Pan American Fire & Casualty Company v. Revere, Civ. A. No. 9952.

Decision Date30 September 1960
Docket NumberCiv. A. No. 9952.
Citation188 F. Supp. 474
PartiesPAN AMERICAN FIRE & CASUALTY COMPANY, Plaintiff, v. Benjamin F. REVERE, Sr., Individually, and as Tutor and Guardian Ad Litem for his Minor Children, Benjamin F. Revere, Jr. and Jewell Autry Revere, et al., Defendants.
CourtU.S. District Court — Eastern District of Louisiana

Talley, Anthony & Hughes, Charles M. Hughes, Bascom D. Talley, Jr., Bogalusa, La., for plaintiff.

H. Alva Brumfield, Baton Rouge, La., for Movers.

WRIGHT, District Judge.

On February 3, 1960, a tragic highway accident occurred near Covington, Louisiana. A large tractor and trailer collided head-on with a bus carrying school children. The bus driver and three of the children were killed and 23 others were injured, some very seriously. A few moments later, compounding the disaster, another collision occurred between two cars following the bus. Having stopped in time to avoid ramming the disabled bus obstructing the highway, the first of the following vehicles was struck from the rear by the other, and John Wells, a passenger in the lead car, was injured.

Alleging that three suits against it have already been filed and that numerous other claims have been made, the tractor's liability insurer has instituted this interpleader action, citing all potential claimants. It asks that they be enjoined from initiating legal proceedings elsewhere or further prosecuting the actions already filed and that they be directed to assert their claims in the present suit. Plaintiff has deposited a bond in the full amount of its policy limits, $100,000,1 and avers that "it has no interest" in these insurance proceeds, being merely "a disinterested stakeholder." On the other hand, the Company denies liability toward any and all claimants. This apparently contradictory position is explained by the statement of its counsel, incorporated in the record as an amendment to the complaint, that plaintiff "has no further claim" on the sum deposited with the court, but cannot technically admit "liability" since that would amount to a concession that its assured was negligent and expose him to a deficiency judgment.

The only question presented at this stage of the proceeding is whether, under the circumstances outlined, the remedy of interpleader is available to the insurer. At least one of the claimants has challenged the propriety of such a procedure in this instance. Because the question is complicated and has not been fully explored, it may be well to examine the problems presented in some detail.

1. Jurisdiction. Though the issue is not raised by the parties, the court must, of course, initially consider whether it has jurisdiction of the cause. Plaintiff here invokes both the Interpleader Act2 and Rule 223 of the Federal Rules of Civil Procedure and alleges diversity of citizenship as a basis for federal jurisdiction.

Considering that four deaths and many serious injuries are involved and that the fund to be distributed is $100,000, the usual jurisdictional amount requirement for diversity suits applicable to an action under the Rule is clearly satisfied.4 A fortiori, the $500 amount stipulated in the Act is present.5

Though the exact limits of the diversity requirement under the Rule and under the Act have not been definitively established, it seems clear enough that sufficient diversity exists in this instance for an action under either provision. Plaintiff is a citizen of Texas with its principal place of business in that state, while one defendant, Wells, is a citizen of Wisconsin and all the others are Louisiana residents. Thus, the normal requirement of complete diversity between plaintiff on the one hand and defendants on the other is satisfied. This is viewed as sufficient to support jurisdiction for interpleader under Rule 22.6 As for the Act, the only requirement, at least for true interpleader, is diversity between some of the defendant claimants, the citizenship of the plaintiff stakeholder being immaterial. Treinies v. Sunshine Min. Co., 308 U.S. 66, 60 S.Ct. 44, 84 L.Ed. 85; Haynes v. Felder, 5 Cir., 239 F.2d 868.7 The joinder of the Wisconsin resident together with the Louisiana claimants satisfies this condition. And even if the rule of Treinies and Haynes does not apply here on the ground that this is not a strict interpleader but rather an action "in the nature of interpleader" in which the plaintiff's citizenship is relevant, sufficient diversity exists since there is both "normal" diversity between the plaintiff and all defendants under § 1332 and "interpleader diversity" between at least two co-claimants.8

