1st Nat L. Bank of Circle v. Garner

Opinion

No. 13441

IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

FIRST NATIONAL BANK OF CIRCLE, Circle, Montana, Plaintiff and Appellant,

-vs-

GRAHAM CHARLES GARNER and SYDNEY MORRIS et al., Defendants,

Graham Charles Garner and Sydney Morris et al., Cross Plaintiffs,

-vs-

FEDERICO CRUZ, et al., Cross Defendants,

Frederico Cruz , Cross-Plaintiff,

-vs-

BERNARD GADD , Cross-Defendant.

Appeal from: District Court of the Seventh Judicial District,

Hon. C.B. Sande, Judge presiding.

Counsel of Record:

For Appellants:

Towe, Ball & Enright Thomas Towe argued, Billings, Montana For Respondents:

George Dalthorp argued, Billings, Montana Crowley, Kilbourne, Hanson, Gallagher & Toole, Billings, Montana

Gene Huntley, Baker, Montana J.B. Casas, Jr., Los Angeles, California

Submitted: March 21, 1977

Yr. j u s r i c e Gene 3 . Daly d e l i v e r e d t h e Opinion of t h e Court.

P l a i n t i f f , F i r s t N a t i o n a l Bank of C i r c l e , C i r c l e , Montana, f i l e c ; t h i s a c t i o n on May 22, 1972, i n t h e d i s t r i c t c o u r t , McCone dounty, f o r a d e c l a r a t o r y judgment t o determine i t s l e g a l o b l i g a - Lions r e g a r d i n g c e r t a i n bank d e p o s i t s and c a s h i e r ' s checks.

311 W y 6 , 1975, p l a i n t i f f ' s motion f o r summary judgment was a

g r a n t e d , p l a i n t i f f then f i l e d a motion f o r award of a t t o r n e y fees. T h i s motion was denied on May 5 , 1976 and from t h a t d e n i a l p l a i n t i f f appeals.

I n 1971, D r . Federico Cruz a c q u i r e d c o n t r o l of t h e B r i t i s h .4merican Bank Limited of t h e Bahamas. D r . Cruz was p r e s i d e n t

;£ I t h e bank when i t s l i c e n s e was suspended by t h e government

oi tlhe Bahamas i n e a r l y 1972. On March 23, 1972, D r . Cruz, c e p r e s e n t i n g himself t o be t h e p r e s i d e n t of t h e British-American Yank, Ltd.(Glasgow, s c o t l a n d ) , opened a c o r p o r a t e checking account w i t h p l a i n t i f f F i r s t N a t i o n a l Bank of C i r c l e , Montana. de p r e s e n t e d checks endorsed t o t h e B r i t i s h American Bank Limited from d e p o s i t o r s l o c a t e d a l l over t h e world, i n t h e approximate rlinount of $1,600,000.00. On May 8 , 1972, t h e account b a l a n c e was approximately $1,542,868.01 and D r . Cruz r e q u e s t e d a w i t h - drawal of $1,327,788.00. The C i r c l e Bank i s s u e d c a s h i e r ' s checks t o him p e r s o n a l l y t o t a l i n g t h i s amount.

On May 1 5 , 1972, t h e C i r c l e Bank r e c e i v e d a telephone c a l l and a celegram from a Bernard Gadd who informed t h e C i r c l e Bank he had been appointed P r o v i s i o n a l L i q u i d a t o r f o r t h e B r i t i s h - American Bank,Ltd., on May 11, 1972, and demanded t h e C i r c l e Bank s t o p payment on t h e c a s h i e r ' s checks i s s u e d t o D r . Cruz on !day 8 , 1972. Gadd l a t e r demanded t h a t a l l remaining funds be

L r o ~ e r land r e t u r n e d t o him. May 1 5 , 1 9 7 2 , was t h e f i r s t n o t i c e c o t h e C i r c l e Bank of such l i q u i d a t i o n proceedings.

