ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Steven W. Handlon Hugo E. Martz
Margaret A. Williford Martz & Boyles
Handlon & Handlon Valparaiso, Indiana
Portage, Indiana
Kent M. Frandsen
Carol Sparks Drake
Parr Richey Obremskey & Morton
Lebanon, Indiana
______________________________________________________________________________
In the
Indiana Supreme Court
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No. 64S04-0606-CV-236
PORTER DEVELOPMENT, LLC Appellant, Cross-Appellee (Defendant below),
v.
FIRST NATIONAL BANK OF VALPARAISO, Appellee, Cross-Appellant (Plaintiff below).
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EAGLE SERVICES CORP., Not Appealing (Defendant below), 1
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Appeal from the Porter Superior Court, No. 64D02-0212-PL-10373
The Honorable David L. Chidester, Special Judge
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On Petition to Transfer from the Indiana Court of Appeals, No. 64A04-0502-CV-95
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May 23, 2007
Dickson, Justice.
When a financial institution interpleads and pays into court deposited funds that are sub-
ject to an adverse claim, how does Indiana Code § 28-9-5-3 govern its entitlement to receive its
1
Eagle Services Corp. has not filed a brief as an appellant or appellee and is not seeking relief on appeal.
But a party of record in the trial court is a party on appeal. Ind. Appellate Rule 17(A).
costs and expenses thereby incurred? To address this question, we granted transfer.
First National Bank of Valparaiso ("the Bank") commenced this action with its complaint
for interpleader pursuant to Indiana Trial Rule 22, alleging that it was the holder of a $100,000
certificate of deposit owned by defendant Porter Development, LLC; that it had received notice
of a purported assignment of the certificate to defendant Eagle Services Corp., which was claim-
ing an interest therein; and that Porter Development had requested to withdraw the funds but Ea-
gle Services refused to consent. The Bank sought to pay the funds to the court clerk, to be re-
lieved of responsibility for further payment, and to receive its costs and attorney fees from the
defendants. On the day the complaint was filed, the trial court ordered the requested payment to
the clerk and declared the Bank relieved from further responsibility as to the certificate of de-
posit.
In their respective answers, both defendants asserted rights to the deposit. Porter Devel-
opment also counterclaimed, alleging that the Bank had converted its $100,000 deposit and had
committed abuse of process and breaches of contract, trust, and fiduciary duty. The parties filed
competing motions for summary judgment. The trial court granted partial summary judgment
for Porter Development and against Eagle Services, establishing that the purported assignment
was invalid and that Porter Development was the true owner of the certificate of deposit. The
court granted summary judgment to the Bank and against Porter Development as to the propriety
of the Bank's interpleader action, but with respect to the Bank's request for costs and attorney
fees, the trial court granted partial summary judgment to Porter Development:
[The Bank] shares some, but hardly all of the blame. Indiana Code 28-9-5-3 allows for
attorney fees for banks who utilize interpleader. But, Indiana Trial Rule 22 does not
mention costs or fees. The above code section reads "is entitled," not "shall." Based on
this difference, the court denies [the Bank's] claim for costs and fees . . . .
Appellant's App'x. at 218.
Porter Development appealed the trial court's ruling affirming the propriety of the Bank's
interpleader action and payment of the funds to the court. The Bank cross-appealed to challenge
the trial court's denial of its claim for costs and attorney fees. The Court of Appeals affirmed the
trial court's rulings. Porter Dev., LLC v. First Nat'l Bank of Valparaiso, 837 N.E.2d 558 (Ind. Ct.
2
App. 2005). Both the Bank and Porter Development sought transfer to this Court. We granted
the Bank's transfer petition but denied Porter Development's petition. Pursuant to Indiana Appel-
late Rule 58(A)(2), we summarily affirm the Court of Appeals opinion with respect to its resolu-
tion of Porter Development's appellate challenge to the propriety of the Bank's interpleader ac-
tion and all issues not addressed below.
The Bank contends that the trial court erred in not awarding it costs and expenses pursu-
ant to Indiana Code § 28-9-5-3, which subsection is titled "Interpleader" and provides:
This article [Article 9, the Depository Financial Institutions Adverse Claims Act] does
not prevent a depository financial institution from interpleading and paying the funds that
are the subject of an adverse claim into a court. If a depository financial institution pays
the funds to the court, the depository financial institution is entitled to recover and collect
the costs and expenses, including attorney's fees, incurred by the depository financial
institution in the interpleader action.
Ind. Code § 28-9-5-3 (emphasis added) (hereinafter the "Adverse Claim Interpleader Statute").
The Bank argues that the phrase "is entitled" mandates the award of costs and expenses, includ-
ing attorney fees, if the requirements under the statute are otherwise met.
Porter Development disputes the Bank's entitlement to any relief under the Adverse
Claim Interpleader Statute but does not dispute that the Bank is a "depository financial institu-
tion" covered by the statute or specifically take issue with the Bank's argument regarding the
meaning of "is entitled" under the statute. In addition, Porter Development contends that the
Bank should not recover its costs and expenses under general principles of common law, noting:
(a) "the 'American Rule'—that each party must pay his/her own attorneys' fees and expenses
unless a statute provides otherwise;" (b) the expense associated with conflicting claims is "sim-
ply an ordinary and expected cost of doing business" for banks; and (c) payment of attorney fees
would "senselessly deplete the fund that is the subject of preservation through the interpleader."
