Brief for Petitioner — Department of Agriculture, Emergency Crop and Feed Loans v. Remund

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FILE COPY.

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# No. 417_ ie th

| Sue Soprne Gute het Sat

~ OcTOBER TERM, 1946

| Unive Seires DEPARTMENT or AGRICULTURE,

_. EMercency Crop AND FEED ‘LoANs, PETITIONER ©

v. il

Grorce G.. REMUND, AS ADMINISTRATOR OF THE

Estate or WiLHELM BuTTKE, DECEASED

ON WRIT OF ‘CERTIORARI TO THE SUPRBME.COURT OF THB

: STATE OF SOUTH DAKOTA '

\

BRIEF FOR -THE PETITIONER

-

os

J ‘

INDEX ~

: Page

Opinion below... -.-..----------- wee cescoee Secewcce----cee 1

Jurisdiction... ..-...----------------20--------------2-- 1

Question presented... ....... .----------e0--------------=- 2

Statutes involved nage loncadadnchedescequssdnesccecececse 2

Meatembent....<< <2 -cccnce +--+ occ ccccceesemense+ e+ eccee 2

Specification of errorg to be urged... -~---------------------- ¢:

Summary of argument...----.--.---.------------++2«-------- 5

Argument: :

I. A claim filed in the name of the Governor of the Farm

Credit Administration for and on behalf of the

United States on loans made pursuant to Acts of

February 23, 1934, and June 19, 1934, is for a debt

* « due to the United States... -.....--------+------ 9

A. The claim here involved is a debt due to the

[7 ee ee 10

= > The manner in which the claim was filed satie-

fies the requirement of the statute.....<---- 15

II. Debts due the United Siates on loans made pursuant to

. Acts of February 23, 1934, and June 19, 1934, are

entitled to priority under R. 8. 3466..-......-...-- 19

- A. The purpose of the Acts of February 23 and

June 19 was notyo restore the credit of the

farmers, and hence is not inconsistent with

= ‘ es 21

B. The Guaranty Tus, case is not controlling - - --¢ 27

Comolusion . .. . . . . . .- - - 22 = 2 nnn Se cence nn ne ene n es ee ee sie:- 30

Appendix. - . ... . -----------------+--+-++---2+---Se+------ 31

CITATIONS

Cases:

Alderman v. N. Y. Underuritets’ Inaurance Co., 61 8. -D.

GO. ncccccstiondnccascosccciscccaceccescoceecccece 19

Beaston v. Permard Bank, 12 Pet. Se 19

Barnett v. American Surety Co., 77 F. 2d 225.....-.....-- 13

Bramwell v. United States -Fidelity and Guaranty Co., 269

Oe. BOON. nnnconccannacehe tenccqnancccoccsotqecce

Cherry Cotton Mills v. United States, 327 U. 8. 536 ebnosbe 14,19

Cook County National Bank v.. United States, 107 U. 8. 445. 20

Dickson's Estate, In re, 197 Wash. 145... .....-- 16, 17

E. I. duPont de Nemoure & Co. v. Davia, 264 U. 8. 456. - 18

Federal Housing Administrator v. Moore, 0 F. 2d 32...... 9,15

Federal Reserve Bank of Dallas v. Smylie, 134 8. W. 2d 838. 11, 12, 13

Fortier v. New Orleans National Bank, 112 U. 8, 439... ..- 18

728368 47T——1 a)

Po

Il .

.Cases—Continued : ; Page

Graves v. O'K~-*-, 306 U. 8. 466....----..------------ = 14

Harrison v. Suerry, 5 Cranch 289° ------ Pe ee

Hansen , Ine., In re, 103 F. RS eae 13, 17

‘Herren v. Farm Security Administration, 153 F. 2d 76. 12, 18, 17, 18

IUinois ex rel. Gordon 'v. United States, No. 749, Oct. Term, :

1945, decided April 22, 1946... ---..-------------- . 8, 20, 28

Inland Waterways Corp. v. Young, 309 U. 8. ORFs kiexta ane 19, 30

Kansos v. United Staten, 204 U. 8. 331-.....------------- 18

er v. Federal Hquaing —— 113 F. 2d 743_ 11,

: 12, 16, a

ikesibi Trusies v. United States, 92 U. 'B. nr lee ions. sel

McCandless v. Furlaud, 293-U. 8. 67..-.---------------- a

Mellon v. Michigan Trust Co., 271 U. 8. 236..°.--=---.-- 20

National Home for Disabled Volunteer Soldiers’v. Wood, 81

F. 2d 963, affirmed, 299-U. 8. 211....°------1---.- g:- 87,38

North Dakota-Montana heat Growers’ Assy * v. United

States, 66 F. 2d 578_.....-----------+------+----- 11, 12,18

Person v. United States, 112 F. 2d 1, certiorari denied, 311

Uy, BO Binc Sno ooo n gp ecinc snd scw en cccnecoeesesen - 26

Pittman v. Home Owners’ * Loan Cotp., 308 U. 8. 21.2.---- 14.

Price v; United States, 269 U. 8. 492..-..---------- save Mae

Schroeder v. Davis, 32 F. 2d 454.......----------; ar 18

Sloan Shipyards Corp. v. ee States in

UmB. 540... 2... ------ 0 pus -- se --e ee ie 11, 13, 14

Stamford Ayto Supply ‘Co Iv/re, 25 F. ‘Supp. 530. -..---. 13, 17 .

State ex rel. Cook v. Board Commissioners, 29 8. D. 358 - - 19 .

State Highway Commialen 2 Wyoming v. Utah*Const. Co.,

278 U.-8. 194... --.- Be hs iS aiachomeet pangaasoce™ Ca

Thelluson v. Smith, 2 Wheat. a oa. hed cs ag hake au ware 20

T. N. Wilson, Inc., In re, 24 F. Supp, 651... .----------- 13, 17

United States v. Brock, Be Pe lils, hw svbhd pcobineeece 13°

United States v. Emory, 314 U. 8, 423...-------- 8, 14, 19, 20, 27

United States Vv. Fisher, 2 Cranch 358_......1..---------- 19

United States y. Fontenot, 33 F. Supp. 629 -------------+ 11, 12

United States v. Golden, 34 F. 2d 367.... ..-------+---- 18

. United States v. Guaranty Trust Co., 280 U. @. 678..... a

8, 20, 21, 22, 28

United States v. Knott, 298 U. 8. 544_-...--- Pye ER dvne eee

United States v. Marzen, 207-U. 8. OO. sock aaik nee 11, 16, 19

United Sigtes v. Midwest Oit-Co,, 236 U. 8. 459.... -..--- 30

United States v. State Bank of North Sopris 6 Pet. 29. .. 14,19

United States v. Summerlin, 310 U. 8. 414, revérsing 140 ;

Wi Be aes pk bun otetiinssesvasasus aps HT

United States v: Thomas, 107 F. 2d 765. ene <adignieie 2

United States v. Waddill Co., 323 U. 8. 353... -- - 14, 19, 20, 28

Wagner v. McDonald, 96 F. 24 273 ...:.--.-- -... 18, 16, 17, 18

Weil, In re, 30 F. Supp. €18 ....2--2..4.-------------- 13, 17

ma

1* oRas

. ae

Cases—Continued Page

,Whan v. Green Star SS ei, pr vest 2d , certiorari denied

sub nom. Adams v. United

W. H. Shenners Co. v. Lake wort Be y. & Building Co.,

f ibe 2d 297, certiorari denied, 283 U.S. 833... .- .. 19

n, In re, 23 F. Supp. 236 -..---. actrees s 11, 12, 13, 18

‘ee 6 ¥

¥ Act of February 23, 1934, ¢. 23, 48 Stat. 364..........-.. 2, 22

OE. coincide erst oedtragaddoneseonsisiiennses 31

Sec es he ee EE A eli 31,

. De, B.S eerie cclsicntndecs cogunewensene ----- 2,33

i BON cs Wanckarcaecdtscaghindinecanes .. 94,38

Sec. 3 ------555--4 et ee ee ee ee 33

* Act of June 19, 1934, c. 648, 48 Stat. 1021, 1056... ___- 2, 23, 34

Act of December 20, en 836 (12 U, 8. C. , Supp. .

