Petition for Writ of Certiorari — Bennett v. International Bank of Miami, N. A.

in the

Supreme Court

of the

United States

October Term, 1988

GENE LEE BENNETT,

Petitioner,

US.

INTERNATIONAL BANK OF MIAMI, N.A.,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

FLORIDA THIRD DISTRICT COURT OF APPEALS

Jesse C. Jones

Counsel for Petitioner

Bailey, Dawes & Hunt,

a professional association

1390 Brickell Avenue

Miami, Florida 33131

(305) 374-5505

February 8, 1988

QUESTION PRESENTED FOR REVIEW

WHETHER SECTION 24, PARAGRAPH

FIFTH, OF THE NATIONAL BANK ACT,

WHICH EMPOWERS THE DIRECTORS OF

A NATIONAL BANK TO DISMISS BANK

OFFICERS “AT PLEASURE,” PRECLUDES

A CONTRACTUAL PROVISION FOR

REASONABLE SEVERANCE PAY.

PARTIES

Petitioner:

Gene Lee Bennett, Defendant, Cross-Claimant,

and Cross-Defendant in the trial court and

Appellee in the Florida Third DistrictCourt of

Appeal.

Respondent:

International Bank of Miami, N.A., Defendant,

Cross-Claimant, Cross-Defendant, and

Appellant in the Florida Third District Court

of Appeal.

Additionally, the following were parties in the trial

court but not in the appellate court, and are not affected

by this proceeding:

Southeast National Bank, N.A., Plaintiff in the

trial court.

Alberto Gonzalez, a Defendant in the trial

court who was dismissed and is no longer

involved in these proceedings.

Guillermo Rossel, a Defendant in the trial

court who was dismissed and is no longer

involved in these proceedings.

Carlton Stewart, a Defendant in the trial court

who is not involved in these proceedings.

International Bank of Florida, Inc., a

Defendant in the trial court who is not involved

in these proceedings.

il

TABLE OF CONTENTS

Page

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STATEMENT OF GROUNDS

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STATEMENT OF CASE...........5...... 3

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TABLE OF AUTHORITIES

CASES Pages

Alegria v. Idaho First National Bank,

728 P.20 S66 (idane 1966) .............. 7

Armano v. Federal Reserve Bank of Boston,

468 F.Supp. 674 (D. Mass. 1979)......... 7

Bollow v. Federal Reserve Bank of San Francisco,

650 F.2d 1093 (9th Cir. 1981),

cert. denied, 455 U.S. 948 (1982)......... 8

Citizens State Bank of New Jersey v. Libertelli,

521 A.2d 867 (N.J. App. 1986)........... 6

Copeland v. Melrose National Bank of New York,

hk eS e 3s ee eee 5

Federal Deposit Insurance Corp. v. Freudenfeld,

492 F.Supp. 763 (E.D. Wisconsin 1980) ... 8

First National Bank of Danville v. Reynolds,

491 N.E.2d 218 (Ind. App. 1986)......... 8

Hawkins v. Peoples Federal Savings

and Loan Association,

399 N.W.2d 484 (Mich. App. 1986)....... 6

Kemper v. First National Bank,

418 N.E.2d 819 (Ill. App. 1981).......... 6

iv

TABLE OF AUTHORITIES (Continued)

CASES Pages

Kerfoot v. Farmer’s and Merchant’s Bank,

Bt Be ee ere 7

Langham’s Estate v. American National Bank

of Beaumont, Texas,

165 F.2d 968 (5th Cir. 1948) ............ 7

Mitchell v. American Savings and

Loan Association,

593 P.2d 692 (Ariz. App. 1979) .......... 8

National Bank v. Case,

SP See EE bce Waa eee eos Ke 7

National Bank v. Mathews,

RP A RS ae ee 7

Noel Estate v. Commercial National Bank

in Shreveport,

232 F.2d 483 (6th Cir. 1966) ............ 7

Olsen v. Arabian American Oil Co.,

194 F.2d 477 (2d Cir. 1952),

cert. denied, 344 U.S. 817 (1952)......... 5

Rohde v. First Deposit National Bank,

497 A.24 1214 (N.E. 1966)... 2.22 we cw aes 6

TABLE OF AUTHORITIES (Continued)

