### No. 13441 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

FIRST NATIONAL BANK OF CIRCLE, Circle, Montana, Plaintiff and Appellant,
-vsGRAHAM CHARLES GARNER and SYDNEY MORRIS et al., Defendants, Graham Charles Garner and Sydney Morris et al., Cross Plaintiffs,

-vsFEDERICO CRUZ, et al., Cross Defendants, Frederico Cruz

## , Cross-Plaintiff,

-vsBERNARD 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. jusrice Gene 3. Daly delivered the Opinion of the Court. Plaintiff, FirstNational Bank of Circle, Circle, Montana, filec; this action on May 22, 1972, in the district court, McCone dounty, for a declaratoryjudgment to determine 

### its legal obligaLions regarding certainbank deposits and cashier's checks. 311Way 

### 6, 1975, plaintiff's motion for summary judgment was granted, plaintiff then filed a motion for award of attorney fees. This motion was denied on May 5, 1976 and from that denial plaintiff appeals. In 1971, Dr. Federico Cruz acquired control of the British .4merican Bank Limited of the Bahamas. Dr. Cruz was president ;I£ the bank when itslicense was suspended by the government oi tlhe Bahamas in early 1972. On March 23, 1972, Dr. Cruz, cepresenting himself tobe the president of the British-American Yank, Ltd.(Glasgow, scotland), opened a corporate checking account with plaintiff First National Bank of Circle, Montana. de presented checks endorsed to the BritishAmerican Bank Limited from depositors located allover the world, inthe approximate rlinount of $1,600,000.00. On May 

### 8, 1972, the account balance

was approximately $1,542,868.01 and Dr. Cruz requested a withdrawal of $1,327,788.00. The Circle Bank issued cashier's checks to him personally totaling this amount. On May 15, 1972, the CircleBank received a telephone call and a celegram from a Bernard Gadd who informed the CircleBank he had been appointed Provisional Liquidator for the BritishAmerican Bank,Ltd., on May 

### 11, 1972, and demanded the Circle Bank stop payment on the cashier's checks issued to Dr. Cruz on !day 

### 8, 1972. Gadd later demanded that allremaining funds beLro~erl and returned to him. May 

### 15, 

### 1972, was the first notice

co the CircleBank of such liquidation proceedings. On May 22, 1972, the CircleBank filed this action against deielldarlts. Although the actionwas styled "Complaint for 9eclaratoryJudgment!', the district court treated it as an interpleader. The Circle Bank asked the districtcourt (1) to ddjudicate its legal obligations to defendants regarding the bank deposits and cashier's checks, (2) for a determination whether it should freeze the account and stop payment on the cashier's checks, and 

### (3) for reasonable attorney fees and costs. Dr. Federico Cruz filed a counterclaim demanding damages against the CircleBank for the face amount of the cashier's zhdcks, which Dr. Cruz allegedwere wrongfully dishonored by the ilrcleBank. The Liquidator fileda counterclaim for a full accounting of allmonies deposited in the Circle Bank in the

name of the British-American Bank Ltd. On November 

### 1, 1972, the Circle Bank filed a motion for the discharge of itself and itsofficers. After a lengthy litigationprocess, on May 

### 7, 1975, the district court ordered: "yc 9~ that the motions for summary judgment of the First National Bank of Circle are in allrespects granted and that the motion for summary judgment of the BritishAmerican Bank Limited and the Official Liquidators thereof againstFederico Cruz are granted with respect to allmatters dealt with herein and with respect to the ownership of the funds in the custody of the Court

# ** *.I' Jw11drshipwas granted to the OfficialLiquidator. 

### All questions !were settled, except for the FirstNational Bank of Circle's :lain1 for attorney fees. Plaintiff presents one issue for review by this Court-- whether plaintiff FirstNational Bank of Circle isentitled to attorney fees and costs tobe paid out of the interpleader fund?

### To answer this question the Court must decide whether the CircleBank was a disinterested stakeholder, If the stakeholder does not stand indifferent between the claimants, it 

### isnot entitledto an allowance for attorney fees. Defendant Bernard Gadd contends thisactionwas not an interpleader and that plaintiff had an interest inkeeping the funds in 

### itsbank

as long aspossible. This Court inCentral Montana Stockyards

v. Fraser; 133Mont, 168, 193, 320 P.2d 981, stated: "'An attitude of perfect disinterestedness, excluding even an indirect interest on the part of the plaintiff isindispensable to the maintenance of the bill [of interpleader! 

