The Crow Tribe of Indians, Plaintiff-appellant, v. Little Horn State Bank, Defendant-appellee, 54 F.3d 785 (9th Cir. 1995)

MEMORANDUM^** 

The Crow Tribe gave promissory notes to Little Horn State Bank that subsequently matured. The Tribe and the Bureau of Indian Affairs (BIA) agreed to establish the Crow Debt Retirement Committee (DRC) and to open the "Crow Tribal Debt Retirement checking account" at the Bank. The Bank set off the amount owing on the notes against the account. The Tribe sued the Bank, alleging that the setoff was unlawful. The court granted summary judgment for the Bank. The Tribe appeals. We have jurisdiction under 28 U.S.C. § 1291 and we affirm.¹ 

The Tribe argues that the Bank had no right to setoff because: (1) the BIA held the funds in trust; (2) the funds were deposited into a special account; and (3) the Bank and the DRC lacked mutuality.

Initially, we conclude that the DRC is a tribal entity and that the BIA did not hold the funds in trust. No provision in either the agreement establishing the DRC or the agreement opening the DRC account shows that the DRC was a BIA entity. Rather, most provisions in the agreements show that the DRC was only a tribal entity. Other provisions in the agreements are not helpful.

Next, we conclude that the funds were deposited into a general account. The Tribe does not contend that the agreement between itself and the Bank created a special account. Instead, it says that the Bank's knowledge that the funds were to be used to retire the Tribe's debts created one.

Under Montana law, the general rule is that a party claiming to have created a special account must show an agreement between itself and the bank. See, e.g., Security State Bank v. First Nat'l Bank, 254 P. 417, 418 (Mont. 1927). An exception applies in cases involving third-party creditors. In such cases, a party claiming that a special account exists may show either that "direction [was] given as to the disposition to be made of the funds" or that "the bank [knew] ... of another's claim thereto." Id. at 418 (emphasis added). We decline to extend Montana's exception for certain third-party creditors to first-party depositors.

Finally, we conclude that mutuality existed between the Bank and the DRC. Both the DRC agreement and the account agreement demonstrate that the DRC acted on the Tribe's behalf and that the DRC funds were the Tribe's funds.

AFFIRMED.