CASES Pages

Rothenberg v. Lincoln Farm Camp, Inc.,

755 F.2d 1017 (2d Cir. 1985) ........... 5

Thompson v. St. Nicholas National Bank,

146 U.S. 240 (1802)... ccc cccccccccs 7

Whitney National Bank v. Bank of New

Orleans and Trust Co.,

SED UE. SIE CIGGS) 0 cc cccessssceesacs 9

Williams v. Florida,

399 U.S. 78 (1979)... eee. 2

Other Authorities:

12 U.S.C. § 24, Paragraph Fifth (1982)...... 2, 3, 4,

5, 6

28 U.S.C. § 1257 (1982)................06. 2

12 C.F.R. § 7.5220 (1982) ................. 4

Annot., 40 A.L.R.2d 1044 (1955) ........... 5

Restatement (Second) of Contracts

§ 356 (1981) 2. eens 7

vi

OPINION BELOW

The opinion below is reported: Jnternational Bank

of Miami, N.A., vs. Bennett, 513 So.2d 1294 (Fla. 3d DCA

1987).

STATEMENT OF GROUNDS FOR JURISDICTION

The Florida Third District Court of Appeal reversed

the trial court’s summary judgment in favor of

Petitioner on October 23, 1986, and denied rehearing

on November 9, 1987. This Court has jurisdiction

pursuant to 28 U.S.C. § 1257 (1982). See Williams v.

Florida, 399 U.S. 78, 80 n.5 (1970) (Florida District

Court of Appeal highest state court from which a

decision can be had).

STATUTE INVOLVED

The statute involved, 12 U.S.C. § 24, Paragraph

Fifth (1982) provides as follows:

Upon duly making and filing articles of

association and an organization certificate a

national banking association shall become, as

from the date of the execution of its

organization certificate, a body corporate, and

as such, and in the name designated in the

organization certificate, it shall have power—

* * *x

Fifth. To elect or appoint directors, and by its

board of directors to appoint a president, vice-

president, cashier, and other officers, define

their duties, require bonds of them and fix the

penalty thereof, dismiss such officers or any of

them at pleasure, and appoint others to fill

their places.

EEE ———eoOV7

STATEMENT OF THE CASE

The International Bank of Miami, N.A. (“IBM’’),

employed Gene Lee Bennett as its president and entered

into a written employment agreement in 1982 which

provided for one year’s severance pay in the event of

a termination without cause. Bennett required this

provision because of IBM’s precarious financial

condition. In 1983, IBM entered into an escrow

agreement with Southeast Bank, N.A., and deposited

one year of Bennett’s salary in escrow to be paid to

Bennett in the event of a termination without cause.

In 1984, in connection with a sale of the bank, IBM

terminated Bennett’s employment without cause.

When IBM objected to releasing the escrowed funds

to Bennett, Southeast Bank filed an interpleader action.

Bennett and IBM cross-claimed against each other.

Bennett’s claim was based upon the escrow agreement

which in turn was based on the employment agreement.

IBM’s claim was based, expressly and exclusively, on

its assertion that both agreements were void because,

IBM claimed, they violated Section 24, Paragraph Fifth,

of the National Bank Act, 12 U.S.C. § 24 (1982).

The trial court entered a summary judgment in

Bennett’s favor. The court of appeal, however. reversed,

and directed that a summary judgment be entered in

favor of IBM, holding that Section 24, Fifth, denied

Bennett his right to the bargained-for severance pay.

IBM raised the federal question in its cross-claim,

in its motion for summary judgment, and in its

opposition to Bennett’s motion for summary judgment.

The court of appeal expressly relied on its interpretation

of the federal statute in ruling against Bennett.

