Wheeler v. Greene

Background

A federal receiver appointed by the Federal Farm Loan Board sued a person who held stock in a Joint Stock Land Bank to collect an assessment equal to the stock’s par value. The assessment had been levied by the Farm Loan Board and the receiver was ordered to collect it. The local trial court dismissed the suit, the appeals court allowed it to proceed, and the Supreme Court agreed to decide whether the Board could make such an assessment or the receiver could sue to enforce the stockholder’s liability under the Federal Farm Loan Act.

Reasoning

The central question was whether the Farm Loan Act gave the Board or its receiver power to enforce stockholders’ statutory liability by levying assessments and suing to collect them. The Court compared the Farm Loan Act with an earlier national bank law that explicitly allowed receivers to enforce stockholder liability, and it found that the Farm Loan Act omitted that language. The opinion explained the omission was intentional because joint stock land banks are local, do not issue national currency, and rely on mortgage security, so summary enforcement from Washington was unnecessary. The Court held the receiver’s authority to collect bank assets did not include suing to force stockholders to pay, because that liability is not an asset of the bank.

Real world impact

The decision prevents the Farm Loan Board and its receiver from using a federal collection route to impose stockholder assessments. Creditors and others must enforce stockholder liability through ordinary local equity suits, where assessments can be adjusted and the stockholder can be heard. This affects stockholders, creditors, and the administration of Joint Stock Land Banks moving forward.