1. The Federal Crop Insurance Corporation, a wholly
governmentowned corporation created by the Federal Crop Insurance
Act to insure producers of wheat against crop losses due to
unavoidable causes, including drought, promulgated and published in
the Federal Register regulations specifying the conditions on which
it would insure wheat crops, including a provision making "spring
wheat which has been reseeded on winter wheat acreage" ineligible
for insurance. Without actual knowledge of this provision, a wheat
grower applied to the Corporation's local agent for insurance on
his wheat crop, informing the local agent that most of it was being
reseeded on winter wheat acreage, but this information was not
included in the written application. The Corporation accepted the
application subject to the terms of its regulations. Most of the
crop on the reseeded acreage was destroyed by drought.
Held: the Corporation is not liable for the loss on the
reseeded acreage. Pp.
332 U. S.
381-386.
Page 332 U. S. 381
2. Having been published in the Federal Register, the Wheat Crop
Insurance Regulations are binding on all who seek to come within
the Federal Crop Insurance Act, regardless of lack of actual
knowledge of the regulations. P.
332 U. S.
385.
67 Idaho 196, 174 P.2d 834, reversed.
The Supreme Court of Idaho affirmed a judgment against the
Federal Crop Insurance Corporation for loss of a wheat crop which
had been reseeded on winter wheat acreage. 67 Idaho 196, 174 P.2d
834. This Court granted certiorari. 331 U.S. 798.
Reversed, p.
332 U. S.
386.
MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
We brought this case here because it involves a question of
importance in the administration of the Federal Crop Insurance Act.
331 U.S. 798.
The relevant facts may be briefly stated. Petitioner
(hereinafter called the Corporation) is a wholly Government-owned
enterprise, created by the Federal Crop Insurance Act, as an
"agency of and within the Department of Agriculture." Sec. 503 of
Chapter 30, Act of February 16, 1938, 52 Stat. 72, 7 U.S.C. § 1503,
as amended. To carry out the purposes of the Act, the Corporation,
"Commencing with the wheat . . . crops planted for harvest in
1945," is empowered
"to insure, upon such terms and conditions not inconsistent with
the provisions of this title as it may determine, producers of
wheat . . . against loss in yields due to unavoidable causes,
including drought. . . ."
52 Stat. 74, § 508(a), as
Page 332 U. S. 382
amended, 55 Stat. 255, in turn amended by the Act of December
23, 1944, Chapter 713, 58 Stat. 918, 7 U.S.C.Supp. V, § 1508(a). In
pursuance of its authority, the Corporation, on February 5, 1945,
promulgated its Wheat Crop Insurance Regulations, which were duly
published in the Federal Register on February 7, 1945. 10 F.R.
1586.
On March 26, 1945, respondents applied locally for insurance
under the Federal Crop Insurance Act to cover wheat farming
operations in Bonneville County, Idaho. Respondents informed the
Bonneville County Agricultural Conservation Committee, acting as
agent for the Corporation, that they were planting 460 acres of
spring wheat, and that, on 400 of these acres, they were reseeding
on winter wheat acreage. The Committee advised respondents that the
entire crop was insurable, and recommended to the Corporation's
Denver Branch Office acceptance of the application. (The formal
application itself did not disclose that any part of the insured
crop was reseeded.) On May 28, 1945, the Corporation accepted the
application.
In July, 1945, most of the respondents' crop was destroyed by
drought. Upon being notified, the Corporation, after discovering
that the destroyed acreage had been reseeded, refused to pay the
loss, and this litigation was appropriately begun in one of the
lower courts of Idaho. The trial court rejected the Corporation's
contention, presented by a demurrer to the complaint, that the
Wheat Crop Insurance Regulations barred recovery as a matter of
law. Evidence was thereupon permitted to go to the jury to the
effect that the respondents had no actual knowledge of the
Regulations, insofar as they precluded insurance for reseeded
wheat, and that they had, in fact, been misled by petitioner's
agent into believing that spring wheat reseeded on winter wheat
acreage was insurable by the Corporation. The jury
Page 332 U. S. 383
returned a verdict for the loss on all the 460 acres, and the
Supreme Court of Idaho affirmed the resulting judgment. 67 Idaho
196, 174 P.2d 834. That court, in effect, adopted the theory of the
trial judge that, since the knowledge of the agent of a private
insurance company, under the circumstances of this case, would be
attributed to, and thereby bind, a private insurance company, the
Corporation is equally bound.