2. Strict Interpleader or Bill in the Nature of Interpleader. Apparently of the opinion that the answer may affect the availability of the remedy sought here, the parties have debated the question whether this is a case for "true," "strict," or "pure" interpleader or whether the present facts support only an action "in the nature of interpleader." The difference between the two is that in strict interpleader the plaintiff is a disinterested stakeholder while in the action in the nature of interpleader he is himself a claimant, whether directly or by denying the validity of some or all of the other claims. State of Texas v. State of Florida, 306 U.S. 398, 406-4079, 59 S.Ct. 563, 830, 83 L.Ed. 817. Thus, if the casualty insurer had brought in the claimants and said to them: "Gentlemen, I put before you the full amount of the policy which those of you who prove your claims must divide between you, but I deny that any of you is entitled to any portion of the fund and pray that all your demands be rejected and that the deposit be returned to me in due course," clearly this would not be a true interpleader but an action in the nature of interpleader. The problem here is whether the allegation of disinterestedness already noted changes the character of the action to one of strict interpleader. In view of the denial of liability and the plaintiff's obligation to its assured to resist all claims, it may be doubted that the requisites of a strict bill are satisfied. On the other hand, some weight must be given to the unequivocal language in which the insurer has attempted to abandon title to the fund. A nice question is presented which theoreticians might debate at some length.

But does it matter how the action is characterized? It would seem to make no difference since both Rule 2210 and the Interpleader Act11 expressly provide for actions in the nature of interpleader as well as strict bills, the drafters in each case voicing their intent to erase the distinction.12 But before so concluding, we must dispose of an old rule of equity that gave importance to the difference between "pure" and "impure" bills of interpleader.

3. Special Equitable Ground for Bill in the Nature of Interpleader. Though apparently known to the early common law, modern interpleader developed in the chancery courts and is today considered an equitable remedy.13 Hence, in theory at least, the resort to equity must be justified by the absence of an adequate remedy at law. One might suppose that exposure to unnecessary vexation by a multiplicity of suits on the same obligation were a sufficient ground for equitable relief. And so it is if the conditions of strict interpleader are met.14 But, for reasons that no one bothered to explain, the rule was otherwise when the plaintiff was not a mere stakeholder. It was laid down that a bill in the nature of interpleader would not lie unless supported by some special equity besides double vexation.15 Thus, a suit like this one which has no independent equitable basis could not be maintained unless it could be characterized as a true bill of interpleader.

Though it was perhaps more honored in the breach than the observance,16 such was the rule. But, inherently weak, it could not long survive the liberalizing force of the Interpleader Act of 1936 and the Rules of Civil Procedure promulgated in 1938. Indeed, once the difference between strict bills and bills in the nature of interpleader was eliminated, there remained no basis for distinguishing the requirements and demanding special equities for the action in the nature of interpleader. Henceforth, it could be assumed that the prerequisites of interpleader were the same whether the plaintiff were interested or not, and that these conditions were spelled out in the written provisions. The point was forcibly made by Judge Chesnut whose celebrated opinion in John Hancock Mut. Life Ins. Co. v. Kegan, supra, noted the absurdity of distinguishing between the equities required for "pure" and "impure" interpleader and held that exposure to undue harassment by a multiplicity of suits was a sufficient ground to maintain a bill in the nature of interpleader.17 The old rule was dying when, a year later, the Eighth Circuit Court of Appeals dealt it the final blow in Standard Surety & Casualty Co. of New York v. Baker, supra, ignoring the complaint of the District Judge that "the admirably expressed views of Judge Chestnut * * * cannot prevail against all authority."18 The Kegan decision is now generally approved19 and followed.20

The present law, then, is that the only equitable ground necessary for interpleader, whether the plaintiff is a disinterested stakeholder or not, is exposure to double or multiple vexation. But, of course, this does not mean that every person threatened with a multiplicity of suits is entitled to interplead. The function of interpleader is to rescue a debtor from undue harassment when there are several claims made against the same fund. It is because the aggregate demands exceed the insurer's contractual obligation that the condition is here satisfied.21

4. Exposure to Multiple Liability. Though the Interpleader Act makes no such requirement, Rule 22 apparently permits interpleader only if the claims "are such that the plaintiff is or may be exposed to double or multiple liability." (Emphasis...

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    ...in aid of its jurisdiction" exception to the Anti-Injunction Act. As Judge Skelly Wright noted in Pan American Fire & Casualty Co. v. Revere, 188 F.Supp. 474 (E.D.La.1960): Usually interpleader will not be really effective unless all claimants are brought before the same court in one procee......
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