THE UNITED STATES IS A CORPORATION
Gyeorgos Ceres Hatonn/ Aton
CORPORATE CHURNINGS
pp. 115-116.
To the editor:
From MEDIA BYPASS, letter to the editor, 3/98: [quoting]
Regarding the [February] letter from Bernard Sussman, J.C., M.L.S., C.P., “Reader Disputes Notion that
For Mr. Sussman’s further edification, the U.S. Court of Appeals [in the case of Lewis v. United States (1982, 680 F. 2d 1240)] stated, “The Federal Reserve Banks are independent, privately owned and locally controlled corporations.” The Federal Reserve Bank is the latest, but not the first, corporation to commit constructive treason against the natural free live American Citizens. In case Mr. Sussman does not know what constructive treason is, I recommend that he get a refund from the government education centers that put those capital letters behind his name.
One more thing—the so-called “Civil War” in this country was not about slavery; Property rights, in rem and absolute, was the issue and still is today. This may come as a shock, but the wanna-be controllers lied to everyone then as they continue to do so today.
Erick Jones, #167157 POB 900 JCCC,
[Editor’s note: Mr. Jones, currently incarcerated in a “franchise agent/corporate prison, technically not a ‘federal’ prison”, invites correspondence directed to the above address.] [End quoting]
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CLERAFIELD TRUST CO. V. UNITED STATES (318 U.S. 363-371
Clearfield Trust Co. v. United States No. 490 Argued February 5, 1943 Decided March 1, 1943 318 U.S. 363 CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE THIRD CIRCUIT 1. When the United States disburses its funds or pays its debts, it is exercising a constitutional function or power; and its rights and duties on commercial paper so issued are governed by federal, rather than local, law. United State v. Guaranty Trust Co., 293 U. S. 340, distinguished. P. 318 U. S. 366. 2. In the absence of an applicable Act of Congress, it is for the federal courts to fashion the governing rule of federal law according to their own standards. P. 318 U. S. 367. 3. Reasons which at times may make state law an appropriate federal rule are singularly inappropriate in determining the rights and duties of the United States on commercial paper which it issues, since the desirability of a uniform rule in such cases is plain. P. 318 U. S. 367. 4. Although the federal law merchant, developed under Swift v. Tyson, represented general commercial law, rather than a choice of a federal rule designed to protect a federal right, it nevertheless stands as a convenient source of reference for fashioning federal rules applicable to such federal questions as are here involved. P. 318 U. S. 367. 5. The right of a drawee to recover from one who presents for payment a check upon which the endorsement of the payee was forged accrues when the payment is made. P. 318 U. S. 368. 6. The drawee, whether it be the United States or another, is not chargeable with the knowledge of the signature of the payee. P. 318 U. S. 369. 7. If it is shown that the drawee on learning of the forgery did not give prompt notice of it and that damage resulted, recovery by the drawee is barred. P. 318 U. S. 369. That the drawee is the United States and the laches that of its employees is immaterial. 8. The United States is not excepted from the general rules governing the rights and duties of drawees by the vastness of its dealings or by the fact that it must act through agents. P. 318 U. S. 369. 9. To bar recovery by a drawee, the damage alleged to have been occasioned by delay in giving notice of a forgery must be established and not left to conjecture. P. 318 U. S. 369. 10. In this case, the showing as to damage resulting from delay of the United States in giving notice of a forgery, held not sufficient to bar recovery. P. 318 U. S. 370. It appeared that the presenting bank could still recover from its endorser, and the only showing on the part of the latter was that, if a check cashed for a customer is returned unpaid or for reclamation a short time after the date on which it is cashed, the employees can often locate the person who cashed it. 130 F.2d 93, affirmed. Certiorari, 317 U.S. 619, to review the reversal of a judgment against the United States in an action brought by it to recover an amount paid on a forged Government check. MR. JUSTICE DOUGLAS delivered the