Court Opinion

ID: 6880540
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:14:59.105365+00
Date Added: 2024-06-11T16:05:34.837498
License: Public Domain

CLARK, Circuit Judge
(dissenting).
Though Judge SWAN’S opinion is persuasive indeed, I think it results in an order for the payment of government funds to private persons without' authorization of law. Even as between private litigants, costs, at least in an equity suit, are not a matter of right to a litigant, but are purely at the discretion of the court. Gold Dust Corp. v. Hoffenberg, 2 Cir., 87 F.2d 451, 453; Ex parte Peterson, 253 U.S. 300, 317, 40 S.Ct. 543, 64 L.Ed. 919; Payne, Costs in Common Law Actions in the Federal Courts, 21 Va.L.Rev. 397, 399. And costs *943are never awarded, against the United States except where there is direct statutory authority going beyond mere permission to bring suit. The opinion cites examples of the many precedents. See also Note, 8 Ann.Cas. 398; 21 Va.L.Rev. 416; 28 U.S.C.A. §§ 548, 555; Rule 32.5 of the Supreme Court, and Rule 29.4 of this Court; and compare Guaranty Trust Co. v. United States, 304 U.S. 126, 134n, 58 S.Ct. 785, 82 L.Ed. 1224; Globe & Rutgers Fire Ins. Co. v. United States, 2 Cir., 105 F.2d 160, 165, 167; 28 U.S.C.A. §§ 258, 870.1
This immunity would appear to apply to a governmental corporation, exercising governmental functions in place of the national government itself, just as much as does tax immunity. Cf. Graves v. New York ex rel. O’Keefe, 306 U.S. 466, 477, 59 S.Ct. 595, 83 L.Ed. 927, 120 A.L.R. 1466. And if any corporation is to be exempt, certainly the Reconstruction Finance Corporation must be included in the list, for it has been made the direct loaning authority of the United 'States, a conduit from the United States Treasury for the supplying of financial assistance for the rehabilitation of industry and commerce, threatened with prostration as a result of the great depression. Baltimore National Bank v. State Tax Commission, 297 U.S. 209, 211, 56 S.Ct. 417, 80 L.Ed. 586; Langer v. United States, 8 Cir., 76 F.2d 817, 823; United States v. Lewis, D.C.W.D.Ky., 10 F.Supp. 471; cf. State Tax Commission v. Van Cott, 306 U.S. 511, 515, 59 S.Ct. 605, 83 L.Ed. 950.
Outside of the decision below, D.C.W.D. N.Y., 29 F.Supp. 853, the only precedents dealing directly with costs against governmental corporations are those denying any award. National Home v. Wood, 7 Cir., 81 F.2d 963, affirmed 299 U.S. 211, 57 S.Ct. 137, 81 L.Ed. 130;2 Federal Deposit Ins. Corp. v. Barton, 10 Cir., 106 F.2d 737; Federal Deposit Ins. Corp. v. Casady, 10 Cir., 106 F.2d 784. These are governmental corporations, which are, if anything, less engaged in exercising functions of sovereignty than is appellee here. Recent cases in the Supreme Court, referred to in the opinion, show the care and caution with which that Court has proceeded in discovering a legislative intent for even suability of particular corporations. Thus, Keifer & Keifer v. Reconstruction Finance Corporation, 306 U.S. 381, 59 S.Ct. 516, 83 L.Ed. 784, and Federal Housing Administration, Region No. 4 v. Burr, 60 S.Ct. 488, 84 L.Ed. -, allowed suits in situations which do not appear to be an extension of previous conceptions.3 The theory of governmental immunity is restated and applied *944in the latest decision. United States v. Shaw, 60 S.Ct. 659, 661, 84 L.Ed. -.4
As the opinion states, complete immunity for the government has been properly criticized, and reforms have been advocated relieving the citizen- of manifest disadvantage from injury by the state. Compare Borchard, State and Municipal Liability in Tort — Proposed Statutory Reform, 20 A.B.A.J. 747, with bibliography; and United States v. Petroleum Nav. Co., 2 Cir., 109 F.2d 699. But all suggestions for legislative reform have recognized the need of limitation and have provided careful restrictions on governmental responsibility, in order to prevent indiscriminate raids on the public treasury. Although costs have been said to be an “anachronism” in modern litigation (R. H. Smith, 3 J.Am.Jud. Soc. 112, 115), a policy favoring the award of reasonable costs against the government in the discretion of the court might well be supported before Congress. Even so, it seems rather doubtful whether a case such as the present one should be included. Here appellee loaned money to the Menihan Corporation, when the latter was in financial distress and on the security of its corporate name and special trademarks. Upon insolvency of the Menihan Corporation, appellee was unable to collect its loan. In this action it was held powerless to prevent a new corporation, J. G. Menihan Corporation, from making use of the similar corporate name and the same trade-marks, and relief was also denied against J. G. Menihan, Sr., president of both corporations. D.C.W.D.N.Y., 28 F.Supp. 920. In the light of such a decision, however necessary it may be, .the adoption here of what is really a new policy seems hardly appropriate. Carried to the extent of supporting an award of counsel fees— “almost uniformly” not' granted even in equity, Gold Dust Corp. v. Hoffenberg, supra — when legal authority is so doubtful and the equities so opposed, the step, in my judgment, is quite undesirable.