O May 22, 1972, t h e C i r c l e Bank f i l e d t h i s a c t i o n a g a i n s t

n

deielldarlts. Although t h e a c t i o n was s t y l e d "Complaint f o r 9 e c l a r a t o r y Judgment!', t h e d i s t r i c t c o u r t t r e a t e d i t a s an interpleader. The C i r c l e Bank asked t h e d i s t r i c t c o u r t (1) t o ddjudicate i t s l e g a l obligations t o defendants regarding t h e bank d e p o s i t s and c a s h i e r ' s checks, (2) f o r a d e t e r m i n a t i o n whether i t should f r e e z e t h e account and s t o p payment on t h e c a s h i e r ' s checks, and ( 3 ) f o r r e a s o n a b l e a t t o r n e y f e e s and c o s t s .

D r . Federico Cruz f i l e d a c o u n t e r c l a i m demanding damages against t h e C i r c l e Bank f o r t h e f a c e amount of t h e c a s h i e r ' s zhdcks, which D r . Cruz a l l e g e d were wrongfully dishonored by t h e i l r c l e Bank. The L i q u i d a t o r f i l e d a c o u n t e r c l a i m f o r a f u l l accounting of a l l monies d e p o s i t e d i n t h e C i r c l e Bank i n t h e

name of t h e British-American Bank Ltd. O November 1, 1972,

n

t h e C i r c l e Bank f i l e d a motion f o r t h e d i s c h a r g e of i t s e l f and i t s officers. After a lengthy l i t i g a t i o n p r o c e s s , on May 7 , 1975, t h e d i s t r i c t c o u r t o r d e r e d :

"yc 9~ t h a t t h e motions f o r summary judgment of t h e F i r s t N a t i o n a l Bank of C i r c l e a r e i n a l l r e s p e c t s g r a n t e d and t h a t t h e motion f o r summary judgment of t h e B r i t i s h American Bank Limited and t h e O f f i c i a l L i q u i d a t o r s t h e r e o f a g a i n s t Federico Cruz a r e g r a n t e d with r e s p e c t t o a l l m a t t e r s d e a l t w i t h h e r e i n and w i t h r e s p e c t t o t h e ownership of t h e funds i n t h e custody of t h e Court ** *.I'

Jw11drship was g r a n t e d t o t h e O f f i c i a l L i q u i d a t o r . All questions !were s e t t l e d , except f o r t h e F i r s t N a t i o n a l Bank of C i r c l e ' s :lain1 for attorney fees.

P l a i n t i f f p r e s e n t s one i s s u e f o r review by t h i s Court--

whether p l a i n t i f f F i r s t N a t i o n a l Bank of C i r c l e i s e n t i t l e d t o a t t o r n e y f e e s and c o s t s t o be p a i d o u t of t h e i n t e r p l e a d e r fund?

To answer t h i s question t h e Court must decide whether t h e C i r c l e Bank was a d i s i n t e r e s t e d stakeholder, I f the stakeholder does not stand i n d i f f e r e n t between t h e claimants, i t i s not e n t i t l e d t o an allowance f o r a t t o r n e y f e e s . Defendant Bernard Gadd contends t h i s a c t i o n was not an i n t e r p l e a d e r and t h a t p l a i n t i f f had an i n t e r e s t i n keeping t h e funds i n i t s bank a s long a s p o s s i b l e . This Court i n Central Montana Stockyards v. F r a s e r ; 133 Mont, 168, 193, 320 P.2d 981, s t a t e d :

"'An a t t i t u d e of p e r f e c t d i s i n t e r e s t e d n e s s , excluding even an i n d i r e c t i n t e r e s t on t h e p a r t of t h e p l a i n t i f f i s indispensable t o t h e maintenance of t h e b i l l [of interpleader! * *.

Jc "'

However, Rule 22(a), M.R.Civ.P., removes t h i s r e s t r i c t i o n

and expressly provides i t i s n o t a ground f o r o b j e c t i o n when a p l a i n t i f f i n an i n t e r p l e a d e r a c t i o n avers he i s not l i a b l e i n whole o r i n p a r t t o any o r a l l of t h e claimants. Since t h e award of c o s t s and a t t o r n e y f e e s i s within t h e d i s c r e t i o n of t h e c o u r t , such award i s commonly denied when t h e stakeholder, although d i s i n t e r e s t e d , i s i n some way culpable a s regards t h e s u b j e c t matter of t h e i n t e r p l e a d e r proceeding, but not s u f f i c i e n t l y culpable t o warrant d e n i a l of i n t e r p l e a d e r a l t o g e t h e r . Merrimack Manufacturing Co. v. Bergman, 154 F.Supp. 688.

