Zins v. Justus

• Decision Date: 11 July 1941
• Docket Number: No. 32859, 32860.,32859, 32860.
• Citation: 211 Minn. 1,299 N.W. 685
• Parties: ZINS et al. v. JUSTUS et al.
• Court: Minnesota Supreme Court

299 N.W. 685

211 Minn. 1

ZINS et al. v. JUSTUS et al.

No. 32859, 32860.

Supreme Court of Minnesota.

July 11, 1941.

Appeal from District Court, Stearns County; J. B. Himsl, Judge.

Actions by Anton Zins and his wife against Elmer H. Justus and Stewart McDonald, administrator of the Federal Housing Administration, called the Federal Housing Administrator, and another, to recover damages arising out of an automobile collision. From orders sustaining the demurrers, by Stewart McDonald to the complaint in each case on ground that it did not state a cause of action against him, the plaintiffs appeal.

Orders reversed.

Quigley, Donohue & Quigley, of St. Cloud, for appellants.

Victor E. Anderson, U. S. Atty., and William P. Murphy, Asst. U.S. Atty., both of St. Paul, for respondent.

GALLAGHER, Chief Justice.

These are companion cases in which plaintiffs, husband and wife, seek to recover damages arising out of a collision between an automobile owned and operated by the husband, Anton Zins, and one owned and operated by the defendant Elmer H. Justus. Defendant McDonald demurred to the complaint in each case on the ground that it did not state a cause of action. These appeals are from orders sustaining the demurrers. As the cases must stand or fall together, we will confine discussion to the husband's case.

The allegations of the complaint upon which decision hinges are that defendant McDonald at all times here important was administrator of the Federal Housing Administration and, as such, exercised all of the powers given by law to the Federal Housing Administration; that in his capacity as administrator and in behalf of the Federal Housing Administration McDonald employed Justus, who at the time of the acts of negligence herein complained of was the owner of an automobile which he was using in the course and scope of his employment, with the knowledge and consent of McDonald and at his direction; that while so doing Justus so negligently and carelessly operated said automobile that it collided with plaintiff's automobile, causing the damages here involved.

The sole question presented is whether the administrator is liable for the tortious acts of his agent committed in the course of the agent's employment. Defendant McDonald contends that the Federal Housing Administration is a component part of the sovereign government and that, as such, both it and he, as its administrator, are entitled to immunity from suit in tort. Plaintiff claims that the Administration is merely an agency of government engaged in semicommercial enterprises and that congress has expressly made it and its administrator subject to suit both in contract and in tort.

The Federal Housing Administration was created by an act of congress known as "National Housing Act." It is entitled, "An Act To encourage improvement in housing standards and conditions, to provide a system of mutual mortgage insurance, and for other purposes." Section 1 of Title I, Act of June 27, 1934, c. 847, 48 Stat. 1246, 12 U. S.C.A. § 1701 et seq.,¹ authorized the President to create a Federal Housing Administration "all of the powers of which shall be exercised by a Federal Housing Administrator." That section was amended in 1935 (Act of August 23, 1935, c. 614, 49 Stat. 684, 722, § 344) by adding thereto the provision that "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."

Section 2 authorized the administrator to insure banks and other financial institutions engaged in the loaning of money for home improvements against losses on loans made for such purposes. The insurance granted under this section to any such financial institution was not to exceed 20 per centum of the total amount of loans, advances of credit, and purchases made by any such financial institution for such purpose, and the total liability of the administrator for such insurance was in no case to exceed in the aggregate $200,000,000. No insurance was to be granted under the section to any financial institution with respect to any obligation representing any such loan, advance of credit, or purchase by it the face amount of which would exceed $2,000; nor unless the obligation would bear such interest, have such maturity, and contain such other terms, conditions, and restrictions as the administrator would prescribe.

Section 3 authorized the administrator to make loans to institutions insured under § 2, and to enter into loan agreements with such institutions upon the security of obligations which would meet the requirements prescribed under § 2.

Section 203(a) of Title II authorized the administrator to insure mortgages within the limitations prescribed therein.

Section 301(a) of Title III empowered the administrator to provide for the establishment of national mortgage associations and authorized him (1) to purchase and sell first mortgages and other first liens and (2) to borrow money for such purposes through the issuance of notes, bonds, debentures, or other obligations referred to in the act.

