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24726 - First Union National v. FCVS Communications, et al.

Davis Adv. Sh. No. 1
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court

First Union National

Bank of South Carolina

and First Union

Brokerage Services,

Inc., Petitioners/Respondents,

v.

FCVS Communications,

VCS Holdings, Inc.,

Walter K. Flynn,

Murray Michaels, and

Vodofsky Financial Co., Defendants,

Of whom

FCVS Communications

is Respondent/Petitioner.

ON WRIT OF CERTIORARI TO THE COURT OF

APPEALS

Appeal From Richland County

Costa M. Pleicones, Judge

Opinion No. 24726

Heard November 19, 1997 --Filed December 16, 1997

DISMISSED IN PART; REVERSED IN PART

James R. Allen, of Barnes, Alford, Stork &

p. 14


FIRST UNION v. FCVS

Johnson, L.L.P., of Columbia, for

petitioner/respondents.

Craig K. Davis and James F. Flanagan, both of

Columbia, for respondent/petitioner.

PER CURIAM: Petitioners/respondents (collectively Bank) is

the depository for funds owned by respondent/petitioner (FCVS). Bank

sought interpleader on the ground there were conflicting claims between

the majority and minority partners of FCVS regarding the funds. The

trial judge granted interpleader and ordered the funds be held by Bank

until further order of the court. He then discharged Bank from the suit,

effectively dismissing FCVS's counterclaims against Bank. The trial judge

also denied Bank's request for attorney's fees. The Court of Appeals

affirmed the grant of interpleader, reversed dismissal of FCVS's

counterclaims, and remanded to the trial court to determine attorney's

fees. __S.C. __, 469 S.E.2d 613 (Ct. App. 1996). This Court granted

the parties' petitions for a writ of certiorari to review all three issues.

FCVS recently filed a motion with this Court representing that the

partners of FCVS have now resolved their conflict regarding the funds.

FCVS seeks an order, with the consent of the minority partners, requiring

Bank to release the funds since there are no longer conflicting claims. We

grant the motion. Since the issue of interpleader is now moot, we dismiss

the writ as to this question. Jones v. Dillon-Marion Resources Dev.

Comm'n, 277 S.C. 533, 291 S.E.2d 195 (1982) (when an event occurs while

a case is pending on appeal so there remains no actual controversy

between the parties, the case is moot and the appeal will be dismissed).

Further, we reverse the Court of Appeals' decision reinstating

FCVS's counterclaims. These counterclaims allege liability arising from

Bank's failure to honor the majority partners' instructions regarding the

funds. In granting interpleader under Rule 22(a), SCRCP, however, the

trial judge necessarily found Bank was entitled to protection from the

conflicting claims of the majority and minority partners. Accordingly,

under Rule 22(b), SCRCP, Bank was entitled to be "discharged from

liability as to such claims." Since the Court of Appeals found interpleader

was appropriately granted, it erred in reversing Bank's discharge from the

suit.

p. 15


FIRST UNION v. FCVS

Finally, we reverse the Court of Appeals' ruling that Bank was

entitled to attorney's fees as an innocent stakeholder in this case.

Attorney's fees are not recoverable unless authorized by contract or

statute. Tharp v. S.C. Dept. of Soc. Servs., 312 S.C. 243, 439 S.E.2d 854

(1993).

DISMISSED IN PART; REVERSED IN PART.

C.J.

A.J.

A.J.

A.J.

A.A.J.

p. 16