Petition for Writ of Certiorari — Federal Housing Administration, Region No. 4 v. Burr

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~ Fepera. Hovsine ADMeN ISTRATION,

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PETITION FOR A: WRIT OF CERTIORARI TO THE SUPREME

COURT OF THE STATE “OF MICHIGAN .

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Opinions Se ee Mins oe ease eee aera

Jurisdiction al statement_______- Ne ee ee ae —

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Statement———.—__— ae Ect 1 eat ——

Spécification of errors to be urged___.-_._-----_-_--- ueciad 4

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\. , ; CITATIONS

Cases: 45> ans

- Buchanan v. Alexander, 4 How. «eas ig de eas .

: Federal Land Bank v. Priddy, 295 U.S. 229. .--....--.- a. ae

Gil; @ Reses, £8 Ohio App. 194. . 5 .----.:..-.---- ese

Graves v . New’York ex rel. 0’ Keefe, 306 U. S. 466.-_____-

. Haines v. Loné Star Shipbuilding Co., 268 Pa. ee

~ HO. L. C. ¥. Hardie & Caudle, 171 Tenn. eo.

McCarthy v. United States Shipping Board Merchant Fleet

Canows

AOODR.

‘Corp., 53 F. (2d) 923, certiorari denied, 285 UY, S, 547__-

Manufacturers Trust Co. v. Ross, 252 App. Div, (N. Y.) 292.

Central Market v. King, 132 Neb. 380, 272. N. W. 244.___..

& McAvoy v. Weber, 88 Pe Ge NN eis ook Mew aksubcce =

’ | Sloan Shipyards vy. U. 8: Fleet Corp: @p8 U.S. 649. __-__-

United States vz»Winkle Terra Cotta, Inc. (pending on sai A

befere the U.S. C. C. A. Sth). .---.----1- at iia

Statutes: ° :

*Act of June 27, 1934, ec. 847, 48 Met. 1908s. . 3 .....-5.. 2,3:

Home Owners’ Lean Act, ¢. 64, 48 Stat. 128, 12 U. 8. CG, ‘

I Pcs os ose sk ee ee a 9

Act of August 23, 19. ec. 641, See. 344 (a), 49 Stat. 722. 2,3

* Miscellaneous: ef

Federal Ccsietiiees and Corporate Agencies, Harvard ..

Business.Revi iew, Vol. XVI, -—.=...2 EE PON Cr te 9

Gov ernthen} Corporations and Federal Funds, 31 Ame rican

Political’ Science Review, 1094- __-- ROE A Re one 9

Rep. 1822, 74th Cong., Ist Se , Pp. 87... pet pdued weed. ooo tae

S.-Rep. 1067, ap gone: Ist. | . p 24e,-.- ek oe 5

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| FemeraL Hovsne - ADMINISTRATION, Reaton No. 4,

Lin -* STATE DIRECTOR Raymonp Fo.ey, "PETITIONER 7

ub | Crisis : aS

t — Burr, Dormna Busewnss AS SECRETARIAL ,

ae SERVICE BUREAU

_permun on 4-warr oP CERTIORARI TO THE! SUPREME

Ao aye OF THE STATE.OF MICHIGAN ‘=

The Solicitor Gerteral, on behalf of the petis

tioner, Federal Housing Administration, Region

No. 4, State: Director Raymond Foley, prays ‘that

a writ of certiorari issue to review the judgment of

thes. Supreme Court of Michigan entered in the

_ above ease on June 5, 1939, affirming the judgment:

bs te Cireuit Court ‘of Wayne County, Michigan.

. OPINIONS BELOW ix:

The opinion . of the Circuit Court. of Wayne

‘County, Michigan (R. 10) is. not_reported. The

opinion of the ‘Supreme. Court. of. Michigan (R.

12). is er in 286 N. W. 16 9. 3

vast (1)

\

ee _SunisprorrowaL STATEMENT

diction of this Court. is itivoked | under Section

i Act of Fébruary 13, 1925, on the ground that the =,

te decision below denied an immtnity claimed by the -

_ tioner’s arfswer and/disclosure w herein it was as-

_serted that ‘‘the Federal Housihg Administration

“is an agency of the United. States ev and

Y is, thetetore, not. subject to gariiishee proceed.