The case no doubt presents phases of hardship. We take for
granted that, on the basis of what they were told by the
Corporation's local agent, the respondents reasonably believed that
their entire crop was covered by petitioner's insurance. And so we
assume that recovery could be had against a private insurance
company. But the Corporation is not a private insurance company. It
is too late in the day to urge that the Government is just another
private litigant, for purposes of charging it with liability,
whenever it takes over a business theretofore conducted by private
enterprise or engages in competition with private ventures.
[
Footnote 1] Government is not
partly public or partly private, depending upon the governmental
pedigree of the type of a particular activity or the manner
Page 332 U. S. 384
in which the Government conducts it. The Government may carry on
its operations through conventional executive agencies or through
corporate forms especially created for defined ends.
See Keifer
& Keifer v. Reconstruction Finance Corp., 306 U.
S. 381,
306 U. S. 390.
Whatever the form in which the Government functions, anyone
entering into an arrangement with the Government takes the risk of
having accurately ascertained that he who purports to act for the
Government stays within the bounds of his authority. The scope of
this authority may be explicitly defined by Congress or be limited
by delegated legislation, properly exercised through the rulemaking
power. And this is so even though, as here, the agent himself may
have been unaware of the limitations upon his authority.
See,
e.g., Utah Power & Light Co. v. United States,
243 U. S. 389,
243 U. S. 409;
United States v. Stewart, 311 U. S.
60,
311 U. S. 70,
and see generally 74 U. S. 7
Wall. 666.
If the Federal Crop Insurance Act had, by explicit language,
prohibited the insurance of spring wheat which is reseeded on
winter wheat acreage, the ignorance of of such a restriction,
either by the respondents or the Corporation's agent, would be
immaterial, and recovery could not be had against the Corporation
for loss of such reseeded wheat. Congress could hardly define the
multitudinous details appropriate for the business of crop
insurance when the Government entered it. Inevitably "the terms and
conditions" upon which valid governmental insurance can be had must
be defined by the agency acting for the Government. And so,
Congress has legislated in this instance, as in modern regulatory
enactments it so often does, by conferring the rulemaking power
upon the agency created for carrying out its policy.
See §
516(b), 52 Stat. 72, 77, 7 U.S.C. § 1516(b). Just as everyone is
charged with knowledge of the United States Statutes at Large,
Page 332 U. S. 385
Congress has provided that the appearance of rules and
regulations in the Federal Register gives legal notice of their
contents. 49 Stat. 502, 44 U.S.C. § 307.
Accordingly, the Wheat Crop Insurance Regulations were binding
on all who sought to come within the Federal Crop Insurance Act,
regardless of actual knowledge of what is in the Regulations or of
the hardship resulting from innocent ignorance. The oft-quoted
observation in
Rock Island, Arkansas & Louisiana R. Co. v.
United States, 254 U. S. 141,
254 U. S. 143,
that "Men must turn square corners when they deal with the
Government" does not reflect a callous outlook. It merely expresses
the duty of all courts to observe the conditions defined by
Congress for charging the public treasury. The "terms and
conditions" defined by the Corporation, under authority of
Congress, for creating liability on the part of the Government
preclude recovery for the loss of the reseeded wheat no matter with
what good reason the respondents thought they had obtained
insurance from the Government. Indeed, not only do the Wheat
Regulations limit the liability of the Government as if they had
been enacted by Congress directly, but they were, in fact,
incorporated by reference in the application, [
Footnote 2] as specifically required by the
Regulations. [
Footnote 3]
Page 332 U. S. 386
We have thus far assumed, as did the parties here and the courts
below, that the controlling regulation in fact precluded insurance
coverage for spring wheat reseeded on winter wheat acreage. It
explicitly states that the term
"'wheat crop' shall not include . . . winter wheat in the 1945
crop year, and spring wheat which has been reseeded on winter wheat
acreage in the 1945 crop year."
Sec. 414.37(v) of Wheat Crop Insurance Regulations, 10 F.R.
1591. The circumstances of this case tempt one to read the
regulation, since it is for us to read it, with charitable laxity.
But not even the temptations of a hard case can elude the clear
meaning of the regulation. It precludes recovery for "spring wheat
which has been reseeded on winter wheat acreage in the 1945 crop
year." Concerning the validity of the regulation as "not
inconsistent with the provisions" of the Federal Crop Insurance
Act, no question has been raised.
