Bank of China v. Wells Fargo Bank & Union Trust Co. (Two Cases)
209 F.2d 467 · Court of Appeals for the Ninth Circuit · 1953
Facts
The Bank of China, aligned with the Nationalist government, had deposits with Wells Fargo. Following the Communist takeover in China, conflicting claims arose over the Bank's funds, leading Wells Fargo to refuse payment on demand. Wells Fargo eventually deposited the disputed funds into the court registry, and the district court denied the Bank of China interest while awarding Wells Fargo attorney's fees and costs from the fund.
Issue
Did the district court err in denying the Bank of China interest on funds withheld by Wells Fargo after demand, and did it err in awarding Wells Fargo attorney's fees and costs from the deposited fund?
Holding
The appellate court reversed the denial of interest, holding that the Bank of China was entitled to interest from the time of demand until the funds were deposited into court, with a brief exclusion for a continuance. The court affirmed the award of attorney's fees and costs to Wells Fargo from the fund, finding no abuse of discretion.
Rule
Under California law, interest is generally due from the date of demand for withheld funds unless the debtor is legally prevented from paying or properly interpleads the funds. Federal courts have discretion under Rule 54(d) to award costs and attorney's fees to an innocent stakeholder from a disputed fund, even if state law on interpleader costs differs.
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