P l a i n t i f f contends t h e reason i t d i d not f i l e a s t r i c t i n t e r p l e a d e r a c t i o n was t o make sure t h i s money would continue t o receive i n t e r e s t . The money did receive i n t e r e s t i n t h e amount of approximately $345,000.00. Defendants, on t h e o t h e r hand, con- tend p l a i n t i f f ' s motive was not a l l t h a t a l t r u i s t i c . They f e l t t h e bank's reason f o r n o t f i l i n g an i n t e r p l e a d e r was t o keep t h e funds a s a deposit i n i t s bank a s long a s p o s s i b l e . The record shows a motion was made demandi~igt h a t p l a i n t i f f pay i n t o t h e r e g i s t r y of c o u r t o r d e p o s i t f o r safekeeping i n a bank n o t a pal-ty t o t h i s a c t i o n , d e s i g n a t e d by t h e c o u r t , a l l sums i n t h e dccount i n q u e s t i o n .

The F i r s t N a t i o n a l Bank of C i r c l e r e s i s t e d t h e t r a n s f e r 02 t h e funds from i t s c u s t o d y , a r g u i n g t h a t i t should be r e l e a s e d from a l l l i a b i l i t y i n c o n s i d e r a t i o n of i t s r e l e a s i n g t h e funds. 3n Wovember 6 , 1972, t h e funds were o r d e r e d t r a n s f e r r e d t o t h e j e c u r i t y T r u s t and Savings Bank of B i l l i n g s , Montana.

During t h e p e r i o d t h e p l a i n t i f f had c o n t r o l of t h e f u n d s , 4Zron1 :<larch 23, 1972, u n t i l they were p a i d over t o t h e S e c u r i t y Crust and Savings Bank, t h e p l a i n t i f f p a i d an i n t e r e s t r a t e of 4% compounded q u a r t e r l y . The S e c u r i t y T r u s t and Savings Bank p a i d an i n t e r e s t r a t e of 5 118% compounded q u a r t e r l y . A t 4% t h e o r i g i n a l d e p o s i t would have produced $7,700 i n t e r e s t d u r i n g r h e p e r i o d from t h e d a t e of t h e i n i t i a l d e p o s i t , March 23, 1 9 7 2 , t o t h e d a t e of t h e f i l i n g of t h e a c t i o n , May 22, 1972. During t h i s p e r i o d p l a i n t i f f C i r c l e Bank p a i d no i n t e r e s t on t h e f u n d s , t h u s f o r t h i s p e r i o d i t had t h e use of t h i s money i n t e r e s t f r e e t o i n v e s t a s i t saw f i t .

I t a p p e a r s from t h e d i s t r i c t c o u r t r e c o r d t h a t p l a i n t i f f was i n no h u r r y t o r e l e a s e t h e funds. M r . Towe, a t t o r n e y f o r p l a i n - t i f f stated:

''We a r e n o t anxious t o r e l e a s e t h e funds u n t i l we r e c e i v e d i s c h a r g e , a t l e a s t f o r t h e l i a b i l i t y . "

Thus i t seems p l a i n t i f f i n t h i s a c t i o n was n o t a d i s i n t e r e s t e d stakeholder. The C i r c l e Bank i n d i c a t e d b e f o r e i t would r e l e a s e t h e s e funds i t d e s i r e d f u r t h e r p r o t e c t i o n from t h e c o u r t i n exon- e r a t i n g i t from any l i a b i l i t y . When t h e a c t i o n i s n o t one of s t r i c t i n t e r p l e a d e r , and p l a i n t i f f i s more t h a n a mere s t a k e h o l d e r , a t t o r n e y f e e s a r e n o t allowable. Metropolitan L i f e I n s u r a n c e Co. v. E n r i g h t , 231 F.Supp. 275, 278.

