persons eligible thereunder for the purpose of purchasing farms. Title II of the act entitled "Rehabilitation Loans," provided in pertinent part:

"SEC. 21. (a) Out of the funds made available under section 23, the Secretary shall have power to make loans to eligible individuals for the purchase of livestock, farm equipment, supplies, and for other farm needs (including minor improvements and minor repairs to real property), and for the refinancing of indebtedness, and for family subsistence.

"SEC. 23. (a) For the fiscal year ending June 30, 1938, the balances of funds available to the Secretary for loans and relief to farmers, pursuant to Executive Order Numbered 7530 of December 31, 1936, as amended by Executive Order Numbered 7557 of February 19, 1937, which are unexpended on June 30, 1937, are authorized to be appropriated to carry out the provisions of this title.

"(b) The President is authorized to allot to the Secretary, out of appropriations made for relief or work relief for any fiscal year ending prior to July 1, 1939, such sums as he determines to be necessary to carry out the provisions of this title and to enable the Secretary to carry out such other forms of rehabilitation of individuals eligible under this title to receive loans as may be authorized by law and designated in the Executive order directing the allotment."

By section 43 of that act it was provided:

"SEC. 43. The Secretary is authorized to continue to perform such of the functions vested in him pursuant to Executive Order Numbered 7530 of December 31, 1936, as amended by Executive Order Numbered 7557 of February 19, 1937, and pursuant to Public Act Numbered 845, approved June 29, 1936 (49 Stat. 2035), as shall be necessary only for the completion and administration of those resettlement projects, rural rehabilitation projects for resettlement purposes, and land development and land utilization projects, for which funds have been allotted by the President, and the balances of funds available to the Secretary for said purposes which are unexpended on June 30, 1937, are authorized to be appropriated to carry out said purposes: Provided, That any land held by the United States under the supervision of the Secretary pursuant to said Executive order may where suitable be utilized for the purposes of title I of this Act, and the Secretary may sell said land and make loans for the necessary improvement thereof to such individuals and upon such terms as shall be in accordance with the provisions of said title."

It is evident that the Bankhead-Jones Farm Tenant Act established a policy and procedure for loans to those engaged in agriculture, both for purchase of farms and for rehabilitation and that prior authority to make such loans must be qualified in view of the provisions of that act, especially sections 23 and 43 which appear to restrict the exercise of functions vested previously in the Secretary of Agriculture by Executive Order No. 7530, December 31, 1936, as amended by Executive Order No. 7557, February 19, 1937.

Subsequent appropriation acts providing funds for rural rehabilitation are not essentially dissimilar in terms to those which preceded the Bankhead-Jones Farm Tenant Act. For example, the Emergency Relief Appropriation Act of 1938 (52 Stat. 809, 810), provides that the funds "shall be available for administration, loans, and rural rehabilitation for needy persons.' The provision contained in section 3 of the Emergency Relief Act, 1939 (53 Stat. 927, 929), is “In order to continue to provide assistance through rural rehabilitation and relief to needy farmers * * *" and the funds are available, among other things, for "(1) administration * * *; (2) farm debt adjustment service and making and servicing of loans under this section and prior law; (3) loans; (4) relief The Emergency Relief Act of 1941 (54 Stat. 611, 614); the Depart ment of Agriculture Appropriation Act, 1942 (55 Stat. 439); and the proposed language of the pending appropriation act for the fiscal year 1943 contain substantially similar provisions with respect to rural rehabilitation funds.

* *

It is indicated in the statements of Farm Security Administrator Baldwin, page 302 of the hearings on the Agriculture Department appropriation bill for 1943 that the Department considers the authority to make loans from rural rehabilitation funds includes the authority to make loans not only to individuals and cooperatives but, also, to corporations of the type which have been organized here, to finance the purchase of land, but it is not apparent on what legal basis that view is predicated; and an examination of prior hearings discloses that such has not heretofore been the understanding of the Department and the congressional committees.

In the hearings (p. 194) before the subcommittee of the Committee on Appropriations, House of Representatives, on the Emergency Relief Appropriation Act

of 1938, Secretary of Agriculture Wallace explained the program of rehabilitation loans to farmers, in pertinent part, as follows:

"In essence, the program consists of making small loans to needy farm families who cannot obtain adequate credit from any other source and accompanying them with enough training in sound farming practices to insure the best possible use of the money. Although the size of the loans naturally varies with the type of agriculture in each area, they have averaged approximately $300 each. Ordinarily they are just large enough to provide the necessities for carrying on farming operations-seed, livestock, a few tools, and sometimes food and clothing to tide the family over until the first harvest."