Vis BRDiewe cdbcedesddnndsadcasaces i éequubiacéinguer

Farm Credit Act‘ of 1933, BD AG BO tpiadia ocean dvenents 23.

Mi: 5.: Res O71, OB Dhak. BP. 2. (2 ce nasccnnen- incndeendy 23,26 —

Reorganization Plan No. 1, Sec. 401 (a), 53 Stat. 1429, 4 l

PE, Ss I fart racine tcnd hp saneasecudedceceatomias 12.

Revised Statutes 3466, 31 U. 8. C. 191... ..- 2, 8, 10, 14, 15, 31

1 Stat. 515.----------; SPO et) Cry Pe ere y Pee 15

BG, I ino ce tia vind dg adsdln dnsteccccnonvuteennd 22

SI Meld ad ctnbilivccnccchacdsetacpsasbceniene , 2

Sie ddisiee cadtin coer astisinensonstie ~ oa iile 22

44 Stat., Part II, 1245, 1251........--------.--- i Be 2°

45 Stat. 1306, as amended by 46 Stat. 3........--..-.. 22; 23

46 Stat. 78, as amended by 46 Stat. 254...-.......-.2-. 29; 23

46 Stat. 1032, as amended by 46 Stat. 1160......--.-.-.. 22, 23

46 Stet, 1976... ......:,-- able Mksneccnsconehpaditeh 23°

GE GE Dink necncs senictdecwacddvntpeccscanepesncccas 23

SG Piva <ccnceavceatencdasxantskoecsaupnsceana: ae

ie cco akicla sink seathudsonsendasausoada 23

a TN a os fe ha a 94

Ss ici nts pon nduadndepits scckausédaqtievcugtocgdd be 23

Ons; 8:60 o55s555-2::- prectap Cais 2 ame rn ee

’ ‘Transportation Act of 1920, Title II, 41 Stat. 456/00... 21

th Dakota Code (1939), Sec. 35.1422. .....-. dl Aivie occa - R/i 24

Miscefla 26 « A ANCL Ao

78 Cong. Rec. 1825, 1953, 1955, 1088, 1000... 15355

. Executive Order No. 6084.........$..-..-..---- Viian'swhin ‘i.

Executive Order No. 9280, 7 Fed. Rey, $0170... 6 SiG + 12.

li. Rep. No. 521, 73d Cong., 2d Sess., p. 1., .-.----. ied 26. 25°.

H. Rep. No. 1707, 75th Cong., 88 Sess., pp. 3-4... 22), 26

8. Rep. No. 148, 73d Cong., 24 Sess.,‘p. 1..-..-..-...-.. 24

S

en 7

oa

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~Sae epe eet etae Ss

-Ocroser TERM 1946

prota

N 417

- Uyrrep States DepakrTMENT oF AGmicuLTURE,

EMERGENCY Crop AND) Feep LOANS, PETITIONER .

v.

Georce G. Remynp, a8 ADMINISTRATOR OF THE

Estate or Witnetm Burrke, DECEASED ~

ON WRIT OF CERTIORARI TO THE SUPREME COURT OF THE

— STATE OF SOUTH DAKOTA

‘ ™ « ,

sais be rein verre

Ke OPINION BELOW

The opinion of the Supreme. Court of the

State of South Dakota (R. 21-30) is reported

at 23 N. W. 2d 281. The Cireuit Court of the

Fifth Judicial Circuit of South Dakota and the

‘County Court of Roberts County, South Dakota,

, Wrote no opinions.

JURISDICTION

Pw apna of the Supreme Court of South

ota was — on May 20, 1946 (R. 30-31).

°

‘

t

2 :

The petition for writ of vertiorati was filed on

+ August 19,1946, and grauted'on Ocfober 28, 1946

(R. 35). The jurisdiction of this Court rests

upon Section 237 (b) of the J udicial Code, as

amended by the Act of February 15, 1925.

QUESTION PRESENTED

Whether, in a state probate eles

. Claim asserted by: the Farm Credit Administra-

tion and certain of its officials for and on behalf.

of the United States is entitled to priority’ under

Section 3466 of the Revised. Statutes.

ia STATUTES INVOLVED © ~~ ree

The relevant portions of the statutes involved

are set forth in the Appendix, pp.-31-35.

oe, STATEMENT |

Section 3466 of the Revised Statutes ( Appen-

dix,’p. 31), in so far as here relevant, provides:

that ‘‘* * * whenever the estate of any de-

United States shal! bx first satisfied * * *.”

The facts are undisputed —

marized as follows:

‘

ceased debtor, in the hands of the executors. or |

administrators, is insufficient to pay all the debts

‘ due from the deceased, the debts due to the

may Be sum- —

-* Purguant to the Acts of February 23, 1934, and .

, June 19, 1934 (Append.x, pp. 31-34), the Gover-

hor of the Farm Credit Administration extended

~~ Joans to Wilhelm, Buttke totalling $370.00. (B.

ys 3 % ‘

5-8). The major portion of these loans remained

unpaid, and on December 26,1941, Buttke died

intestate, leaving an estate insufficient to pay all

-’ of hi®debts (R. 9). _On March 2, 1942, the Gover-~

nor of ‘the Farm Credit Administration filed in

the: County Court of Roberts County, Soutif

Dakota, a claim against’ Buttke’s estate . for

$523.80, the amount of the unpaid indebtedness

inclading interest. This claim was made ‘for and

on behalf of the United States of America” (R.

1-4}, and a priority therefor on behalf of the

* United States was asserted. under R. S. 3466

(R. 1-2). % ve ee.

1 Eighty dollars of this amount was evidenced by a 514%

interest-bearing ,note, payable on or before August 13,

1935, and bearing on its face the printed notations: “This

instrument given to the Governor, Farm Credit Adminis-

tration acting pursuant to the act of Congress approved

February 23, 1934”; and “This note’ is given as evidence

of a loan made by the Governor of the Farm Credit Ad-

ministration, which loan is secured by a lien instrument

covering personal property” .(R. -5). “The remaining

$290.00 loaned to Bottke was evidenced by six 514% inter- —

est-bearing notes, payable on or before November 1, 1935,

each note bearing on its face the printed notations: “This

instrument given to the Governor, Farm Credit Adminis-

tration, acting pursuaht to the act of Congress approved

J 19, 1934,” and “This note is given as evidence of a

loan ina by the Governor of the Farm Credit Admin-

i ion” (R. 5-8). . “ a ea

_ * The claim -was filed. by “John T. Ashford, Manager,

Emergency Crop ‘and Feed Loan Office, Farm Credit Ad-

_ ministration, Omaha, Nebraska, an authorized agent for

the Governor, Farm Credit Administration, for and on

behalf of the United States of America” (R. 1-4). Ac-

companying theclaim was a mimeographed memorandum

. 4

‘On Qetober 31, 1942, the, County Court denied

* preference to the claim, but allowed it in the.

sum of $79.53, representing the pro rata share of a

qjaim of a common efeditor (R. 12-16). On ap-

peal, ‘this decision was affirmed by the Circuit

Court of the Fifth Judicial Circuit of ‘South’ ..

- Dakota (R. 18-19) and by the Supreme Court of

South Dakota (R. 21-30). The Supreme Court, |

» while not specifically deciding whether the claim.

in question was or was not a claim of the United |

. States, stated that since the claim was not filed

in the name of the United States, it could be

treated as a claim of the United States ‘‘only by

inference, expiination and argument’? (R. 23).

It then held, relying on United States v. Guaranty

Trust Co., 280 U. 8. 478 which it regarded as

controlling, that an exception to R. 8S. 3466 was

created by the Acts of February 23, 1934, and

June 19, 1934, and accordingly refused. to allow

the claimed priority.