opinion of the Court. On April 28, 1936, a check was drawn on the Treasurer of the United States through the Federal Reserve Bank of Philadelphia to the order of Clair A. Barner in the amount of $24.20. It was dated at Harrisburg, Pennsylvania, and was drawn for services rendered by Barner to the Works Progress Administration. The check was placed in the mail addressed to Barner at his address in Mackeyville, Pa. Barner never received the check. Some unknown person obtained it in a mysterious manner and presented it to the J. C. Penney Co. store in Clearfield, Pa., representing that he was the payee and identifying himself to the satisfaction of the employees of J. C. Penney Co. He endorsed the check in the name of Barner and transferred it to J. C. Penney Co. in exchange for cash and merchandise. Barner never authorized the endorsement nor participated in the proceeds of the check. J. C. Penney Co. endorsed the check over to the Clearfield Trust Co., which accepted it as agent for the purpose of collection and endorsed it as follows: "Pay to the order of Federal Reserve Bank of Philadelphia, Prior Endorsements Guaranteed." [Footnote 1] Clearfield Trust Co. collected the check from the United States through the Federal Reserve Bank of Philadelphia and paid the full amount thereof to J. C. Penney Co. Neither the Clearfield Trust Co. nor J. C. Penney Co. had any knowledge or suspicion of the forgery. Each acted in good faith. On or before May 10, 1936, Barner advised the timekeeper and the foreman of the W.P.A. project on which he was employed that he had not received the check in question. This information was duly communicated to other agents of the United States, and, on November 30, 1936, Barner executed an affidavit alleging that the endorsement of his name on the check was a forgery. No notice was given the Clearfield Trust Co. or J. C. Penney Co. of the forgery until January 12, 1937, at which time the Clearfield Trust Co. was notified. The first notice received by Clearfield Trust Co. that the United States was asking reimbursement was on August 31, 1937. This suit was instituted in 1939 by the United States against the Clearfield Trust Co., the jurisdiction of the federal District Court being invoked pursuant to the provisions of § 24(1) of the Judicial Code, 28 U.S.C. § 41(1). The cause of action was based on the express guaranty of prior endorsements made by the Clearfield Trust Co. J. C. Penney Co. intervened as a defendant. The case was heard on complaint, answer and stipulation of facts. The District Court held that the rights of the parties were to be determined by the law of Pennsylvania, and that, since the United States unreasonably delayed in giving notice of the forgery to the Clearfield Trust Co., it was barred from recovery under the rule of Market Street Title & Trust Co. v. Chelten T. Co., 296 Pa. 230, 145 A. 848. It accordingly dismissed the complaint. On appeal, the Circuit Court of Appeals reversed. 130 F.2d 93. The case is here on a petition for a writ of certiorari which we granted, 317 U.S. 619, because of the importance of the problems raised and the conflict between the decision below and Security-First Nat. Bank v. United States, 103 F.2d 188, from the Ninth Circuit. We agree with the Circuit Court of Appeals that the rule of Erie R. Co. v. Tompkins, 304 U. S. 64, does not apply to this action. The rights and duties of the United States on commercial paper which it issues are governed by federal, rather than local, law. When the United States disburses its funds or pays its debts, it is exercising a constitutional function or power. This check was issued for services performed under the Federal Emergency Relief Act of 1935, 49 Stat. 115. The authority to issue the check had its origin in the Constitution and the statutes of the United States, and was in no way dependent on the laws of Pennsylvania or of any other state. Cf. Board of Commissioners v. United States, 308 U. S. 343; Royal Indemnity Co. v. United States, 313 U. S. 289. The duties imposed upon the United States and the rights acquired by it as a result of the issuance find their roots in the same federal sources. [Footnote 2] Cf. Deitrick v. Greaney, 309 U. S. 190; D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U. S. 447. In absence of an applicable Act of Congress, it is for the federal courts to fashion the governing rule