It is fundamental that the United States cannot be sued without its permission. United States v. McLemore, 4 How. 286, 11 L.Ed. 977; Hill v. United States, 9 How. 386, 13 L.Ed. 185; The Western Maid, 257 U.S. 419, 42 S.Ct. 159, 66 L.Ed. 299; North Dakota-Montana W. G. Ass'n v. United States, 8 Cir., 66 F.2d 573, 92 A.L.R. 1484. But this suit is not against the United States as such. It is against an agent of the government, in his official capacity, and an employe of the agent, for a tort committed by the employe in the course of his employment and in the furtherance of his master's business. The sovereign immunity of the United States does not extend to its agents, individual or corporate. United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171; Sloan Shipyards Corp. v. United States Shipping Board Emergency Fleet Corp., 258 U.S. 549, 42 S.Ct. 386, 66 L.Ed. 762; Belknap v. Schild, 161 U.S. 10, 16 S.Ct. 443, 40 L.Ed. 599. In Sloan Shipyards Corp. v. United States Shipping Board Emergency Fleet Corp., supra, Mr. Justice Holmes, speaking for the court, said (258 U.S. page 566, 42 S.Ct. page 388, 66 L.Ed. 762):

"The sovereign properly so called is superior to suit for reasons that often have been explained. But the general rule is that any person within the jurisdiction always is amenable to the law. If he is sued for conduct harmful to the plaintiff his only shield is a constitutional rule of law that exonerates him. Supposing the powers of the Fleet Corporation to have been given to a single man we doubt if any one would contend that the acts of Congress and the delegations of authority from the President left him any less liable than other grantees of the power of eminent domain to be called upon to defend himself in court. An instrumentality of government he might be and for the greatest ends, but the agent, because he is agent, does not cease to be answerable for his acts."

Our problem here is to determine whether in creating the Federal Housing Administration congress intended that it and its administrator be immune from suit for torts. In determining that question we are aided by a recent decision of this court (Casper v. Regional Agricultural Credit Corp., 202 Minn. 433, 278 N.W. 896) and by late decisions of the United States Supreme Court (Federal Housing Administration v. Burr, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724; Keifer & Keifer v. Reconstruction Finance Corp., 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784; Federal Land Bank v. Priddy, 295 U.S. 229, 55 S.Ct. 705, 79 L.Ed. 1408).

In Casper v. Regional Agricultural Credit Corp. supra, we held that Regional Agricultural Credit Corporations are not immune from suit for tort. There the Regional was created by the Reconstruction Finance Corporation pursuant to § 201b(e), 15 U.S.C.A. §§ 605b(e), of the act under which the Reconstruction Finance Corporation was organized. 15 U.S.C.A. §§ 601-617. That act provided that the Reconstruction Finance Corporation may "sue and be sued," but it contained no express provision authorizing Regionals to sue and be sued. We held that the authorization conferred on the parent corporation carried with it the inference that the Regionals might also sue and be sued. This construction of the law was later approved by the United States Supreme Court in Keifer & Keifer v. Reconstruction Finance Corp., 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784. While the court held that the action there involved was in contract rather than in tort, it took the pains to point out that the same rule would be applied in a tort action. In discussing the question Mr. Justice Frankfurter said (306 U.S. page 395, 59 S.Ct. page 521, 83 L.Ed. 784):

"To assume that Congress in subjecting these recently created governmental corporations to suit meant to enmesh them in these procedural entanglements, would do violence to Congressional purpose. When it chose to do so, Congress knew well enough how to restrict its consent to suits sounding only in contract, even with all the controversies in recondite procedural learning that this might entail. It did so with increasing particularity in the successive Court of Claims Acts. 10 Stat. 612, 24 Stat. 505, 28 U.S.C. §§ 41(20), 250(1), 28 U.S.C.A. §§ 41(20), 250(1). In the light of these statutes it ought not to be assumed that when Congress consented `to suit' without qualification, the effect is the same as though it had written `in suits on contract, express or implied, in cases not sounding in tort.' No such distinction was made by Congress, and no such interpolation into statutes has been made in cases affecting government corporations incorporated under state law or that of the District of Columbia. There is equally no warrant for importing such a distinction here. To do so would make application of a steadily growing policy of...