~

SPECIFICATION OF ERRORS TO BE URGED

‘The Supreme Court of South Dakota erred:

1. In holding in substance that a-elaim filed in

the name of the Farm Credit Administration or

from the Farm Credit Administration, Emergency Crop

and Feed Loan Office, Omaha, Nebraska, asserting priority

on behalf, ofthe United States under RS, 3466; this . Y,

. Memorandum was addressed to “All Receivers, Referees,

Executors,- Administrators, Assignees, and Courts Dealing

with Insolvent, Bankrupt, or Deceased Borrowers of the

Emergency Crop and Feed Loan Office, Farm Credit Ad- —

ministration, Omaha, Nebraska” (R. 1-2).

eee : fae

5

its. officers “for and on. behalf of the United

States” is not a claim filed by. the United States.

2. In holding that the Farm Credit Adminis-

tration is an entity separate and distinct from the

United States, having independent power to sue.

3. In holding that claims of the Farm Credit

Administration based upon loans made under the

Acts of February 23, 1934, and June 19, 1934,

are not “debts due to the United States” within

the meaning of R. S. 3466.

4. In holding that claims of the Farm Credit

Administration based upon loans under the Acts

.of February 23, 1934, and June 19, 1934, are not

entitled to priority under R. S. 3466. ;

5. In denying asa 8 to or: of the United

States.

6. In affirming the joodboent of the Circuit -

Court of the Fifth J udicial, Circuit of South

Dakota.

+ SUMMARY oF ARGUMENT .

I \

The claim here involved, filed in the name’ of

the Governor of the Farm Credit Administration

‘for and on, behalf of. the United. States: on_loans

made pursuant to the Act of February 23, 1934 and

June 19, 1934, is for a debt due to the United S tes.

As its evolution clearly demonstrates, the Farm

Credit Administration (unlike the . government .

\

\

corporation involved in Sloan Shipyards Corp. -

v. United States Fleet Corp., 258 U. 8. 549) has

no: identity separate from the Government, and is

—

| merely : an administrative unit similar to any reg--

6°

s

ular department or other noncorporate establish-

ment of the United States. Moreover, since the

monies which the Farm Credit Administration

used to make loans to farmers pursuant to these

Acts were: appropriated by Congress out of the js

United States Treasury, and when collected are

repaid into the Treasury, t these monies are those

- of the United States and the debts are due it.

. The fact that these activities were conducted by

an agent of the. United ; tates under a name other

than the United States is immaterial.

Nothing either in R.“S. 3466’or in the long line

f cases involving that statute supports the re- —

“ qui ement impliedly imposed by the court below

#iatine claim must be filed in the name of the

United tates. The sole condition of the priority

established in the statute—that the debt be due to’

the United States—is here’ satisfied. Although

the claifir’was filed in the name of the Governor,’

Farm Credit Administration, he.was at most only

a nominal claimant and an agent of the Govern- .

ment, asserting the claim on behalf of the United —

sos In any case, respondent was not preju-—

by the fact that the claim was filed in the

pone of, the Governor, which variation is only a 3

formal matter and, since not raised below, is no

longer open to challenge. }

ios tiem eMC. aka: Ce.

Thé decision of the court below. should be

examined in light of the ,settled law. R. 8.

7.

3468 j is to be liberally construed, and that excep-

tions to its clear language are not to be found in

the absence of express statutory language or of

the plainest inconsistency with the avowed pur-

pose of the particular statute. Relying on: United |

States v. Guaranty Trust Co., 280. U. 8. 478, the -

court bélow: found an. inconsistency between the —

_ purposes of the Acts here involved and R. S. 3466,

in that the Goyernment’s priority .might handi-

cap the farmer in securing credit with the local

bankers and investors. Such inconsistency does

not in fact exist here. It is clear both from the

expreks language of the Acts here involved and ”

their legislative history that these statutes were —

: intended simply to lend aid and assistance to”

farmers who were suffering from repeated crop °

failures and adverse economic conditions and who

had no money and no means of obtaining credit in

order. to.keep their farms in operation. These

statutes were only two of various similar statutes -

°-nassed during the depression period to provide

relief for farmers. Although the creation of’ Pro-

duction’ Credit Associations by the Farm Credit

Act of 1933 made credit: available to farmers who

were more or less sound financial risks, emergency

feed and ergp loans secured generally by only

first liens on crops growing or to be grown were

continued for farmers.who could not qualify for

loans: from these “Associations, thereby empha-

sizing the emergency relief nature of these loans.

°

@ ;

8

Moreover, even if the purpose of these. Acts had

been to restore the“farmers’ credit, the Guaranty

Trust case is nevertheless not controlling. Under

the more recent dlecisions of this Court such pur-

pese would ap AY not to-be'so plainly inconsistent

*-with R. S. 3466 as to warrant the implieation that

Congress had intended to relinquish the priority.

This Court éxpressly so held in United States v.

‘Emory, 314-0. S. 423. In addition, the Emory

ease, together with United States v..W addill Co., -

323 U.S. 353, and Illinois ea rel. Gordon v. United

States, No. T49,- October ‘Perm, 1945, decided

April 22, 1946, makes it clear that the Guaranty

. Trust case is simply an isolated exception carved

out of R. 8S. 3466 because of the unique character -

of its lending statute: These recent decisions

demonstrate that R. S. 3466 is to be applied in its

full vigor, and that before an exception will be

implied, the language or legislative history of the

pertinent Act must affirmatively and plainly show

that the priority of the United States was in-

tended to be waived. No such showi ing has been,

or can be, made here.

_ Finally, the Farm Credit Administration and

the Department of Agriculture have consistently

asserted successfully that these claims are entitled

to priority; and the Departmént of Justice in

litigation has likewise taken that position in con-

nection with loans referred t¢) it for collection.

It also appears, that Congress was aware of this

uniform practice, and ae it has enacted leg-

9°

islation permitting the Secretary of Agriculture to

compromise such debts, it has not waived priority.

Such long-continued practice, acquiesced in by

Congress, should prevail.

ARGUMENT

eat is Te EN es ;

A CLAIM FILED IN THE NAME OF .THE “GOVERNOR

OF THE FARM CREDIT ADMINISTRATION FOR AND

ON BEHALF OF THE UNITED STATES ON LOANS

MADE PURSUANT TO ACTS OF FEBRUARY 23, 1934),

AND JUNE 19, 1934, IS Fok A DEBT DUE TO THE

UNITED STATES ¥

The Supreme Court of South Dakota, in deny-

ing priority to- the clain® here involved, did not

explicitly hold that it was not a debt “due Ao

the United States.’’ The court’s statement that .

this claim can be treated “fas a claim filed hy the

United Stat s only by inference, explanation and

argument” (R. 23) does not necessarily deny

- that the debt is one due the United States, but

* The court also took judicial notice of the fact “that many

claims of this character have actually been sued in the

courts, exemplifying that the plaintiff at least would in-

_ terpret the act as giving authority for the plaintiff to sue”

(R. 24). Although the caption in the court below was the

same as it is here, we presume that the court below was

referring either to the Farm Credit Administration or to its

Governor, and not to the Department of Agriculture. The

- court below also discussed, as if applicable, the Sloan Ship-

yards case (R, 25-26) and Federal Housing Administrator

¥. Moore, 9 F. 2d 82.(C. C. A. %) (R. 29-30), which cases

have no significance here except in relation to the question .

of whether the claim hers asserted was a debt due the United

States.

Fae)

ry

10

rely be an attempt to tack fo the assertion

- priority under R. 8. 3466 a wholly unwar-

ranted formal requirement. Respondent; how-

eyer, squarely contends that the claim here

involved’ is not a debt to the United States.

‘Neither the statutes-involved nor the controlling

decisions lend any/support to the Court’s intima-

‘tions and respondent's ae conten-

tyfons in this respect.

