The opinion of the court was delivered by: GOETTEL
On June 28, 1983, plaintiff Amoco Transport Company ("Amoco") commenced this action, pursuant to 28 U.S.C. § 1335 (1976), by interpleading Dietze, Inc. ("Dietze"), The Royal Bank of Canada ("RBC"), and the various defendants who are a part of the Cast shipping group. Amoco's objective was, and is, to obtain a clear determination of who is entitled to payment of $470,728.84 in freight charges that Amoco incurred in May of last year. Rather than pay that amount into court, Amoco chose to post a bond, as allowed under section 1335(a)(2). By taking this step, Amoco secured for itself the continuous use of the interpleader fund.
In the instant motion, Amoco seeks a default judgment against the Cast defendants, who have failed to answer the summons, and an award of costs (including the $3,530 cost of the bond) and attorney's fees, all of which are to be deducted from the inerpleader fund.In response, RMC concedes that Amoco's costs and attorney's fees are deductible
but contends that Amoco should be ordered to pay interest for the use of the interpleader fund from June 21, 1983, when RBC made its first demand for payment, until the date that demand is satisfied. Amoco replies by denying liability for interest and by contending that RBC is not yet entitled to the interpleader fund because it has yet to establish the validity of its claim. Thus, the Court is faced with two questions: first, whether the interpleader fund can be distributed at this time; and second, whether RBC is entitled to interest.
The Defendants' Entitlement to the Fund
Because the Cast defendants are clearly in default and the Court, therefore, is granting Amoco's motion for a default judgment against them, there is no reason why the Court should not simultaneously direct a distribution of the interpleader fund. Other than the Cast defendants, the only claimants remaining are Dietze and RBC. Dietze, as a broker, is entitled to have its commission deducted from the interpleader fund, the amount ofwhich has already been agreed to by both Dietze and RBC. Quite clearly then, RBC is the only real, remaining claimant to the fund. In this situation, it is appropriate for the Court to order Amoco to pay the fund to RBC.
Amoco suggests that there must be some further judicial proceeding in which RBC properly establishes its claim. We know of no such proceeding,
and the cases that have been cited make no reference to such. Nor is it clear what the purpose of such a proceeding would be. if Amoco believes that it would provide additional protection against a latter motion by one of the Cast defendants to set aside the default, Amoco is wrong. See Fed. R. Civ. P. 55(c). If there have been procedural defects in service and notification, they won't be cured by a hearing. Nor would such a proceeding insulate Amoco against claims by other parties not named in this interpleader action. Amoco determined who the litigants would be, and if there are other possible claimants, they pose a problem for Amoco, not the Court.
Unable to discern a valid reason for holding any further proceedings, the Court concludes that a judgment for the distribution of the interpleader fund should be entered in accordance with the terms of RBC's agreement with Dietze, as well as with the following discussion of the question of interest.
One of the jurisdictional requirements of the federal interpleader statute is that the plaintiff-stakeholder deposit with the court either the money or property that is in dispute or a bond "in such amount and with such surety as the court or judge may deem proper. . . ." 28 U.S.C. § 1335(a)(2). In this instance, Amoco met this requirement by depositing a bond payable to the Clerk of the Court and thus gained for itself the continued use of a fund that it admittedly owed to one claimant or another. The question, therefore, is whether Amoco should be required to pay interest for the use of that fund during the pendency of the litigation.
To answer that question, one must turn to a series of rather inconsistent holdings. In its last decision on this issue, the Second Circuit held that the mere fact that the stakeholder has had the use of a disputed fund subsequent to his timely furnishing of a bond under section 1335(a)(2) will not entitle the claimants to interest. Aetna Casualty & Surety Co. v. B.B.B. Const. Corp., 173 F.2d 307, 309-10 (2d Cir.), cert. denied, 337 U.S. 917, 93 L. Ed. 1726, 69 S. Ct. 1158 (1949). However, as Judge Tyler of the Southern District of New York later noted, Aetna "does not represent the culmination of a long line of sturdy precedent." Lee National Corp. v. Kansas City Southern Industries, Inc., 50 F.R.D. 412, 414 n.1 (S.D.N.Y. 1970).
Indeed, threeyerars before it decided Aetna, the Second Circuit ruled in another interpleader suit that a judgment debtor who had chosen to retain the use of $4,500 by giving a bond for that amount, rather than pay the money into court, was entitled to receive the cost of the premium on the bond but not to an order stopping the running of interest against it. Great Lakes Transit Corp. v. Marceau, 154 F.2d 623, 626-27 (2d Cir. 1946).
More recently, Great Lakes Transit was cited with approval by the Eastern Distirct of Arkansas in Equifax, Inc. v. Luster, 463 F. Supp. 352, 356 (E.D. Ark. 1978), aff'd sub nom. Arkansas Louisiana Gas Co. v. Luster, 604 F.2d 31 (8th Cir. 1979) (per curiam). In Equifax, the court held that interest on the plaintiff's debt would continue to accrue until the debt was paid, as was required under state law, and that the filing of a surety bond pursuant to the federal interpleader statute would not interrupt the running of such interest on the amount owed.
This Court recognizes that, in Great Lakes Transit and Equifax, there was an independent basis for initiating the running of interest on the interpleader fund and that the courts, therefore, were merely holding that the posting of a bond to commence an interpleader action is not sufficient to stop the running of interest. However, Lee National does offer precedent for awarding interest even where there is no independent basis for its accrual; and, in general, equitable considerations strongly favor a ruling that a stakeholder should be liable for interest on the disputed amount, less the premium of the bond, simply because the stakeholder has enjoyed unfettered use of a fund that admittedly belongs to one of the climants. See United States v. United Drill & Tool Corp., 87 U.S. App. D.C. 236, 183 F.2d 998, 999 (D.C. Cir. 1950) (citing Young v. Godbe, 82 U.S. (15 Wall) 562, 565, 21 L. Ed. 250 (1873) (a creditor is entitled to interest from the tie the debt ought to be paid as compensation for loss of use of his money)). It was in accordance with this reasoning that Judge Tyler held in Lee National that, despite circumstances similar in all important respects to Aetna, "principles governed by equity and fairness which the court of appeals would find controlling if it were to re-examine this particular point today" support a holding that the stakeholder is liable for interest on the amount owing the claimant, less the cost of the premium on the interpleader bond. Lee National, supra, 50 F.R.D. at 414 (quoting United States v. Eastern Air Lines, Inc., 366 F.2d 316, 321 (2d Cir. 1966) "It is well established that a party who has had use of disputed funds for a period of time must pay interest on that portion of the funds finally determined to belong to his adversary.")).
Judge Tyler's conclusion in Lee National recognizes that ordering an interpleader, such as Amoco, to pay interest on the interpleader fund is analogous to compelling a defendant in a non-interpleader action to pay interest to a successful plaintiff for the period prior to judgment.
See id. at 413-14. Such an award of pre-judgment interst can be made under the equitable powers of the court, even where, as here,