the party would be entitled to redress against the United States either in a court of law, equity, or admiralty if the United States were suable * * *".

These two statutes are often spoken of as the Court of Claims Act. The single question now raised is whether an action against the Federal Housing Administrator in his official capacity in a Federal District Court is limited to $10,000 under the Court of Claims Act.

There is an abundance of authority for the proposition that where an agency of the government is a party, the courts look through the nominal party and treat the case as one in fact against the United States. Schevitzky v. Home Owners' Loan Corp., et al., D.C., 26 F.Supp. 311; Reconstruction Finance Corporation v. Krauss et al., D.C., 12 F.Supp. 44; Walker v. Home Owners' Loan Corporation, D.C., 25 F.Supp. 589; Prato v. Home Owners' Loan Corporation, D.C., 24 F. Supp. 844; Henson et al. v. Eichorn et al., D.C., 24 F.Supp. 842; Sloan Shipyards Corporation v. United States Shipping Board Emergency Fleet Corporation, D.C., 268 F. 624.

With a growing tendency to utilize corporations and agencies for governmental purposes, there has been significant contemporaneous opinion to bring governmental immunity from suit into disfavor. Congress has uniformly given expression to this opinion by making more than forty such corporations amenable to suit. By an Act of August 23, 1935, C. 614, Sec. 344 (a), 49 Stat. 684, 722, 12 U.S.C.A. § 1702, the following sentence was added to Title I of the National Housing Act: "The Administrator shall, in carrying out the provisions of this title and titles II and III, be authorized, in his official capacity, to sue and be sued in any court of competent jurisdiction, State or Federal".

Whatever may have been the law under former decisions, the recent cases of Keifer & Keifer v. Reconstruction Finance Corporation, February 27, 1939, 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784, and Federal Housing Administration v. Burr, February 12, 1940, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724, seem to settle this question. The inescapable conclusion from reading these opinions is that a suit against the Federal Housing Administrator, in his official capacity, in a Federal District Court is not limited to $10,000 under the Court of Claims Act. 28 U.S. C.A. § 41 (20).

In the Keifer case an action in tort was brought in a District Court against Regional Agricultural Credit Corporation, a federal subsidiary of Reconstruction Finance Corporation. The District Court dismissed the case for lack of jurisdiction, holding that Congress had not given its consent to a suit in tort against its instrumentality. 22 F.Supp. 918. The Circuit Court of Appeals (8 Cir., 97 F.2d 812) affirmed the District Court and the Supreme Court reversed them both. Keifer & Keifer v. Reconstruction Finance Corp., supra. The act creating Regional did not provide that it could sue and be sued, but the act creating its parent corporation did contain such provision. After discussing the reason assigned in the earlier cases for governmental immunity from unconsented suit, the court says 306 U.S. 381, 59 S.Ct. 517, 83 L.Ed. 784: "Therefore, the government does not become the conduit of its immunity in suits against its agents or instrumentalities merely because they do its work. United States v. Lee, 106 U.S. 196, 213, 221, 1 S.Ct. 240, 254, 261, 27 L.Ed. 171; Sloan Shipyards v. U. S. Fleet Corp., 258 U.S. 549, 567, 42 S.Ct. 386, 388, 66 L.Ed. 762. For more than a hundred years corporations have been used as agencies for doing work of the government. Congress may create them `as appropriate means of executing the powers of government as, for instance, * * * a railroad corporation for the purpose...