A. Tie. CLAIM HERE INVOLVED IS A DEBT DUE TO THE UNITED

STATES

Respondent argues (Br. in Opp., pp. 45)

that since the claim here involved is based on

seven notes executed by the deceased to ‘‘the

Governor of the Farm Credit Administration,

: or order, at Washington, D. C. " WE 5, 6),xand

‘that since the notes stated that they were ‘‘given

as evidence of a loan made by the Governvr of

the Farm Credit Administration,” they ‘are ob-

ligations due to the Governor of the Farm Credit

Administration and not to the United States.’

The premise of this argument is that the Farm

- Credit Administration, like the government corpo-

ration in Sloan Shipyards Corp. v. United States _ |

Fleet Corp. , 258 U. 8. 549, is an entity, separate

and distinct from the United States,.and hence

obligations due it-are not entitled to priority

under R. S. 3466.*

‘We do not understand ieaiiiieasd to saidiiadl nor could

such a contention reasonably be made, that the “Governor”

is an — distinct from the Farm Credit Administration,

ll

The Sloan Shipyarde. -ease, whatever its present

Vitality, is restricted to the’ situation where the

preference i is in fact being claimed for debt due, -

not to. the United States or any depitement or

agency thereof, but to a, government eorporation

constituting a distinct legal entity and havihy an

identity separate from that of the. United States.

United States v. Marzen, 307 U. S. 200, 203, 206; —

In re Wilson, 23 F. Supp. 236, 238 (N. D. Texas).

Nathing is shown by respondent, or by the court -

below, which indicates that the Farm’ Credit Ad-

ministration is in any material respect different

from a regular department or ‘other noncorporate

establishment of the United States. North

Dakota-Montana Wheat ‘Growers’ .Ass’n. Vv. |

United States, 66 F. 2d 573 (C. C. A. 8)3;"In re

Wilson, supra; Federal Reserve Bank of Dallas v.

Smylie, 134.8. W. 2d 838 (Tex. CivyApp.).

That the Farm Credit Administration “‘is merely

an administrative body of the * * * Govern-

ment’’ (United States v. Fontenot, 33 F. Supp. °

: 629, 630 (W. D. La.); ef. Korman:v. Federal

Hotsing Administrator, 113 F. 2d 743 (App.

D. C.)) is clear. It was created originally in

1933 as an satpecllias agency to také over the

functions of the Federal Farm Board’ and the

- Federal Farm Loan Board. Executive Order No.

6084. In 1939, it was subordinated to the Depart-

* See Federal Reserve Bank of Dallas v. Smylie, 134 8. W. ,

2d 838, 840-841 (Tex. Civ. App.), for a history of the

Federal yea ;

a

wile Mois

| ment of Aadicultuse to-be administered in that

department undér the general supervision and

direction of the Secretary of ‘Agriculture (Reor-—

ganization-Plan No. 1, Sec. 401 (a), 53 Stat, 1429, .

_ ‘Fed. Reg. 3730), and in 1942, as the consequence of.

consolidation within the Department of Agricul-

* ture, the Farm ‘Credit Administration was made

a part of the Food Production Administration.

Executive Order .No. 9280, 7 Fed. ‘Reg. 10179.

Plainly, then, the Farm Cr edit ‘Administration 48

an unincorporated agency of the Government pres-

ently operating within the Department of <Agri- ~

culture, established to’ carry out functions del¢-

gated to it for administration, has. no identit

separate from the Government, and its contracts

and undertakings are those of the United States.

Herren v. Farm Security Administration, 153 F.

4. 2a°76 (C. C. A. 8); North Dakota-Montana W heat

Growers’ Ass’n. Vv. United -States, 66 F. 2d 573

(C. C. A. 8); United States v. Fontenot, sepra;

In re. Wilson, 23. F. Supp. 236 (N. D. Texas) ;

Federal Reserve Bank of Dallas v. Smylie, 134

S. W. 2d 838 (Tex. Civ. App.);. cf. Korman v.

Federakt Housiyg Administrator, supra,

Moreover, the Farm Credit Administration

‘‘has no legal entity but exists as an agency of the

United States Government to administer and dis+

burse the funds appropriated by Congress out of the

United States Treasury, Money thus distributed

or loaned. to farmers, when repaid by, or collected

.*

‘ Bad” ese

-. from, them negessarily ‘is paid back into the

| Treasury of the United States from whence it was

_taken.”’ Federal] Reserue Bank of Dallas v.

Smylie, 134 8. W. 2d °838, 841 (Tex. Civ. App.).

In other-words, ‘‘the Governor of the Farm Credit

Administration was merely an agent, or, inter-

meédiary through which the money passed from the

treasury to the citi#en. That those agents were .

given names other.than the United States. does not

alter tHe fact that actually and in truth it was

the money of the United States in each instance,

and the debts are due .the United States.”” In

re Wilson, supra, at 238; ef. Herren v. Farm

Security Administration, supra, pp. 77-78 ; In

re Hansen Bakeries, Inc., 103 F. 2d 665, 666 (C.° °

G. A. 3). The fact that the monies which have

been loaned and which are the basis for the claim

for repayment and preference have been appro-

priatedi by Congress out of the Treasury of the

. United States for the purpose of such loans has

frequently been regarded as controlling. -_ Wagner

v. McDonald, ¥& F.2d 273 (C. C. A.’8); Barnett

vy. American Surety Co., T7 F. 2d 225 (C. C. A.

10); In_re T. N. Wilson, Inc.; 24 F. Supp. 651

(E.D.N. Y.); Me re Weil, 39 F. Supp. 618 (M. D. —

Pa.); In re Stamford Auto Supply Co., 25 F.

. Supp. 530, 531 (N. D. Tex.) ; ef. UnitedgStates v.

Summerlin, 310 U. S. 414; United States v. Brock,

5 F.2d 265 (W. D. La.).. And it may be observed

that the ee 0. the Sloan Shipyards casé

728368—47--

o? a & 9

“e

LS gos alae

seems to have been seriously: impaired by subse-

— quent decision#of. the Court which have recog-

nized the identity between the claims of govern-

mental’ corporations and claims of the United

_ States.” Cf. Inland Watertvays Corp. Vv. Young,

309 U. 8.517, 524; Cherry Cotton Mills v. United

"States, 327 U. S. 536, 539., Accordingly, we sub-

* As pointed out by the court below (R: 26-27), Mr. Chief

Justice Taft concurred in the Sloan Shipyards case on the =,

* . ground that he would limit the preference established by ..

* - B'S, 3466 to'claims of the UnitedyStates for taxes. Re- —

spondent (Br. in Opp., pp. 3-5) has similarly suggested

that R..S. 3466 is properly limited to the collection of taxes

“imposed by the Federal Government in support of its

sovereignty” in contradistinction claims, such as those

involved in the present case, arising*from some business

venture. But this attempted limitation on the seope of R. 8.

™ 3466 has nat found acceptance. See United tates v. Knott,

298 U. S. 544; United States v. Emory, 314 U. S. 423;

‘United States v. Waddill Co., 323 U. S. 358. Even assum-\.

ing that the claim here involved had certain elements of a

commercial nature“and did not square exactly. with the

classic concept. of governmental undertakings, it neverthe-

less. was solely governmental in character. All valid acts -

ot the United States are necessarily governmental and

sovereign in character. Graves v. O'Keefe, 306 U. S. 466,

477; Pittman v. Home Owners’ Loan Corp., 308 U. S. 21,

32. A contrary holding in respect of a Federal Housing

Administration loan by the Supreme Court of Florida was,

_ summarily rejectétl by this Court in United States v. Sum-

\, merlin, 310 U: S. 414, 416, reversing 140 Fla: 475. Tif adai--

4 tion, it is well-established that the preference’ established

_ by R. S. 3466 does not arise from the sovereign character

of the United States but from the statute itself. +, United

States v. State Bank of North Carolina, 6 Pet. 29; Whan v.

