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Parties Involved:
Deposit Insurance National Bank of Oklahoma City, Oklahoma
Appellant
Federal Deposit Insurance Corporation
Appellant
Rocket Oil Company
Appellee

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

FEDERAL DEPOSIT INSURANCE CORPORATION; ) 

DEPOSIT INSURANCE NATIONAL BANK OF ) 

OKLAHOMA CITY, OKLAHOMA, ) 

) 

Plaintiffs-Appellants, ) 

) 

FILED 

United States Court of Appeals 

Tenth Circuit 

JAN 1 31989 

ROBERT L. HOECKER 

Clerk 

v. ) 

) 

No. 86-2821 

ROCKET OIL COMPANY, ) 

) 

Defendant-Appellee. ) 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. 83-186-W} 

Charles v. Wheeler of Gable & Gotwals, Tulsa, Oklahoma, for 

Plaintiffs-Appellants. 

Frank L. Hill of Thompson and Knight, Dallas, Texas, (B. J. 

Rothbaum, Jr. and Brinda K. White of Linn and Helms, Oklahoma 

City, Oklahoma, on the brief) for Defendant-Appellee. 

Before MOORE, BARRETT, and ALARCON,* Circuit Judges. 

*The Honorable Arthur L. Alarcon, Circuit Judge, United States 

Court of Appeals for the Ninth Circuit, sitting by designation. 

PER CURIAM. 

Appellate Case: 86-2821 Document: 01019678294 Date Filed: 01/13/1989 Page: 1 
The Federal Deposit Insurance Corporation and the Deposit 

Insurance National Bank of Oklahoma City, Oklahoma, appellants, 

contest the district court's order denying their claim for 

prejudgment interest and setting the date for commencement of 

postjudgment interest as the date the court entered judgment on 

remand from an appeal to this court. Appellants contend the court 

abused its discretion in denying prejudgment interest and erred in 

not granting postjudgment interest from the date of the district 

court's first judgment which was later reversed. We affirm. 

The facts of this case are presented in the previous opinion 

of this court, Federal Deposit Ins. Corp. v. McKnight, 769 F . 2d 

658 (lOth Cir. 1985), cert. denied, 475 u.s. 1010 (1986). We 

reiterate only those facts relevant to this appeal. Briefly, on 

July 1, 1982, Rocket Oil Co., appellee, redeemed a certificate of 

deposit from Penn Square Bank and accepted in exchange a bank 

cashier's check in the amount of $1,480,273.98. The check was 

deposited in Rocket Oil's own bank for collection, but before it 

was presented for payment, Penn square was declared insolvent by 

the Comptroller of the Currency of the United States on July 5, 

1982. The FDIC, the appointed receiver, immediately organized the 

Deposit Insurance National Bank {DINB), a new bank, to make 

payments of designated funds to insured parties pursuant to 12 

u.s.c. § 1821 (1982). Through the mistake of the DINB and t he 

FDIC, instead of receiving the $100,000 as authorized under 

§ 1821, Rocket Oil received the entire amount of its cashier's 

check presented to Penn Square Bank. 

2 

Appellate Case: 86-2821 Document: 01019678294 Date Filed: 01/13/1989 Page: 2 
The FDIC, after discovering its error, sued for restitution 

in the amount of $1,380,273.98. The district court determined 

that, although the FDIC made a prima facie case for restitution, 

the final payment rule of the Uniform Commercial Code barred its 

recovery. In reversing the lower court's opinion, this court held 

Penn Square's underlying insolvency dictated that the National 

Bank Act, which provides for liquidation of a national bank, took 

precedence over the u.c.c. Under this Act, Rocket Oil became a 

creditor of the insolvent bank because the cashier's checks were 

not presented until after the bank was declared insolvent. This 

court reversed and remanded the case with direction to enter 

judgment i n favor of the FDIC. The opinion gave no i nstruction 

about interest. 