of law according to their own standards. United States v. Guaranty Trust Co., 293 U. S. 340, is not opposed to this result. That case was concerned with a conflict of laws rule as to the title acquired by a transferee in Yugoslavia under a forged endorsement. Since the payee's address was Yugoslavia, the check had "something of the quality of a foreign bill," and the law of Yugoslavia was applied to determine what title the transferee acquired. In our choice of the applicable federal rule, we have occasionally selected state law. See Royal Indemnity Co. v. United States, supra. But reasons which may make state law at times the appropriate federal rule are singularly inappropriate here. The issuance of commercial paper by the United States is on a vast scale and transactions in that paper from issuance to payment will commonly occur in several states. The application of state law, even without the conflict of laws rules of the forum, would subject the rights and duties of the United States to exceptional uncertainty. It would lead to great diversity in results by making identical transactions subject to the vagaries of the laws of the several states. The desirability of a uniform rule is plain. And while the federal law merchant developed for about a century under the regime of Swift v. Tyson, 16 Pet. 1, represented general commercial law, rather than a choice of a federal rule designed to protect a federal right, it nevertheless stands as a convenient source of reference for fashioning federal rules applicable to these federal questions. United States v. National Exchange Bank, 214 U. S. 302, falls in that category. The Court held that the United States could recover as drawee from one who presented for payment a pension check on which the name of the payee had been forged, in spite of a protracted delay on the part of the United States in giving notice of the forgery. The Court followed Leather Manufacturers Bank v. Merchants Bank, 128 U. S. 26, which held that the right of the drawee against one who presented a check with a forged endorsement of the payee's name accrued at the date of payment, and was not dependent on notice or demand. The theory of the National Exchange Bank case is that the who presents a check for payment warrants that he has title to it and the right to receive payment. [Footnote 3] If he has acquired the check through a forged endorsement, the warranty is breached at the time the check is cashed. See Manufacturers Trust Co. v. Harriman Nat. Bank Trust Co., 146 Misc. 551, 262 N.Y.S. 482; Bergman v. Avenue State Bank, 284 Ill.App. 516, 1 N.E.2d 432. The theory of the warranty has been challenged. Ames, The Doctrine of Price v. Neal, 4 Harv.L.Rev., 297, 301-302. It has been urged that "the right to recover is a quasi-contractual right, resting upon the doctrine that one who confers a benefit in misreliance upon a right or duty is entitled to restitution." Woodward, Quasi Contracts (1913) § 80; First Nat. Bank v. City Nat. Bank, 182 Mass. 130, 134, 65 N.E. 24. But whatever theory is taken, we adhere to the conclusion of the National Exchange Bank case that the drawee's right to recover accrues when the payment is made. There is no other barrier to the maintenance of the cause of action. The theory of the drawee's responsibility where the drawer's signature is forged (Price v. Neale, 3 Burr. 1354; United States v. Chase Nat. Bank, 252 U. S. 485) is inapplicable here. The drawee, whether it be the United States or another, is not chargeable with the knowledge of the signature of the payee. United States v. National Exchange Bank, supra, p. 214 U. S. 317; State v. Broadway Nat. Bank, 153 Tenn. 113, 282 S.W. 194. The National Exchange Bank case went no further than to hold that prompt notice of the discovery of the forgery was not a condition precedent to suit. It did not reach the question whether lack of prompt notice might be a defense. We think it may. If it is shown that the drawee, on learning of the forgery, did not give prompt notice of it, and that damage resulted, recovery by the drawee is barred. See Ladd & Tilton Bank v. United States, 30 F.2d 334; United States v. National Rockland Bank, D.C., 35 F.Supp. 912; United States v. National City Bank, 28 F.Supp. 144. The fact that the drawee is the United States and the laches those of its employees are not material. Cooke v. United States, 91 U. S. 389, 