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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1338%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1988
- **Citation:** 485 U.S. 988

## Text

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
QUESTION PRESENTED FOR REVIEW ... i
EE a ks aed sae Ce beeen ce se ii
TAR GP CONTIN GS 2. ccc ccc secs esses lil
pip ee ee 8g y | >. iv, v,
vi
SU IY oc vs pnd scencccsncaes 1
STATEMENT OF GROUNDS
oo ks ty 6 SR 2
se estes - Dig 8 AG § | Ee 2
STATEMENT OF CASE...........5...... 3
EES eee ee CET EE REE 4
ee ac eas sank seas sie a es 8 App. 1

ill

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1338%3A1. Public record. Not legal advice.