No. 94-508
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
LYNNETTE SIROKY, Trustee,
Plaintiff and Respondent,
v.
RICHLAND COUNTY,
Defendant and Appellant
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Richland,
The Honorable Richard G. Phillips, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Mike Weber, Richland County Attorney,
Sidney, Montana
For Respondent:
Monte J. Boettger, Attorney at Law,
Lewistown, Montana
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Submitted on Briefs: March 23, 1995
API? 2 5 19% Decided: April 25, 1995
Justice W. William Leaphart delivered the Opinion of the Court.
Plaintiff, Lynnette Siroky, brought suit in District Court,
Seventh Judicial District, Richland County, to recover damages from
Richland County for the conversion of interest earned on a $50,000
cash bond deposited with the District Court to satisfy a condition
of bail in a criminal action. The District Court granted summary
judgment in favor of Siroky and Richland County appeals. We
affirm.
Factual Backqround
Lawrence Sack is the individual who deposited the $50,000 bond
at issue. Lynnette Siroky is Mr. Sack's trustee and is treated as
the owler of the bond and the claimant to the monetary interest
throughout this opinion.
Lawrence Sack was charged with one count of felony theft and
one count of conspiracy alleged to have occurred on or about March
26, 1990 in Richland County, Montana. Bond was set in the sum of
$50,000. On April 23, 1990, Sack deposited the sum of $50,000 with
the Clerk of the Court. On April 30, 1990, the $50,000 bond was
deposited into the trust account of the Richland County Clerk of
Court and then into an interest bearing account with the Richland
County Treasurer at the Richland National Bank and Trust, Sidney,
Montana. The money continued to accrue interest thereafter.
Sack ultimately pled guilty and was sentenced. The $50,000
bond was then exonerated with $25,000 being applied toward
restitution and $25,000 returned to Sack. Richland County retained
the interest income generated by the bond.
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Sack submitted a claim to the County on June 13, 1991, for the
accrued interest and his claim was denied on January 23, 1992.
On July 22, 1992, Lynnette Siroky instituted the present
action as trustee for Lawrence Sack. On December 30, 1993, Siroky
filed a motion for partial summary judgment on the issue of whether
Siroky was entitled to receive the interest earned as a result of
Siroky's bail bond deposit with the court. A hearing on the motion
was held February 15, 1994. The District Court entered an order
granting partial summary judgment on March 29, 1994. On June 16,
1994, Siroky made a motion for full summary judgment, which motion
was granted by order of the Seventh Judicial District Court on July
25, 1994. Richland County appeals.
Issue presented
Whether interest earned on bond monies deposited in criminal
actions under Montana law is to be returned to the owner of the
money or is to be retained by the County as part of its general
fund.
Standard of Review
Our standard of review of an order by a district court
granting summary judgment is the same as that used by the district
court under Rule 56(c), M.R.Civ.P. Mills v. Mather (Mont. 1995),
___ P.2d _, _I 52 St.Rep. 139, 141. Summary judgment is proper
when there is no genuine issue of material fact and the moving
party is entitled to judgment as a matter of law. Rule 56(c),
M.R.Civ.P. In the present case, the parties agreed that there were
no genuine issues of material fact and thus, the matter was
3
properly subject to summary disposition pursuant to Rule 56(c),
M.R.Civ.P.
Discussion
Property interests are created not by the constitution, but by
independent sources such as state law. Mogan v. City of Harlem
(1989), 238 Mont. 1, 6-7, 775 P.2d 686, 689. In the present case,
the Montana Legislature has established a statutory scheme
regulating the posting, forfeiture and discharge of bail. Section
46-g-106, MCA, authorizes the release of an accused upon reasonable
conditions that ensure the appearance of the accused and protect
the safety of the community. Section 46-g-108, MCA, allows the
court to impose any condition that will reasonably ensure the
appearance of the accused, including a condition that "the
defendant shall furnish bail in accordance with 46-9-401."
Section 46-g-401, MCA, sets forth numerous ways that bail may
be furnished, one of which is by a deposit of cash with the court
of an amount equal to the required bail. Mr. Sack voluntarily
chose to deposit a cash bond with the District Court in order to
satisfy the condition of his bail.
The legislature has further provided that, if the conditions
of bail are not satisfied (e.g. if the defendant does not appear in
court) , the bail shall be forfeited and the bail money shall be
paid to the treasury of the city or county where the money was
deposited. Section 46-g-511, MCA. On the other hand, if the
conditions of bail are satisfactorily performed and the accused is
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discharged from his obligations, "the court shall return to him or
his sureties the deposit of any cash . . .I! Section 46-g-502,
MCA. The statutes do not specifically state whether or not the
defendant is entitled to the interest generated by the cash during
the time of the deposit.
