Court Opinion

ID: 876498
Source: CourtListenerOpinion
Date Created: 2013-06-04 20:41:44.88497+00
Date Added: 2024-06-11T12:28:36.745953
License: Public Domain

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 :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
                     n

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.