In the 1939 case Federal Housing Administration, Region No. 4 v. Burr, the U.S Supreme Court ruled that while federal agencies are generally immune from lawsuits under sovereign immunity principles, they can be sued if Congress has waived this immunity or if the agency is carrying out a commercial activity in which private entities also engage. The court held that the Federal Housing Administration (FHA), as an entity created by Congress to promote home ownership and construction through insurance programs, was not immune from garnishment proceedings initiated by a creditor of an FHA employee because it engaged in commercial activities similar to those performed by private companies. This decision established important precedent regarding when federal agencies could be subject to legal action.

In the dissenting opinion for Federal Housing Administration, Region No. 4 v. Burr, Justice Black argued that the majority's decision to allow a private creditor to garnish funds from a government agency was misguided and could potentially disrupt important governmental functions. He contended that Congress did not intend for such agencies to be subject to garnishment when it passed legislation creating them and providing them with certain immunities. Furthermore, he expressed concern about the potential consequences of allowing creditors access to public funds held by these agencies, including possible financial instability or even insolvency in extreme cases.