Federal Land Bank v. Priddy

Background

A real estate broker sued a federal land bank in Arkansas to recover a brokerage commission and began the case by attaching the bank’s real estate under state law. The bank was organized under the Federal Farm Loan Act and based in Missouri. It argued the Arkansas seizure law did not apply because it was a federal agency and immune from attachment (a court seizure of property during a lawsuit). Arkansas courts held the bank was a foreign corporation subject to attachment, and the Supreme Court reviewed whether the bank was exempt from such judicial process.

Reasoning

The Court noted federal land banks are federal instrumentalities but also carry many private business features: private stockholders, profit-making activities, contracts, and power to hold and sell land. The Farm Loan Act explicitly allows the banks “to sue and be sued... as fully as natural persons,” so the question became whether that includes ordinary court remedies like attachment and execution. Comparing the banks to private joint stock land banks and to historical laws about national banks, the Court found strong evidence Congress intended liability to suit to include judicial seizures. The Court rejected an implied immunity from attachment and said Congress specifically exempted the banks from taxation but not from seizure to satisfy judgments. The Court affirmed the lower ruling, while reserving a different result if attachment would directly interfere with federal functions.

Real world impact

Creditors can use state attachment and execution procedures against federal land banks like private banks in similar suits, making it easier to hold bank property for unpaid judgments unless the seizure would disrupt essential federal functions.