After remand, the FDIC moved the district court for entry of 

judgment and requested prejudgment and postjudgment interest from 

the date of the district court's original order. 

court denied prejudgment interest based on 

consideration of the circumstances of the case. 

The district 

its equitabl e 

Post judgment 

interest was awarded from the entry of judgment on remand pursuant 

to the court's interpretation of the Tenth Circuit case law. 

The issue of interest in a federal question case is governed 

by federal law. The general rule under federal l aw for awarding 

prejudgment interest is that "interest is not recovered according 

to a rigid theory of compensation for money withheld, but is given 

in response to considerations of fairness. It is denied when its· 

exaction would be inequitable." Board of Comm'rs of Jackson 

County v. United States, 308 U.S. 343, 352 (1939); see also Blau 

3 

Appellate Case: 86-2821 Document: 01019678294 Date Filed: 01/13/1989 Page: 3 
v. Lehman, 368 u.s. 403, 414 (1962): Brock v. Richardson, 812 

F.2d 121, 126 (3d Cir. 1987). In absence of a statutory provision 

to the contrary, the district court has broad discretion in 

deciding whether to grant prejudgment interest. Ambromovage v. 

United Mine Workers of Am., 726 F.2d 972, 982 (3d Cir. 1984); 

Bricklayers' Pension Trust Fund v. Taiariol, 671 F.2d 988, 990 

(6th Cir. 1 982}. The district court in this case held that "under 

the instant circumstances equity does not demand an award of 

prejudgment interest to plaintiffs." This court must uphold the 

lower cour t 's determination on prejudgment interest unless it 

finds an abuse of discretion. 1 Royal Indem. Co. v. United States, 

313 u.s. 289 (1 941); Northern Natural Gas Co. v. Grounds, 666 F.2d 

1279, 1290 (lOth Cir. 1981), cert. denied, 457 U.S. 1126 (1982). 

The FDIC argues that prejudgment interest should be awarded 

in restitution cases unless there are exceptional circumstances 

which justify denial. Although other circuits have applied this 

rule under certain circumstances, 2 this court declines to limit 

1 Under the abuse of discretion standard, a trial court's 

decision wi ll not be disturbed unless the appellate court has a 

definite and firm conviction that the lower court made a clear 

error of judgment or exceeded the bounds of permissible choice in 

the circumstances. United States v. Ortiz, 804 F.2d 1161, 1164 

n.2 (lOth Cir. 1986). 

2 Appellants cite several cases that have followed this rule. 

Many of these cases concern state law claims involving breach of 

contract or wrongful acts giving rise to tort claims. ~, In 

re First Penn Corp., 793 F.2d 270 (lOth Cir. 1986) (construing 

Oklahoma law); Stroh Container Co. v. Delphi Indus., Inc., 783 

F.2d 743, 752 (8th Cir.), cert. denied, 476 U.S. 1141 (1986) 

(granting interest on a breach of contract claim); Cargill, Inc. 

v. Taylor Towing Serv., Inc . , 642 F.2d 239 (8th Cir. 1981) 

(granting interest on damages from accident caused by defendant's 

negligence). Other cases cited involve actions brought under 

federal statutes providing for damages of a remedial nature. 

~, Lodges 743 & 1746 v. United Aircraft Corp., 534 F.2d 422 

4 

Appellate Case: 86-2821 Document: 01019678294 Date Filed: 01/13/1989 Page: 4 
the district court's discretion in this case. The congressional 

purpose in enacting the National Bank Act was to equitably 

distribute the assets of the insolvent bank. Jennings v. United 

States Fidelity & Guar. Co., 294 u.s. 216, 226 (1935}; Smith v. 

Baldwin, 69 F.2d 390, 392 (D.C. Cir. 1934). Clearly, Congress did 

not intend to create a compensatory remedy. 3 As such, obligations 

created under the National Bank Act do not compel an award of 

interest. 