 The history of 28 U.S.C.A. § 870 seems to me instructive because of what the statute does not say. That section originally provided that no bond on appeal should be required of the United States or a party acting by its direction, but in case of adverse decision “such costs as by law are taxable against the United States” or the party acting for it should be paid out of the contingent fund of the department under whose directions the proceedings were instituted. This statute was held to deal only with costs on appeal, which, however, were subject to the rules of court above cited. Treat v. Farmers’ Loan & Trust Co., 2 Cir., 185 F. 760. In 1934, it was amended to include specifically governmental corporations, 48 Stat. 1109; it has been held to apply to the appellee here. In re New York Investors, 2 Cir., 79 F.2d 179, certiorari denied Endelman v. Reconstruction Finance Corp., 296 U.S. 649, 56 S.Ct. 308, 80 L.Ed. 462.

 The force oi this precedent does not seem to me destroyed because the statute, 38 U.S.C.A. § lid, authorizes suits in the district courts and court of claims “according to the ordinary provisions of law governing actions against the United States, and such eourts shall have the power to enter judgment against the United States, with interest, in the same manner and to the same extent as if said corporation were a party defendant.” This language affords a narrow basis for according this corporation alone an immunity from costs; rather does it suggest that Congress did not think of a judgment against the United States as differing in “manner” and “extent” from one against a corporation of this nature.

 In the Keifer case, supra, the Court held the Regional Agricultural Credit Corporation, the child of the Reconstruction Finance Corporation which is subject to suit, liable for negligent care as a bailee of livestock, a wrong not “disassociated from carrying out the very transaction which brought it into existence.” In the Burr case, supra, suit by the garnishee process was held to be within the statutory authority to be sued; the Court carefully pointed out, however, that if the Administration had no funds they could not be obtained from the Treasurer of the United States by any process and hence execution in the action might prove futile.

 Compare the statement of Mr. Justice Reed: “ * * * The reasons for this immunity are imbedded in our legal philosophy. They partake somewhat of dignity and decorum, somewhat of practical administration, somewhat of the political desirability of an impregnable legal citadel where government as distinct from its functionaries may operate undisturbed by the demands of litigants. A sense of justice has brought a progressive relaxation by legislative enactments of the rigor of the immunity rule. As representative governments attempt to ameliorate inequalities as necessities will permit, prerogatives of the government yield to the needs of the citizen. * * * It is not our right to extend the waiver of sovereign immunity more broadly than has been directed by the Congress.”