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, First National Bank of Circle, Circle, Montana, 

filec; this action on May 22, 1972, in the district court, McCone 

dounty, for a declaratory judgment to determine its legal obligaLions regarding certain bank deposits and cashier's checks. 

311 Way 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 its license was suspended by the government 

oi tlhe Bahamas in early 1972. On March 23, 1972, Dr. Cruz, 

cepresenting himself to be 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 British American Bank Limited 

from depositors located all over the world, in the 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 Circle Bank received a telephone call 

and a celegram from a Bernard Gadd who informed the Circle Bank 

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 all remaining funds be 
Lro~erl and returned to him. May 15, 1972, was the first notice 

co the Circle Bank of such liquidation proceedings. 

On May 22, 1972, the Circle Bank filed this action against 

deielldarlts. Although the action was styled "Complaint for 

9eclaratory Judgment!', the district court treated it as an 

interpleader. The Circle Bank asked the district court (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 Circle Bank for the face amount of the cashier's 

zhdcks, which Dr. Cruz alleged were wrongfully dishonored by the 

ilrcle Bank. The Liquidator filed a counterclaim for a full 

accounting of all monies 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 

its officers. After a lengthy litigation process, 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 all respects 

granted and that the motion for summary judgment of 

the British American Bank Limited and the Official 

Liquidators thereof against Federico Cruz are granted 

with respect to all matters dealt with herein and with 

respect to the ownership of the funds in the custody of 

the Court * * *.I' 

Jw11drship was granted to the Official Liquidator. All questions 

!were settled, except for the First National Bank of Circle's 

:lain1 for attorney fees. 

Plaintiff presents one issue for review by this Court-- 

whether plaintiff First National Bank of Circle is entitled to 

attorney fees and costs to be paid out of the interpleader fund? 
To answer this question the Court must decide whether 

the Circle Bank was a disinterested stakeholder, If the 

stakeholder does not stand indifferent between the claimants, 

it is not entitled to an allowance for attorney fees. Defendant 

Bernard Gadd contends this action was not an interpleader and 

that plaintiff had an interest in keeping the funds in its bank 

as long as possible. This Court in Central Montana Stockyards 

v. Fraser; 133 Mont, 168, 193, 320 P.2d 981, stated: 

"'An attitude of perfect disinterestedness, 

excluding even an indirect interest on the part of the 

plaintiff is indispensable to the maintenance of the 

bill [of interpleader! * Jc *. "' 

However, Rule 22(a), M.R.Civ.P., removes this restriction 

and expressly provides it is not a ground for objection when a 

plaintiff in an interpleader action avers he is not liable in 

whole or in part to any or all of the claimants. Since the 

award of costs and attorney fees is within the discretion of 

the court, such award is commonly denied when the stakeholder, 

although disinterested, is in some way culpable as regards the 

subject matter of the interpleader proceeding, but not sufficiently 

culpable to warrant denial of interpleader altogether. Merrimack 

Manufacturing Co. v. Bergman, 154 F.Supp. 688. 

Plaintiff contends the reason it did not file a strict 

interpleader action was to make sure this money would continue 

to receive interest. The money did receive interest in the amount 

of approximately $345,000.00. Defendants, on the other hand, contend plaintiff's motive was not all that altruistic. They felt 

the bank's reason for not filing an interpleader was to keep the 

funds as a deposit in its bank as long as possible. The record 
shows 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 all liability in consideration of its releasing the funds. 

3n Wovember 6, 1972, the funds were ordered transferred to the 

jecurity Trust and Savings Bank of Billings, Montana. 

During the period the plaintiff had control of the funds, 

4Zron1 :<larch 23, 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 initial deposit, March 23, 1972, 

to the date of the filing of the action, May 22, 1972. During 

this period plaintiff Circle Bank paid no interest on the funds, 

thus for this period it had the use of this money interest free 

to invest as it saw fit. 

It appears from the district court record that plaintiff was 

in no hurry to release the funds. Mr. Towe, attorney for plaintiff stated: 

''We are not anxious to release the funds until 

we receive discharge, at least for the liability." 

Thus it seems plaintiff in this action was not a disinterested 

stakeholder. The Circle Bank indicated before it would release 

these funds it desired further protection from the court in exonerating it from any liability. When the action is not one of 

strict interpleader, and plaintiff is more than a mere stakeholder, 
attorney fees are not allowable. Metropolitan Life Insurance 

Co. v. Enright, 231 F.Supp. 275, 278. 

In this case the record reveals the Circle Bank was not a 

disinterested stakeholder. The Bahama Bank Liquidator was 

attempting to hold plaintiff liable for $97,000 withdrawn from 

the account prior to the time the liquidation procedure started. 

Such a claim can hardly be characterized as a minor part of the 

litigation. Circle Bank had a great deal riding on the outcome 

of this litigation. It is generally recognized that when a 

party interpleading claimants to funds or property disputes the 

amount of the fund or to the extent of the property, has some other 

substantial interest in the subject matter or the outcome of the 

litigation, or does not stand indifferent between the claimants, 

he stands on the same footing as any other litigant and is not 

entitled to an allowance for attorney fees. Groves v. Sentell, 

153 U.S.465, 14 S.Ct. 898,:38 L ed 785. 

Where a plaintiff has placed himself in a position 

necessitating interpleader to avoid double vexation, he is not 

entitled to attorney fees. Gresham State Bank 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 Circle National Bank called the Office of the Comptroller 

of the Treasury in Washington D. C. to make sure Dr. Cruz was 

president of the BritSsh-American Bank, Ltd., of Scotland. He 

never received a response and no further inquiries were made. 

Subsequently plaintiff issued $1,327,788.00 in cashier's checks 

to Dr. Cruz at his request, including one check in the sum of 

$914,288.00 payable personally to Dr. Cruz, out of the account 
regiseered 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 in the 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 its attorney uncompensated. It simply represents 

a decision that all or part of the fees incurred by the stakeholder should be paid out its pocket, 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 in the federal courts, whether under the 

interpleader statute or under Rule 22(1), is that 

it is within 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 in denying 

attorney fees to the First National Bank of Circle. The judgment 

of the district court is affirmed, 

Just ice 

chief Justice /'I 

Justices.