The United States Supreme Court addressed a similar issue in
Webb's Fabulous Pharmacies, Inc. v. Beckwith (1980), 449 U. S. 155,
101 S.Ct. 446, 66 L.Ed.2d 358. Webb's Pharmacies sold all of its
assets to Eckerd, another Florida corporation. At the closing, it
appeared that Webb's Pharmacies' debts were greater than the
purchase price to be paid by Eckerd. Accordingly, under the Bulk
Transfer Act, Eckerd filed a complaint in interpleader and tendered
the purchase price to the court. Under Florida law, the clerk
deposited the money in an interest bearing account. The court
reserved decision on entitlement to the interest, as between the
clerk and Webb's Pharmacies' creditors. The clerk deducted a fee
from the funds "for services rendered" as allowed by Florida
statute. A receiver was appointed for Webb's Pharmacies and the
receiver filed a motion for release of the funds to him. The court
released the funds, less the amount of the statutory fee and less
the amount of accumulated interest. The receiver then moved for
release of the accumulated interest. The court held in favor of
the receiver and the clerk appealed. The Florida Supreme Court
reversed the Circuit Court stating that the funds, although private
money at the time of deposit, were "considered 'public money"' from
the date of the deposit until they left the account; that "the
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statute takes only what it creates;" and that there was no
unconstitutional taking because interest earned on the account was
not private property. Beckwith v. Webb's Fabulous Pharmacies,
Inc. (Fla. 1979), 374 So.2d 951, 952-53.
The United States Supreme Court noted that the Florida
statutory scheme would allow the county to exact two tolls while
the interpleader funds were held by the clerk of court. The first
being the statutory fee for services rendered. The second would be
the keeping of the accrued interest pursuant to Florida's statutory
provision that the interest "shall be deemed income of the office
of the clerk of the circuit court."
The Supreme Court found that the clerk held those funds for
the "ultimate benefit of Webb's creditors, not for the benefit of
the court and not for the benefit of the county." Rather, the
creditors had a state-created property right to their respective
portions of the funds. The Court noted that the general rule is
that any interest on interpleaded funds follows the principal and
is to be allocated to those who are ultimately to be the owners of
that principal. Webb's Fabulous Pharmacies, 155 U.S. at 161-62.
In rejecting the Florida Supreme Court's reasoning that the funds
temporarily assumed the status of "public money," the Supreme Court
held:
This court has been permissive in upholding
governmental action that may deny the property owner of
some beneficial use of his property or that may restrict
the owner's full exploitation of the property, if such
public action is justified as promoting the general
welfare.
. . . .
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Here, however, Seminole County has not merely
"adjust[edl the benefits and burdens of economic life to
promote the common good." [Citation omitted.] Rather,
the exaction is a forced contribution to general
governmental revenues, and it is not reasonably related
to the costs of using the courts. Indeed, " [t]he Fifth
Amendment's guarantee . . was designed to bar
Government from forcing some people alone to bear public
burdens which, in all fairness and justice, should be
borne by the public as a whole." [Citation omitted.]
Webb's Fabulous Pharmacies, 155 U.S. at 163.
Noting that neither the statute nor the county offered any
justification for the deprivation, the Court rejected the notion
that the money could simply be characterized as "public money"
because it was temporarily held by the court.
The earnings of a fund are incidents of ownership of the
fund itself and are property just as the fund itself is
property. The state statute has the practical effect of
appropriating for the county the value of the use of the
fund for the period in which it is held in the registry.
To put it another way: a State, by ipse dixit, may
not transform private property into public property
without compensation, even for the limited duration of
the deposit in court. This is the very kind of thing
that the Taking Clause of the Fifth Amendment was meant
to prevent. That Clause stands as a shield against the
arbitrary use of governmental power.
Webb's Fabulous Pharmacies, 155 U.S. at 164.
Under the narrow circumstances of the Webb's Pharmacies case,
where there was a separate and distinct statute authorizing a
clerk's fee for "services rendered" and where the deposited fund
itself concededly was private, the United States Supreme Court
concluded:
Seminole County's taking unto itself, under 5 28.33 and
1973 Fla. Laws, ch. 73-282, the interest earned on the
interpleader fund while it was in the registry of the
court was a taking violative of the Fifth and Fourteenth
Amendments. We express no view as to the constitution-
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ality of a statute that prescribes a county's retention
of interest earned, where the interest would be the only
return to the county for services it renders.
Webb's Fabulous Pharmacies, 155 U.S. at 164-65.
Richland County relies upon a decision from an intermediate
appellate court in California, Fresno Firefighters' Local 753 v.
