The opinion of the court was delivered by: Mills, District Judge:
Defendants' arguments for federal jurisdiction are specious.
The case is remanded to state court.
The matter presently before the Court is a motion by the Federal Land
Bank for remand to the Circuit Court for the Fourth Judicial Circuit of
Illinois at Hillsboro.
The bank brought a mortgage foreclosure suit under Ill.Rev.Stat., Ch.
110, ¶ 15-101 et seq., in the state circuit court, and the Defendants
have removed that case here, claiming that there is original federal
question jurisdiction under 28 U.S.C. § 1331, which may be removed to
the district court under 28 U.S.C. § 1441 (b). No other grounds are
alleged to exist for original jurisdiction here, such as diversity.
The nonfederal defendant is trying to "boot strap" his way here by the
use of the Plaintiff's federal status. The defendant has no standing to
do this. The federal Plaintiff could have chosen the federal forum, which
was provided for its protection from local prejudice. They have not
chosen to avail themselves of this and since they are bringing the action
they may choose the forum by "determining the theory of the action, and
so long as fraud is not involved, [they] may defeat removal to the
federal courts by avoiding allegations which provide a basis for the
assertion of federal jurisdiction." Jones v. General Tire & Rubber Co.,
541 F.2d 660, 664 (7th Cir. 1976).
In general, to remove a case from state court to a United States
district court the defendant must establish at least two requisites: that
"the action was properly commenced in the state court, and that it could
have been originally commenced in federal court." Nuclear Engineering
Co. v. Scott, 660 F.2d 241, 248 (7th Cir. 1981). "Removal is proper where
the real nature of the claim asserted in the complaint is federal,
whether or not so characterized by the Plaintiff." Jones v. General Tire
& Rubber Co., 541 F.2d 660, 664 (7th Cir. 1976). Furthermore, "A federal
law, statute, or question, a right or immunity created by the
Constitution or . . . law of the United States must be an element, and an
essential one, of the Plaintiff's cause of action . . . i.e. . . . , the
federal nature of the claim must be a basic issue in the case." Id. These
cases are cited with approval in People of the State of Illinois v.
Kerr-McGee Chemical Corp., 677 F.2d 571, 575 (7th Cir. 1982), where the
court went on to say, "a federal question must appear on the face of the
complaint . . . [and] a defendant's assertion of an issue of federal law
in the pleadings or in the petition for removal does not create a federal
question. Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 127-28
[94 S.Ct. 1002, 1003-04, 39 L.Ed.2d 209] (1974)."
Also, "the removal statute should be construed narrowly and against
removal, see Shamrock Oil and Gas Corp. v. Sheets, 313 U.S. 100, 108 [61
S.Ct. 868, 872, 85 L.Ed. 1214] (1941)," Kerr-McGee Chemical Corp., 677
F.2d at 576.
More specifically—and most pertinent to the case at hand—is
the case of The Federal Land Bank of Columbia v. Cotton, 410 F. Supp. 169
(N.D.Ga. 1975). This case was initiated by the Federal Land Bank against
defendant Cotton in the Georgia state court to foreclose upon a mortgage
because the defendant Cotton had defaulted on a promissory note. The
defendant had attempted to remove the case to the United States District
Court, using the same arguments that are found in the case before the
court, but to no avail.
Cotton argued that the case arose under the laws of the United States
because the plaintiff is a federally chartered corporation formed under
the Federal Farm Loan Act, 12 U.S.C. § 2011 et seq. [sic]. The court
noted that due to 28 U.S.C. § 1349,*fn1 "corporations organized
under federal law as [a] party," "federally-chartered corporations cannot
sue or be sued in federal court merely because they are federally
chartered, unless the United States government owns 51% of the capital
stock." (Emphasis the court's.) Cotton at 170. The only way this case
could be removed is for the Plaintiff to allege a "violation of the
regulatory guidelines governing such organizations." Id. The court noted
in Cotton (and the same is true here) that "plaintiff is merely seeking
to enforce a contract right pursuant to the laws of the State." Id.
The Defendant before us, and the one in Cotton, argue that the federal
land banks were agencies of the federal government and so removal would
be proper under 28 U.S.C. § 1345. That section of the Code states:
"Except as otherwise provided by Act of Congress, the district courts
shall have original jurisdiction of all civil actions, suits or
proceedings commenced by the United States, or by any agency or officer
thereof expressly authorized to sue by Act of Congress." However, the
term Agency is defined at 28 U.S.C. § 451 and states in part: "The
term `agency' includes . . . any corporation in which the United States
has a proprietory interest, unless the context shows that such term was
intended to be used in a more limited sense." The court in Cotton read
this section in tandem with § 1349, supra, and found that a federally
chartered corporation could not be an "agency" "unless the government has
a substantial proprietory interest in the corporation or exercised
considerable control over operation and policy of the corporation."
Cotton at 171.
For the purposes of comparison, the defendant in Cotton and the
Defendant here wish to compare the Federal Savings and Loan Insurance
Corporation (FSLIC) with the federal land banks because FSLICs have been
found to be "agencies" of the federal government and so there is original
federal jurisdiction in all cases involving them. The court in Cotton
found that federal land banks were "obviously meant to be a private,
rather than governmental, corporation which" is merely subject to various
federal regulations. 12 U.S.C. § ...