Aetna Life Insurance Company v. Johnson, 61 C 1985.

• Decision Date: 18 June 1962
• Docket Number: No. 61 C 1985.,61 C 1985.
• Citation: 206 F. Supp. 63
• Parties: AETNA LIFE INSURANCE COMPANY, a corporation, Plaintiff, v. Cynthia JOHNSON, Alma Johnson, and Annie Bell Carroll, Defendants.
• Court: U.S. District Court — Northern District of Illinois

206 F. Supp. 63

AETNA LIFE INSURANCE COMPANY, a corporation, Plaintiff, v. Cynthia JOHNSON, Alma Johnson, and Annie Bell Carroll, Defendants.

No. 61 C 1985.

United States District Court N. D. Illinois, E. D.

June 18, 1962.

Edward J. Griffin, Chicago, Ill., for plaintiff.

Francis Kennedy, Michael Levin, Sidney Pyster, Charles H. C. Kimball, Charles N. Brown and Norman L. Olson, Jr., Chicago, Ill., for defendants.

CAMPBELL, Chief Judge.

Plaintiff herein has brought this action under the Federal Interpleader Statute, Title 28 U.S.C.A. § 1335. Plaintiff, a stakeholder of the proceeds of a life insurance policy, has been given leave to deposit the policy funds into the registry of the Court to there await disposition of the rights of the adverse claimant defendants. Plaintiff is presently before the Court on its motion for the allowance of attorneys' fees out of the proceeds of the policy.

Over fifteen years ago in the case of Illinois Bankers Life Assurance Company v. Blood, D.C., 69 F.Supp. 705, I was presented with an analogous factual situation and rejected the interpleading stakeholder's request for attorneys' fees. I based my decision upon the law of the State of Illinois, which does not allow attorneys' fees to a party filing an interpleader action. The law of Illinois has not changed, and I presently feel that my legal conclusions in 1947 were sound then and are still sound notwithstanding some subsequent expressions to the contrary. In now reaffirming my decision in the Blood case I shall also reconsider the legal issue involved in light of some recent judicial decisions and commentaries thereon.

As a general rule in the United States, contrary to the prevailing practice in England, attorneys' fees are not taxable as costs. However, as is the case with most general rules, their broad pronouncement is always subject to exceptions. One major exception on attorneys' fees in the United States seems to exist in equity cases where a "fund" is involved. The factual situation necessary to qualify under this exception usually arises where a so-called disinterested party holds a sum of money, usually referred to as the "stake", the subject of rival claims. To avoid the stakeholder being subjected to multiple suits by the conflicting claimants, the courts historically have permitted him legally to dispose of the money or property. At early common law the "stake" was turned over to the local Bishop for his ultimate resolution "in the King's conscience" of the various claims. This procedure ultimately developed into the disposal of the stake by means of an interpleader action in Equity wherein the stake is delivered to the Chancellor's registry. The interpleading stakeholder is upon such delivery discharged from further liability and the adverse claimants are enjoined from bringing any action at Law against him. As this procedure evolved in American jurisprudence, a majority of the courts in this country have deemed it just and equitable that the stakeholder be awarded reasonable attorneys' fees along with other taxable costs.

I well understand and readily accept the principle of reasoning and the law of this majority. However, the Courts of Illinois have not seen fit to follow this majority, indeed, this State is properly counted with the minority of jurisdictions flatly denying the allowance of attorneys' fees to an interpleader. Metropolitan Life Insurance Co. v. Kinsley, 269 Ill. 529, 109 N.E. 1011. In the Blood case, I felt compelled to follow the law of the State and to deny the interpleader attorneys' fees. The facts in this case are similar to those considered by me in the Blood case; the law of the State of Illinois has not since changed; therefore I once again follow the law of Illinois and deny to this interpleading stakeholder attorneys' fees.

In support of its motions requesting attorneys' fees plaintiff contends that in cases such as this where jurisdiction is obtained under the Federal Interpleader Statute, state law is not controlling and federal law should be applied. To buttress its contention that federal courts have and should grant such fees plaintiff cites decisions by the 2nd, 5th, 6th, 8th and 9th Federal Circuits wherein attorneys' fees were included as part of the costs and allowed in suits most of which were brought under the Federal Interpleader Statute, citing: Bank of China v. Wells Fargo Bank & Union Trust Co., 9 Cir., 209 F.2d 467; Palomas Land & Cattle Co. v. Baldwin, 9 Cir., 189 F.2d 936; Warner v. Florida Bank & Trust Co., 5 Cir., 160 F.2d 766; Globe Indemnity Co. v. Puget Sound Co., 2 Cir., 154 F.2d 249; Hunter v. Federal Life Ins. Co., 8 Cir., 111 F.2d 551; Kohler v. Kohler, 9 Cir., 104 F.2d 38; Treinies v. Sunshine Mining Co., 9 Cir., 99 F.2d 651, affirmed in 308 U.S. 66, 60 S.Ct. 44, 84 L.Ed. 85; Massachusetts Mutual Life Ins. Co. v. Morris, 9 Cir., 61 F.2d 104; Mutual Life Ins. Co. of New York v. Bondurant, 6 Cir., 27 F.2d 464. My review of these decisions clearly indicates that in all but two the issue presently before me was not presented or decided, and certainly was not even discussed. Although those courts did grant attorneys' fees, with the exception of the 9th Circuit's Palomas and Bank of China cases there is no mention by the Courts of taking this action contrary to existing state law. Inasmuch as the large majority of states do allow such fees it would follow that the Federal Courts were in effect doing what I did in the Blood case and am doing here, applying the prevailing state law. (In the Hunter case the 8th Circuit specifically states that it is following the Arkansas Statute.)

In the Palomas case, the Court of Appeals of the 9th Circuit did have before it and did consider the issue in this case. The Court, notwithstanding existing State law to the contrary, did award an interpleader attorneys' fees. In support of its decision the Court relied on some of the cases cited by plaintiff herein. As I have already pointed out none of these cases militate against my holding in the Blood decision. The Court goes further however and states that its case "* * * arose under a Federal statute and was heard and determined by a Federal Court. In Federal courts, the allowance or disallowance of costs, including attorneys' fees, is governed by Federal law, not by State law." A footnote following the terms "Federal law" cites Rule 54(d) of the Federal Rules of Civil Procedure, 28 U.S.C.A. With due deference to the 9th Circuit Court of Appeals I believe that their reasoning as set forth above constitutes a rejection of the Erie doctrine and again attempts to create what the Supreme Court there destroyed, "that great body of federal law." Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, Guaranty Trust Company of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079. The Bank of China case cites and follows the Palomas decision, notwithstanding the Court there noting that the actions before it were brought as diversity suits under Section 1332.

Moore's Federal Practice, Vol. 6 page 1352, without citing the Blood decision does suggest a novel contrary theory. Advocating the same result as that reached in the Palo...