Te

ARGUMENT

The National Bank Act, 12 U.S.C. § 24, Fifth (1982),

empowers a national bank’s board of directors to appoint

officers and to “‘dismiss such officers or any of them at

pleasure, and to appoint others to fill their places.” The

state court below held that this statutory provision

voided the bargained-for contractual provision between

IBM and Bennett for severance pay.

Bennett respectfully submits that neither the

language nor the intent of the statute supports this

interpretation, and that if this misinterpretation is

allowed to stand, national banks would be virtually

crippled in their efforts to compete for high quality

executive personnel. This Court should therefore accept

jurisdiction to prevent the state courts from interfering

with the operation of national banks by such an illogical

interpretation of the National Bank Act.

The obvious intent of the statute is to give the

directors of a national bank the ultimate and real

authority to manage its affairs, and to prevent

employees of the bank from interfering with the

directors’ discharge of their fiduciary duties by claiming

a right to continued employment. The statute therefore

makes any employment contract between a national

bank and an officer terminable at will.

The statute does not, however, prevent national

banks from entering employment contracts. Indeed, the

regulations of the Comptroller of the Currency, 12

C.F.R. § 7.5220 (1982), expressly authorize employment

contracts:

The Board of Directors of a national bank,

pursuant to paragraph 5 of 12 U.S.C., § 24, may

enter into employment contracts with its

officers and employees upon reasonable terms

and conditions.

The parties here stipulated in the trial court that

the terms of the severance pay provision were

reasonable.

A provision for severance pay does not prevent (and

did not prevent here) a termination at will. See

Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017,

1021 (2d Cir. 1985); Olsen v. Arabian American Oil Co.,

194 F.2d 477 (2d Cir. 1952), cert. denied, 344 U.S. 817

(1952); Annot., 40 A.L.R.2d 1044 (1955). The statute

therefore does not preclude reasonable provisions for

severance pay.

The state court below relied on decisions of other

state courts holding that patently unreasonable

severance pay provisions void under Section 24, Fifth.

In Copeland v. Melrose National Bank of New York,

241 N.Y.S. 429, 430 (1930), a bank vice-president’s

contract provided a three-year term and provided for

payment upon termination of “liquidated damages...

equal to the total compensation which he would receive

thereunder for its unexpired period.” The court ruled

that “‘a contract for a definite term which forbids such

discharge except under penalty of paying compensation

for the full term violates [the National Bank Act] and

is unenforceable.” 241 N.Y.S. at 430.

In Rohde v. First Deposit National Bank, 497 A.2d

1214 (N.H. 1985), a bank vice-president had a three-year

employment contract which provided that were he

terminated for reasons other than fraud or forgery, he

would receive another three years’ salary. The court

ruled:

To hold on the one hand that contracts for

employment of national bank officers cannot

provide for guaranteed salaries for fixed

periods of time in contravention of the bank’s

right to immediately discharge the officer, and

on the other hand that such contracts can

provide as a condition precedent to discharge

that an officer is entitled to 36 months’ salary,

would be to elevate form over substance and

render the language of 12 U.S.C. § 24, Fifth,

meaningless.

In Kemper v. First National Bank, 418 N.E.2d 819

(Ill. App. 1981), the bank president sued to recover

salary for the balance of his terminated employment

contract, and not to collect under severance pay

provision.

Other state courts have followed, albeit on

distinguishable facts, the notion that “provisions in

bank officers’ contracts for a specified term of

employment are void as against the public policy

embodied in the federal statute.” Citizens State Bank

of New Jersey v. Libertelli, 521 A.2d 867, 868 (N.J. App.

1986); see also Hawkins v. Peoples Federal Savings and

Loan Association, 399 N.W.2d 484 (Mich. App. 1986);

Alegria v. Idaho First National Bank, 723 P.2d 858

(Idaho 1986); Bollow v. Federal Reserve Bank of San

Francisco, 650 F.2d 1093, 1097 (9th Cir. 1981), cert.

denied, 455 U.S. 948 (1982); Armano v. Federal Reserve

Bank of Boston, 468 F.Supp. 674 (D. Mass. 1979).

