(dissenting).
I cannot agree with the majority holding that the Wells Fargo be required to pay a substantial sum of interest to the Bank. The judgment of the trial court should be affirmed.
The allowance of interest is predicated upon the assertion that Wells Fargo “chose not to rely upon the protection offered by Section 953 of the California Financial Code.”1
The record affirmatively shows that Wells Fargo did not have, nor could it exercise, a choice of either fact or lav/ at the time the demand was made upon it. The code section referred to obviously could not afford any claimed protection, for the reason that it was designed and clearly intended to cover acts and conduct of only an agent or authorized person, as distinguished from the primary authority of the principal. The section is thus restricted by its plain terms.
The cases which have construed this section are distinguishable. They deal with specific agents who have acted without authorization or beyond the scope of their authority. Under such circumstances it has been held that a *478bank incurs no liability for honoring demands of previously authorized agents; nor need the bank inquire into the destination of the proceeds. Boston Insurance Co. v. Wells Fargo Bank, 80 Cal.App.2d 59, 181 P.2d 84.
The problem facing Wells Fargo at the time of the demand, as well as the complexities of fact and law confronting the trial court, centered on the issue of internal corporate authority, contested by rival claimants and rival attorneys.
The following chronology is important in following the sequence of events:
Demand made for $600,000..............October 7, 1949
Suit filed (Appeal No. 13412).........November 9, 1949
(This action included an additional sum of $26,860.07 and constitutes the demand for that amount)
Appellee’s answer filed...............December 5, 1949
(No extensions of time requested)
Motion for Summary Judgment
Argued ............................December 19, 1949
Trial Date ...........................December 29, 1949
Appellant’s Request for Postponement ...............................December 27, 1949
New Trial Date ......................February 1, 1950
Appearance of Rival Attorneys......January 26, 1950
Immediately after filing the first action, appellant moved for summary judgment. The District Court reserved ruling on the motion and ordered an early trial date. Thereafter, as indicated, appellant requested a postponement and a new trial date was indicated, to-wit February 1, 1950. However, before the •matter came to trial a motion was filed ■on behalf of the Chinese Communists by .a distinct and rival group of attorneys,2 relying upon cabled instructions from Communist China, wherein it was sought to have the Complaint dismissed, or in •the alternative, to substitute themselves .as attorneys for the plaintiff. The basis ■of this claim was that the Communist government had succeeded by conquest to the rights in the Bank of China which had theretofore belonged to the National Government.
The issues presented to the trial court were without analogous precedent. Upon review from its interim decision, D. C., 92 F.Supp. 920, this court observed, 9 Cir., 190 F.2d 1010, 1012; “In briefs and oral argument, the parties have made it clear that there is now available additional evidence of substantial significance. The District Court may deem it expedient to re-examine the case in the light of changing world conditions and such additional evidence as may be made available to it by the respective parties.”
Upon remand, extensive proceedings were engaged in: Appellant renewed its motion for summary judgment. The group of attorneys purporting to represent the Chinese Communists renewed their motion to dismiss, and the Wells Fargo moved the court to allow costs and attorneys’ fees. Upon the hearing of these motions appellant introduced new documentary evidence in support of its authority to represent the Bank of China. In the light of this new evidence and changing world conditions and after additional argument, Judge Goodman rendered his exhaustive opinion, D.C., 104 F.Supp. 59, that appellant had at last established its authority to act for the corporate depositor, and it was only then that the court granted the motion for summary judgment.
Such being the posture of the case, how can it be said that the representatives of Wells Fargo at the outset could have reached a decision outlining a safe course of conduct for the bank in the light of the high standards of care demanded? Ogborn v. Bank of America, 28 Cal.App.2d 565, 83 P.2d 44.
Absent specific statutory authority,3 Wells Fargo adopted the only course of *479conduct which was then available and acted neither capriciously nor arbitrarily. The jurisdiction of the United States District Court was immediately invoked and upon the entry of the interim order, the funds were deposited in the registry of the court.
In requiring Wells Fargo to pay interest, the majority opinion has misconceived the application of Section 953 of the California Financial Code. This section cannot be applied as a legal abstraction.
The factual, as well as legal, issues confronting Wells Fargo were real and substantial as vividly depicted by the trial court, D.C., 104 F.Supp. 59, 65, 67:
“This factual situation is without analogous precedent in any reported case. The resulting legal problem, arising as it does out of sweeping historical changes and the claims of rival governments, cannot be met by the application of technical rules of corporation law.
“A year and a half ago, this Court felt that the best course was to withhold judgment. At that time the Nationalist forces had only recently retreated to their last stronghold; their ability to consolidate this position was doubtful. The Peoples Government which had assumed control of the Chinese Mainland had not yet demonstrated its stability. Our executive policy had not assumed definite outlines in the wake of these events. The émigré directors of the Bank who sought control of the deposit in suit could not demonstrate their authority to do so or their ability to apply the funds to corporate purposes. The Bank of China, under new management on the Chinese Mainland, was not yet functioning normally in accordance with its Articles of Association. Whether its assets there would be employed for corporate purposes or diverted to other ends was not known.
“Now time has clarified the picture. Both the Nationalist and Peoples Governments have maintained and strengthened their positions. Our national policy toward these governments is now definite. We have taken a stand adverse to the aims and ambitions of the Peoples *480Government. The armed forces of that Government are now engaged in conflict with our forces in Korea. We recognize only the Nationalist Government as the representative of the State of China, and are actively assisting in developing its military forces in Formosa. The Bank of China now operates as two corporate entities, each performing within the area of its operations the functions bestowed upon the Bank of China by its Articles of Association. Each Bank of China is in a position to employ the deposit in suit for corporate purposes.