91 U. S. 398. The United States, as drawee of commercial paper, stands in no different light than any other drawee. As stated in United States v. National Exchange Bank, 270 U. S. 527, 270 U. S. 534, "The United States does business on business terms." It is not excepted from the general rules governing the rights and duties of drawees "by the largeness of its dealings and its having to employ agents to do what if done by a principal in person would leave no room for doubt." Id., p. 270 U. S. 535. But the damage occasioned by the delay must be established, and not left to conjecture. Cases such as Market St. Title & Trust Co. v. Chelten Trust Co., supra, place the burden on the drawee of giving prompt notice of the forgery -- injury to the defendant being presumed by the mere fact of delay. See London & River Plate Bank v. Bank of Liverpool, [1896] 1 Q.B. 7. But we do not think that he who accepts a forged signature of a payee deserves that preferred treatment. It is his neglect or error in accepting the forger's signature which occasions the loss. See Bank of Commerce v. Union Bank, 3 N.Y. 230, 236. He should be allowed to shift that loss to the drawee only on a clear showing that the drawee's delay in notifying him of the forgery caused him damage. See Woodward, Quasi Contracts (1913) § 25. No such damage has been shown by Clearfield Trust Co., who, so far as appears, can still recover from J. C. Penney Co. The only showing on the part of the latter is contained in the stipulation to the effect that, if a check cashed for a customer is returned unpaid or for reclamation a short time after the date on which it is cashed, the employees can often locate the person who cashed it. It is further stipulated that, when J. C. Penney Co. was notified of the forgery in the present case, none of its employees was able to remember anything about the transaction or check in question. The inference is that the more prompt the notice, the more likely the detection of the forger. But that falls short of a showing that the delay caused a manifest loss. Third Nat. Bank v. Merchants Nat. Bank, 76 Hun 475, 27 N.Y.S. 1070. It is but another way of saying that mere delay is enough. Affirmed. MR. JUSTICE MURPHY and MR. JUSTICE RUTLEDGE did not participate in the consideration or decision of this case. Guarantee of all prior indorsements on presentment for payment of such a check to Federal Reserve banks or member bank depositories is required by Treasury Regulations. 31 Code of Federal Regulations § 202.32, § 202.33. Various Treasury Regulations govern the payment and endorsement of government checks and warrants and the reimbursement of the Treasurer of the United States by Federal Reserve banks and member bank depositories on payment of checks or warrants bearing a forged endorsement. See 31 Code of Federal Regulations §§ 202.0, 202.32-202.34. Forgery of the check was an offense against the United States. Criminal Code § 148, 18 U.S.C. § 262. We need not determine whether the guarantee of prior endorsements adds to the drawee's rights. See Brannan's Negotiable Instruments Law (6th ed.) pp. 330-331, 816-817; First Nat. Bank v. City Nat. Bank, 182 Mass. 130, 134, 65 N.E. 24. Cf. Home Ins. Co. v. Mercantile Trust Co., 219 Mo.App. 645, 284 S.W. 834. Under the theory of the National Exchange Bank case, the warranty of the title of him who presents the check for payment would be implied in any event. See Philadelphia Nat. Bank v. Fulton Nat. Bank, 25 F.2d 995, 997. supreme.justia.com/us/318/363/case.html *************************************************U.S. Supreme Court
Clearfield Trust Co. v. United States, 318 U.S. 363 (1943)
LEWIS V. UNITED STATES (1982, 680 F.2d 1240)
No. 80-5905
UNITED STATES COURT OF APPEALS, NINTH CIRCUIT
680 F.2d 1239; 1982 U.S. App. LEXIS 20002
March 2, 1982, Submitted
April 19, 1982, Decided
As Amended June 24, 1982.
PRIOR HISTORY:
Appeal from the United States District Court for the Central District of California.
COUNSEL: Lafayette L. Blair, Compton, Cal., for plaintiff/appellant.
James R. Sullivan, Asst. U. S. Atty., Los Angeles, Cal., argued, for defendant/appellee; Andrea Sheridan Ordin, U. S. Atty., Los Angeles, Cal., on brief.
JUDGES: Before POOLE and BOOCHEVER, Circuit Judges, and SOLOMON, District Judge. n*
* The Honorable Gus J. Solomon, Senior District Judge for the District of Oregon, sitting by designation.