* *

In justifying the appropriation of funds for rural rehabilitation before the subcommittee of the Appropriation Committee, House of Representatives, page 181 of the hearings on the work relief and relief appropriation, 1940, the purpose of the appropriation was said to be "* to make loans * * * to enable such eligible families to acquire livestock, farm equipment, supplies, and for other farm needs (including improvements and repairs to real property), and for the refinancing of chattel mortgage indebtedness, and for family subsistence * * * "" Substantially similar language was used to explain the purpose of rural rehabilitation appropriations in the hearings before the subcommittee of the Appropriation Committee of the House of Representatives in connection with the Emergency Relief Appropriation Act, 1941, the Agriculture Department Appropriation Act, 1941, and the Department of Agriculture Appropriation Act, 1942. In the hearings on the latter act (p. 150), it is indicated that the average loan for rural rehabilitation, cumulative as of June 30, 1940, was $277, as compared with an estimated average of $7,000 per family under the present program. There is no indication in such hearings or elsewhere that rural rehabilitation funds had been or were intended to be loaned either to individuals, cooperatives, or corporations to finance the purchase of farms under a program coextensive in scope with that authorized by the Bankhead-Jones Farm Tenant Act. On the contrary, the specific provision made under title I of the Bankhead-Jones Farm Tenant Act for loans to finance the purchase of farms would preclude the use of funds appropriated for "Loans, grants, and rural rehabilitation" for the same or similar purposes. (Compare 19 Comp. Gen. 893.) The decisions of October 12, 1935, and March 16, 1936, A-63140, to which you refer, involved community projects authorized prior to the Bankhead-Jones Farm Tenant Act and, therefore, are distinguishable from the present situation. (Compare 39 Op. Atty. Gen. 254.)

While the conclusion above reached as to the nonavailability of the appropriation involved would be sufficient to dispose of the matter presented, it is deemed appropriate to consider at this time the lack of authority for the means employed in effectuating the loans or land acquisitions even if funds otherwise were available therefor.

The procedure adopted by the Farm Security Administration apparently has been to direct the organization by its employees of nonstock, nonprofit corporations in the State in which it is desired to acquire land-such employees serving as officers and directors of the corporations—and to loan to such corporations from rural rehabilitation funds amounts sufficient to purchase the land. It is evident that the corporations are not in any sense farmers' cooperatives. In fact at the time the loan is made to the corporation, it has not yet been determined who shall ultimately purchase and occupy the land to be acquired by the corporation. If the corporations are to be considered as private corporations, then the policy of the Congress with regard to loans to such corporations is evidenced in section 46 of the Bankhead-Jones Farm Tenant Act, supra, as follows:

"Nothing in this Act shall be construed to authorize the making of any loan, or the sale or other disposition of real property or any interest therein, to any private corporation, for farming purposes.'

However, the fact that these corporations were organized by employees of the Department who serve as officers and directors thereof and that they were organized at the direction of the Department in order to carry out a declared policy of the Department, to render financial assistance to this class of farm families with funds appropriated for the use of the Department, support the view that such corporations are under the control of the Department of Agriculture. Furthermore, it is inconceivable that the Department would undertake to provide for the creation of such corporations without taking steps to insure the conduct of the affairs of those corporations in line with the purposes which the Department had in view. Such control is a criterion by which private and public corporations are distinguished. (See Maiatico Construction Company v. United States, 79 F. (2d) 418, certiorari denied; 296 U. S. 649.)

While title IV of the Bankhead-Jones Tenant Act did provide for the establishment of a Farmers' Home Corporation to carry out such functions as the Secretary of Agriculture might delegate to the corporation from those powers and duties conferred upon him by titles I, II, and IV of the act, there is no indication that the various defense relocation corporations organized by employees of the Department were created under that authority or bear any relation to the Farmers' Home Corporation.

It is not asserted that the Farm Security Administration has either express or implied statutory authority to organize or create corporations to carry on any of its functions, such as has existed with respect to the many other Government corporations which have been created from time to time.. In this connection it may be observed that an important concomitant of the corporate form of carrying on governmental activities-that is, liability to suit in the courts-has been construed as dependent upon legislative consent, either express or implied. (See Keifer & Keifer v. Reconstruction Finance Corporation, 306 U. S. 375; Federal Housing Administration v. Burr, 309 U. S. 242; annotation, 83 L. Ed. 794. Compare North Dakota-Montana Wheat Growers' Association v. United States, 66 F. (2d) 573, certiorari denied 291 U. S. 742. No indication is found in those decisions that such a corporation may be created by administrative officers of the Government without color of legislative authority. On the contrary, it would seem inherent from the conclusions expressed therein that the legislative intent to create or authorize the creation of a corporation must first be found to exist before the legislative intent with regard to immunity to suit may be determined. (See North Dakota-Montana Wheat Growers' Association v. United States, supra.) But the matter may be considered more simply as a question whether officers or employees of the Government may act, without authority of law, to create corporations under State laws to conduct the business of the United States. I regard it as well settled that such officers and employees have no authority to act in behalf of the Government except such as is duly conferred upon them (Floyd's Acceptances, 7 Wall. 666; Whiteside v. United States, 93 U. S. 247). See also, 39 Op. Atty. Gen. 373, 376, in which it is remarked that

"It is, of course, not to be supposed that in the absence of such inhibitions or in cases not coming within their terms administrative officers possess unlimited powers to contract and to acquire land independently of statutory authority. The elementary fact is that no statutory officer has the power to make any contract, to acquire any land, or to do any other official act, unless some law has conferred such power upon him."