The logic of such decisions is that penalizing a

national bank for exercising its power to discharge an

officer “‘at pleasure” would improperly deter the use of

such power (which did not happen here, because IBM

terminated Bennett after having placed the severance

pay in escrow). On the facts in those other cases, the

results are understandable. For example, common law

generally distinguishes “liquidated damages,’ which

are properly recoverable, from penalties, which are not

enforceable, by whether the sum agreed to is reasonable.

See Restatement (Second) of Contracts § 356 (1981).

Here, however, IBM stipulated that the amount of

severance pay is reasonable.

Whatever limitations on the terms of employment

for national bank officers may be implicit in Section 24,

Fifth, should be enforced by the Comptroller, and not

by a state court’s voiding bargained-for contractual

provisions. A long line of cases recognize that actions

prohibited by the National Bank Act are “not void but

voidable,” and that “only the sovereign can object.”

Langham’s Estate v. American National Bank of

Beaumont, Texas, 165 F.2d 968, 970 (5th Cir. 1948);

National Bank v. Mathews, 98 U.S. 621 (1878); Kerfoot

v. Farmer’s and Merchant’s Bank, 218 U.S. 281 (1910);

Thompson v. St. Nicholas National Bank, 146 U.S. 240

(1982); National Bank v. Case, 99 U.S. 628 (1878); Noel

Estate v. Commercial National Bank in Shreveport, 232

F.2d 483 (5th Cir. 1956); Federal Deposit Insurance Corp.

vu. Freudenfeld, 492 F.Supp 763 (E.D. Wisc. 1980.)

In First National Bank of Danville v. Reynolds, 491

N.E.2d 218 (Ind. App. 1986), the Court held that Section

24, Fifth, of the National Bank Act did not preclude a

provision in a bank president’s employment contract

guaranteeing payment of a stipulated sum should the

president resign for cause. The court there rejected the

bank’s “form over substance” argument, quoting

Mitchell v. American Savings and Loan Association, 593

P.2d 692 (Ariz. App. 1979):

But it often happens that a blind and

unreasoning application of a “general rule,” in

the absence of the circumstances it was

intended to apply to, results in defeating rather

than serving the interest of justice....The

proper function of rules is to serve the ends of

justice. Conversely, where the circumstances

are such that no such evil or any likelihood of

it exists, the rule has no proper application.

And this is true, a fortiori, where application

of the rule would bring about an unjust and

ineguitable result.

IBM, and all other national banks, have power to

terminate officers at will. IBM exercised that power

here. Nothing about that power or its exercise should

render unenforceable the reasonable, bargained-for

provision for severance pay.

The interpretation of the federal statute by the state

court below would prevent national banks from

competing on equal terms with other employers for high

quality executive personnel. The question is one which

this court can and should review by certiorari. See

Whitney National Bank v. Bank of New Orleans and

Trust Co., 379 U.S. 411, 414-415 (1965).

CONCLUSION

This Court should issue a writ of certiorari to review

the state court’s interpretation of Section 24, Fifth, of

the National Bank Act.

February 8, 1988

Respectfully submitted,

a. 3; lh ae

Bailey, Dawes & Hunt

a professional association

1390 Brickeli Avenue

Penthouse

Miami, Florida 33131

Telephone: 305/374-5505

10

Appendix

APPENDIX

Page

eg en ree er ee ee App. 1

Opinion of Florida District

SE oe i a eh ee elewd on App. 5

Order Denying Rehearing ................ App. 15

App. 1

IN THE CIRCUIT COURT OF THE 11TH JUDICIAL

CIRCUIT IN AND FOR DADE COUNTY, FLORIDA

GENERAL JURISDICTION DIVISION

CASE NO. 84-16667 CA (30)

SOUTHEAST BANK, N.A.,

Plaintiff,

Us.