OPINIONBY: POOLE
OPINION: [*1240]
On July 27, 1979, appellant John Lewis was injured by a vehicle owned and operated by the Los Angeles branch of the Federal Reserve Bank of San Francisco. Lewis brought this action in district court alleging jurisdiction under the Federal Tort Claims Act (the Act), 28 U.S.C. § 1346(b). The United States moved to dismiss for lack of subject matter jurisdiction. The district court dismissed, holding that the Federal Reserve Bank is not a federal agency within the meaning of the Act and that the court therefore lacked subject matter jurisdiction. We affirm.
In enacting the Federal Tort Claims [**2] Act, Congress provided a limited waiver of the sovereign immunity of the United States for certain torts of federal employees. United States v. Orleans, 425 U.S. 807, 813, 96 S. Ct. 1971, 1975, 48 L. Ed. 2d 390 (1976). Specifically, the Act creates liability for injuries "caused by the negligent or wrongful act or omission" of an employee of any federal agency acting within the scope of his office or employment. 28 U.S.C. §§ 1346(b), 2671. "Federal agency" is defined as:
the executive departments, the military departments, independent establishments of the United States, and corporations acting primarily as instrumentalities of the United States, but does not include any contractors with the United States.
28 U.S.C. § 2671. The liability of the United States for the negligence of a Federal Reserve Bank employee depends, therefore, on whether the Bank is a federal agency under § 2671.
There are no sharp criteria for determining [**3] whether an entity is a federal agency within the meaning of the Act, but the critical factor is the existence of federal government control over the "detailed physical performance" and "day to day operation" of that entity. United States v. Orleans, 425 U.S. 807, 814, 96 S. Ct. 1971, 1975, 48 L. Ed. 2d 390 (1976), Logue v. United States, 412 U.S. 521, 528, 93 S. Ct. 2215, 2219, 37 L. Ed. 2d 121 (1973). Other factors courts have considered include whether the entity is an independent corporation, Pearl v. United States, 230 F.2d 243 (10th Cir. 1956), Freeling v. Federal Deposit Insurance Corporation, 221 F. Supp. 955 (W.D.Okla.1962), aff'd per curiam, 326 F.2d 971 (10th Cir. 1963), whether the government is involved in the entity's finances. Goddard v. District of Columbia Redevelopment Land Agency, 109 U.S. App. D.C. 304, 287 F.2d 343, 345 (D.C.Cir.1961), cert. denied, 366 U.S. 910, 81 S. Ct. 1085, 6 L. Ed. 2d 235 (1961), Freeling v. Federal Deposit Insurance Corporation, 221 F. Supp. 955, [*1241] and whether the mission of the entity furthers the policy of the United States, Goddard v. District of Columbia Redevelopment Land Agency, 287 F.2d at 345. [**4] Examining the organization and function of the Federal Reserve Banks, and applying the relevant factors, we conclude that the Reserve Banks are not federal instrumentalities for purposes of the FTCA, but are independent, privately owned and locally controlled corporations.
Each Federal Reserve Bank is a separate corporation owned by commercial banks in its region. The stockholding commercial banks elect two thirds of each Bank's nine member board of directors. The remaining three directors are appointed by the Federal Reserve Board. The Federal Reserve Board regulates the Reserve Banks, but direct supervision and control of each Bank is exercised by its board of directors. 12 U.S.C. § 301. The directors enact by-laws regulating the manner of conducting general Bank business, 12 U.S.C. § 341, and appoint officers to implement and supervise daily Bank activities. These activities include collecting and clearing checks, making advances to private and commercial entities, holding reserves for member banks, discounting the notes of member banks, and buying and selling securities on the open market. See 12 U.S.C. §§ 341 [**5] 361.
Each Bank is statutorily empowered to conduct these activities without day to day direction from the federal government. Thus, for example, the interest rates on advances to member banks, individuals, partnerships, and corporations are set by each Reserve Bank and their decisions regarding the purchase and sale of securities are likewise independently made.