“There is no question but that defendant Bank should be relieved of all obligation to pay interest after the deposit was paid into court and the funds were no longer subject to the use of defendant. The legal issues raised by the conflicting claims of authority were real and substantial and their judicial determination was necessary to protect defendant Bank. Conner v. Bank of Bakersfield, 1920, 183 Cal. 199, 190 P. 801. During the period from the initial demand for payment of $600,000 on October 7, 1949 until August 14, 1950, the deposit remained subject to defendant’s use. But the Court is of the opinion that the demand was legally insufficient, under the circumstances which then existed, to obligate the defendant Bank to make payment. Even up to the time that the deposit was paid into court, those who sought to receive payment on behalf of the Bank of China, as controlled by the Nationalist Government, had not demonstrated their authority to do so. In view of the confusion which then existed the defendant Bank could not properly have risked making payment to anyone without proof of their corporate authority. Since the Bank was under no obligation to pay interest prior to the demand, the circumstances do not warrant imposing such obligation upon it thereafter.”
The trial court exercised a sound discretion in relieving Wells Fargo from any claimed liability for interest prior to deposit of the funds in the registry, pursuant to order of the trial court.
The account in question was a commercial account. It did not draw interest and there was no contract, either express or implied, on the part of Wells Fargo requiring the payment of any interest.
Interest is allowed by the majority in the nature of a penalty.
It is a recognized principle of law that a court has discretion to relieve an involuntary stakeholder from liability for interest on considerations of equity and justice. The California courts have likewise held that relief will be afforded an innocent stakeholder from liability for interest during the period before deposit of a disputed fund in court.
The lengthy legal contest waged before the trial court rendered it doubtful to whom the debt should be paid and the resolution of this judgment was not made until after an interim appeal to this Court. Under such circumstances it appears clearly inequitable to penalize the debtor.
A number of available remedies are suggested, any one of which it is claimed would have relieved Wells Fargo from the interest liability.
The several suggestions indicated by the majority, were apparently considered by Wells Fargo and found to be either inapplicable or inappropriate in the light of the unusual facts. In addition, it should be observed that the case of Republic of China v. American Express Co., 2 Cir., 195 F.2d 230, had not been decided by the Appellate Court at the time Wells Fargo was obliged to institute its action.
There are several distinguishing features concerning the case, one of which is that it dealt with the Republic of China and Directorate General of Postal *481Remittances and Savings Bank. The Bank of China, as such in the case at bar, is a corporate entity — it is not the Government of China. Obviously, recognition may have a different significance where a corporation is concerned.
Considerations of justice require that the judgment of the trial court be affirmed.
. “§ 953. Authorization of withdrawals by depositor. When the depositor of a commercial or savings account has authorized any person to make withdrawals from the account, the bank, in the absence of written notice otherwise, may assume that any cheek, receipt, or order of withdrawal drawn by such person in the authorized form or manner, including cheeks drawn to his personal order and withdrawal orders payable to him personally, was drawn for a purpose authorized by the depositor and within the scope of the authority conferred upon such person.”
. Robert W. Kenny, Esq., Martin Popper, Esq., Benjamin Dreyfus, Esq., and Francis J. MeTernan, Esq.
. Subsequently, in 1951, the California Legislature enacted a specific statute to enable California banks to meet comparable situations. California Financial Code
—Section 954:
“Recognition of claims to deposits of cash or secuz'ities of corporations or firms in occupied territoz-y: ‘Occupied territory’: Wizen section effective: Application of section. A bank need not recognize or give any effect to (1) any claim to a deposit of cask or securities standing on its books to the credit of, or field by it
*479fer the account of, any corporation, firm or association in occupied territory or (2) any advice, statute, rule or regulation purporting to cancel or to give notice of the cancellation of the authority of any person at the time appearing on the books of such bank as authorized to withdraw o-r otherwise dispose of cash or securities of such corporation, firm or association, unless such bank is required so to do by appropriate process procured against it in a court of competent jurisdiction in the United States in a cause therein instituted by or in the name of such corporation, firm or association, or unless the person making such claim or giving such advice or invoking such statute, rule or regulation, as the case may be, shall execute to such bank, in form and with srireties acceptable to it, a bond indemnifying it from any and all liability, loss, damage, costs and expenses for and on account of recognizing or giving any effect to such claim, advice, statute, rule or regulation.
“For the purposes of this section (1) the term ‘occupied territory’ shall mean territory occupied by a dominant author-
ity asserting governmental, military or police powers of any kind in such territory, but not recognized by the United States as the de jure government of such territory, and (2) the term ‘corporation, firm or association in occupied territory’ shall mean a corporation, firm or association which has, or at any time has had, a place of business in territory which has at any time been occupied territory.
“The provisions of this section shall be effective only in cases where (1) such claim or advice purports or appears to-have been sent from or is reasonably believed to have been sent pursuant to orders originating in, such occupied territory during the period of occupation, or (2) such statute, rule or regulation appears to have emanated from such dominant authority and purports to be or to have been in force in such occupied territory during the period of occupation.
“This section applies to claims, advices, statutes, rules or regulations given or invoked either before or after the effective date of this section.”