FEDERAL LAND BANK OF SAINT PAUL v. GEFROH

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Docket Number

Civ. No. 11051.

Attorney(S)

Anderson Dobrovolny, Minot, for plaintiff and appellee. Shelley Lashkowitz, Lashkowitz Law Offices, Fargo, for defendant and appellant.

Judges

MESCHKE, Justice.

Acts

Banks And Banking — Farm Credit System — Farm Credit Banks — Establishment, Charters, Titles, Branches
Banks And Banking — Farm Credit System — Farm Credit Banks — Board Of Directors

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Smart Summary

Factual and Procedural Background

In February 1984, the Federal Land Bank of Saint Paul obtained a judgment of foreclosure on Gordon G. Gefroh's farm property. Gefroh failed to redeem the property, and it was conveyed to the Bank by sheriff's deed in April 1985. Subsequently, the Bank initiated an action to evict Gefroh and obtain possession of the property. The Rolette County Court granted the Bank restitution and immediate possession and later denied Gefroh's motion to vacate that judgment. Gefroh appealed both the eviction judgment and the denial of his motion to vacate.

Legal Issues Presented

Whether the Federal Land Bank of Saint Paul is barred by § 10-22-19, N.D.C.C., from maintaining this action in state court because it is a "foreign corporation" without a certificate of authority to do business in North Dakota.
Whether the property, having title derived from a federal land patent, is immune from mortgage foreclosure.

Arguments of the Parties

Defendant and Appellant (Gordon G. Gefroh)

The Bank is a "foreign corporation" under § 10-22-19, N.D.C.C., and lacking a certificate of authority to do business in North Dakota, it cannot maintain this action.
The property is immune from mortgage foreclosure because its title originates from a federal land patent.

Plaintiff and Appellee (Federal Land Bank of Saint Paul)

The Bank is a federally chartered instrumentality of the United States and thus not a "foreign corporation" subject to state certificate of authority requirements.
The property is subject to foreclosure despite its federal land patent origin, as mortgages on government land under homestead laws are valid and enforceable.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95 (1941)	Recognition of federal land banks as federally chartered instrumentalities of the United States.	Supported the characterization of the Bank as a federally chartered entity empowered to sue and be sued.
Federal Land Bank of Omaha v. Felt, 368 N.W.2d 592 (S.D. 1985)	Corporations created by the United States are not "foreign corporations" in states where they transact business pursuant to congressional authority.	Used to conclude the Bank is not a foreign corporation subject to state certificate of authority requirements.
Adam v. McClintock, 21 N.D. 483, 131 N.W. 394 (1911)	Validity of mortgages on government lands held under homestead laws.	Rejected the claim that federal land patent title immunizes property from mortgage foreclosure.

Court's Reasoning and Analysis

The court first addressed the status of the Federal Land Bank of Saint Paul under state law. It noted that federal land banks are federally chartered instrumentalities authorized by Congress to sue and be sued. Citing federal statutes and relevant case law, the court determined that such banks are not "foreign corporations" under § 10-22-19, N.D.C.C., and thus are not required to obtain a certificate of authority to maintain a suit in state court.

Regarding the immunity claim, the court held that title derived from a federal land patent does not exempt the property from mortgage foreclosure. It relied on precedent establishing that mortgages on government lands held under homestead laws are valid and enforceable. Since Gefroh mortgaged the property to the Bank in exchange for a loan, the property was subject to foreclosure.

Consequently, the court affirmed the county court's judgment evicting Gefroh and granting possession to the Bank.

Holding and Implications

The judgment evicting Gordon G. Gefroh and granting possession of the property to the Federal Land Bank of Saint Paul is affirmed.

The decision confirms that federally chartered land banks are not "foreign corporations" under North Dakota law and can maintain foreclosure and eviction actions without a state certificate of authority. It also establishes that property title originating from a federal land patent does not provide immunity from mortgage foreclosure. This ruling directly affects the parties by upholding the eviction and possession order but does not establish new legal precedent beyond applying existing principles.

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FEDERAL LAND BANK OF SAINT PAUL, a body corporate, Plaintiff and Appellee, v. Gordon G. GEFROH, Defendant and Appellant.

MESCHKE, Justice.

Gordon G. Gefroh appeals from a judgment evicting him from his farm and granting possession of it to the Federal Land Bank of Saint Paul, and from an order denying his motion to vacate the judgment. Gefroh asserts that the Bank is barred by § 10-22-19, N.D.C.C., from maintaining this action in state court; and that, because title to the property stems from a federal land patent, it was immune from mortgage foreclosure. We reject both contentions and affirm.

During February 1984, the Bank obtained a judgment of foreclosure on Gefroh's property. Gefroh failed to redeem and the property was conveyed to the Bank by sheriff's deed in April 1985. The Bank then sued to remove Gefroh and to obtain possession of the property. Following a hearing, the county court decreed "the restitution and immediate possession" of the property to the Bank. The county court also denied Gefroh's subsequent motion to vacate this judgment.

Gefroh contends that the Bank is a "foreign corporation" within the meaning of § 10-22-19, N.D.C.C., and since it has not been issued a certificate of authority to do business in this state, it cannot bring this action.

Federal land banks are "federally chartered instrumentalities of the United States." 12 U.S.C. § 2011. See also Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1, 86 L.Ed. 65 (1941). Each federal land bank is a "body corporate" which has the power to "[s]ue and be sued." 12 U.S.C. § 2012(4). It is well settled that "[c]orporations created by the authority of the United States are not foreign corporations but have a legal existence in every state in which they may transact business pursuant to the authority conferred upon them by Congress." Federal Land Bank of Omaha v. Felt, 368 N.W.2d 592, 595 (S.D. 1985). See generally 17 Fletcher, Cyclopedia of the Law of Private Corporations § 8291 (1977). Thus, we conclude that the Bank, as a federally chartered corporation, is not a "foreign corporation" subject to § 10-22-19, N.D.C.C., and therefore it is not required to obtain a certificate of authority in order to maintain this action. Felt, supra. See also § 10-22-01, particularly subsections (7) and (8), N.D.C.C.

Gefroh's assertion that his property was immune from mortgage foreclosure because title stemmed from a federal land patent is completely without merit. Even "an entryman on government lands, holding the same under the homestead laws, may give a valid mortgage thereon, . . ." Adam v. McClintock, 21 N.D. 483, 488, 131 N.W. 394, 396 (1911). Gefroh mortgaged his property to the Bank in return for a loan. Therefore, his property was subject to foreclosure action.

The judgment evicting Gefroh is affirmed.

ERICKSTAD, C.J., and LEVINE, VANDE WALLE and GIERKE, JJ., concur.