I n t h i s c a s e t h e record r e v e a l s t h e C i r c l e Bank was n o t a d i s i n t e r e s t e d stakeholder. The Bahama Bank L i q u i d a t o r was a t t e m p t i n g t o hold p l a i n t i f f l i a b l e f o r $97,000 withdrawn from t h e account p r i o r t o t h e time t h e l i q u i d a t i o n procedure s t a r t e d . Such a c l a i m can h a r d l y be c h a r a c t e r i z e d a s a minor p a r t of t h e litigation. C i r c l e Bank had a g r e a t d e a l r i d i n g on t h e outcome of t h i s l i t i g a t i o n . It i s g e n e r a l l y recognized t h a t when a p a r t y i n t e r p l e a d i n g c l a i m a n t s t o funds o r p r o p e r t y d i s p u t e s t h e amount of t h e fund o r t o t h e e x t e n t of t h e p r o p e r t y , h a s some o t h e r s u b s t a n t i a l i n t e r e s t i n t h e s u b j e c t m a t t e r o r t h e outcome of t h e l i t i g a t i o n , o r does n o t s t a n d i n d i f f e r e n t between t h e c l a i m a n t s , he s t a n d s on t h e same f o o t i n g a s any o t h e r l i t i g a n t and i s n o t e n t i t l e d t o a n allowance f o r a t t o r n e y f e e s . Groves v. S e n t e l l , 153 U.S.465, 14 S.Ct. 898,:38 L ed 785.

Where a p l a i n t i f f h a s placed himself i n a p o s i t i o n n e c e s s i t a t i n g i n t e r p l e a d e r t o avoid double v e x a t i o n , he i s n o t e n t i t l e d t o attorney fees. Gresham S t a t e Bank v. 0 and K Con- s t r u c t i o n Co., 231 O r . 106, 370 P.2d 726. Here, it appears from t h e record p l a i n t i f f used l e s s than prudent banking p r a c t i c e s i n handling t h i s account. On March 24, 1972, Edward Towe, p r e s i d e n t of t h e C i r c l e N a t i o n a l Bank c a l l e d t h e O f f i c e o f t h e Comptroller of t h e Treasury i n Washington D. C. t o make s u r e D r . Cruz was p r e s i d e n t of t h e BritSsh-American Bank, L t d . , of Scotland. He never r e c e i v e d a response and no f u r t h e r i n q u i r i e s were made. Subsequently p l a i n t i f f i s s u e d $1,327,788.00 i n c a s h i e r ' s checks t o D r . Cruz a t h i s r e q u e s t , i n c l u d i n g one check i n t h e sum of $914,288.00 payable p e r s o n a l l y t o D r . Cruz, o u t of t h e account r e g i s e e r e d L t h e name o f t h e British-American Bank, Ltd., of

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Scotland w i t h o u t f u r t h e r c o n f i r m a t i o n . These c a s h i e r ' s checks 5ecame an i s s u e i n t h e l a w s u i t and i n t h e p l a i n t i f f ' s plead.ings it asked t h e c o u r t t o a d j u d i c a t e t h e r i g h t s and o b l i g a t i o n s of defendants t o t h e funds r e p r e s e n t e d by t h e c a s h i e r ' s checks.

To deny t h e award of c o u n s e l f e e s t o t h e s t a k e h o l d e r w i l l not 5e t o l e a v e i t s a t t o r n e y uncompensated. I t simply r e p r e s e n t s a d e c i s i o n t h a t a l l o r p a r t of t h e f e e s i n c u r r e d by t h e s t a k e - h o l d e r should be p a i d o u t i t s pocket, r a t h e r t h a n o u t of t h e

pocket of t h e p r e v a i l i n g c l a i m a n t . 3 Moore's F e d e r a l P r a c t i c e

A

$~22.16[2], p. 3144, s t a t e s :

"The p r e v a i l i n g p r i n c i p l e i n i n t e r p l e a d e r a c t i o n s brought i n t h e f e d e r a l c o u r t s , whether under t h e i n t e r p l e a d e r s t a t u t e o r under Rule 2 2 ( 1 ) , i s t h a t i t i s w i t h i n t h e d i s c r e t i o n of t h e c o u r t t o award t h e stakeholder c o s t s including a reasonable attorneys'

f e e o u t of t h e d e p o s i t e d fund."

The d i s t r i c t c o u r t d i d n o t abuse i t s d i s c r e t i o n i n denying a t t o r n e y f e e s t o t h e F i r s t N a t i o n a l Bank of C i r c l e . The judgment of the d i s t r i c t court i s affirmed,

Justice

chief Justice /'I

Justices.