Green Star SS Corp., 22 F. 2d 483 (C. C. A. 2), certiorari

denied’ sub nom. Adams v. United States, 276 UeS. 629.

, -

’

.

15

mit that the ales have involved constitutes a debt

due to the United States. Ors.

B. rity MANNER IX WHICH THE CLAIM @WAS PILED SATISFIES

fire THE REQUIREMENT OF THE STATUTE

Since the Slaim was filed in the name of the |

' Governor of the Farm Credit Administration,

the court below stated that “inference, explana-

’ ‘tion or argument” js needed to arrive at the

conclusion that the claim was filed by the United

States, In denying the claim priority, dhe court

by implication imposed the additional requirement

_ that the claim must be filed ‘in the name of the

United States. This is a retinement for which

no support cant be found. *

1. Neither R. 8. 3466 itself nor any of the long

line of cases involving that statute supports such

_ a requirement. As far as the statute is concerned,

the sole condition. uf the priority there -estab-

lished is that the debt be due tp the United States.

There is no requirement that it ‘be filed in the

name of the. United States nor does the statute

bar from priority debts admittedly due to the

United States ‘but filed in the name of one of

its noncorporate agencies. ‘In addition, although

the statute has been in force in substantially its

present fyrm since 1797 (1 Stat. 515; Price v.

United States, 269 U. 8. 492, 501), no other case

arising thereunder has ever imposed such a

- requirement.’ 4

tIn Federal Howsing Administrator v. Moore, # F. 2d

32 (C. C. A. 9), m@htioned by the court below (R. 29), pri-

‘

~~

=) .

2: In any event, the claim itself ifically |

stated that it was a “claim of the Phited States

of America’ (R. 4) and that Farm. Credit

Administration was acting “‘for and on behalf of.

the United States of America’’ and ‘‘as the agent

_ of the United States in making and collecting

loans to farmers throughout the United States”’

‘(R. 4); the memorandum attached to the claim

(R. 1) asserted preference under R. S. 3466 for

"debts due to the United States’ and asserted

that ‘‘the United ‘States Government, acting

® through the Secretary of Agriculfure or through

the Governor of the Farm Credit Administra-

tion, has made emergency crop and feed~loans

to farmers. Loans’ pf this character are now

. administered. by the Farm Credit Administra-

ority in bankruptcy was denied a claim of the Federal

Housing Administrator, partly on the ground that the

claim was not filed in the name of the United States. But

it does not appear that the claim there was filed; as here, on

behalf of the United States, nor that the debt upon which

the claim was based was acquired by the Administrator

_ acting for the United States. Moreover, the decision of the

_court turned primarily ypon the fact that ‘the debt was

assigned to the Administrator after the date of adjudica-

+ tien. See United States v. Marzen, 307 U. S. 200; Korman

v. Federal Housing Administrator, 113 F. 2d 748, 745-746.

(App. D. C.); Wagner v.. McDonald, 9% -F. 2d 273, 276 ©

(C. C. A. 8); In re Dickson's Estate, 197 Wash. 145, 153.

_ Finally, the Circuit Court of Appeals. for the Ninth Cir-

cuit itself expressly questioned the soundness of the Moore

decision in the certificate (p. 4) filed in United States v.

Marzen, No. 544, October Term, 1938. —

‘i é ; . f

/

a ae

17 ae ;

tion * © Furthermore, the United States.

Attorney and his assistants appeared in their

_ official capacities in the County Court of Reberts

County (R. 13, 17, 18), the Circuit Court of

Roberts County (R. 19, 20), and. the Supreme

Court of South Dakota (R. 21), to press the

claim for priority; Cf. National “Home. for Dis-

ubled Volunteer Soldiers v. Wood, 81 F. 2d 963,

965 (C. C. A. 7), affirmed, 299 U. S. 211. ‘In

these circumstances, it was clear that the claim —

was being asserted by the United States in its,

name, and. hence was entitled to priority under

R. 8. 3466. Wagner v. McDonald, 96° F: 2d 273

(0. C. A. 8); In re Hansen Bakeries, 103 F. 2d

665, 666 (C. C. A. 3) ; Korman v. Federal Housing

Administrator, 113 F. 2d 743, 744 (App. D. C.)'

In re T. N. Wilson, Inc., 24 F. Supp. 651 (E. D.

N. Y.); In re>Stamford Auto Supply Co., 25 BF.’

a Supp. 530 (N. D, Texas) ; In re Weil, 39 F. Supp.

618 (W. D. Pa.); In re Dickson’s Estate, 197

"Wash. 145. Cf. Herren v..Farm Security Ad-

ministration, 153 F. 2d 76 (€. C. A. 8).

Moreover, although the claim was filed in the *

_ name of the Governor of the Farm Credit Ad-

ministration, he has no personal interest in the

“claim nor does he claim ownership of the debt

in his own right; he is an agent of the United '

States, and his acts in so far as they are author-

ized are in legal effect the; acts of the United

States. Accordingly, he is at-most only a nominal

18

’ -elaimant, and the court below should have looked

through him to the real claimant and treated

the claim as one made by the Government. Wag-

ner v..McDonald, supra, at 276; North Dakoéta-

Montana Wheat Growers’ Ass’n v. United States,

_ 66 F, 2d 573 (C. C. A. 8); In re Wilson, 23 F.

Supp. 236 (N. D. Tex.); ef. State Highway Com-

mission of Wyoming v. Utah Const. Co., 278 U.S.

194; E. I. Dupont de Nemours & Co. Vv. Davis,

264 U. S. 456, 459; Kansas v. United States, 204 —

U. 8..331; Herren v. Farm. Security Administra-

_tion, supra; National Home for Disabled Volun-

teer Soldiers v. Wood, 81 F. 2d 963 (C. C..A. 7),

affirmed, 299 U. S. 211; United States v. Golden,

/ 34 F. 2d 367 (C. C. A. 10); Schroeder v. Davis,

J $2 F. 2d 454.(C. C. A. 8).° ‘3

| ~ 3. In any case, respondent was not prejudiced

by the fact that the claim was filed in the name .

of the GoWernor, Farm Credit Administration, fs

rather than in the name of the United States. “Cf.

f° BE. I: du Pont de Nemours & Co. v. Dams, 264

fi 'U. 8. 456, 459. Such variation is purely a formal.

matter which, since it has not been raise! in the

lower courts, is no longer open to challenge, .for

it is -well settled under’ both federal and South

Dakota law that after issue is joined, the raising

of suck a question is barred. Fortier_v. New

Orleans National Bank, 112 U. 8. 439; McCand-

less V. Furland, 293 U. 8. 67, 73; National Home

for Disabled Volunteer Soldiers v. Wood, 81 F.

£,

19

2d 963 (C. C. A. 7), affirmed, 299 U. 8. 211; W. H.

Shenners Co. v. Lake Worth Realty & Building

Co., 45 F. 2d 297 (C C. A. 7), certiorari denied,

283 :U. S. 833; Alderman v. N. Y. Underwriters’

Insurance Co., 618. TD. 284, 299, and cases there

cited; State ex rel. Cook v. Board of Commis- ;

sioners, 29 S. D. 358.

II

DEBTS DUE THE UNITED STATES ON LOANS MADE

PURSUANT TO ACTS OF FEBRUARY 23, 1934, AND

JUNE 19, 1934, ARE ENTITLED TO PRIORITY UNDER

*R. 8. 3466

This Court has repeatedly ond consistently held

that R. S. 3466 is a statute enacted to secure ade-

quate public revenues to sustain the public bur-

den * and is to be liberally construed to effectuate

its purpose. United States v. Fisher, 2 Cranch

358; Harrison v. Sterry, 5 Cranch 289, 298-299;

United States v. State Bank of North Carolina, 6

'. Pet. 29, 35; Beaston v. Farmers’ Bank, 12 Pet/102,

134; Bramwell v. United States Fidelity and Guar-

anty Co., 269 U. 8. 483, 487; Price v. United States,

269 U.S. 492, 500; United States v. Marzen, 307

_-U. 8, 200, 206; United States v.\Emory, 314 U. 8.