It is evident from the legislative history of the Federal Reserve Act that Congress did not intend to give the federal government direction over the daily operation of the Reserve Banks:
It is proposed that the Government shall retain sufficient power over the reserve banks to enable it to exercise a direct authority when necessary to do so, but that it shall in no way attempt to carry on through its own mechanism the routine operations and banking which require detailed knowledge of local and individual credit and which determine the funds of the community in any given instance. In other words, the reserve-bank plan retains to the Government power over the exercise of the broader banking functions, while it leaves to individuals and privately owned institutions the actual direction of routine.
H.R. Report No. 69, 63 Cong. [**6] 1st Sess. 18-19 (1913).
The fact that the Federal Reserve Board regulates the Reserve Banks does not make them federal agencies under the Act. In United States v. Orleans, 425 U.S. 807, 96 S. Ct. 1971, 48 L. Ed. 2d 390 (1976), the Supreme Court held that a community action agency was not a federal agency or instrumentality for purposes of the Act, even though the agency was organized under federal regulations and heavily funded by the federal government. Because the agency's day to day operation was not supervised by the federal government, but by local officials, the Court refused to extend federal tort liability for the negligence of the agency's employees. Similarly, the Federal Reserve Banks, though heavily regulated, are locally controlled by their member banks. Unlike typical federal agencies, each bank is empowered to hire and fire employees at will. Bank employees do not participate in the Civil Service Retirement System. They are covered by worker's compensation insurance, purchased by the Bank, rather than the Federal Employees Compensation Act. Employees traveling on Bank business are not subject to federal travel regulations and do not receive government [**7] employee discounts on lodging and services.
The Banks are listed neither as "wholly owned" government corporations under 31 U.S.C. § 846 nor as "mixed ownership" corporations under 31 U.S.C. § 856, a factor considered in Pearl v. United States, 230 F.2d 243 (10th Cir. 1956), which held that the Civil Air Patrol is not a federal agency under the Act. Closely resembling the status [*1242] of the Federal Reserve Bank, the Civil Air Patrol is a non-profit, federally chartered corporation organized to serve the public welfare. But because Congress' control over the Civil Air Patrol is limited and the corporation is not designated as a wholly owned or mixed ownership government corporation under 31 U.S.C. §§ 846 and 856, the court concluded that the corporation is a non-governmental, independent entity, not covered under the Act.
Additionally, Reserve Banks, as privately owned entities, receive no appropriated funds from Congress. Cf. Goddard v. District of Columbia Redevelopment Land Agency, 109 U.S. App. D.C. 304, 287 F.2d 343, 345 (D.C.Cir.1961), cert. denied, 366 U.S. 910, 81 S. Ct. 1085, 6 L. Ed. 2d 235 (1961) [**8] (court held land redevelopment agency was federal agency for purposes of the Act in large part because agency received direct appropriated funds from Congress.)
Finally, the Banks are empowered to sue and be sued in their own name. 12 U.S.C. § 341. They carry their own liability insurance and typically process and handle their own claims. In the past, the Banks have defended against tort claims directly, through private counsel, not government attorneys, e.g., Banco De Espana v. Federal Reserve Bank of New York, 114 F.2d 438 (2d Cir. 1940); Huntington Towers v. Franklin National Bank, 559 F.2d 863 (2d Cir. 1977); Bollow v. Federal Reserve Bank of San Francisco, 650 F.2d 1093 (9th Cir. 1981), and they have never been required to settle tort claims under the administrative procedure of 28 U.S.C. § 2672. The waiver of sovereign immunity contained in the Act would therefore appear to be inapposite to the Banks who have not historically claimed or received general immunity from judicial process.
