The opinion of the court was delivered by: FORMAN
This interpleader action was begun by a complaint filed February 18, 1955, in which the United States was named a party defendant. The suit arose in the following fashion:
The defendant Hackart Construction Company, as general contractor, agreed with the plaintiff, the Ford Motor Company, to perform construction work at the site of the plaintiff's plant at Metuchen, New Jersey. Subsequently, the plaintiff found itself confronted with many claims to money which it owed Hackart and which totaled far in excess of the amount Hackart had yet to be paid.
It was determined that the claim of the United States under its federal tax lien was paramount to all other claims asserted to the fund and it was ordered that the entire fund be paid over to the United States. At this time plaintiff's counsel asked that a counsel fee be granted to them out of the fund. The United States opposes the allowance of counsel fee on the ground that to allow it out of this fund would be to allow counsel fees against the United States without its consent, contrary to the express provision of 28 U.S.C. § 2412(a), and on the further ground that the tax lien raises the rights of the United States even higher than the traditional rights of an innocent stakeholder to such counsel fees.
The almost exclusive reliance of plaintiff's counsel is upon Judge Clary's decision in United States v. Ullman, D.C.E.D. Pa.1953, 115 F.Supp. 211,
in which he allowed counsel fees to an interpleading stakeholder despite the claim of the United States that to do so would be contrary to 28 U.S.C. § 2412(a). Although the government claim involved in the Ullman case arose out of a tax lien, since that lien had not been foreclosed nor its priority established at the time the counsel fees were allowed Judge Clary did not, because he could not, discuss the relative priority of a paramount government lien and a claim for counsel fees out of the fund in interpleader. Thus, Judge Clary's decision concerning counsel fees, coming as it did before the question of priorities of interest in the fund had been reached, did not purport to resolve a conflict between a government lien and an allowance of fees. This is made clear by his statement of the issue involved:
'The simple legal question to be determined in these two actions is, therefore, whether an award of counsel fees and costs may be granted in an interpleader action to a disinterested third party stakeholder who interpleads the United States and other claimants to a fund.' 115 F.Supp. at page 214.
The argument that the government's lien, if paramount, defeats even the inherent equity power of the court to allow counsel fees seems not to have been either advanced or considered in the Ullman case.
Counsel fees to the plaintiff in this case are foreclosed by the decision of the United States Supreme Court in United States v. Liverpool & London & Globe Ins. Co., 1955, 348 U.S. 215, 76 S. Ct. 247, 99 L. Ed. 268. In that case suit was brought in a Texas state court against an insured who was owed the proceeds of a fire insurance policy by the Liverpool & London & Globe Insurance Company. The fund in the hands of the insurer was garnished by the plaintiff and the insurer moved in the state court to have the United States added as a party defendant because the United States had also asserted a claim to the fund held by it. The motion to add the United States was granted. Thereafter the United States removed the suit to the United States District Court for the Northern District of Texas. Further facts may be taken from the opinion of the Court of Appeals for the Fifth Circuit, 209 F.2d 684, 686-687:
'The District Court made fact findings * * *. The court was further of opinion that there was no contest between the appellee insurance company and any other parties to the cause and concluded that the insurer was entitled to a reasonable attorney's fee. * * *'
The facts in this case are substantially similar to those outlined in the opinion quoted from above. In both cases there was a stakeholder who was confronted with claims of creditors of the owner of the fund and with lien claims of the United States for taxes. In both the fund was insufficient to satisfy the total amount of the claims and in both were presented substantial questions of priority to the fund among the several claimants.
The District Court allowed the Liverpool & London & Globe Insurance Company a counsel fee upon the authority of Rule 677, Vernon's Texas Rules of Civil Procedure. This court is asked to award the fee in the exercise of its inherent equity power to do so in interpleader cases. See Globe Indemnity Co. v. Puget Sound Co., 2 Cir., 1946, 154 F.2d 249, 250, and cases cited. This difference is seized upon by counsel for the plaintiff, but I am of the opinion that it is a difference without significance for the reasons stated below.
The award of counsel fees under the Texas rule by the district court was affirmed by the Court of Appeals for the Fifth Circuit, 209 F.2d 684, as was its determination that the garnishment lien was superior to the federal tax lien. The Supreme Court, however, reversed on the merits, 348 U.S. 215, 75 S. Ct. 247, 99 L. Ed. 268, and also voided the allowance of counsel fees saying:
'If the garnishment lien is not prior to the Government liens, and we have held that it is not, certainly fees allowed in that proceeding are not prior to the Government liens, and the authorization of the payment of the attorney's fees prior to the Government ...