Porter Development's Cross-Appellee's Br. at 27-28. And Porter Development alternatively as-
serts that, even if the Bank is found to be entitled to attorney fees and expenses, any such award
should be made against Eagle Services, the unsuccessful party whose conduct precipitated the
Bank's interpleader, and not against Porter Development, the depositor and successful claimant.
In the interpretation of statutes, our goal is to determine and give effect to the intent of
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the legislature in promulgating it. Collier v. Collier, 702 N.E.2d 351, 354 (Ind. 1998). Our pri-
mary resource for this determination is the language used by the legislature, and thus our inter-
pretation begins with an examination of the statute's language. Sales v. State, 723 N.E.2d 416,
420 (Ind. 2000). We presume that the words of an enactment were selected and employed to ex-
press their common and ordinary meanings. Mendenhall v. Skinner and Broadbent Co., Inc., 728
N.E.2d 140, 142 (Ind. 2000). Where the statute is unambiguous, the Court will read each word
and phrase in this plain, ordinary, and usual sense, without having to resort to rules of construc-
tion to decipher meanings. Sees v. Bank One, Indiana, N.A., 839 N.E.2d 154, 157 (Ind. 2005).
In this case, the trial court believed that the statutory phrase "is entitled" did not mean "shall re-
ceive." The interpretation of a statute, however, is an issue of law, which we determine de novo
on appeal. Horseman v. Keller, 841 N.E.2d 164, 168 (Ind. 2006); Shell Oil Co. v. Meyer, 705
N.E.2d 962, 976 (Ind. 1998).
We find no ambiguity in the Adverse Claim Interpleader Statute's declaration that "the
depository financial institution is entitled to recover and collect the costs and expenses, including
attorney's fees, incurred by the depository financial institution in the interpleader action." Ind.
Code § 28-9-5-3. As defined by dictionary editions contemporaneous with this 1987 enactment,
the verb "entitle" means "to furnish with a right or claim to something," THE AMERICAN HERI-
TAGE DICTIONARY 457 (2d ed. 1985); see also WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY
416 (1987) ("to furnish with proper grounds for seeking or claiming something"). Similarly, the
phrase "is entitled to" is defined to mean "has a right to," in Bryan A. Garner's A DICTIONARY OF
MODERN LEGAL USAGE 942 (2d. ed. 1995). And "right" is defined to mean "something to which
one has a just claim . . . the power or privilege to which one is justly entitled . . . something that
one may properly claim as due." WEBSTER'S NINTH NEW COLLEGIATE DICTIONARY at 1015.
Thus the language with which the General Assembly crafted § 28-9-5-3 expresses the legisla-
ture's intention to create for the interpleading depository financial institution an enforceable right
to receive costs and expenses, including attorney fees, incurred in the interpleader action. This
reading of "is entitled" is consistent with the plain meaning of the term, and it advances the De-
pository Financial Institutions Adverse Claims Act's general policy of protecting financial insti-
tutions from liability stemming from controversies arising out of competing claims for deposited
funds.
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It is correct that Indiana common law generally follows the "American Rule," under
which each party bears its own legal fees and expenses unless otherwise provided by statute.
State Bd. of Tax Comm'rs v. Town of St. John, 751 N.E.2d 657, 659 (Ind. 2001). But the Ad-
verse Claim Interpleader Statute explicitly provides for a variation from this general rule and
thus modifies the common law as to attorney fees incurred in depository institution interpleader
actions that fall within the statute.
But the statute expressly identifies neither the nature and extent nor the payment source
for an interpleading depository bank's recovery of costs and expenses. An interpleading party's
costs and expenses could exceed the amount of the disputed funds paid to the court. And, as pre-
sumably has occurred in the present case, an interpleading financial institution may incur not
only the expenses normally associated with filing and prosecuting a routine interpleader action,
but also additional trial and appellate expenses in resisting the objections and counterclaims as-
serted by its depositor.
The express reference to attorney fees in Indiana's Adverse Claim Interpleader Statute is
not reflected in federal interpleader practice. Neither Rule 22 of the Federal Rules of Civil Pro-
cedure nor the federal interpleader statute, see 28 U.S.C. § 2361, contain any express reference to
costs or attorney fees. 7 Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal
Practice & Procedure § 1719 (3d ed. 2001). Current federal practice allows trial court discretion
to award reasonable costs and counsel fees from the deposited fund to a faultless mere stake-
holder (regardless whether a depository financial institution), whenever fair and equitable, with
such costs usually taxed against the losing claimant. Id. Several federal decisions have held that
costs and fees are generally paid out of the interpleaded fund before it is distributed. See, e.g.,
Septembertide Publ'g, B.V. v. Stein and Day, Inc., 884 F.2d 675, 683 (2d. Cir. 1989); Prudential
Ins. Co. v. Boyd, 781 F.2d 1494, 1498 (11th Cir. 1986); U.S. Fidelity & Guar. Co. v. Sidwell,
525 F.2d 472, 475 (10th Cir. 1975); New York Life Ins. Co. v. Miller, 139 F.2d 657, 658 (8th
Cir. 1944). In some cases, the parties' respective conduct has been found to warrant imposing
such costs and fees directly against one party or splitting them equitably among the claimants.