# * Jc

# *."' However, Rule 22(a), M.R.Civ.P., removes this restriction and expressly provides it 

### isnot a ground for objectionwhen a plaintiff in an interpleader action avers he 

### isnot liable in whole or inpart to any or allof the claimants. Since the award of costs and attorney fees iswithin the discretion of the court, such award 

### is commonly denied when the stakeholder, although disinterested, isinsome way culpable as regards the subject matter of the interpleaderproceeding, but not sufficiently culpable towarrant denial of interpleader altogether. Merrimack Manufacturing Co. v. Bergman, 154 F.Supp. 688. Plaintiff contends the reason it 

### did not filea strict interpleader actionwas tomake sure this money would continue toreceive interest. The money did receive interest in the amount of approximately $345,000.00. Defendants, on the otherhand, contend plaintiff's motive was not allthat altruistic. They felt thebank's reason fornot filing an interpleaderwas tokeep the funds as a deposit in

### itsbank as long aspossible. The recordshows a motion was made demandi~ig that plaintiff pay into the registry of court or deposit for safekeeping in

### a bank not a pal-ty to this action, designated by the court, all sums in the dccount in question. The First National Bank of Circle resisted the transfer 02 the funds from 

### its custody, arguing that it should be released from allliability in consideration of itsreleasing the funds. 3n Wovember 

### 6, 1972, the funds were ordered transferred tothe jecurity Trust and Savings Bank of Billings, Montana. During theperiod the plaintiff had control of the funds, 4Zron1:<larch23, 1972, until they were paid over to the Security Crust and Savings Bank, the plaintiff paid an interest rate of

4% compounded quarterly. The Security Trust and Savings Bank paid an interest rate of 

### 5 118%compounded quarterly. 

### At

### 4% the original deposit would have produced $7,700 interest during rhe period from the date of the initialdeposit, March 23, 

### 1972, to the date of the filingof the action, May 22, 1972. During this period plaintiff CircleBank paid no interest on the funds, thus for thisperiod it had the use of thismoney interest free to invest as it saw fit. It appears from the district court record that plaintiff was inno hurry to release the funds. 

### Mr. Towe, attorney for plaintiff stated: ''We are not anxious to release the funds until we receive discharge, atleast for the liability." Thus it seems plaintiff in this actionwas not a disinterested stakeholder. The Circle Bank indicated before it would release these funds it desired further protection from the court inexonerating it from any liability. When the action 

### isnot one of strictinterpleader, and plaintiff ismore than a mere stakeholder,

### attorney fees arenot allowable. Metropolitan Life Insurance Co. v. Enright, 231F.Supp. 275, 278. In thiscase the record reveals the CircleBank was not a disinterested stakeholder. The Bahama Bank Liquidatorwas attempting tohold plaintiff liable for $97,000 withdrawn from the account prior to the time the liquidation procedure started. Such a claim can hardly be characterized asa minor part of the litigation. CircleBank had a great deal riding on the outcome of this litigation. It isgenerallyrecognized thatwhen a party interpleading claimants tofunds orproperty disputes the amount of the fund or to the extent of theproperty, has some other substantial interest inthe subject matter or the outcome of the litigation, or does not stand indifferentbetween the claimants, he stands on the same footing asany other litigant and 

### isnot entitled to an allowance forattorney fees. Groves v. Sentell, 153U.S.465, 

### 14S.Ct. 898,:38 Led 785. Where a plaintiff has placed himself ina position necessitating interpleader to avoid double vexation, he isnot entitled to attorney fees. Gresham StateBank 

### v. 0 and 

### K Construction Co., 231 Or. 

### 106, 370 P.2d 726. Here, it 

### appears from the record plaintiff used less than prudent banking practices in handling this account. On March 24, 1972, Edward Towe, president of the CircleNational Bank called the Office of the Comptroller of the Treasury inWashington D. C. 

### tomake sureDr. 

### Cruz was president of theBritSsh-American Bank, Ltd., of Scotland. He



### never received a response and no further inquirieswere made. Subsequently plaintiff issued $1,327,788.00 incashier's checks to

### Dr. Cruz athis request, including one check in the sum of $914,288.00 payable personally to

### Dr. Cruz, out of the accountregiseered Ln the name of the British-American Bank, Ltd.,of Scotland without further confirmation. These cashier's checks 5ecame an issue in the lawsuit and inthe plaintiff's plead.ings it asked the court to adjudicate the rights and obligations of defendants to the funds represented by the cashier's checks. To deny the award of counsel fees to the stakeholder 

### will not 5e to leave itsattorney uncompensated. It simply represents

a decision that allor part of the fees incurred by the stakeholder should be paid out itspocket, rather than out of the pocket of the prevailing claimant. 3A Moore's Federal Practice $~22.16[2], p. 3144, states: "The prevailing principle in interpleader actions brought inthe federal courts, whether under the interpleader statute orunder Rule 22(1), isthat it 

### iswithin the discretion of the court to award the stakeholder costs including a reasonable attorneys' fee out of the deposited fund." The district court did not abuse 

### its discretion indenying attorney fees to the First National Bank of Circle. The judgment of the district court isaffirmed,

Justice

chief Justice 

# /'I

Justices.