Jernagan (Cal. Ct. App. 5th Dist. 1986), 222 Cal. Rptr. 886, 177
Cal. App. 3d 403. In Fresno Firefighters, the California court
held that the interest earned on cash bail bonds in criminal
actions belongs to the county not the depositor. The court found
that, unlike cash deposits in civil cases such as Webb's Pharmacies
where the money is deposited only for the benefit of a private
person, "bail money is deposited for a public purpose--security for
the appearance of the defendant at all required court hearings."
Accordingly, the court concluded: "Hence, the public purpose of
bail justifies the denial to the owner of the beneficial use of the
money while it is on deposit with the court." Fresno Firefighters,
222 Cal. Rptr. at 892.
We find that the situation in Fresno Firefighters is
distinguishable from the case before us. In Fresno Firefighters,
222 Cal. Rptr. at 890, the court noted that the State of California
had enacted a statute providing that:
interest earned on any bail money deposited in a bank
pursuant to [specified Pen.Code sections1 shall, if the
board of supervisors so directs, be allocated for the
support of the courts in that county.
In light of this statutory provision, the California court
concluded that the retention of interest was justified as
"promoting the general welfare." Fresno Firefighters, 222 Cal.
8
Rptr. at 892. In contrast to California, Montana has not adopted
any statutory provisions allowing political entities to retain
interest on cash bonds nor is there any suggestion advanced that,
in Montana, the retained interest would go to the court system,
thereby promoting the public welfare. On the contrary, the record
indicates that in the present case, the County's general fund,
rather than the court, would benefit from the earned interest.
Although the United States Supreme Court's holding was based
upon the narrow circumstances of the Webb's Pharmacies case, we
conclude that the principles enunciated in Webb‘s Pharmacies are
applicable to the facts presently before us. As in Webb's
Pharmacies, Richland County offers no justification to sustain the
taking of the interest earned by the bond money. The bond money
was Sack's private property and could only be lost upon a
forfeiture resulting from a violation of the terms of the bond.
That did not happen. Rather, the bond was exonerated.
We hold that the constitutional analysis in Webb's Pharmacies
is persuasive. The money deposited was Sack's private property at
all times. The retention of earned interest on that money would
amount to a taking of Sack's property in violation of the 5th and
14th Amendments of the United States Constitution and Article II,
Section 29 of the Montana Constitution.
Furthermore, during the period that the deposit was earning
interest, Sack was an "accused" who was presumed innocent of the
charges. The court's requirement of a cash bond was designed to
create an incentive to Sack to appear in court at all appointed
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times. Section 46-g-106, MCA. Obviously, if the State or County
lays claim to some or all of that bond or the interest thereon,
there is less incentive for Sack to appear.
In the Webb's Pharmacies decision, the Supreme Court noted
that, if the county were allowed to retain interest on the
interpleader deposit, "its officials would feel an inherent
pressure and possess a natural inclination to defer distribution,
for that interest return would be greater the longer the fund is
held; there would be, therefore, a built-in disincentive against
distributing the principal to those entitled to it." Webb's
Fabulous Pharmacies, 155 U.S. at 162.
That reasoning is even more compelling in the context of a
cash bond in a criminal proceeding. If Richland County were
allowed to retain the interest as public monies, there would be an
incentive to the County to tie up the money as long as possible,
thereby earning more interest. The County would thus stand to gain
by prolonging Sack's criminal prosecution. Such an incentive runs
contrary to the constitutional guarantees of speedy trial under the
6th Amendment to the United States Constitution and Article II,
Section 24 of the Montana Constitution.
We hold that the County's retention of the interest money on
a bail bond cash deposit would violate the guarantee in Article II,
Section 17 of the Montana Constitution that a citizen cannot be
deprived of property without due process of law, and the guarantee
in Article II, Section 29 of the Montana Constitution, that
property cannot be taken for public use without just compensation.
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Furthermore, Article II, Section 24 of the Montana Constitution
guarantees a speedy public trial. Allowing a county to retain
interest on bail money has the potential to thwart that
constitutional guarantee.
In Montana, there is no statutory requirement that the clerk
of court deposit bond money in an interest bearing account.
However, if the court does so (or, upon motion, is ordered to do
so) then the court must abide by the general rule recognized by the
United States Supreme Court in Webb's Pharmacies, that is, that
interest earned belongs to the owner of the funds that generated
the interest.
As the District Court correctly noted, the County is no more
entitled to retain the interest on this cash bond than it would be
to retain accruing dividends on a deposit of stocks or bonds or the
appreciated value on a pledge of real estate under 5 46-g-401, MCA.
Affirmed.
We concur.