Equitable Life Assurance Society of United States v. Miller, 6-63-Civ. 355.

• Citation: 229 F. Supp. 1018
• Decision Date: 22 May 1964
• Docket Number: No. 6-63-Civ. 355.,6-63-Civ. 355.
• Parties: The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Plaintiff, v. Esther R. MILLER and Lorna N. Miller, Defendants.
• Court: U.S. District Court — District of Minnesota

229 F. Supp. 1018

The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Plaintiff, v. Esther R. MILLER and Lorna N. Miller, Defendants.

No. 6-63-Civ. 355.

United States District Court D. Minnesota, Sixth Division.

May 22, 1964.

Richard H. Kyle, St. Paul, Minn., for plaintiff.

Albert H. Newman, Minneapolis, Minn., for defendant Esther R. Miller.

Paul Van Valkenburg, Minneapolis, Minn., for defendant Lorna N. Miller.

LARSON, District Judge.

This is an interpleader action brought under 28 U.S.C. § 1335, requesting a discharge from liability under 28 U.S.C. § 2361. The plaintiff insured the life of one Frank G. Miller in 1933. In 1937 Miller named his then wife, Esther R. Miller, as beneficiary of the policy in question. In 1942 Frank and Esther R. Miller were divorced and Miller subsequently married Lorna N. Miller, who was his wife at the time of his death in 1962.

Both defendants filed claimant's statements with the plaintiff with regard to the policy. Defendant Esther R. Miller is the named beneficiary of the policy, and the Order granting the Esther R. Miller-Frank G. Miller divorce contained a provision ordering that Esther R. Miller be made the beneficiary of insurance on Frank G. Miller's life adequate to protect her interest in future alimony payments. After his remarriage Frank G. Miller asked the plaintiff to change the beneficiary designation of the policy in favor of Lorna N. Miller. She is the beneficiary under his will.

After receiving the second claimant's statement, the plaintiff issued a check payable to the order of both defendants. In November, 1963, Esther R. Miller commenced a State court action against the plaintiff, and on December 6, 1963, an Order of this Court issued restraining Esther R. Miller from prosecuting the State court action and restraining Lorna N. Miller from commencing an action against the plaintiff.

The instant motion requests an Order:

1. Permitting plaintiff to deposit $7,225.00, the "admitted liability of plaintiff to defendants," in Court and releasing the plaintiff from all liability to either defendant as to the $7,225.00;

2. Awarding plaintiff its costs and disbursements and reasonable attorneys' fees to be paid out of the $7,225.00.

At the hearing on the motion the question of whether plaintiff should pay interest on the $7,225.00 was raised.

1. There are two adverse claimants to the benefits of the policy; the plaintiff is a mere stakeholder with no interest in the outcome of the dispute between the two defendants. "A stakeholder, acting in good faith, may maintain a suit in interpleader for the purpose of ridding himself of the vexation and expense of resisting adverse claims * *." Hunter v. Federal Life Ins. Co., 111 F.2d 551, 556 (8th Cir. 1940). Neither claim is so wanting in substance as to make this use of interpleader unjustified. Compare Bierman v. Marcus, 246 F.2d 200 (3rd Cir. 1957); John Hancock Life Ins. Co. v. Beardslee, 216 F.2d 457 (7th Cir. 1954). The use of the interpleader device is thus proper and the plaintiff will be discharged from litigation.

In her brief defendant Esther R. Miller makes the statement that the plaintiff disputes the "full amount to be deposited in Court" and, therefore, has an interest in the subject matter of the dispute so as to disqualify it as a disinterested stakeholder. The reference is apparently to the question as to interest on the policy amount. The subject matter of the dispute is the proceeds of the policy. Whether or not the plaintiff must pay interest on this amount is irrelevant to the argument between the defendants. The plaintiff's position on the interest is the same as to each defendant, and it is no more interested in the outcome of the dispute between them because of the argument over interest than it is because it claims attorneys' fees and the defendants dispute the claim.

2. Plaintiff requests attorneys' fees of $500; both defendants resist. Plaintiff argues that reasonable attorneys' fees are allowed the interpleading plaintiff in Federal interpleader actions; defendants argue that such fees should only be allowed if allowed by the courts of the State in which the Federal court sits, citing Erie R. R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Since the reported cases in Minnesota applying the Minnesota interpleader rule (Minn.R.Civ. P. 22) do not reflect awards of attorneys' fees, defendants says that such fees should not be awarded in the instant proceeding.

The general rule in the Federal courts has been that a disinterested stakeholder who is threatened with multiple liability and who interpleads the claimants is entitled to attorneys' fees. See cases cited in Anno. 48 A.L.R.2d 190, 194-95 (1956). Where this rule conflicts with the State rule, Federal courts have reached contrary results. Compare Aetna Life Ins. Co. v. Johnson, 206 F.Supp. 63 (N.D.Ill. 1962), (Denying attorneys' fees because denied by State courts) with Palomas Land & Cattle Co. v. Baldwin, 189 F.2d 936, 938 (9th Cir. 1951) (Granting attorneys' fees though State courts do not.)

The starting point for analysis of the question of whether State or Federal law applies is the interpleader statute itself. Do the policies expressed in the interpleader statute require the application of Federal decisional law to the issue of attorneys' fees for an interpleading plaintiff? If no Federal interest is perceived, State law should be applied.

The availability of nationwide service of process under Federal interpleader (28 U.S.C. § 2361) provides a party who may be subjected to multiple liability with a remedy in the Federal courts which would be unavailable to him in any State court. That is the situation in the instant case where the two defendants are apparently citizens of Minnesota and of Arizona. There would seem to be a question as to the application of Erie at least in an interpleader case where a State court could not grant interpleader but where a Federal court is authorized by a Federal statute to grant it. If a uniform Federal rule is deemed necessary to effectuate the statute, the doctrine of Erie would not seem to bar such a rule. Professor Moore has stated:

"We suggest that state law should not control. The federal statutes on interpleader were designed to protect a party against

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