The Reserve Banks have properly been held to be federal instrumentalities for some purposes. In [**9] United States v. Hollingshead, 672 F.2d 751 (9th Cir. 1982), this court held that a Federal Reserve Bank employee who was responsible for recommending expenditure of federal funds was a "public official" under the Federal Bribery Statute. That statute broadly defines public official to include any person acting "for or on behalf of the Government." S. Rep. No. 2213, 87th Cong., 2nd Sess. (1962), reprinted in (1962) U.S. Code Cong. & Ad. News 3852, 3856. See 18 U.S.C. § 201(a). The test for determining status as a public official turns on whether there is "substantial federal involvement" in the defendant's activities. United States v. Hollingshead, 672 F.2d at 754. In contrast, under the FTCA, federal liability is narrowly based on traditional agency principles and does not necessarily lie when the tortfeasor simply works for an entity, like the Reserve Banks, which perform important activities for the government.
The Reserve Banks are deemed to [**10] be federal instrumentalities for purposes of immunity from state taxation. Federal Reserve Bank of Boston v. Commissioner of Corporations & Taxation, 499 F.2d 60 (1st Cir. 1974), after remand, 520 F.2d 221 (1st Cir. 1975); Federal Reserve Bank of Minneapolis v. Register of Deeds, 288 Mich. 120, 284 N.W. 667 (1939). The test for determining whether an entity is a federal instrumentality for purposes of protection from state or local action or taxation, however, is very broad: whether the entity performs an important governmental function. Federal Land Bank v. Bismarck Lumber Co., 314 U.S. 95, 102, 62 S. Ct. 1, 5, 86 L. Ed. 65 (1941); Rust v. Johnson, 597 F.2d 174, 178 (9th Cir. 1979), cert. denied, 444 U.S. 964, 100 S. Ct. 450, 62 L. Ed. 2d 376 (1979). The Reserve Banks, which further the nation's fiscal policy, clearly perform an important governmental function.
Performance of an important governmental function, however, [**11] is but a single factor and not determinative in tort claims actions. Federal Reserve Bank of St. Louis v. Metrocentre Improvement District, 657 F.2d 183, 185 n.2 (8th Cir. 1981), Cf. Pearl v. United States, 230 F.2d 243 (10th Cir. 1956). State taxation has traditionally been viewed as a greater obstacle to an entity's ability to perform federal functions than exposure to judicial process; therefore tax immunity is liberally applied. Federal [*1243] Land Bank v. Priddy, 295 U.S. 229, 235, 55 S. Ct. 705, 708, 79 L. Ed. 1408 (1955). Federal tort liability, however, is based on traditional agency principles and thus depends upon the principal's ability to control the actions of his agent, and not simply upon whether the entity performs an important governmental function. See United States v. Orleans, 425 U.S. 807, 815, 96 S. Ct. 1971, 1976, 48 L. Ed. 2d 390 (1976), United States v. Logue, 412 U.S. 521, 527-28, 93 S. Ct. 2215, 2219, 37 L. Ed. 2d 121 (1973).
Brink's Inc. v. Board of Governors of the Federal Reserve System, 466 F. Supp. 116 (D.D.C.1979), held that a Federal Reserve Bank is a federal [**12] instrumentality for purposes of the Service Contract Act, 41 U.S.C. § 351. Citing Federal Reserve Bank of Boston and Federal Reserve Bank of Minneapolis, the court applied the "important governmental function" test and concluded that the term "Federal Government" in the Service Contract Act must be "liberally construed to effectuate the Act's humanitarian purposes of providing minimum wage and fringe benefit protection to individuals performing contracts with the federal government." Id. 288 Mich. at 120, 284 N.W.2d 667.
Such a liberal construction of the term "federal agency" for purposes of the Act is unwarranted. Unlike in Brinks, plaintiffs are not without a forum in which to seek a remedy, for they may bring an appropriate state tort claim directly against the Bank; and if successful, their prospects of recovery are bright since the institutions are both highly solvent and amply insured.
For these reasons we hold that the Reserve Banks are not federal agencies for purposes of the Federal Tort Claims Act and we affirm the judgment of the district court.
AFFIRMED.
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