Looking realistically at what is sought to be accomplished here, it is evident that approprated funds are proposed to be used for the purchase of land, through a corporation, because the funds not only are unavailable for that purpose by the terms of the appropriation acts, but are positively precluded from such use by section 3736, Revised Statutes. Aside from this, the program closely resembles the resettlement projects of a type, the prosecution of which was restricted by section 43 of the Bankhead-Jones Farm Tenant Act. I cannot agree that the Farm Security Administration may thus accomplish in an indirect manner what it cannot do directly.

In view of the foregoing, it must be held that there is no authority for the loan of funds appropriated under the heading, Loans, Grants, and Rural Rehabilitation, to corporations organized under the laws of the various States by employees of the Department of Agriculture, at its direction, for the purpose of financing purchases of land on which are to be relocated those farm families which may have been displaced due to the acquisition of land for defense purposes.

While it is appreciated that the relocation of farm families of the type here involved possibly could not be carried on as expeditiously, if at all, by the means provided in the Bankhead-Jones Farm Tenant Act, nevertheless it seems proper to observe that there hardly could have been complete certainty in the Department of its authority to embark on a program of such scope and in the manner chosen and that the matter could and should have been presented to Congress which has been in session practically continuously since the inception of the program.

Respectfully;

LINDSAY C. WARREN, Comptroller General of the United States.

D-23881

OPINION OF THE COMPTROLLER GENERAL, D-23881

COMPTROLLER General oF THE UNITED STATES,
Washington, May 18, 1942.

The honorable the SECRETARY OF AGRICULTURE.

MY DEAR MR. SECRETARY: I have your letter of May 12, 1942, as follows: "This will acknowledge your letter of March 5, 1942, informing me of your inability to approve that phase of this Department's rural rehabilitation program which relates specifically to the relocation of farm families who have been deprived of their farms as a direct result of the Government's war program.

"I am in complete agreement with you that the mandates of the Congress expressed with particularity on any subject should be followed scrupulously by the executive branch of the Government. Determining whether the Congress has spoken with particularity and reducing to certainty the terms of its mandate are, of course, problems not easy of solution, especially where, as here, the intention of the Congress must be gathered, if at all, from several apparently related statutes enacted and implemented over a period of several years. It will be conceded, I trust, that this process of statutory construction is one which can well lead reasonable men to different conclusions. Because your ruling, which is a culmination of such a process, seriously affects, if it does not prevent, the proper discharge of my wartime responsibilities for maximum agricultural production and for the assistance of farmers displaced as a consequence of a victory program, I feel obliged to ask your further consideration of the problem dealt with in your previous letter. My feeling in this respect arises not only because of the departmental interest in the matter but also because of the collaboration in the matter which the Department has had with the National Defense Advisory Commission, the Army, the Navy, and the Department of Justice. I am accordingly anxious that the facts on which the Department's position was formulated be clarified and supplemented.

"When Congress passed the Bankhead-Jones Farm Tenant Act, it did, of course, speak with particularity. Briefly, title I of the act authorized the Secretary to make loans for the purpose of reducing the prevalence of farm tenancy and promoting farm ownership. The funds made available for such loans must, under the act, be allocated among the States on the basis of farm population of and the degree of farm tenancy within the States. Title II of the act authorizes the Secretary to make loans (* * * for the purchase of livestock, farm equipment, supplies, and for other farm needs (including minor improvements and minor repairs to real property), and for the refinancing of indebtedness, and for family subsistence.' The act authorized annual maximum appropriations for carrying out the purposes of title I. For carrying out the purposes of title II however, it authorized only the reappropriation of funds already available for rural rehabilitation purposes, and, in addition, the allotment by the President of funds appropriated for relief purposes for the fiscal years prior to the fiscal year

1940.

"It is clear, of course, that by enacting title I of the Bankhead-Jones Farm Tenant Act and by appropriating funds annually for title I purposes, the Congress has reduced somewhat to certainty its mandate concerning loans to 'farm tenants, farm laborers, sharecroppers, and other individuals,' designed solely to relieve farm tenancy. It follows that the Secretary cannot use rural rehabilitation funds to make such loans.

