Webb Fabulous Pharmacies, Inc v. Beckwith, 79-1033

• Citation: 101 S.Ct. 446,449 U.S. 155,66 L.Ed.2d 358
• Decision Date: 09 December 1980
• Docket Number: No. 79-1033,79-1033
• Parties: WEBB'S FABULOUS PHARMACIES, INC. et al., Appellants, v. Arthur H. BECKWITH, Jr., Clerk of the Circuit Court, etc
• Court: United States Supreme Court

449 U.S. 155

101 S.Ct. 446

66 L.Ed.2d 358

WEBB'S FABULOUS PHARMACIES, INC. et al., Appellants,

v Arthur H. BECKWITH, Jr., Clerk of the Circuit Court, etc.

No. 79-1033.

Argued Oct. 13, 14, 1980.

Decided Dec. 9, 1980.

Syllabus

Held: Appellee county's taking as its own, under the authority of a Florida statute, the interest accruing on an interpleader fund deposited in the registry of a county court was a taking violative of the Fifth and Fourteenth Amendments, where a fee, based on the amount of the principal deposited as prescribed by another Florida statute, was also charged for the court clerk's services in receiving the fund into the registry, and where the deposited fund was concededly private and was required by statute in order for the depositor to avail itself of statutory protection from the claims of creditors and others. Neither the Florida Legislature by statute nor the Florida courts by judicial decree may accomplish the result the county sought simply by recharacterizing the principal of the deposited fund as "public money" because it was held temporarily by the court. The earnings of the fund are incidents of ownership of the fund itself and are property just as the fund itself is property. Pp. 159-165.

374 So.2d 951, reversed.

Harry A. Stewart, Sanford, Fla., for appellees.

Harvey M. Alper, Altamonte Springs, Fla., for appellants.

BLACKMUN, Justice.

This case presents the issue whether it is constitutional for a county to take as its own, under the authority of a state statute, the interest accruing on an interpleader fund deposited in the registry of the county court, when a fee, prescribed by another statute, is also charged for the clerk's services in receiving the fund into the registry. The statute which is the object of the constitutional challenge here is Fla.Stat. § 28.33 (1977).¹

I

On February 12, 1976, appellant Eckerd's of College Park, Inc., entered into an agreement to purchase for $1,812,145.77 substantially all the assets of Webb's Fabulous Pharmacies, Inc. Both Eckerd's and Webb's are Florida corporations. At the closing, Webb's debts appeared to be greater than the purchase price. Accordingly, in order to protect itself and as permitted by the Florida Bulk Transfers Act, Fla.Stat. § 676.106(4) (1977),² Eckerd's filed a complaint of interpleader in the Circuit Court of Seminole County, Fla., inter- pleading as defendants both Webb's and Webb's creditors (almost 200 in number) and tendering the purchase price to the court.

Pursuant to § 676.106(4), the Circuit Court thereupon ordered that the amount tendered be paid to the court's clerk and that the clerk deposit it "in an assignable interest-bearing account at the highest interest." App. 4a. The court specifically reserved decision on the issue of entitlement, as between the clerk and Webb's creditors, to the interest earned on the fund while so deposited, stating that the transfer to the clerk was without prejudice to the creditors' claims to that interest. Id., at 4a-5a. Eckerd's tendered the sum to the clerk on July 13, 1976, id., at 6a, and that official proceeded to make the required investment.

The clerk deducted from the interpleader fund so deposited the sum of $9,228.74 as his fee, prescribed by Fla.Stat. § 28.24(14) (1977),³ "for services rendered" for "receiving money into the registry of court." The fee, as the statute directed, was calculated upon the amount placed in the registry, that is, 1% of the first $500, and 1/2% of the remainder.

On July 5, 1977, almost a year after the tender and payment, the Circuit Court upon its own motion ⁴ appointed a receiver for Webb's. Among the receiver's stated duties were the determination of the number and amount of claims filed against the interpleader fund and the preparation and filing with the court of a list of those claims. App. 9a. The receiver filed a motion for an order directing the clerk to deliver the fund to him. Id., at 12a. The motion was granted, id., at 14a, and the principal of the fund, reduced by the $9,228.74 statutory fee and by $40,200 that had been paid out pursuant to court order, was paid to the receiver on July 21. The interest earned on the interpleader fund while it was held by the clerk, but which was not turned over to the receiver, then exceeded $90,000. Interest earned thereafter on the amount so retained brought the total to more than $100,000. Tr. of Oral Arg. 34. It is this aggregate interest that is the subject matter of the present litigation. Appellants make no objection to the clerk's statutory fee of $9,228.74 taken pursuant to § 28.24(14). Tr. of Oral Arg. 6; Brief for Appellants 6, 9.

