Smith v. Kan. City Title & Tr. Co.

255 U.S. 180, 41 S. Ct. 243 (1921)

 

RULE:

Section 27 of the Federal Farm Loan Act of July 17, 1916 (Act), ch. 245, 39 Stat. 360, as amended January 18, 1918, ch. 9, 40 Stat. 431, provides that Farm Loan Bonds issued under the provisions of the Act by Federal Land Banks or Joint Stock Land Banks shall be a lawful investment for all fiduciary and trust funds, and may be accepted as security for all public deposits.

FACTS:

Appellant shareholder sought to enjoin appellee trust company from investing appellee's funds in farm loan bonds issued by federal land banks or joint stock land banks under the authority of the Federal Farm Loan Act of July 17, 1916, ch. 245, 39 Stat. 360, as amended January 18, 1918, ch. 9, 40 Stat. 431 (the Acts), on the ground that the Acts were unconstitutional exercises of Congressional authority. The district court held in appellee's favor. Appellant sought the court's review. The Supreme Court of the United States affirmed the district court’s decision.

ISSUE:

Could appellee trust company invest in farm loans issued under the authority of the Federal Farm Loan Act of July 17, 1916, ch. 245, 39 Stat. 360, as amended January 18, 1918, ch. 9, 40 Stat. 431?

ANSWER:

Yes.

CONCLUSION:

The creation of the banks, and the grant of authority to them to act for the Government as depositaries of public moneys and purchasers of Government bonds, brought them within the creative power of Congress although they might be intended, in connection with other privileges and duties, to facilitate the making of loans upon farm security at low rates of interest.

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