The opinion of the court was delivered by: LA Buy, District Judge.
The issues before the court in the above matter are whether
defendant is liable for interest on funds deposited by it and
whether the court should allow defendant's claim for attorneys
With respect to the issue of interest there is no dispute that
the law of Illinois is applicable. After due consideration, the
court concludes that the defendant, Central Scientific Company,
should be charged with interest on the fund from the date of the
filing of this suit, July 24, 1953, to the date of the deposit of
said funds into the registry of the court pursuant to its order
entered February 3, 1954.
The question of counsel fees to the "stakeholder" presents a
more difficult question since the court must determine whether
the law of Illinois controls. Defendant relies on Bank of China
v. Wells Fargo Bank & Union Trust Co., 9 Cir., 1953, 209 F.2d 467
and Palomas Land & Cattle Co. v. Baldwin, 9 Cir., 1951,
189 F.2d 936. Plaintiff relies upon two decisions of the district court of
this district, Danville Building Ass'n of Danville v. Gates, D.C.
1946, 66 F. Supp. 706, and Illinois Bankers Life Assur. Co. v.
Blood, D.C. 1947, 69 F. Supp. 705, to sustain its contention that
attorneys fees are not allowable.
The jurisdiction of this court rests upon the general
jurisdiction given to district courts under 28 U.S.C.A. § 1332(a)
(2) and Rule 22 of the Federal Rules of Civil Procedure,
28 U.S.C.A. Since jurisdiction depends solely on diversity, the
question of liability must be determined by the law of Illinois.
Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82
L.Ed. 1188; Trust Co. of Chicago v. National Surety Corp., 7
Cir., 1949, 177 F.2d 816. In the latter case and in the Danville
case, supra, a thorough exposition is set forth of the Illinois
law prohibiting the assessment of attorney's fees as costs and
the court will not unduly extend this memorandum by setting it
The issue now resolves itself into whether Rule 54(d) of the
Federal Rules of Civil Procedure which grants to the district
court discretion as to the taxing of costs, United States for Use
of Wadeford Electric Co. v. E.J. Biggs Constr. Co., 7 Cir., 1940,
116 F.2d 768, 775, also includes a discretion to assess
attorney's fees even though the applicable state law forbids such
an assessment. It has been held that Rule 54(d) vests a
discretionary power in the court with respect to the allowance of
costs, including attorney's fees, the exercise of which cannot be
curtailed by state legislation. Bank of China v. Wells Fargo
Bank, D.C.Cal., 1952, 104 F. Supp. 59, 65-66; Kellems v.
California CIO Council, D.C.Cal., 1946, 6 F.R.D. 358, 361.
In the exercise of such a discretion, however, the court is
required to consider the state law. Where, as here, the action is
brought under the general jurisdictional provisions of
28 U.S.C.A. § 1332, and where Illinois law discloses a "substantive"
policy in connection with attorney's fees as costs, see Moore's
Fed. Prac., Vol. 6, pp. 1347, 1352 fn., the court concludes that
the item regarding attorney's fees must be denied.
Counsel are requested to submit an appropriate order not
inconsistent with the conclusions hereinabove stated.
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