The receiver then moved that the court direct the clerk to pay the accumulated interest to the receiver. App. 22a, 26a, 33a. The Circuit Court ruled favorably to the receiver, holding that the clerk "is not entitled to any interest earned, accrued or received on monies deposited in the registry of this Court pursuant to the Court's order. . .; the creditors herein are the rightful parties entitled to all such interest earned on the interpleader fund while it is held by the Clerk of this Court." Id., at 35a.

Seminole County and the clerk appealed to the Florida District Court of Appeal. That court transferred the cause to the Supreme Court of Florida. The Supreme Court, in a per curiam opinion with one justice dissenting in part, ruled that § 28.33 was "constitutional" and reversed the judgment of the Circuit Court. 374 So.2d 951 (1979). The stated rationale was that a fund so deposited is "considered 'public money' " from the date of deposit until it leaves the account; that "the statute takes only what it creates"; and that "[t]here is no unconstitutional taking because interest earned on the clerk of the circuit court's registry account is not private property." Id., at 952-953.⁵

Because it had been held elsewhere that a county's appropriation of the interest earned on private funds deposited in court in an interpleader action is an unconstitutional taking, Sellers v. Harris County, 483 S.W.2d 242 (Tex.1972); see McMillan v. Robeson County, 262 N.C. 413, 137 S.E.2d 105 (1964), we noted probable jurisdiction. 445 U.S. 925, 100 S.Ct. 1310, 63 L.Ed.2d 757 (1980).

II

It is at once apparent that Florida's statutes would allow respondent Seminole County to exact two tolls while the interpleader fund was held by the clerk of the court. The first was the statutory fee of $9,228.74 "for services rendered," as § 28.24 recites, by the clerk's office for "receiving money into the registry of court." That fee was determined by the amount of the principal deposited.

The second would be the retention of the amount, in excess of $100,000, consisting of "[a]ll interest accruing from moneys deposited." This toll would be exacted because of § 28.33's provision that the interest "shall be deemed income of the office of the clerk of the circuit court."

An initial reading of § 28.33 might prompt one to conclude that, so far as it concerns entitlement to interest, the statute applies only to interest on funds clearly owned by the county (such as charges for certifications) and that it does not apply to interest on private funds deposited under the direction of another statute. The Florida Supreme Court, however, has read § 28.33 otherwise and has ruled that it applies to interest earned on deposited private funds. That reading of the State's statute is within the Florida court's competency, and we must take the statute as so read and interpreted.

III

The pertinent words of the Fifth Amendment of the Constitution of the United States are the familiar ones: "nor shall private property be taken for public use, without just compensation." That prohibition, of course, applies against the States through the Fourteenth Amendment. Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226, 239, 17 S.Ct. 581, 585-86, 41 L.Ed. 979 (1897); Penn Central Transportation Co. v. New York City, 438 U.S. 104, 122, 98 S.Ct. 2646, 2658, 57 L.Ed.2d 631 (1978). Our task is to determine whether the second exaction by Seminole County amounted to a "taking"—it was obviously uncompensated within the Amendment's proscription.

The principal sum deposited in the registry of the court plainly was private property, and was not the property of Seminole County. This is the rule in Florida, Phipps v. Watson, 108 Fla. 547, 551, 147 So. 234, 235 (1933), as well as elsewhere. See Coudert v. United States, 175 U.S. 178, 20 S.Ct. 56, 44 L.Ed. 122 (1899); Branch v. United States, 100 U.S. 673, 25 L.Ed. 759 (1880); Sellers v. Harris County, 483 S.W.2d, at 243. We do not understand that the appellees contend otherwise so far as the fund's principal is concerned.

Appellees submit, Tr. of Oral Arg. 26, 29—and we accept the proposition—that, apart from statute, Florida law does not require that interest be earned on a registry deposit. See 374 So.2d, at 953. We, of course, also accept the further proposition, pressed upon us by the appellees, that "[p]roperty interests . . . are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law. . . ." Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). But a mere unilateral expectation or an abstract need is not a property interest entitled to protection. See, for example, Fox River Paper Co. v. Railroad Comm'n, 274 U.S. 651, 47 S.Ct. 669, 71 L.Ed. 1279 (1927); United States v. Willow River Power Co., 324 U.S. 499, 65 S.Ct. 761, 89 L.Ed. 1101 (1945). See also Penn Central Transportation Co. v. New York City, supra; Andrus v. Allard, 444 U.S. 51, 100 S.Ct. 318, 62 L.Ed.2d 210 (1979).

Webb's creditors, however, had more than a unilateral expectation. The deposited fund was the amount received as the purchase price for Webb's assets. It was property held only for the ultimate benefit of Webb's creditors,...