423, 426. Moreover, the language of ,the statute,

* That the rule of liberal construction applies to ‘ald claims -

involving debts due. the United States seems too clear to

warrant discussion. See United States v. Knott, 298 U. S.

544; United States v. Emory, 314 U. S. 423; United States

v. Waddill Co., 323 U. S. 353; see also, Jnland Waterways v.

Young, 209 U. 's. 517; ; Cherry. Cotton Mills v. United States,

327 U. S. 536.

?

’

\ 20

\

which admits of no exception, is so clear that there

-is but little room for construction. Thelluson v.

Smith, 2 Wheat. 396; Lewis, Trustee v. United —

States, 92. U. 8. 618, 621; United States v. Emory,

314. U.S. 423,426 ; United States v. Waddill Co., 323

U. 8. 353, 355; Illinots ex rel. Gordon v. United

States, No. 749, October Term, 1945, decided April

22, 1946. It is only in'the presence of express

language (Mellon -v. Michigan Trust Co., 271

U. S. 236) or. of a basic inconsistency with the

avowed purpose of a particular statute (Cook |

- County National Bank v. United States, 107 U.S.

- 445; United States v. Guaranty Trust Co., 280

U..S. 478) that this Court will conclusively pre-

‘sume a legislative intent to waive the priority con-

ferred by R. S. 3466. It is in this setting, we

‘* submit, that the , doqicion below. should be

examined. .

- Although the claim here involved : is a debt due

to the United States and there is no*provision in |

the Acts of February 22 and June 19 expressly re-

ws linquishing the priority of the United States with

G respect to claims thereunder, the court below

| found | air inconsistency between the purposes of

these Acts and R. S. 3466 in that ‘‘knowledge of

priority of Governme claims certainly would

_ have been a handicap a farmer in using his

credit with locai bankers and investors’’ (R. 28).

Because’ of this * purported: inconsistency the -

®ourt below considered the present case, to be

‘‘practically an exact parallel with’’ United States -

: S34 = ; “* ~~ o

\ ea oe

vy | 21

en ? Guaranty Trust Co., 280 U.S. 478, and hence

*

refused to apply R. S. 3466 to this debt (R. 28, :

30). . 0 i

The_Guaranty Trust case involved loans ‘nade :

to railroads under Title II of the Transportation _

Act of 1920, 41 Stat. 456, 457-469. That Act was.

designed \to promote the stability of the railroads

for the national — by providing for govern-

ment financing of the éarriers to a certain extent

until their credit | was restored. Since the loans —

were for the ‘purpose of stabilizing the railroads,

this Court there refused to apply R. S. 3466 on

‘the ground that priority in respect of such loans

would impair, rather than improve, the credit -

of the railroads, and thus according these. loans

priority would defeat the purpose of the legis-. .

lation (280 U. S. at 485). :

- We submit that the purpose of the -Acts, here

involved was not to restere the credit of the

farmers; that there fs ¥ no such .inconsistency here, +

as in the Guaranty rust case, between the pur-

poses of these Acts and R. 8. 3466, as to require

a denial of priority to debts arising thereunder;

* and, further, that even if there were such an in-

consistency; the Guaranty Trust case is neverthe-

less not contralling.

NOT TO RESTORE THE CREDIT OF THE FARMERS, AND HENCE I8 |

_ NOT INCONSISTENT WITH RK. 8. 3463

e e

‘. THE PURPOSE OF THE ACTS OP FEBRUARY 23 AND JUNE 19 WAS

The finding of the court below that debts: owed

to the United States.on loans made pursuant to

22

the Acts of February 23, 1934, and June 19, 1934,

are not entitled to priority is based*-on the

Guaranty, Trust case, which it regarded as con- —

trolling. But the purpose of the statutes here

_ “involved, unlike the Transportation Act involved

“in the Guaranty Trust case, was not ‘to restore the

-eredit of the farmers, but rather to provide emer-

gency relief to distressed farmers for the short

period that they were unable elsewhere to obtain

credit. ‘This is obvious not only from the express

langtage of these Acts, but from their legislative

history:as well. _

The Acts of February 23, 1934, and of June

19, 1934, were only two in a series of emergency

seed and crop loan statutes, the primary objec-

tive of which was to provide ‘“‘for relief of farmers

in the drought and/or storm stricken areas

* * #99 (46 Stat. 1032, 48 Stat. 354; ef. 45 Stat.

1306; 46 Stat. 78), and generally required as

security only a first lien on all crops growing or

to be grown. Of these statutes, the first was

_passed in 1921 (41 Stat. 1347) and similar

statutes .were enacted during that depression. 42

>.

‘Stat. 467; 43 Stat. 110; 44 Stat., ‘Part Il, 1245,

*In' the Guaranty Trust case, this Court relied, as an ad-

ditional ground for not applying R. S. 3466, on tie fact

that the Transportation Act provided other means of secur-

ing repayment of the Government’s advances (280 U. S. at

485). ‘That ground is inapposite here, since, in the ‘light

ot uue-economic conditions then prevailing and the re-

peated crop failures, a first lien on crops growing or to be

- grown was clearly of dubious value.

23

- 1251. The large majority of statutes with accom-

panying appropriations were enacted from 1929 to .

1935, during the depression period when farmers

were suffering from repeated crop failures and ad-

verse economic conditioris. 45° Stat. 1306, as

_ amended by 46 Stat. 3; 46 Stat. 78, ‘as. amended

by 46 Stat. 254; 46 Stat. 1032, as amended by

46 Stat. 1160; 46 Stat. 1276; 47: Stat. 5; 47

Stat. 795; 48 Stat. 1056; 49 Stat. 28; see also 50

. Stat. 5; 52 Stat. 27. The statutes passed early in

this period did not require that the applicant be

unable to secure credit elsewhere; in addition, |

. they placed ‘either no limit (46 Stat. 78;.46 Stat.

1032; 46 Stat. 1276; 47 Stat. 795), or a high ceil-

ing on the maximum permissible loan (45 Stat.

1306, as amended by 46 Stat. 3). However,. in

1933, the Farm Credit Act of that year, 48 Stat.

257, was enacted, establishing agencies for the ex-

tension of credit to those farmers who were more

or less sound credit risks. Thereafter, a limit was

- placed on the amount of the loan” and if was re-

© Although under the Act of February 23, 1934, the loans

were normally limited to $250, the Governor of ‘the Farm

Credit Administration’ was authorized to loan larger

amounts up to. $400 if in his opinion the circumstances so

' warranted; these limitations were inoperative in thie case

of loans to farmers in areas which the President. certified

as. distressed emergency areas. Section 2 (b), Appendix,

- infra, pp. 32-83. Such loans would, of course, be a greater

credit risk and therefore authorization to make such larger

. loans in those’ circumstances me?ely emphasizes that their

, basic purpose was to provide relief.

- 24

quired that the applicant must not be able to—

secure credit elsewhere, A. ¢., from the Production

Credit Associations, organized pursuant to the

Farm Credit Act. Section 2 (c) of the Act of

February 23, 1934 (48 Stat. 354) ; Section 2 (c) of

49 Stat. 28; Section 2 (a) of 50 Stat. 5; H. Rep. .

No. 521, 73d Cong,., 2d Sess., p.1;8. Rep. No. 148,

73d Cong., 2d Sess., p. 1. ’ The continuation of

loaning facilities, after the creation of the Produe-

tion Credit Associations; for farmers who were

unable to obtain credit through such: assdciations

indicates clearly the emergency relief natare of

the loans here involyed. en

“During the. consideration of the bills whieh sub-

sequently became the Acts with which werdre here

particularly concerned, the emergency relief aspect

‘of the loans was continually emphasized. The

Senate Committee on Agriculture and Forestry

pointed out in its report that a large percentage

of farmers would not qualify for loans under the

Faim Credit Act, which requires stock, a financial '

statement, and unpledged property sufficient to

__ justify the loan, and that withéut ‘hese seed loans,

millions of farmers and farm laborers will have to

seek other employment which would necessarily

add to the ranks of the distressed and unem-

ployed, 8. Rep. 148, 73d Cong., 2d Sess., p. 1.

