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Federal Crop Ins. Corp. v. Merrill

Supreme Court of United States
332 U.S. 380 (1947)
ELI5:

Rule of Law:

All persons dealing with the United States government are charged with knowledge of federal statutes and all regulations validly published in the Federal Register. The government cannot be estopped from enforcing its regulations by the erroneous or unauthorized acts of its agents.


Facts:

  • The Federal Crop Insurance Corporation (Corporation), a wholly government-owned entity, was authorized to insure wheat crops against unavoidable loss.
  • The Corporation promulgated and published Wheat Crop Insurance Regulations in the Federal Register, which explicitly excluded from coverage 'spring wheat which has been reseeded on winter wheat acreage.'
  • Respondents, the Merrills, applied for crop insurance for 460 acres of spring wheat.
  • The Merrills informed the Corporation's local agent that 400 of these acres were reseeded on winter wheat acreage.
  • The Corporation's agent advised the Merrills that the entire 460-acre crop was insurable.
  • The formal application submitted to the Corporation did not disclose that any portion of the crop was reseeded.
  • The Corporation accepted the application and issued the insurance policy.
  • Subsequently, a drought destroyed most of the Merrills' crop.

Procedural Posture:

  • After the Corporation refused to pay the Merrills' insurance claim, the Merrills sued the Corporation in an Idaho state trial court.
  • The trial court rejected the Corporation's demurrer, which argued that its regulations legally barred the Merrills' claim.
  • The case proceeded to trial, and a jury returned a verdict in favor of the Merrills.
  • The Corporation appealed to the Supreme Court of Idaho, which affirmed the trial court's judgment.
  • The Corporation then successfully petitioned the U.S. Supreme Court for a writ of certiorari.

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Issue:

Is the Federal Crop Insurance Corporation, a government agency, bound by its agent's assurance that a crop is insurable when that assurance contradicts a validly published regulation?


Opinions:

Majority - Mr. Justice Frankfurter

No. The Federal Crop Insurance Corporation is not bound by its agent's erroneous advice because all citizens are charged with knowledge of the law, including regulations published in the Federal Register. The Corporation is a government entity, not a private insurer, and anyone dealing with the government assumes the risk of ascertaining that the agent they deal with is acting within the bounds of their authority. The Wheat Crop Insurance Regulations were properly published in the Federal Register, giving legal notice of their contents to all, including the Merrills. Therefore, the regulation precluding coverage for reseeded wheat is binding, regardless of the agent's mistake or the Merrills' lack of actual knowledge.


Dissenting - Mr. Justice Jackson

Yes. The court should hold the government to the same fundamental principles of fair dealing that apply to private insurers, which would bind the Corporation to its agent's representations. It is an absurdity to expect ordinary farmers to know the contents of the voluminous and obscure Federal Register. The government entered a commercial field and should not be permitted to use a hidden regulation to render a policy void after accepting premiums, especially when its own agent was unaware of the rule. The principle that one must 'turn square corners' when dealing with the government should be a 'two-way street.'



Analysis:

This case establishes a formidable precedent that protects the government from liability for the unauthorized acts of its agents, reinforcing the doctrine of sovereign immunity. It solidifies the principle that publication in the Federal Register constitutes constructive notice, meaning citizens are legally presumed to know the content of published regulations, regardless of actual knowledge. This decision imposes a significant burden on individuals and entities dealing with the government, requiring them to verify that official representations align with statutory and regulatory authority, thereby prioritizing the protection of the public treasury over individual hardships caused by government error.

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