THE INTERNATIONAL BANK OF

MIAMI, N.A.., et al.,

Defendants.

SUMMARY JUDGMENT AWARDING

INTERPLEADED FUND

THIS CAUSE came before the court, on September

26, 1986 and October 20, 1986, pursuant to the motion

of The International Bank of Miami, N.A. for summary

judgment, and on October 20, 1986, pursuant to the

motion of Gene Lee Bennett for summary judgment, and

the court having heard argument of counsel, having

reviewed the memoranda of law submitted by counsel,

and being otherwise fully advised in the premises, it is

hereby

ORDERED AND ADJUDGED as follows:

1. The motion for summary judgment by The

International Bank of Miami, N.A. is denied.

App. 2

i ceeeinenniiliaaiamaiaae

2. With respect to the entitlement to the $89,810.00

interpleaded fund in the registry of this court, the

motion for summary judgment of Gene Lee Bennett is

granted, and Bennett is hereby awarded the

interpleaded fund, upon the grounds that he is entitled

to said fund, pursuant to Paragraph II-A of his

Employment Agreement.

3. The interpleaded fund of $89,810.00 in the

registry of this court shall be placed in an interest-

bearing account in a bank located in Dade County,

Florida, mutually acceptable to the respective parties,

to be withdrawn only upon the signatures of both Sara

Soto, Esq., and David B. McCrea, Esq., and only upon

the order of this court.

4. A stay of execution pending review is hereby

entered by the court with respect to the payment of the

$89,810 interpleaded fund and such fund shall remain

in said interest-bearing account, until the conclusion of

any Florida District Court of Appeal appellate

proceeding, any Florida Supreme Court discretionary

review or appellate proceeding, and any United States

Supreme Court appellate or certiorari proceeding, in

this matter, unless the parties otherwise agree in

writing.

5. With respect to the monthly payments of

$1,015.16, claimed by Mr. Bennett, pursuant to the

Modification to his Employment Agreement, the motion

for summary judgment by Gene Lee Bennett is denied.

6. This court’s order of April 9, 1986 setting cause

for jury trial and pre-trial instructions is vacated.

App. 3

DONE AND ORDERED, in Chambers, at Miami,

Dade County, Florida this 23 day of October, 1986.

ls) MURRAY GOLDMAN

CIRCUIT COURT JUDGE

Copies furnished to:

David B. McCrea, Esq.

Sara Soto, Esq.

App. 4

IN THE DISTRICT COURT OF APPEAL OF FLORIDA

THIRD DISTRICT

JULY TERM, A.D. 1987

CASE NO. 86-2898

THE INTERNATIONAL BANK OF MIAMI,

Appellant,

US.

GENE LEE BENNETT,

Appellee.

Opinion filed September 15, 1987.

An Appeal from a non-final order from the Circuit

Court for Dade County, Murray Goldman, Judge.

Finley, Kumble, Wagner, Heine, Underberg,

Manley, Myerson & Casey and David B. McCrea and

Gregory P. Borgognoni, for appellant.

Bailey, Dawes & Hunt and Jesse C. Jones, for

appellee.

Before SCHWARTZ, C.J. and DANIEL S. PEARSON

and JORGENSON, JJ.

PER CURIAM.

App. 5

Both the facts and controlling authorities are

thoroughly treated in Judge Jorgenson’s opinion. We

come to the opposite conclusion, however, as to the

appropriate result. In our view, the arrangement under

which the appellant was required to pay Bennett, at the

termination of his employment, a year’s salary for

unrendered services is directly contrary to the

untrammelled right to dismiss officers “‘at pleasure”’

conferred by paragraph fifth of the National Bank Act,

12 U.S.C. § 24 (1982). Rohde v. First Deposit Nat’] Bank,

127 N.H. 107, 497 A.2d 1214 (1985); Kemper v. First

Nat’! Bank, 94 Ill. App. 3d 169, 418 N.E.2d 819 (1981);

Copeland v. Melrose Nat’l Bank, 229 A.D. 311, 241

N.Y.S. 429 (1930), aff'd, 254 N.Y. 632, 173 N.E. 898

(1930). As these cases hold, the bank’s purported

obligation is therefore unenforceable as a matter of law.