In its Report (H. Rep. 521, 73d. Cong., 2d

Sess.), the. House Committee on Agriculture re-

ee

>

25 -

‘ported the -bill favorably. In justifying that

recommendation, thé Committee said (p. 1):

“ae Your committee is well aware of the fact

that. the various production credit associ-

ations that are now being organized will

serve a great purpose. These associations

are to be permanent. It is not intenfled

that crop production Joans made diréctly ®

by the Federal’Government to the farmer

- - shall be permanent but this bill is reported

favorably by the committee at this time in_

the belief that it is necessary to taper off,

so to speak, with loans of this character

foh the year 1934, until the production

erédit associations are well established and

‘the farmers are in a position to avai},them-

selves of the benefits provided by these as-

soviations. a /

Under existing circumstances, these Fed-

eral crop loans will reach a class of crop

producers who possibly would not be able

- at this time to procure loans from the pro-

. . duction credit associations.

Both the Senate and House of Representatives

“were apparently in- accord with these Committee - -

Reports’ (78 Cong. Ree. 1825, 1953, 1955, 1956),

the general purpose of which was summarized by

Representative Kerh, who said (78 Cong. Ree: -

1959) : 7 ee

Let it be remembered that the Govern-~_

ment is not seeking to make an investment;

this is simply an endeavor to finance the

a . — .: |

farmers of this country who are utterly |

unable to: finance themselves.”.

1ere involved ‘‘was solely an act of’

grace by the sovereign to meét a temporary

emergency which had grasped certain citizens _

and left them temporarily ii dire need of help.”’

Person v. United States, 112'F. 2d I, 2(C.C. 4.8),

certiorari denied, 311 U. S. 672- The purpose of

the legislation was ‘‘to create an agency to make |

loans to distressed farmers. * * * The govern-

" ment was not seeking by this legislation to enter

business and make money. It we simply trying

” he ‘Such_a legislative history indicates that the

to lend aid and assistance to farmers who had no |

credit-and no money with whi¢h to purchase feed

for their livestock and seeds for their crops.”’

United States v. ‘Thomas, 107. F. 2d: 765, 766 *

(07 C: A, 5). Clearly then, the loans here in-

volved were hardly intended as a device for main-

taining credit, and the court below, in concluding s

that the Guaranty Trust .case was “dontralling

in this-case,”” was clearly in error -(R. 28). -

to

- need are small, whose financial condition is such t

il

for the extension of it Government

through the. medium of, crop luction- pnd harvesting —

loans; would require some other fo

HH. Rep. No. 1707, 75th Cong., 3d Sess,

4

’ -

’ ° | . - of .

3 - ° ,

x f f . ® eo ay

. . ° o

, .

a

hat they | ;

tention that suppliers of goods and services would —

-

wa

i : ee oe,

B. THE GUARANTY TRUST CASE ah NOT ac niateniaied

1. Assuming, contrary to the foregoing, + gy

the purpose of the loans was; as found by the

court below, to restore the credit of the farmers,

we submit, nevertheless, that the Guaranty Trust

ease is not controlling, since under the more recent

cases such purpose would appear not so incon-

sistent with R. 8° 3466 ‘as to warrant the impli-

ation that Congress. had intended to ——

the priority.:

United States v. Emory, '314 U.S. 423, re

the applicability of R. S,-4466 tefloans made pur-

suant to the National Housing Act. There, this

Court expressly’ considered and rejected. the ¢on-

refuse- to.extend credit if in/case of insolvency,

they would be subordinated to the claims of the .

United ‘States, and thus that the broad purpeses

of the National Housing Act would be thwarted

-if R. 8. 3466 were applied, saying: 3

- In the first place, whatever may be the |

merits ofthe contention, it’ should be. ad-

dressed to Con and not to this Court.

In the second Digs the argument proves

. too much. If it #’sound as applied to this

kind of claim of the United States, it*is

equally sound as applied to all claims as |

to which the United States asserts priority

_ under § 3466 (314.U. §. at 431).

Although the Emon case did not expressly

overrule “the Guaranty Trust case, it did limit

~

a

. em

: : - 58 } eae :

‘the application of the basic ground of decision .

in that case, saying: “Only the plainest incon- i

\sistency would> warrant our finding an implied .

exception to the operation of so clear a ‘command -

as that of §°3466. “We think such inconsistency:

‘is wholly wanting here” (314 U.S. at 433). That

this represents the considered view of this Court

‘Reems clear. In United States v. Waddill Co., 323

U. S. 353, the applicability of R. 8. 3466 to an»

F. H. A. loan was not questioned. In Illinois

- ox rel. Gordon v. United States, No. 749, October

Term 1945, decided April 22, 1946, this Coutt

unanimously reaffirmed the Emory doctrine. \c-

cordingly, we submit that the applicability of

Guaranty Trust case has been so narrowed as -

make it not controlling here.

Furthermore, because of the unique character

of the lending statute involved in the Guaranty

Trust case, we believe that that cage is simply an _

isolated exception carved out of B. S. 3466. This ;

view is supported by the subsequent decisions

involving that statute which, although dealing

with otlier situations, have charted a wholly dif-

. ferent: course. These later decisions, and par- —

ticularly the Emory case, demonstrate that R. S.

3466 is to be applied in its full vigor, and that,

before an exception thereto, will be implied, the

Aanguage and the legislative history of the pertinent

- Act must affirmatively and. plainly show that

*. the priority of the United States was intended to

— aa “

29

~ be waived. Nosuch showing can be made here, and.

the debt here involved is clearly entitled to priority.

2. The administrative interpretation of the

Emergency Seed and Crop Loan Acts of Febru- —

ary 23; 1934, and June 19, 1934, supports the

view that the priority conferred. by R. 8. 3466.

applies to loans made thereunder.. The Govern- |

ment has consistently asserted priority under

these Acts, both administratively through the

Farm Credit Administration and the Department

. of Agriculture * and in litigation conducted by

the Department of Justice when unpaid loans

have been referred to it for. collection.’ Owing —

to the large number of claims asserted and col-

lected, it A® inconceivable that Congress was

unaware of the uniform practice of insisting on

_ priority in respect of the payment of these loans

2 The form notification of the claim for' priority, appear-

ing at pages 1 and 2 of the record, of itself discloses a

settled administrative interpretation by the Department of

’ Agriculture and the Farm Credit Administration.

13 According to the figures supplied by the regional Emer-

.gency Crop and Feed Loan Offices, these Offices have, since

1924, filed a total of 12,969 claims for priority in cases where

the debtor is deceased. Of these claims, only 229 were in=~

itially denied, of which 171 were subsequently paid in full

or part. ‘Thus, recovery hus been had on 12,911, or over

99% of the total number of. claims, the total collections

amounting to $3,850,808.48. Of the 58 claims which initially

were denied, 28 are still pending and the other 30 have not

been pursued beeause the time for taking an appeal had been

allowed to: lapse,’ because the estate was so insolvent as to

indicate that no recovery could be had or because the amount -

involved was too insignificant to warrant the cost of an ap-

peal. It is interesting to note that although the Omaha

af

es

‘ 30

where the debtor is deceased.* ‘A long-continued.

_ practice. of. this character should prevail even —

were the soundness of such practice Jess clear.

Inland Waterways Corp. v. Young, 309 U. 8. 517, —

24-525; United States v. Midwest Oil Co.,236 U.S. :

459, 473. a ae RE |

_ CONCLUSION: : ne

It is respectfully submitted that ‘the decision

below should be reversed and the case remanded

with instructions to allow the priority claimed

‘by the United States. )

/ Georce T. WASHINGTON,

Acting Solicitor General.

