Allstate Insurance Company v. McNeill, 10912.

• Decision Date: 21 July 1967
• Docket Number: No. 10912.,10912.
• Citation: 382 F.2d 84
• Parties: ALLSTATE INSURANCE COMPANY, and Josiah S. Murray, III, Administrator of the Estates of Leroy Canaty, Sr. and Leroy Canaty, Jr., Appellees, v. Raymond McNEILL and Queen City Coach Company, Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

382 F.2d 84 (1967)

ALLSTATE INSURANCE COMPANY, and Josiah S. Murray, III, Administrator of the Estates of Leroy Canaty, Sr. and Leroy Canaty, Jr., Appellees, v. Raymond McNEILL and Queen City Coach Company, Appellants.

No. 10912.

United States Court of Appeals Fourth Circuit.

Argued March 8, 1967.

Decided July 21, 1967.

Charles T. Myers, Charlotte, N. C., (Myers & Totherow, Charlotte, N. C., on brief), for appellants.

Jerry S. Alvis, Raleigh, N. C. (Dupree, Weaver, Horton, Cockman & Alvis, Raleigh, N. C., on brief), for appellee Allstate Ins. Co.

Josiah S. Murray, III, Durham, N. C., and David A. White, Rock Hill, S. C. (Newsom, Graham, Strayhorn & Hedrick, Durham, N. C., and Roddey, Sumwalt & Carpenter, Rock Hill, S. C., on brief), for appellee Administrator.

Before HAYNSWORTH, Chief Judge, BRYAN, Circuit Judge, and SIMONS, District Judge.

ALBERT V. BRYAN, Circuit Judge:

This statutory interpleader action was instituted by Allstate Insurance Company, appellee, under 28 U.S.C. § 1335, to obtain an equitable and conclusive distribution of moneys payable under an automobile liability policy it had issued on July 20, 1962 to Sam McCullough. With requisite diversity of citizenship among the interpleaded defendants, Allstate deposited the fund in the registry of the District Court and prayed discharge of further liability.

The insured and two passengers — Leroy Canaty, Sr. and Leroy Canaty, Jr. — with him in his car, were killed when it collided on November 2, 1963 upon a North Carolina highway with a bus owned by the defendant-appellant Queen City Coach Company, and operated for it by the defendant-appellant Raymond McNeill. Bodily injuries were suffered by the bus driver and his passengers and the bus was damaged. The policy protection was limited to $20,000 for death and personal injuries, and $5,000 for property damage.

Confessing its potential liability on claims for these deaths, injuries and damage, Allstate named as defendants not only Queen, its driver and the administrator of the Canaty estates, but also each of the bus passengers. McCullough's estate was not impleaded. All of the defendants asserted claims against the impounded moneys. Additionally, the Canatys' administrator cross-claimed against Queen and McNeill for the deaths of his intestates.

The District Court granted Allstate's motion for an injunction restraining the defendants from prosecuting elsewhere any claim against Allstate on account of the policy, and released the company of further responsibility under its contract. At the same time, the Court denied Queen's and McNeill's motions for dismissal of the interpleader bill and the Canaty claims. Incidentally, Allstate does not disavow its policy obligation to defend at its expense any action brought against the McCullough estate upon any liability asserted as arising from his operation of the accident car.

Queen and McNeill appeal on the following grounds:

(1) That the interpleader action could not proceed without the estate of McCullough as a party;

(2) That it cannot be maintained until the claims of the defendants against McCullough have been reduced to judgments; and

(3) That the appellants Queen and McNeill are not subject to suit in the interpleader action by the Canaty estates.

None of these contentions can prevail except (3). Irrespective of whether the McCullough estate is insolvent, as Allstate avers and appellants deny, his personal representative is not a necessary party here. The estate had no claim whatsoever against the deposit, and hence it was not one of the "adverse claimants" contemplated by the statute, 28 U.S.C. § 1335. Furthermore, Queen and McNeill made no effort to bring the estate into the suit, F.R.Civ.P. 13(h), thus refuting their present assertion of the necessity of the estate's joinder.

The second ground is refuted by State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 87 S.Ct. 1199, 18 L. Ed.2d 270 (April 10, 1967) which was decided after the entry of the decree now on review. It upholds the standing of an insurer to resort to interpleader without awaiting liquidation of the claims against its insured.

This decision, however, compels a reversal of the decree here insofar as it overruled the motions of Queen and McNeill, its driver, to dismiss the Canaty claims against them. Interpleader, Tashire held, was not the equivalent of a bill of peace. It may not be used as the arena for resolution of claims of the defendants inter se, except insofar as they have adversity in their demands upon the fund. We quote the Court:

"We recognize, of course, that our view of interpleader means that it cannot be used to solve all the vexing problems of multiparty litigation arising out of a mass tort. But interpleader was never intended to perform such a function, to be an all-purpose `bill of peace.\' Footnote omitted. * * * None of the legislative and academic sponsors of a modern federal interpleader device viewed their accomplishment as a `bill of peace,\' capable of sweeping dozens of lawsuits out of the various state and federal courts in which they were brought and into a single interpleader proceeding. * *"

Of course, cross-claims may be asserted by the Canaty estates under F.R.Civ.P. 13 (g) against Queen and McNeill, to attack their claims against the common fund, but for no other purpose.

As to the property-damage portion of the fund, it is arguable that the interpleader should not be allowed because there is but one claimant to this money, i. e. Queen. That company, before it was impleaded in this litigation, sued the McCullough estate for property damage in a State court — since removed to the United States District Court for the Western District of North Carolina and stopped temporarily — and the estate had counterclaimed there for damages for its decedent's death. Without reservation Allstate has surrendered even the property-damage money and has been acquitted of further responsibility. It is doubtful that the statute intends a severance of the moneys due under a single policy or other sole instrument. But, more importantly, some other claim for property loss might develop in the division of the fund. At all events the contention will not be allowed to disturb the decree on appeal.

Dismissal of the appeal of Queen and McNeill is moved by the Canaty estates. They desire to secure the advantage of the decree insofar as it gives them a trial of their claims against Queen and McNeill in the interpleader suit. While it is not the marrow of their motion, we explain in passing that the order was rendered on the plaintiff's motion and not on evidence. There was no dispute on the facts and consequently nothing to prove.

The real point made by the Canaty estates is that the order was interlocutory and no permission obtained for the appeal under 28 U.S.C. § 1292(b). A further point is that if the order is final, no appeal can be taken without a certificate under 54(b) F.R.Civ.P.

The appeal will lie, we think, under 28 U.S.C. § 1292(a) (1) as an interlocutory decree granting an injunction. This statute is self-executing without need of permission under 1292(b). Wright, Federal Courts 403 (1963 ed.). While appellants Queen and McNeill do not specifically and directly attack the injunction, their appeal is nevertheless proper under 1292(a) (1). 6 Moore's Federal Practice 253, fn. 6. The reason is that they make a more fundamental assault. They question the jurisdiction of the Court to entertain the interpleader at all. For grounds, to repeat, they note the absence from the suit of the insured as a party and the unliquidated state of the claims interpleaded. Thus issues basic to the injunction are made on their appeal. In these circumstances an appeal may be prosecuted under 1292(a) (1). 6 Moore's Federal Practice 54.

On such an appellate review the court may and should resolve all other questions adjudicated by the decree. These would include the right of the Canaty estates to sue Queen and McNeill within the interpleader suit. In this particular, dealing with the predecessor of 1292(a) (1), the Court in Smith v. Vulcan Iron Works, 165 U.S. 518,...