® 2

The judgment of the Suprente Court of Michigan,

was entered-on June 5, 1939 (R. 15). The juris--

237 (b) of, the J udicial Code, as amended ‘by the

petitioner ‘under. the Constitution and- under the

National Housing Act} as amended, e. 847, 48 Stat.

1246, e. 614, 49°Stat. j22, See. 344 (a). ‘The case.

relied on to sustain the jurisdiction ef tis Court |

is Fede ral Land Ban k-v. Priddy, 295 U. _S. 229.

The federal question was first raised by. the peti-

ings”. (R. 6). The triad court -held the petitioner , 5

subject te garnishment on the ground that the

nature of the business\ of the. Federal Housing. A@ 2

ministration, was net gor vernmmental but ‘that of :

an insurer of loans”’ |((R. 10). The petitioner’s

ground of appeal from the trial court to. the Su-

.preme Court ot Michigan was that ‘the Bedéral

Housing Administr ation is an executive branch of

a the United. States’ Government, which is a sover-

eign body politic, and cannot be sued. without its

consent, and is not within the jurisdictioft of this

-. -eourt”’ (R. 4). The Supreme Court of Michgan

affirmed the judgment of the court of first instance

on the ground. that that asentie had been waived — wk

._-by-the “‘sue-and- be-sued’ ’oelause of Section Yot-. '

+ the National Housing Act, as amended (R. 19415). ep

‘The grounds upon which it is contended, that the

question involved is substantial are set forth un- °

= der the Reasons for: Grosting the Writ, infra,

; PPS-9._ 3 pay og f

\. >. QUESTION PRESENTED © ONS Ieee vs as

5s 97 naar

Whether the Federal Hougihg Administration, . oes

2 through its State. Directorgh S ; subject to. garnish~ ;

ment tor modiféys due to aGemployee. =

.” sriruTE INVOLVED, 1

edtline 1 of the National Housing. Act, approved

June 27, 1934, of 847, 48 Stat. 1246, as amended o

by: the Act of August. 23, 1935, ¢. 614, Sec. 344 -

‘(a);. 49 Stab 722 (12 U. 8S. C., Sapp. IV, sacle

‘provides: / ” Sills | = | pitas

a ie es The Administrator shall, in car-

tying out the provisions of this title [title 1}

and titles II and EII, be authorized, in his ©

official capacity, to sue and be sued in any

= eourt of competent jurisdiction, State as

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“2 Federal.’ ie ae Re ee

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ele = STATEMENT |

On November 5 _ 1930, the re SRSA obtained g..

final judgment against one Heffner and a Geor ge.

Brooks ( R. 4). Thereafter, on March 5, 1938,

the petitioner was serv ed with a writ of garnish-

. ment issued by the Cire cuit Court for the Cougify of

(hy:

Wayne, Michigan (R. 4):’ Petitioher appeared.

in the cause and: filed an answer and disclosure |

admitting that there was due and owing to Brooks

by the Federal Housing Administration the sum |

of $71.11, and asserting ‘“‘That the Federal. Hous- ,

ing Administration is an agency of. the United

: States ‘Government and tis, therefor e, not subject

to garnishee proceedings’”(R. 6). . ,

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Respondent moved for judgnrent against the, pe-.

titioner (R. 6); Which motion was granted and

_ judgment entefed thereow i ‘in favor of the respond, -

» ent -(R, caster the petitioner appealed

to the Supremé Court of Michigari, which affirmed 7

7 the judgment of the Cireuit Court (R. 15).

SPECIFICATION OF ERRORS TO BE URGED

Tie ‘Supreme. Court of Michigan erred:

“1. In olding that the Federal Housing Admin-

istration is subject to garnishment proceedings. .

2. In holding that the. ‘‘sue-and-be-sued”’ elquse

- of So 1 of the National Housing Act, as

¥,° anfen

d, makes the Federal Housing Administra-*

tion subject to garnishment proceedings. | =. °

3. In failing to, hold that the “‘sugsand-be-sued”

clause of the ye was limited solely to suits arising

_ out of the carrying dut’of the provisions of Titles, ,

I, I, and II of the Act. .

