B & M Coal Corp. v. United Mine Workers of America

• Court: Indiana Appellate Court
• Writing for the Court: RATLIFF
• Citation: B & M Coal Corp. v. United Mine Workers of America, 480 N.E.2d 227 (Ind. App. 1985)
• Decision Date: 08 July 1985
• Docket Number: No. 4-884A231,4-884A231
• Parties: B & M COAL CORPORATION, Plaintiff-Appellant, v. UNITED MINE WORKERS OF AMERICA and David R. Norrick, Individually and as a Member of the United Mine Workers of America et al., Defendants, the Spencer County Clerk, Spencer County Auditor, Spencer County Council, and the Spencer County Board of Commissioners, Intervenors-Appellees. 1

Page 227

480 N.E.2d 227

B & M COAL CORPORATION, Plaintiff-Appellant, v. UNITED MINE WORKERS OF AMERICA and David R. Norrick Individually and as a Member of the United Mine Workers of America et al., Defendants the Spencer County Clerk, Spencer County Auditor, Spencer County Council, and the Spencer County Board of Commissioners, Intervenors-Appellees.

No. 4-884A231. ¹

Court of Appeals of Indiana First District.

July 8, 1985.

Rehearing Denied Aug. 21, 1985.

Dennis M. Stark, Richard S. Eynon, Richard S. Eynon, P.C., Columbus, for plaintiff-appellant.

Jack R. Robinson, Rockport, for intervenors-appellees.

RATLIFF, Presiding Judge.

STATEMENT OF THE CASE

B & M Coal (B & M) appeals from an adverse decision of the trial judge, after a bench trial, denying its claim for interest which accrued on an appeal bond. We reverse.

FACTS

The present dispute is between Spencer County (County) and B & M but it arose out of litigation initiated by B & M against the United Mine Workers (U.M.W.). In December 1977, a labor dispute arose between B & M and its employees affiliated with U.M.W. The U.M.W. called a nationwide strike paralyzing coal mining in Indiana except for non-union operations along the Ohio River. These non-union operations precipitated unprovoked harassment from the union and B & M obtained a temporary restraining order to protect the workers. On January 7, 1978, B & M was raided by approximately 400 to 500 individuals, in violation of the court order, who caused extensive property damage to the premises. B & M sued the 191 people arrested at the scene and recovered a $173,873.09 judgment plus $10,117.72 in fees. The defendants sought to stay enforcement pending appeal and the court granted the stay on condition that $200,000 be deposited as an appeal bond. The U.M.W. and union members deposited a total of $160,363.00 with the clerk. The Fourth District Court of Appeals affirmed the decision in part but remanded for a further hearing on damages. Bottoms v. B & M Coal Corporation (1980), Ind.App., 405 N.E.2d 82. Ultimately, B & M received a total judgment of $222,232.43.

The original deposit of $160,363 by the defendants was invested by the Spencer County Clerk from May 1979 to the time of the bench trial in May 1984. Until 1982, all interest accruing on the fund was deposited by the clerk into the County general fund pursuant to statutory authorization. On February 24, 1982, the court ordered that from this date interest accruing must be returned to the fund. From February 1982 on, interest accordingly was added to the principal and as of the date of the bench trial the bond totalled $191,876.97 which has since been paid to B & M. However, the balance of the judgment remains unpaid and uncollectible.

The parties agree that the only amount at issue is $34,440.43 which represents accrued interest from 1979 until the court's 1982 order. At the 1984 bench trial, B & M argued this amount belonged to it because of its unsatisfied judgment. However, the trial court agreed with the county, which intervened in 1982, and found the $34,440.43 belonged to the county pursuant to a provision in the Indiana Code. B & M now appeals this judgment.

ISSUE

Due to our decision we need address only the single issue of whether Indiana Code section 5-13-1-3.5(b), which allows a county to retain interest accrued on funds deposited with the county clerk, violates the constitutional proscription against governmental appropriation of private property without just compensation or due process.

DISCUSSION AND DECISION

Indiana Code section 5-13-1-3.5(b) provides that the Clerk of the county court may invest any and all monies deposited with him into interest bearing accounts in local banks.

"(b) The Clerk of any Circuit Court of this state may invest any or all of his total monies on deposit. He shall invest this money in any or all of the kinds of investments permitted in this chapter. He shall credit interest on these investments to the County general fund of his County."

This statute represents the authority under which the Spencer County Clerk acted when she invested the money from the cash bond and ultimately deposited the interest accruing from 1979 to 1982 in the general county fund. It is the constitutionality of this statute, as it was applied in this case, which is before this court.