Rohde; Kemper; Copeland.

Contrary to the dissenter’s analysis, it does not

matter that the bank’s payment, as mandated by the

terms of the employment agreement, was to be effected

through the device of a fund created by another piece

of paper called an “escrow agreement.” The substance,

as opposed to the form, of the matter is that the escrow

is distributable—and the bank is or is not out its

89,000-odd-dollars—according to the controlling

provisions of an agreement which the dissent itself

appears to acknowledge is invalid. To uphold Bennett's

judgment as “really” stemming from the escrow, rather

than the employment contract, “‘would be”—as was said

in Copeland in an only slightly different context—‘“‘to

countenance a patent subterfuge designed to circumvent

the law.” 229 A.D. at 313, 241 N.Y.S. at 430.

App. 6

Finally, we certainly agree that to deny Bennett the

fruits of the severance clause is to deprive him of a

benefit, and relieve the bank of a burden, for which they

both freely bargained. But that is in the very nature

of a ruling declaring a contract invalid and

unenforceable as contrary to the public policy

established by Congress or the legislature. 4 Williston

on Contracts §§ 602A, 615A (3d ed. 1961); 6A Corbin

on Contracts §§ 1374-1375 (1962). In Ferguson v. Five

Points Nat’] Bank, 187 So.2d 45 (Fla. 3d DCA 1966),

we have already made a similar ruling—declaring

unenforceable a bank extension of credit upon which a

lender had specifically relied to to his great financial

detriment—with respect to another element of the

National Bank Act. We have no power to do otherwise

in this case.

Accordingly the judgment under review is reversed

for entry of one in favor of the appellant bank.

Reversed.

SCHWARTZ, C.J., and DANIEL S. PEARSON, J.,

concur.

The intergi Bank of Miami v. Bennett

Case No. 86-2898

JORGENSON, Judge, dissenting.

I respectfully dissent.

International Bank of Miami [International] appeals

from an order of the trial court granting summary

App. 7

judgment in favor of Gene Lee Bennett and awarding

an interpleaded fund of $89,810 to Bennett.

International, a national banking association

plagued by financial troubles, contacted an executive

recruiter in New York to seek a new bank president.

Following a national search, International, through its

board of directors, selected Bennett, then president of

a bank in New Jersey, to serve as its president for a term

of three years, to run from June 7, 1982, to June 6, 1985.

Prior to Bennett’s acceptance of International’s offer,

the parties entered into negotiations for Bennett's

compensation package. Bennett expressed his concern

for the security of his position with International since

acceptance would result in the relocation of his family

from New Jersey to Miami as well as the resignation

of his current lucrative post. International responded

to Bennett’s concern by agreeing to provide Bennett

with one year’s salary in the event of his premature

termination. This provision was of critical importance

to Bennett in deciding to accept the presidency of a

troubled bank which might ultimately fail. Accordingly,

the written employment agreement drafted by

International provides for the payment of one year’s

salary to Bennett as liquidated damages.and severance

pay if Bennett’s employment were to‘be terminated

without cause prior to June 6, 1985. The severance

payment clause of the employment agreement provides,

in relevant part: “The Employee shall receive one year’s

salary payable in twelve (12) monthly installments as

liquidated damages and severance pay only if his

employment is terminated without cause by the

Employer, regardless of the period of time remaining

to be performed under this Agreement.”