The judgment is reversed, and the cause remanded for further
proceedings not inconsistent with this opinion.
Reversed.
MR. JUSTICE BLACK, and MR. JUSTICE RUTLEDGE, dissent.
[
Footnote 1]
Judging from the legislative history of the Act, the Government
engaged in crop insurance as a pioneer. Private insurance companies
apparently deemed all-risk crop insurance too great a commercial
hazard.
See Report and Recommendations of the President's
Committee on Crop Insurance, H.Doc.No.150, 75th Cong., 1st Sess.,
pp. 2-4, 11-12; H.Rep. No.1479, 75th Cong., 1st Sess., p. 2; 81
Cong.Rec. 2866, 2867, 2887, 2891, 2893, 2895; Hearings before a
Subcommittee of the Senate Committee on Agriculture and Forestry on
S.1397, 75th Cong., 1st Sess., 125, 185. But this does not affect
the legal issues. It merely underscores the fact that the
undertaking by the Government is not an ordinary commercial
undertaking, and thereby reenforces the conclusion that the rules
of law whereby private insurance companies are rendered liable for
the acts of their agents are not bodily applicable to a Government
agency like the Corporation, unless Congress has so provided.
[
Footnote 2]
"H. Acceptance by the Federal Crop Insurance Corporation. -- It
is understood and agreed that, upon acceptance of the application
by a duly authorized representative of the Corporation as evidenced
by his approval below, the insurance contract shall be in effect,
provided the application has been submitted in accordance with the
provisions of the application and the applicable Wheat Crop
Insurance Regulations. It is further understood and agreed that the
accepted application and the applicable Wheat Crop Insurance
Regulations, including any amendments thereto, constitute the
contract between the Corporation and the insured."
[
Footnote 3]
"§ 414.3.
Acceptance of applications by the
Corporation. (a) Upon acceptance of an application by a duly
authorized representative of the Corporation, the insurance
contract shall be in effect, provided such application is submitted
in accordance with the provisions of the application and of these
regulations, including any amendments thereto."
10 F.R. 1586. The regulation defined "insurance contract" as
"the contract of insurance entered into between the applicant
and the Corporation by virtue of the application for insurance and
these regulations and any amendments thereto."
10 F.R. 1591.
MR. JUSTICE JACKSON, dissenting.
I would affirm the decision of the court below. If crop
insurance contracts made by agencies of the United States
Government are to be judged by the law of the State in which they
are written, I find no error in the court below.
Page 332 U. S. 387
If, however, we are to hold them subject only to federal law,
and to declare what that law is, I can see no reason why we should
not adopt a rule which recognizes the practicalities of the
business.
It was early discovered that fair dealing in the insurance
business required that the entire contract between the policyholder
and the insurance company be embodied in the writings which passed
between the parties, namely, the written application, if any, and
the policy issued. It may be well enough to make some types of
contracts with the Government subject to long and involved
regulations published in the Federal Register. To my mind, it is an
absurdity to hold that every farmer who insures his crops knows
what the Federal Register contains, or even knows that there is
such a publication. If he were to peruse this voluminous and dull
publication as it is issued from time to time in order to make sure
whether anything has been promulgated that affects his rights, he
would never need crop insurance, for he would never get time to
plant any crops. Nor am I convinced that a reading of technically
worded regulations would enlighten him much, in any event.
In this case, the Government entered a field which required the
issuance of large numbers of insurance policies to people engaged
in agriculture. It could not expect them to be lawyers, except in
rare instances, and one should not be expected to have to employ a
lawyer to see whether his own Government is issuing him a policy
which, in case of loss, would turn out to be no policy at all.
There was no fraud or concealment, and those who represented the
Government in taking on the risk apparently no more suspected the
existence of a hidden regulation that would render the contract
void than did the policyholder. It is very well to say that those
who deal with the Government should turn square corners. But
Page 332 U. S. 388
there is no reason why the square corners should constitute a
one-way street.
The Government asks us to lift its policies out of the control
of the States and to find or fashion a federal rule to govern them.
I should respond to that request by laying down a federal rule that
would hold these agencies to the same fundamental principles of
fair dealing that have been found essential in progressive states
to prevent insurance from being an investment in
disappointment.
MR. JUSTICE DOUGLAS joins in this opinion.