HN F. SoNNETT, ~

ssistant Attorney General.

Pau A. SWEENEY,

ex ~ MELVIN RICHTER, ‘

| Puuir Evan,

. Attorneys.

ie

vd

J ANUARY 1947.

“~

regional office which serves South Dakota, the state of origin

‘of the present case, has filed 2,212 claims, the present claim

_was the first in which the agserted priority has been denied ;

thére are now pending in'that region five additional cases

‘awaiting.the decision of this Court in the present case.

4 Congressional awareness of the difficulties surrounding

the collection of seed and crop loans is evidenced’ by the

‘Act of December 20, 1944, 58 Stat. 836 (12 U\S.S., Supp. Vv,

1150), which authorizes the Secretary of Agriculturé to com-

promise, adjust, or cance} these loans under specified condi-

tions. This Act also authorizes the Secretary to cancel the

‘indebtedness where “the debtor is leveased * * * and

there is no reasonable prospect of : btaining collection,” a

situation which is not here present as collection may he

effected in full in the instant case.

‘APPENDIX

1. R. S. 3466, 31 U.S. i 191, provides as

follows:

2.

oF" wm,

Priority - | established.— Whenever any

person indebted to the United States is in-

solvent, or whenever the estate of any de-

ceased debtor, in the hands of the executors —

or administrators, is insufficient to pay all

the debts due from the deceased, the debts

due to thg United States shall. be first

satisfied ; he the priority established shail

extend as Well to.cases in which a debtor,

not having sufficient property to pay all his

‘debts, makes a voluntary assignment

thereof, or in which the estate and effects ~

‘of. an abscondirig, concealed, or ‘absent

debtor are attached by process of law, as to

‘eases in which an act of bankruptcy” is

committed. | , 0 os

Governor of the Farm Credit Administra-

‘tion, hereinafter in this Act referred to as

the ‘“‘Governor’’, is hereby authorized to

make loans to farmers during the year 1934

fore crop production, planting, fallowing,

and .cultivation and, to the extent of not

exceeding $1,000,000, for feed for livestock

in drought- and storm-stricken areas.

Src. 2 (a) A first-lien on all crops, grow-

_ ing or to be planted or or harvested

(31)

+

The Act of February 23, 1934, c. 23, 48 Stat.

354, provides as follows: :

Be it enacted by the Senate and House

- of Representatives of the United States of

America in Congress assembled, That the

Sa,

' 82 Bh geen

during the year 1934, or.on livestock, shall

be required as security for any such loan: -

Provided, however, That in the .case of a

loan for the pfopose of summer fallowing

or the production of winter wheat, a first

lien, or an agreement to give a first lien,

on erops to be harvested in 1935 may, in

the discretion of the Govérnor, be deemed

sufficient security. Except as hereinafter

provided, such loans shall be made through

such agencies, upon such terms and condi-

tions, and subject to. such regulations as

the Governor shall prescribe. Recording

and other fees in connection with such loans -

- shall not exceed $1 in any case, which shall

“be paid by the: Farm Credit Administra-

tion. Loans made pursuant to the provi-

sions of this Act shall bear interest at the

rate of not to exceed 514 per-centum per

annum. For the purpose of collecting loans

-made under this Act and under ‘prior acts

of-the same general character, the Governor

may use thé facilities and services of the

Farm Credit Administration or of any offi-

cer or officers théreof and may pay for such

services and the use of such facilities from

the funds made available under section 5

hereof for the payment of necessary admin-

istrative expenses; and such institutions

are- hereby expressly .empowered to enter

into agreements with the Governor for such

ur é ; ae

r (b) The amount which may be loaned

. to any borrower pursuant to this Act shall

—~ not exceed: $250‘wnless, .in the opinion of

the Governor, the circumstances surround-

‘ing the loan are such as to warrant a.

larger amount, in which event the bor-

~ower shall be entitled to a loan not in ex-

cess of $400; Provided, however, That in |

any area certified by the President of the

5

wv

. if

P

Fy

33

United States to the Governor as a dis--

tressed emergency area, the Governor may ~

make loans without regard to the fore-

going limitations, under such regulations _

and for such time as he may prescribe

therefor. Pari

(ec) Na loan shall be made under this

Act to any applican

first established to the . f the

proper officer or é yee of the Farm

Credit Administration, yndeg such regula-

tions as the Governor may prescribe (1)

that such applieant is unable to procure

from other sources a loan 5

reasonably adequate to meet his needs for

the purposes ‘for which loans may be made

- under this-Act; and (2) that such applicant

is cooperating directly in the crop produc-

tion control program of the Agricultural

Adjustment Administratiqh or is not pro- .

posing to Increase his 1 production of

basic agricultural commodities in a manner

‘detrimental ‘to the success of such prograni.

Sec. 3 (a) The moneys authorized to be

loaned by the Governor under this Act are

declared to be impressed with a trust to

accomplish the purposes provided for by

this Act; namely, the production, planting,”

fallowing, cultivation of crops, and feed for —

farm livestock, which trust shall continue

until the moneys loaned pursuant to this ~

Act have been used for the purposes’ con-

templated by this Act, and it-shall be un-

lawful for any person to make any material

false representation for the purpose of

obtaining any loan or to assist in obtaining

such loan or to disposébf or assist in dis-

posing of any crops given as security for

any loan made under authority of this Act,

except for the account of the Governor, and

in an amount -

J 34 | a >

for the purpose of carrying out the provi-..-

sidns of this Act. . | ° 23 ek ae

soa Z ” ‘ ob \ ~ : : *

_3.-The Act>of June 19, on © 648, 48 Stat.

1021, 1056, provides as sy ae \ rae

eee eee cae “Tee eS +

To meet the emergency and necessity

for relief in\ stricken agricultural areas, »

to remain available until- June 30. 1935,

$525,000,000, to. be allocated by ‘the Presi- ”

dent to supplement the appropriations

- heretofore made for eimérgency purposes

- and@.in addition .thereto for (1). making |

> wa loans to farmers for, and/or (2) jhe pur-

- * ‘ehase, sale, gift,/or other disposition of,

. seed, feed, freight, summer fallowing and

similar purposes; expenditures hereunder

andy the manner ‘in which ‘they shall be

'°ineurred, allowed, and paid, shall be de-

termined by the President, and: may in-

« clude expenditures for ,personal . services

‘and rent’in the District of Columbia’ and

elsewhere and for printing and binding: |

and may he made without regard to the

_.-provisions of section 3709 of the Revised

, a Statutes. * bat 2s

7 ‘a eee a a *

. N\

Tp .

ov —..

sf & ~ wo 6 ‘ . . : or .

—~ 4, Section 35.1422, South Dakota Code (1939)

provides as follows: = ) i

Order of Payment of Claims.: All de- ¢ °

mands against the estate of any deceased. —

person must.be paid in the following order:

(1) The expenses of administration ;

; (2) Funeral. expenses, inchiding reason-

_¢, » + able cost of burial lot, and not to. exceed

““o % fifty dollars for marker on grave; —-- 1

_ (3) The expenses of last sickness; a

> :

*

. ee

Na

Fe

rs

_ lien shall have -preference according to its’

cS"

°

See 4

(4) Any debt that may be due by de-

‘eedent personally to, servants and em-

-ployees for services ig ‘within ‘the

- of the United States; -

_ any speci

_ Shall have

relat Vin

sixty days-next preceding. his death ;.

(5), Debts having pre “\. by the laws —

(6) All other -demands

ments, judgments, ‘or execution levy, such

priority tqthe gxtent of such demand, on

oe rty on which such lien

ched. es

io

™“s

H, S. GOVERMENT PAINTING OFFICE 1947

r inst the es-

- tate, except that’ where a lieri for any .

_ demand exists by mortgage, pledge, attach-

ss