Webb's Fabulous Pharmacies, Inc. v. Beckwith

Background

A buyer of a Florida pharmacy deposited the purchase price with the county court to protect itself while many creditors of the seller made claims. The court clerk invested that money, charged a separate statutory clerk fee based on the principal, and later kept more than $100,000 in interest earned on the deposit. A court-appointed receiver for the creditors sued for the interest, and Florida’s highest court held the state statute allowed the county to keep the interest.

Reasoning

The Supreme Court asked whether a county can lawfully keep interest on privately owned funds that must be deposited in court when a distinct clerk fee has already been charged. The Court said no: interest is part of the property and cannot be taken for public revenue without compensation. Because the clerk’s fee already paid for services, the county’s retention of interest was not a service charge but a forced appropriation, creating a constitutional “taking” under the Fifth and Fourteenth Amendments.

Real world impact

The decision protects creditors and others who have money placed in court by preventing local governments from converting the earnings on those funds into general revenue when a separate clerk fee exists and deposit is required by law. The ruling is narrow: it applies where deposits are statutorily required and a separate fee is charged, and it does not decide statutes that make interest the only payment for clerk services.

Dissents or concurrances

The Florida Supreme Court had read the state law to treat deposited funds as temporary “public money” and upheld the statute; one state justice dissented in part. The U.S. Supreme Court rejected that view as inconsistent with the Taking Clause.