"It is possible that by enacting title II of the Bankhead-Jones Farm Tenant Act, the Congress may have intended to make certain its mandate with respect to rural rehabilitation loans. However, events contemporaneous with and subsequent to the passage of title II indicate quite clearly to us the abandonment of this intention by the Congress. The first indication of this is in the failure of the Congress even to authorize appropriations beyond the fiscal year 1939 for the purposes of title II. In addition and perhaps more significant is the fact that whereas the particularization contained in title I was followed up and made effective by the Congress during each subsequent fiscal year by the appropriation of funds expressly for the purposes of title I no such congressional action has ever been taken to implement the particularization contained in title II of the act. That the Congress deliberately forsook what may have been its first intention in passing title II appears also from the fact that appropriations for carrying out the purposes of both titles I and III of the act have been made each year while the Congress at the same time continued to appropriate funds for rural rehabilitation purposes and has made no reference whatever to title II of the Bankhead-Jones Farm Tenant Act. Reference is made to the Emergency Relief Appropriation Acts of

1938 and 1939, the Emergency Relief Appropriation Act, fiscal year 1941, and the Department of Agriculture Appropriation Act, fiscal year 1942. Some of these appropriation acts contained restrictions and limitations that would have been unnecessary if the funds had been expressly made available by the Congress for the purposes of title II. In this connection the current departmental appropriation bill would, if the appropriation were for purposes of title II, add another unnecessary restriction. This restriction against ** the purchase of land or for carrying on any land-purchase program * * *' if enacted into law, would make moot, for the fiscal year 1943, the problem with which we are here dealing.

"As a result of our undertaking of this relocation project and of the resultant assurance that farm families will be taken care of, large tracts of land have been and are being acquired for war purposes. In the meanwhile, the relocation corporations concerned have begun acquiring tracts of land upon which to relocate these families. Since, however, we have ceased disbursing funds on loan contracts pending a clarification of the entire question with you, many farm families find themselves in the most uncertain position of being shortly without either their old homes or without a certainty of acquiring new ones. The effect of such a situation not only on the morale of the people involved but also upon the Food for Victory program of the Department, which depends for its success in great measure upon the efforts of such farm families, is apparent.

"The relocation corporations concerned, in which the United States has a financial interest by way of loans, find themselves in the position of owning parts of particular tracts of land and being under contractual obligation to purchase the balance. Some of the land has been partially improved and there are many half-finished structures on the land. Construction contractors and vendors of land are threatening to sue the corporations to enforce compliance with previous commitments and filing of mechanics liens is threatened. The jeopardy to the interests of the United States which is apparent in this situation will, of course, be continued and perhaps increased so long as present circumstances remain unchanged.

"In view of the doubts expressed in your letter, we are proceeding as rapidly as possible to convert the corporations concerned into bona fide cooperative associations of farmers.

"In view of all the circumstances it is earnestly hoped that upon reconsideration you will not find it necessary to withhold your approval insofar as the liquidation of obligations which we have already undertaken is concerned."

In my decision of March 5, 1942, to you, it was held that funds appropriated for "Loans, grants, and rural rehabilitation" were not legally available for loans to finance the purchase of farms and that, even if the situation were otherwise, the Department of Agriculture was without legal authority to create corporations composed of officers and employees of the Farm Security Administration for the purpose of carrying out the rehabilitation program.

While it is recognized that the funds now available under the appropriation for "Loans, grants, and rural rehabilitation” were not made available to carry out title II of the Bankhead-Jones Farm Tenant Act, 50 Stat. 522 (7 U. S. C. 1000, et seq.), nor made subject to the provisions thereof, there appears nothing in the acts which made such funds available specifically authorizing the purchase of land or the making of loans for the purchase of land.

Careful consideration has geen given to the views of the Department of Agriculture and it is appreciated that whether the Farm Security Administration now has authority to make loans for the purchase of land constitutes a difficult question of statutory construction. However, even if it be conceded that an otherwise proper rehabilitation loan would not be illegal merely because the project for which the loan was made involved, as an incident thereto, the acquisition of some land, in view of the magnitude of the land acquisition program here involved and the means administratively adopted to carry out said program, I do not feel warranted in authorizing any further expenditures in connection therewith, notwithstanding the fact that the interests of the Government, as well as of the dispossessed farmers, would seem to require that some provision be made for liquidating the commitments that have been made.

As was observed in my letter of March 5, 1942, to you, this issue should have been presented initially to the Congress for clarification; and it is suggested that an effort be made at this time to obtain an expression of the views of the Congress with respect to the manner of liquidating such commitments.

Respectfully,

LINDSAY C. WARREN, Comptroller General of the United States.