Waylyn Corporation v. United States

• Decision Date: 03 April 1956
• Docket Number: No. 5039-5046.,5039-5046.
• Citation: 231 F.2d 544
• Parties: WAYLYN CORPORATION, Defendant, Appellant, v. UNITED STATES of America, Plaintiff, Appellee. GARDEN CORPORATION v. UNITED STATES of America. PIEDMONT CORPORATION v. UNITED STATES of America. OKLAHOMA CORPORATION v. UNITED STATES of America. HILL CORPORATION v. UNITED STATES of America. PONCE DARLINGTON, Inc. v. UNITED STATES of America. RIO PIEDRAS DARLINGTON, Inc. v. UNITED STATES of America. MAYAGUEZ DARLINGTON, Inc. v. UNITED STATES of America.
• Court: U.S. Court of Appeals — First Circuit

231 F.2d 544 (1956)

WAYLYN CORPORATION, Defendant, Appellant, v. UNITED STATES of America, Plaintiff, Appellee.

GARDEN CORPORATION v. UNITED STATES of America.

PIEDMONT CORPORATION v. UNITED STATES of America.

OKLAHOMA CORPORATION v. UNITED STATES of America.

HILL CORPORATION v. UNITED STATES of America.

PONCE DARLINGTON, Inc. v. UNITED STATES of America.

RIO PIEDRAS DARLINGTON, Inc. v. UNITED STATES of America.

MAYAGUEZ DARLINGTON, Inc. v. UNITED STATES of America.

Nos. 5039-5046.

United States Court of Appeals First Circuit.

Heard February 8, 1956.

Decided April 3, 1956.

William G. Grant, Atlanta, Ga., with whom Garrard Harris and Benicio Sanchez Castano, San Juan, P. R., were on brief, for appellants.

Ruben Rodriguez Antongiorgi, U. S. Atty., San Juan, P. R., for appellee.

Before MAGRUDER, Chief Judge, and MARIS and WOODBURY, Circuit Judges.

MAGRUDER, Chief Judge.

These cases are all essentially the same, and reference will be made only to Waylyn Corp. v. United States, No. 5039.

The United States filed its complaint in the United States District Court for the District of Puerto Rico, seeking in a foreclosure proceeding to recover on a mortgage note given by defendant Waylyn Corp. to Manufacturers Trust Co. The loan for which the note was given was secured by a mortgage insured by the Federal Housing Administration pursuant to the provisions of the National Housing Act, 12 U.S.C.A. § 1702 et seq. Upon a default, as alleged, the mortgage note was assigned to Guy T. O. Hollyday, as Federal Housing Commissioner, together with all rights under the mortgage securing the same.

Waylyn Corp. filed an answer and a counterclaim for damages against the United States in the sum of $1,551,902.00. By virtue of the allegations of the answer and counterclaim, defendant's prayer was that the complaint be dismissed and that an affirmative judgment be rendered against the United States in the sum just mentioned.

The counterclaim undertook to state a cause of action sounding in tort, alleging that Waylyn Corp. had suffered pecuniary losses in consequence of wrongful action of the Federal Housing Administration in willfully and arbitrarily withholding occupancy permits and willfully and arbitrarily causing the publication of a newspaper announcement to the effect that Waylyn Corp. was without authority to sell the dwellings in the housing project covered by the mortgage.

Upon motion, the district court entered a "final judgment" dismissing this counterclaim for lack of jurisdiction, reciting in accordance with Rule 54(b), Fed.Rules Civ.Proc. 28 U.S.C. that there was no just reason for delay. The present appeal is from this judgment.

In its memorandum opinion the district court considered, and rejected, the possibility that the counterclaim might fall within the consent of the United States to be sued as contained in the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680. Appellant makes no challenge to this ruling of the district court, and we take it that we may leave the Federal Tort Claims Act out of account.

In the National Housing Act, it is provided, 12 U.S.C.A. § 1702, that the Federal Housing Commissioner shall, in carrying out the provisions of the Act, "be authorized, in his official capacity, to sue and be sued in any court of competent jurisdiction, State or Federal." This no doubt constituted a partial waiver of governmental immunity, to the extent that it permitted a suit against the Commissioner in his official capacity; but the statutory provision falls short of a consent that the United States as such may be sued on a claim arising out of the administration of the National Housing Act. The practical difference is pointed out in Federal Housing Administration, Region No. 4 v. Burr, 1940, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724. There, after holding that 12 U.S.C.A. § 1702 should be construed liberally to constitute a consent that the Federal Housing Administrator (now Commissioner) might be subjected to garnishment proceedings on account of moneys payable by the Federal Housing Administration to an employee, the Court ended up its opinion with the following, 309 U.S. at pages 250, 251, 60 S.Ct. at page 493:

"Petitioner claims that execution should not have been allowed under the judgment. The Act permits the Administrator `to sue and be sued in any court of competent jurisdiction, State or Federal.\' Whether by Michigan law execution under such a judgment may be had is, like the availability of garnishment, Federal Land Bank of St. Louis v. Priddy 1935, 295 U.S. 229, 55 S.Ct. 705, 79 L.Ed. 1408, a state question. And so far as the federal statute is concerned, execution is not barred, for it would seem to be part of the civil process embraced within the `sue and be sued\' clause. That does not, of course, mean that any funds or property of the United States can be held responsible for this judgment. Claims against a corporation are normally collectible only from corporate assets. That is true here. Congress has specifically directed that all such claims against the Federal Housing Administration of the type here involved `shall be paid out of funds made

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