Both the United States and Indiana Constitutions prohibit the government from taking private property unjustly. ² Since as a general rule, interest follows principal, our inquiry necessarily begins with determining the extent to which B & M had a protectable property interest in the fund deposited with the clerk. Webb's Fabulous Pharmacies, Inc. v. Beckwith (1980), 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358. Generally, the dimensions of particular property interests stem from state law. "[A] mere unilateral expectation or an abstract need is not a property interest. [Citation omitted.]" Id. The fund deposited in the present case represented an appeal bond which suspended enforcement of the judgment pending appellate review. Indiana Rules of Procedure, Trial Rule 62(D); Dzur v. Northern Indiana Public Service Company (1972), 257 Ind. 674, 676, 278 N.E.2d 563, 564-65; Western & Southern Life Insurance Company v. Lottes (1945), 116 Ind.App. 559, 562, 63 N.E.2d 146, 147. The purpose of the fund was to insure B & M's judgment if the appellants failed on appeal. In short, the fund would go to B & M if it could persuade the appellate courts to affirm the trial court's judgment. Therefore, B & M had more than a unilateral expectancy or abstract need because the principal represented a debt owing B & M by virtue of the trial court's judgment.

Although during the period in question the ownership of the fund was uncertain, B & M still had a sufficient property interest in the fund. In Webb's, the Supreme Court determined that interest, which accrued on an interpleader fund while creditor's rights were being litigated, should follow the fund. In that case, Eckerds, Inc. offered to buy Webb's Fabulous Pharmacies but the tendered purchase price was insufficient to cover Webb's existing indebtedness. Consequently, Eckerd's interpleaded the purchase price pursuant to Florida law and a receiver was appointed to determine the claims of creditors who filed against the fund. While the money was in the clerk's hands he invested it in interest bearing accounts. Later, the clerk delivered only the principal to the receiver keeping the interest for the county pursuant to Fla.Stat. Sec. 28.33. ³

The Supreme Court unanimously held that expropriation of the interest was unconstitutional. The Court found the creditors had a protectable property interest in the fund despite the fact that they were not immediately entitled to it.

"It is true ... that none of the creditor claimants had any right to the deposited fund until their claims were recognized and distribution was ordered. [Citation omitted.] That lack of immediate right, however, does not automatically bar a claimant ultimately determined to be entitled to all or a share of the fund from claiming a proper share of the interest, the fruit of the fund's use, that is realized in the interim."

Webb's, 449 U.S., at 161-62, 101 S.Ct. at 451, 66 L.Ed.2d at 365. Similarly, although B & M had no immediate right to the appeal bond money, its purpose was to secure B & M's recovery if it ultimately prevailed. B & M has ultimately prevailed and consequently, the Webb's analysis leads us to conclude B & M possessed a protectable property interest in the appeal bond despite the fact that recovery was, for a time, uncertain.

We now turn to the question of whether B & M had a protectable property interest in the $34,440.43 in accrued interest. In Webb's, the court found that one who has an interest in the principal necessarily has an interest in the fruit from that principal. In other words, interest follows principal. Webb's at 162, 101 S.Ct. at 451, 66 L.Ed.2d at 365. Added to this are the unique circumstances of this case where the appeal bond's principal is insufficient to satisfy the judgment. Under Indiana law, the right to recover on a civil judgment is a property right. Griffin v. Wilcox (1863), 21 Ind. 370, 373. As it stands, the appeal bond's principal is insufficient to satisfy a judgment and interest accrued from that principal, sufficient to make B & M whole, is put out of B & M's reach. The fact that interest follows principal together with B & M's right of recovery establishes its property interest in the $34,440.43 of accrued interest.

With recognition of B & M's protectable property interest we now consider whether the Spencer County Clerk's retention of the interest constituted an uncompensated taking without due process. In cases such as this, where the government interference is an expropriation of property, there is clearly a taking under the constitution. Loretto v. Teleprompter Manhattan C A T V Corp. (1982), 458 U.S. 419, 427 n. 5, 102 S.Ct. 3164, 3171, n. 5, 73 L.Ed.2d 868, 876-77 quoting from Michelman, Property, Utility and Fairness: Comments on the Ethical Foundation of "Just Compensation" Law 80 Harv.L.Rev. 1165, 1184 (1967). In the present case, the county government expropriated what was undeniably private property. Under no set of circumstances would the county ever be entitled to the bond principal. The bond was private property belonging to a private party....