Federal Intermediate Credit Bank of Columbia v. Mitchell

Background

A Federal Intermediate Credit Bank chartered under an Act of March 4, 1923, and located in Columbia, South Carolina, sued in federal court to recover more than $3,000 on promissory notes. All of the bank’s capital stock was owned by the United States. The defendants were citizens and residents of the same State. The district court dismissed the case for lack of federal jurisdiction, and the Court of Appeals affirmed that dismissal, leading to review by this Court.

Reasoning

The central question was whether a bank created by Congress and wholly owned by the Government could bring its suit in a federal court. The Court examined the statutory scheme: one provision treats these banks as citizens of the State where located, while another statute bars federal jurisdiction over corporations created by Congress except when the United States owns more than half the stock. The lower courts relied on rules governing national banks, but the Court concluded that those rules did not remove the separate statutory exception. The Court explained that the state‑citizenship rule governs where suits may be brought but does not strip federal courts of jurisdiction when Congress has plainly provided an ownership‑based exception. Because the United States owned all the bank’s stock, the exception applied and federal jurisdiction existed.

Real world impact

The Court reversed the dismissal, allowing the Government‑owned bank’s claim to proceed in federal court. The decision clarifies that federally chartered banks wholly owned by the Government can rely on the statutory ownership exception to bring or defend suits in federal court. This ruling decides jurisdiction only; the underlying dispute over the promissory notes must still be decided on the merits in the trial court.