In addition, this case presents a unique situation because 

the obligation imposed on Rocket Oil to repay the funds was not 

created by its own voluntary act in either forming a contract or 

committing a tort. Instead, Rocket Oil's obligation to pay is a 

result of t he law's attempt to equitably distribute the loss 

caused by a bank's insolvency among the injured parties. As this 

court stated, 11 [d]espite their good faith and the origin of the 

funds, the defendant s have been cast by law into the role of 

creditors, and as such they must be treated in a circumscribed 

fashion." FDIC v. McKnight, 769 F.2d at 661. The legal 

consequences of the National Bank Act do not invoke the same 

(2d Cir. 1975), cert. denied, 429 U.S. 825 (l976)(construing the 

National Labor Relations Act): Hodgson v. American Can Co., 440 

F.2d 916, 922 (8th Cir. 1971) (construing the Fair Labor Standards 

Act); see also West Virginia v. United States, 479 U.S. 305 

(1987) (reimbursement claims under the Disaster Relief Act include 

right to prejudgment damages because underlying claim was 

contractual obligation to pay money). 

3 "In the absence of an unequivocal prohibition of interest, and 

where the statute imposes a money obligation, the power of the 

court to award interest is dependent on an appraisal of the 

congressional purpose of imposing the obligation and on the 

relative equities of the parties." Rodgers v. United States, 332 

u.s. 371, 373 (1947). 

5 

Appellate Case: 86-2821 Document: 01019678294 Date Filed: 01/13/1989 Page: 5 
considerations of full compensation as do cases based on common 

law obligations or federal law which provides for damage remedies. 

Considering the circumstances surrounding an insolvent bank, 

involving many victims who each possess a legitimate claim to the 

property of the bank, the district court did not make a clear 

error of judgment in deciding that the equities of the case do not 

warrant an award of prejudgment interest. We therefore conclude 

that the denial of interest was not so unfair or inequitable as to 

amount to an abuse of discretion. 

The second contention on appeal is that the district court 

erred in awarding postjudgment interest fr om the date the judgment 

was entered on remand rather than from the date of the original 

erroneous judgment. This court addressed this issue in Ashland 

Oil, Inc . v. Phillips Petroleum Co., 607 F.2d 335, 336 (lOth Cir. 

1979), cert. denied, 446 U.S. 936 (1980), where we stated, 

The plaintiff urges that postjudgment interest should 

commence upon the date of the first judgment and not at 

the end of the remand trial. However, we must hold 

under 28 u.s.c. § 1961 , in view of the extent to which 

the case was reversed, 'the judgment' for the purpose of 

interest was that entered by the trial court on remand. 

Relying on Ashland, the district court found, due to the extent of 

the reve rsal in this case, that postjudgment interest should 

commence on the date of the remand judgment. We agree. 

In the recent case Northern Natural Gas Co. v. Hegler, 818 

F.2d 730 (l Oth Cir. 1987), cert. dismissed, 109 s.ct. 7 (1988), 

this court focused on the Ashland language "the extent to wh ich 

the case was reversed11 as determinative of when postjudgment 

interest should commence. This court concluded that the reversal 

in that case "was not on any basic liability errors or errors in 

6 

Appellate Case: 86-2821 Document: 01019678294 Date Filed: 01/13/1989 Page: 6 
procedure which affected the basic issues but only on a dollar 

value, a matter of degree." Id. at 737. The court, therefore, 

held that the postjudgment interest should commence on the initial 

entry by the trial court. 

In the present case, this court completely reversed the 

district court's determination of liability and substantive rights 

of the parties changing the determinati ve judgment for purposes of 

postjudgment interest. From the clear reasoning of Northern 

Natural Gas, the district court correctly held that the final 

judgment for granting post j udgment interest under 28 U. S.C. § 1961 

was the judgment entered on remand. 

The judgment of the United States District Court for the 

Western District of Okl a homa is AFFIRMED. 

Ente re d for the Cour t 

Per Cur iam 

7 

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