What authority allows courts to use bank accounts versus bonds?
The authority for a court to place funds in a bank account (rather than requiring a bond) comes primarily from the procedures governing the deposit of money with the court under Fed. R. Civ. P. 67 and the related statutory provisions, 28 U.S.C. §§ 2041–2045.
Issue
Whether the court has authority to order the deposit of money into a bank account or investment account rather than require a party to post a bond.
Rule
Under Fed. R. Civ. P. 67, when a party gives notice and obtains leave of court, it may deposit with the court all or part of a sum of money or any other deliverable thing. The funds are then handled as directed by statute. 28 U.S.C. § 2041 provides that all money paid into any court of the United States must be deposited with the Treasury of the United States in the name and to the credit of the court. However, 28 U.S.C. § 2045 authorizes courts to direct that such funds be placed in interest-bearing accounts to secure fair preservation and accrual of interest for the parties.
Local court rules supplement those authorities. For example, local rules following Rule 67 (such as E.D. Mo. Local Rule 13.04) expressly allow funds to be placed into the Court Registry Investment System (CRIS) — an interest-bearing pooled account administered by the Administrative Office of the U.S. Courts — when so ordered by the court.[1]
Additionally, certain state authorities, including Cal. Code Civ. Proc. § 995.730, provide that a deposit of money may be made in lieu of a bond, and that such deposit has the same legal effect as if a bond had been filed.[2]
Application
Thus, where a bond might ordinarily be required (for example, to secure the performance of an obligation or appeal), the court has discretion to allow a cash deposit to be made instead. That deposit can either be held in the registry of the court or directed by the court to an interest-bearing account under Rule 67 and 28 U.S.C. §§ 2041–2045. The funds are generally maintained by the clerk of court and are subject to withdrawal only upon further order of the court under 28 U.S.C. § 2042.
Conclusion
A federal or state court may lawfully order the deposit of funds in a bank account (such as a CRIS account) instead of requiring a bond pursuant to Fed. R. Civ. P. 67 and 28 U.S.C. §§ 2041–2045, or comparable state provisions like Cal. Code Civ. Proc. § 995.730.