See, e.g., Septembertide Publ'g, 884 F.2d at 683 (citing one claimant's "unreasonable litigation
5
posture" preventing the stakeholder from depositing the funds with the court and being dismissed
as reason for awarding costs and fees out of that party's share of the interpleaded fund); Boyd,
781 F.2d at 1498 (reversing charge of attorney fees against interpleaded fund after finding alle-
gation of claimant's bad faith was unsubstantiated); Schirmer Stevedoring Co. v. Seaboard Ste-
vedoring Corp., 306 F.2d 188, 195 (9th Cir. 1962) (instructing that on remand trial court has dis-
cretion to determine claimant against whom award of attorney fees is charged); Consol. Under-
writers of South Carolina Ins. Co. v. Bradshaw, 136 F.Supp. 395, 401 (W.D. Ark. 1955) (impos-
ing fees upon the prevailing claimant, and holding that equity does not require the unsuccessful
claimant to replenish the fund for these fees). But see Nat'l Basketball Ass'n v. Nat'l Ass'n of
Basketball Referees, 644 F.Supp. 342, 344 (S.D.N.Y. 1986) (providing no award for attorney
fees because all claimants acted in good faith).
Without reference to express statutory or rule authority for awarding costs or fees to a
stakeholder who has deposited disputed funds for judicial resolution, several state courts, often
noting that it was the losing party's unsuccessful claim to the funds that rendered the interpleader
necessary, have required the losing claimant to bear the ultimate burden for the interpleading
stakeholder's attorney fees, even where the fees initially are paid to the stakeholder out of the de-
posited funds. Terra Energy, Ltd. v. State, 241 Mich.App. 393, 399 n.2, 616 N.W.2d 691, 694
n.2 (2000); Hairston v. Bell, 282 So.2d 48 (Miss. 1973); Foreman v. Graham, 693 S.W.2d 774,
778 (Tex. Ct. App. 1985). In Evans v. Cushing Properties, 197 Ga.App. 380, 382, 398 S.E.2d
306, 308 (1990), the court applied the Georgia "Equitable Interpleader" statute 2 and approved
payment of an interpleading stakeholder's expenses out of the deposited fund.
From our review of other jurisdictions, it appears that the prevailing approach is to allow
the interpleading stakeholder to recover its attorney fees directly from the deposited fund before
it is distributed to the prevailing claimant and, as between competing claimants, to require those
claimants whose claims to the fund are rejected to replenish the fund or reimburse the prevailing
2
Ga. Code § 23-3-90(b) provides:
If the person bringing the action has to make or incur any expenses in so doing, including attor-
ney's fees, the amount so incurred shall be taxed in the bill of costs, under the approval of the
court, the court in its discretion determining the amount of the attorney's fees, and shall be paid
by the parties cast in the action as other costs are paid.
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claimant. We agree and adopt this general rule. But we observe that this approach may be inap-
propriate for application in unusual circumstances, such as when the interpleading stakeholder
incurs additional attorney fees and costs beyond the reasonable and ordinary expenses associated
with the prosecution of an interpleader proceeding.
We conclude that Indiana's Adverse Claim Interpleader statute is mandatory and estab-
lishes the right of a depository financial institution that pays funds subject to an adverse claim
into a court to "recover and collect the costs and expenses, including attorney's fees, incurred by
the depository financial institution in the interpleader action." Ind. Code § 28-9-5-3. Applying
the plain language of this enactment, such recovery extends to all reasonable costs and expenses
incurred by a depository financial institution with respect to the interpleader action or proceed-
ing. We hold, however, that such right to recovery includes only those costs and expenses that
are expended in bringing a proper interpleader, or successfully defending its use of interpleader.
In the event the deposited funds are insufficient, the trial court may impose such costs and ex-
penses upon unsuccessful claimants whose claims led to the interpleader and deposit of funds
with the court.
We reverse the trial court's partial summary judgment denying the Bank attorney fees and
remand the case to the trial court for the following purposes: (a) to determine the reasonable
costs and expenses, including attorney fees, incurred by the Bank in this interpleader action; (b)
to order the payment of such costs and expenses to the Bank from the deposited fund; (c) to de-
termine whether and to what extent Eagle Services, by its conduct in asserting an interest in the
fund, should in fairness be required to replenish all or any portion of said costs and expenses to
the fund or to Porter Development, and to enter appropriate orders thereon; and (d) for all other
proceedings consistent with this opinion and that of the Court of Appeals to the extent summarily
affirmed by this Court.
Shepard, C.J., and Sullivan, Boehm, and Rucker, JJ., concur.
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