App. 8

ani ttinine

Shortly after the execution of the employment

contract, International drafted a separate escrow

agreement. This agreement details the procedure for the

opening of an escrow account at Southeast Bank in order

to set aside funds equal to the net current annual

salaries of various bank officers, including Bennett. The

agreement also sets farth the procedure for

disbursement of the escrow funds. The escrow

agreement provides that “([t]his agreement shall be

construed in accordance with the laws of the State of

Florida.” Additionally, the escrow agreement contains

a clause which provides that the escrow agreement has

a separate existence apart from the employment

agreement.' The plain language of the clause attests to

the obvious intent of International to maintain the

independence of the employment and escrow

agreements. International subsequently funded an

escrow account at Southeast Bank.

Predictably, International foundered. The bank was

sold before the expiration of Bennett’s term. The new

board of directors of International terminated Bennett’s

employment without cause as of May 7, 1984. Bennett

and International both made demand upon the escrow

agent, Southeast Bank, for the escrow fund. On May 9,

1984, Southeast Bank filed an interpleader action

'This clause reads as follows:

15. No Effect on Employment Agreements. This

Agreement shall have no effect on the validity or

enforceability of the written Employment

Agreements between the Officers and the Bank,

which are, and remain, in full force and effect.

App. 9

against Bennett and International in order to determine

their respective rights to the fund. International and

Bennett filed cross-motions for summary judgment. At

the hearing on these motions, International and Bennett

stipulated that entitlement to the fund could be

determined as a matter of law. International further

stipulated that the amount of the interpleaded fund,

representing Bennett’s annual salary, was reasonable.

The sole question before the trial court was to whom

the interpleaded amount rightfully belonged.

International claims that the trial court erred in

entering summary judgment for Bennett because the

severance payment clause in the employment

agreement is void and unenforceable under the National

Bank Act, 12 U.S.C. § 24 (1982). The crucial provision

of section 24 is the fifth paragraph which states that

the board of directors of a national bank may dismiss

any bank officer “‘at pleasure.’’? International argues

that a severance payment clause violates this section

because it restricts the ability of a board of directors to

freely exercise its power to remove a bank officer “at

2The relevant portion of the National Bank Act provides:

[A] national banking association. . . shall have

power—

* * *

Fifth. To elect or appoint directors, and by its

board of directors to appoint a president, vice

president, cashier, and other officers, define their

duties, require bonds of them and fix the penalty

thereof, dismiss such officers or any of them at

pleasure, and appoint others to fill their places.

12 U.S.C. § 24 (1982).

App. 10

pleasure” by virtue of imposing a penalty. In support

of its position, International relies on a substantial body

of law interpreting the fifth paragraph. In Rohde v. First

Deposit National Bank, 127 N.H. 107, 497 A.2d 1214

(1985), a discharged officer of a national bank sought

damages under his employment contract which had

provided that if he were terminated without cause any

time prior to the expiration of his three-year contract,

he would receive as compensation the salary due him

for those three years. The court affirmed the dismissal

of his claim on the ground that such a contractual

provision contravened the bank’s right to immediately

discharge the officer. The court in Copeland v. Melrose

National Bank, 229 A.D. 311, 241 N.Y.S. 429, aff'd, 254

N.Y. 632, 173 N.E. 898 (1930), similarly refused to

enforce a provision in a bank officer’s employment

contract requiring the bank to pay the remainder of the

officer’s salary for the unexpired period of his

employment contract in the event of termination prior

to the expiration of his contract. See also Kemper v. First

Nat'l Bank, 94 Ill. App. 3d 169, 418 N.E.2d 819 (1981)

(board of directors of national bank could dismiss officer

before expiration of his stated tenure without incurring

liability for breach of officer’s employment contract).

Although these cases disallow enforcement of severance

payment clauses in the employment contracts of bank

officers as violative of the National Bank Act, the cases

are not dispositive of the question of Bennett’s

entitlement to the interpleaded escrow fund.

Bennett’s right to enforce the severance pay

provision in his employment contract is not at issue and

thereby distinguishes the instant case from cases such

as Rohde and Copeland. The only issue here concerns

App. 11

Bennett’s rights under the escrow agreement. The

escrow agreement itself furnishes the basis for Bennett’s

claim to the fund. Unlike Rohde and Copeland, this case

was before the trial court in the posture of an

interpleader action. Significantly, this was not an action

brought by Bennett to recover damages pursuant to his

employment agreement with International.