1 The Federal Housing Administrator is not named:as de-

fendant, as is provided for in Sectior I of the National Hous-

‘ing a , quoted above. However, no objection has been made

“on t

tis gfound by the Government, and it’has treated the

suit as against the Federal Housing Administration (R. 6).

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4. In altailies the judgment of the Circuit Court,

for the County of Wayne, Michigan.

REASONS FOR GRANTING THE WRIT ‘

1. The holding of .the: Supreme Court of Michi-

gan that the Federal Housing Administration is.

‘subject to’ garnishifier nt decides -an important fed-

- eral question which has not been but. should be _

determined by this Court. The Federal Housing

. Administration was. created. -by the President pur- —

. suant-to the authority conferred upon him by the

. National Housing Act 6f June 27, 1934, ¢. 847, 48-—

Stat. 1246. . It is an unin¢or potated agency of the

United - States, operating with funds supplied , |

wholly, by the.United States and functioning as an, -

integral part of a. broad plan adopted to remedy .

the urban. home- -mortgage- crisis. ‘Its: functions |

‘are goverimental in character: -Cf.. Graves v.

New-York ea rel. O’Keefe, 306 U. 8. 466. By the

_*Banking Act of August 23, 1935, supra, p. 3, Sec- -

. tion 1 of the Act was amended to provide that the

- Federal Housing. Administrator ‘‘in. carrying, out

“the provisions of” titles I, II, and III of the Act,

- could sue ‘and ‘be sued in both. feder al and state

| Sourts.’ The Supreme Court of Michigan held that

%

? Title I dealt with. Heasing Renov ation and Modernisa’

tion; Title II dealt with Mutual Mortgage Insurance; and x

Title gl dealt with National Mortgage Associations. The

legislative, history of the amendnient throws no light upon

its interpretation~With respect to the’ ‘present controversy,

See S. Rep. 1007, p. 24, 74th Cong., Ist Sess. ; A. ?- 1822,

_p, 5%, 74th Cong. Ist Sess, ee

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'-* of Appeals for the District of Columbia held that

ee os ae

by reason of this amendment the Federal Housing —

Administrator was liable to garnishment proceed- -

ings brought by a ‘ereditor of an rata ee of the’

_ Administration. ~

The decision below i is int subistantial coifliet with ‘ :

“Mel ‘arthy. v, United States Shipping Board .Mer-

“chant. Fleet Corporation, 53. F. (2d) 923 (App...

_D.&.), certiorari. denied, 285 U. S: 547. In that . .

ease an attempt was made to garnish the. wages’ of: :

an employee of. the Shipping Board. The Court

- the Shipping: Board -was exempt from garnish- |

quent.” Although this Court had lield, in Sloan .

‘Shipyards v. U.S, Fleet Corporation, 258 U.S. 549,

that the Shipping Board was subject. generally to

be sued upon its. contracts and torts, the Court. of

Appeals said (p. 923-924) ) that it did not follow

that it was not exempt from garnishment— — .

for suc ‘han agency may be permitted by law

” tosue or be sued upon its obligations w ithout

= being subjected to: attachment or yarnish-—

ment in cases unr lated. to its own. duties or

liabilities. The present case is. governed. -’

by this rule. Jee

‘The court below attempted to distmguish the Mc-

am tarthy case on the ground that “That tase was 7

based on the:Merchant Marine Act of 1920, 41 Stat.

= WE ontra:. Haines: ¥.. Lone Star Shipbnitding C On 268 Pa.

92, 110 Atl. 188." |

in,

,

-988, which bee not contain the broad waiver of 3 im:

munity found in the Federal Housing Act”’ (R. 15).

But in the Sloan case this Courtjheld that the Sbip-

ping Board ‘was originally subject unrestrictedly

quent bestowal upon it of governmental powers did

not give it immunity from suit. Thus. the immu-

nity of thé Shipping Board from suit was cer tiénly

& » to suit by reason of its incorporation under the lays ‘a

of the District of ‘Columbia, and. that the “subse:

not~ greater than that of ‘the Federal. Housing» ,

Administr ator, and was probably less. .. we:

- The court below relied .on Federal Land Bank 3

Y: Priddy, 295 U. S. 929, in which this ‘Court held

that a federal land bank was subject to attach-

ment. The. bank’s charter stated that the bank

’ might sué and be sued ‘as fully as natural per- - 3

99

_sons.’’ No such: language appears in the Federal

Housing Act. ’ Moreover, the attachmerits stemmed.

from the ‘land bank’s performance of its own .

duties, not from a controversy between third per-

sons in whi_h the bank was not interested. Finally,

_ the bank had many of the ¢ haracteristics of private

busines? corporations, including gwnersInp of its

* stock by private interests, .w hich are lacking. in the -

‘ease of the Federal’ Housing Administration.

