May Department Stores Co. v. Smith

572 F.2d 1275
CourtCourt of Appeals for the Eighth Circuit
DecidedMarch 31, 1978
DocketNos. 77-1848, 77-1849
StatusPublished
Cited by14 cases

This text of 572 F.2d 1275 (May Department Stores Co. v. Smith) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
May Department Stores Co. v. Smith, 572 F.2d 1275 (8th Cir. 1978).

Opinion

PER CURIAM.

These consolidated appeals from the United States District Court for the Eastern District of Missouri1 present the narrow question whether the Veterans Administration is immune to garnishment procedures to effect judgments in state courts.

James Edward Smith and Mable M. Walton, both employees of the Veterans Administration, made several purchases on credit from the Famous-Barr Department Store, a division of appellant May Department Stores Company. After they failed to pay the bills duly submitted to them, appellant filed suit in state court and obtained judgments against them. Appellant then sought to garnish their wages. The Veterans Administration, as garnishee, successfully sought to remove the action to the federal district court. The Veterans Administration then moved to dismiss and these motions were granted on the basis that the Veterans Administration is immune to garnishment procedures to effect judgments in state courts. We affirm.

“It long has been established, of course, that the United States, as sovereign, ‘is immune from suit save as it consents to be sued . . . and the terms of its consent to be sued in any court define that court’s jurisdiction to entertain the suit.’ ” United States v. Testan, 424 U.S. 392, 399, [96 S.Ct. 948, 953, 47 L.Ed.2d 114] (1976), quoting United States v. Sherwood, 312 U.S. 584, 586, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). See also Bor-Son Building Corp. v. Heller, No. 77-1632, 572 F.2d 174, at 177 (8th Cir. March 8, 1978). This general rule of sovereign immunity has also long been applied to suits seeking to garnish the wages of employees of the United States. See, e. g., Buchanan v. Alexander, 45 U.S. (4 How.) 20, 11 L.Ed. 857 (1846).

Although the general rule of immunity from garnishment remains intact,2 courts [1277]*1277have been liberal in finding that the immunity has been waived. The most frequent basis for finding a waiver of immunity, and the only basis to do so in this case, has been congressional enactment of statutes authorizing federal agencies to sue and be sued in courts of competent jurisdiction. See, e. g., Reconstruction Finance Corp. v. Menihan Corp., 312 U.S. 81, 61 S.Ct. 485, 85 L.Ed. 595 (1941); Bor-Son Building Corp. v. Heller, supra; May Dept. Stores Co. v. Williamson, 549 F.2d 1147 (8th Cir. 1977). As we have recently noted, the words “sue and be sued” normally embrace all civil process incident to legal proceedings, including garnishment procedures. See May Dept. Stores Co. v. Williamson, supra.

The “sue and be sued” clause covering the Veterans Administration, 38 U.S.C. § 1820(a)(1), as it read at the time this suit was filed, provided:

(a) Notwithstanding the provisions of any other law, with respect to matters arising by reason of this chapter, the Administrator may—
(1) sue and be sued in the Administrator’s official capacity in any court of competent jurisdiction, State or Federal .

At first blush, this “sue and be sued” clause might appear to be a waiver of immunity in regard to garnishment proceedings. One court has so held. See Chicago Housing Authority v. Davis, No. 75 C 2133 (N.D.Ill. Nov. 29, 1975).

We are persuaded, however, that the Davis case was incorrectly decided and that the better reasoned view is that expressed in DePaul Community Health Center v. Campbell, 445 F.Supp. 484, No. 77-025 C (4) (E.D.Mo. March 29,1977), a case relied upon by the district courts in the cases currently before us. In Campbell the court noted that this “sue and be sued” clause is expressly limited to “matters arising by reason of this chapter,” and that the chapter referred to is chapter 37, entitled “Home, Condominium, and Mobile Home Loans.” Accordingly, the Campbell court distinguished cases where the “sue and be sued” clause was drafted in general terms, see, e. g., May Dept. Stores Co. v. Williamson, supra, and cases where the “sue and be sued” clause related to statutory provisions dealing with agency employees, see, e. g., Federal Housing Admin, v. Burr, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724 (1940), and held that the waiver of immunity in 38 U.S.C. § 1820(a)(1) did not extend to garnishment proceedings.

We conclude that the result reached in Campbell and the cases currently before us accurately assesses the congressional intent in enacting 38 U.S.C. § 1820(a)(1). Our conclusion is bolstered by the fact that Congress has recently amended this section. As amended the section provides:

(a) Notwithstanding the provisions of any other law, with respect to matters arising by reason of this chapter, the Administrator may—
(1) sue and be sued in the Administrator’s capacity in any court of competent jurisdiction, State or Federal, but nothing in this clause shall be construed as authorizing garnishment or attachment against the Administrator, the Veterans’ Administration, or any of its employees . . . . (emphasis added).

The legislative history of this amendment includes the following language:

Reaffirmation of Congressional Intent with Respect to Limited Waiver of Sovereign Immunity (Section 404)
Section 404 [38 U.S.C. § 1820(a)(1)] reaffirms the intent of the Congress with respect to the limited waiver of sovereign immunity provided by section 1820 of title 38, United States Code, which permits suits by and against the Administrator of Veterans’ Affairs in, but specifically limits such suits to, home-loan guaranty matters. Despite the clear intent and statutory language of this section, in Chicago Housing Authority v. Davis, Civil No. 75 C 2133, November 20, 1975, the United States District Court for the Northern District of Illinois held that section 1820(a)(1), which provides that the Administrator, with respect to matters arising by reason of chapter 37 (relating to the VA’s home-loan guaranty pro[1278]*1278gram), may “sue and be sued in the Administrator’s official capacity,” permitted garnishment of a VA employee’s salary for the benefit of a creditor on the theory that this provision constituted a complete waiver of sovereign immunity.

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Bluebook (online)
572 F.2d 1275, Counsel Stack Legal Research, https://law.counselstack.com/opinion/may-department-stores-co-v-smith-ca8-1978.