I would hold, as did the trial court, that the

interpleaded fund properly belongs to Bennett according

to the plain language of the escrow agreement. Nothing

in the National Bank Act prohibits a national bank from

entering into an escrow agreement with a prospective

employee. The creation of an'escrow agreement and

funding of an escrow account in order to attract a

president of Bennett’s caliber are not barred by the

National Bank Act. Nor does the establishment of an

escrow fund constitute a “penalty” which contravenes

the ‘at pleasure” provision of the National Bank Act.

Although Bennett could not require International to

fund an escrow account, once International did so its

board of directors and its successors were bound by its

contract. After the escrow fund was set up, it could no

longer be characterized as an asset of International.

Moreover, International, the drafter of the escrow

agreement, envisioned the severability of the escrow

agreement and its construction pursuant to Florida law

notwithstanding any infirmities in the employment

agreement. A party is bound by the language it adopts

in an agreement no matter if the language may later

prove to be disadvantageous. Security First Fed. Sav.

& Loan Ass’n v. Jarchin, 479 So. 2d 767, 770 (Fla. 5th

DCA 1985), rev. denied, 488 So. 2d 831 (Fla. 1986).

App. 12

Where a contract is clear and unambiguous, the contract

itself is the best evidence of the parties’ intent, and the

contract’s meaning is a question of law for the court.

Jarr v. University of Miami, 474 So. 2d 239, 242 (Fla.

3d DCA 1985), rev. denied, 484 So. 2d 10 (Fla. 1986).

It is clear that International voluntarily elected to

establish the escrow agreement. But for the existence

of the escrow account and agreement, Bennett would

not have accepted the presidency of a bank with a

troubled past and a tenuous future. International’s

reliance on Ferguson v. Five Points National Bank of

Miami, 187 So. 2d 45 (Fla. 3d DCA 1966), is misplaced.

In Ferguson, this court held that a holder of a note could

not enforce the bank’s promise to purchase the note

where such a promise was without consideration as

required by the National Bank Act. In this case,

International received consideration in the form of

Bennett’s acceptance of its presidency for its agreement

to establish an escrow fund. The trial court correctly

concluded that the award of the interpleaded fund to

Bennett did not unlawfully violate the “at pleasure”

provision of the National Bank Act. To hold otherwise

would completely ignore the obvious intent of the parties

in agreeing to and establishing the escrow account and

would sanction the attempt of International’s new board

of directors to evade a lawful commitment made by the

predecessor board.

Contrary to the court’s conclusion that upholding

the escrow agreement would only amount to providing

a patent subterfuge designed to circumvent the law, the

escrow agreement, in my view, is a lawful contract

binding on the successor board of directors. The

App. 13

deposition of the appellee Bennett indicates that

representatives of the office of the Controller of the

Currency had reviewed both the employment contract

and the escrow agreement during the course of a regular

audit of the bank. Bennett testified that such

agreements are an industry standard. Nothing in this

record controverts that testimony. If such agreements

were not to be enforced, it seems to me that during

regular audits the Controller of the Currency would

point out such a fact to bank directors and officers.

I would affirm.

App. 14

GIII hs ahem setae a

IN THE DISTRICT COURT OF APPEAL OF FLORIDA

THIRD DISTRICT

JULY TERM, A.D. 1987

MONDAY, NOVEMBER 9. 1987

CASE NO. 86-2898

THE INTERNATIONAL BANK OF MIAMI,

Appellant,

US.

GENE LEE BENNETT,

Appellee.

Upon consideration, appellee’s motion for rehearing

is hereby denied.

A True Copy

ATTEST:

LOUIS J. SPALLONE

Clerk District Court of

Appeal, Third District

By /s/_Evelyn A. Hillman

Deputy Clerk

cc: David B. McCrea

Jesse C. Jones

/aeh

App. 15