- In Buchanan v. Alexander, 4 How. 20, the .lead- ©

ing case establishing the immuiiity of federal

officers and instrumentalities from garnishment, it

Was pointed out that ‘it would be embarrassing to-

“9 Pi

» the Government to perniit garnishment.

appeal before the United ‘States Circuit Court of

_ against the St. Louis Director, of the Federal Hous-

Housing Administration,

that the United States was a ‘stranger to the rec ord.

District: of Missouri against the creditor and the

sheriff, to enjoin exceution against the property of *

ie

This is

well illustrated by United States of America Vv.

Winkle Terra Cotta, Inc., No. 11,587 pending on |

¢ippeals for the Eighth Ci reuit, The creditor there

brought gz wnishment proc eedings in the state court

ing. Administr ation, who. moved to dismiss, but was

unsue cessful, Judgment w ent against. the Fedéral®

-An appeal on behalf of

the U nited States was disallowed on ‘the eround

The United States then filed an injunction suit in

the United States District Gourt for the Eastern

the Federal Housing Administration: The District.

Court disihissed the suit, and the U nited States has

taken an appeal. The creditor has ‘served writs of.

garnishment upon certain banks, as debtors of:the

Federal Housing Administration, and enjoined

them from paying over money to the Federal Hous~

ing Administrition until the debt was paid. Fur- |

thermore, the Federal Housing Administration — .°

cunt dispose be al property acquired through

forec lostire because title cofthpanies have exe epted

the gar nishment. reais from their guaranties of

clear tithe, Degas Mee 3

. : '9

2. The Act authorizing the er eation of the Home

Owners’ Loan Corporation provides, without quali-.

: fication, that the Corporation ‘shall haye author ity

to. suie and: to. be sued.” Home Owners’ Loan Act, «

48 Stat. 128, c. 64, 12 U. S. C.,; See. 1463.. With

respect to whether the Home Seales’ Loan Cor-

poration is subject to gar nishment, a sharp con-

- flict hag arisen in the state courts. It was held that

. it is fot in Home Owners’ Loan Corporation v.

Hardie &: Caudle, 171 Tenn. 43, 100.8. W. (2d) 238.

» And in Manufacturers Trust Co. v. Ross; 252 App. }

Div 292, 299 N. Y. Supp. 399, it was held that the

Home Owners’ Loan Corporation was not subject» —

to third* party orders in supplementary proceed- ;

ings. On the other hand, it was held that the -_ ae:

Owners’ Loan’ Corpor ation was subject to garnis

ment in Cevtral Market v. King, 132 Neb. 380, 272

_N.W. 244; Gill v. Reese, 58 Ohio App. 134, 4.N. E..

(2d). B73; 2 and erate v. Weber, 88 P. (2d) 448 |

(Wash, : ree

In view of the’ number of FF vcemmental agencies’

&

and corporations, the wide range of their. opera-

tions’ and the confused state of the law in the

lower courts, this Court should make an authorita-:

tive determination , of their responsibility to gar-

nishment proceedings. . a

*See “F ad Corporations and Corporate Ageticies,” —

‘Harvard Business Review, Yol. X V1, 436; “Government Cor-

porations and Federal Funds,” 31° American Politica!

Science Reviewg 1694.

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CONCLUSION

‘ The decision of the court: below is in substantial

conflict with the decision of a United States Coyrt °

of Appeals ‘and is in conflict with decisions of other

state courts. The question involved is one of sub-

stantial importance which calls for-an. authoritative *

- ruling by this Court. Therefore it is respectfully

submitted that this petition for a writ of certiorari . 4

should be granted.

| : Rosert H. J ACKSON,

ue aa ; Solicitor General. «

September 1939.

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