Jefferson Standard Insurance Company v. Craven, Civ. No. 72-491.

• Decision Date: 01 November 1973
• Docket Number: Civ. No. 72-491.
• Citation: 365 F. Supp. 861
• Parties: JEFFERSON STANDARD INSURANCE COMPANY, Plaintiff, v. Elsie Andrews CRAVEN et al., Defendants.
• Court: U.S. District Court — Middle District of Pennsylvania

365 F. Supp. 861

JEFFERSON STANDARD INSURANCE COMPANY, Plaintiff, v. Elsie Andrews CRAVEN et al., Defendants.

Civ. No. 72-491.

United States District Court, M. D. Pennsylvania.

November 1, 1973.

Richard H. Wix, Wix & Wenger, Harrisburg, Pa., for claimant Elsie Andrews Craven.

Robert J. Stewart, Liverant, Senft & Cohen, York, Pa., for defendants David Clifton Blain Craven and Robert Brent Craven.

MEMORANDUM AND ORDER

HERMAN, District Judge.

This is an interpleader action¹ which requires resolution of two unsettled areas of the law:

(1) Whether a claimant to an impleader fund may demand a jury trial in a dispute between defendants which does not involve the stakeholder, and;

(2) Whether there exists an absolute prohibition on an interpleader cross-claim which does not directly involve the interpleader fund.

The Jefferson Standard Insurance Company paid $36,799 into the registry of the court, being the total liability on five life insurance policies on the life of the late Clifton A. Craven. The insurance company named Elsie A. Craven, the widow, and her sons David and Robert as nominal defendants.

Once the issue was joined Jefferson Standard moved for summary judgment against the defendants. The court determined that no dispute existed as to the amount of Jefferson Standard's liability; granted summary judgment to Jefferson Standard and retained the fund less $1,615.73 to Jefferson for costs and counsel fees. Mrs. Craven and her two sons, David Clifton Blain Craven and Robert Brent Craven are embroiled in a dispute as to who has rightful claim on the proceeds.

In actuality Mrs. Craven is the true plaintiff, asserting that her adult sons wrongfully induced their late father to eliminate their mother as beneficiary, placing them in her stead. In addition, Mrs. Craven has cross-claimed seeking $13,000 from her son Robert on a similar charge arising out of a Civil Service insurance policy.

The details of the dispute are not here relevant. Suffice it to say that Mr. Craven changed the beneficiaries during a period when he was allegedly terminally ill and lacking the necessary mental ability to change the beneficiaries. Any factual matters regarding undue influence or the mental state of Mr. Craven must await a later determination. However, the question as to who shall be the fact finder is now at issue. Mrs. Craven has demanded a jury trial on the issue of her sons' alleged undue influence. The two sons have moved to strike the demand for a jury trial. They have further moved to strike the cross-claim covering the Civil Service policy.

A. JURY TRIAL

As noted, the court has discharged the interpleading insurance company from further liability, leaving only the ownership of the proceeds at issue.

This court views the jury trial issue in the spirit of Dimick v. Schiedt, 293 U.S. 474, 486, 55 S.Ct. 296, 301, 79 L.Ed. 603 (1935) wherein the court wrote:

"Maintenance of the jury as a fact-finding body is of such importance and occupies so firm a place in our history and jurisprudence that any seeming curtailment of the right to a jury trial should be scrutinized with the utmost care."

The sons argue that interpleader is for all purposes an equitable action. In other words, once an interpleader always an interpleader. It seems unquestionable that the matter of whether the initial interpleading is to be permitted is an equitable inquiry for the court. This court has already studied that segment of the case and disposed of it. The second stage involves the resolution of disputes amongst possible claimants to the fund now held by the Clerk of Courts. 3A Moore, Federal Practice § 22.14 4 at 3113. 7 Wright & Miller, Federal Practice and Procedure § 1718, at 469.

Early decisions, mostly in dictum, gave support to the notion that the entire interpleader action was committed to the equity courts. See, e. g., dicta in Liberty Oil Co. v. Condon Nat'l Bank, 260 U.S. 235, 43 S.Ct. 118, 67 L.Ed. 232 (1922). Such a construction has been altered sufficiently so that a jury trial is a matter of right where there is a dispute over the liability of the stakeholder. Moore, supra, at 3114. Here, however, the stakeholder's liability was not at issue and Jefferson Standard was consequently removed from the case. The status of a jury trial is unsettled in the gray area of disputes between interpleader claimants.

The two sons have taken the position that there is no constitutional requirement mandating a jury for Mrs. Craven's claim. Instead, they argue the matter to be discretionary with the court. The sons urge the court to strike the demand for a jury trial on the ground that they would be irreparably harmed by sympathy which assertedly will flow toward the mother. As the sons see it, the sympathy which they fear, would transform a jury trial into an inadequate remedy at law. We cannot agree.

Were this court to interpose itself between a claimant and a jury trial purely because of possible sympathy toward one party, we would be engaging in the most dubious speculation striking at the very heart of trial by jury. A plaintiff's case, based only on emotion, can be guarded against without denying a party access to a jury. The sons' argument that Mrs. Craven has a weak case built on sympathy is better left to motions for a directed verdict or judgment n. o. v. for insufficient evidence, assuming them to be appropriate.

In 3A Moore, Federal Practice § 22.14 4, at 3114-15 the author concluded:

"Most recently, a heightened appreciation of the function of the Federal Rules and of the significance of the constitutional right to jury trial has convinced more courts that a claimant should not be deprived of that right on such issues as would have been properly triable by jury had the claimant asserted his rights against the stakeholder in an ordinary civil proceeding. . . . In the light of legal history, it would be anomalous to hold that a necessary concomitant of such procedural reform — reform which has remedied the very causes for withdrawal of interpleader, historically, from the law courts — is a sacrifice of the right to a jury determination of issues which are fit for resolution by a jury. . . .

"Quite apart from history, statutory and Rule interpleader should be viewed primarily and simply as devices for the joinder of parties and claims which justice and judicial economy demand be tried together. This should work no sacrifice of a jury right available were the causes to be tried separately."

Cf. 5 Couch on Insurance 2d § 28:105; 18 Couch on Insurance 2d § 74:253; Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959).

This court is of the view that the motion to strike the demand for a jury trial should be denied.

B. CROSS-CLAIM

In addition to claiming the proceeds from the five Jefferson Standard policies, Mrs. Craven has filed a cross-claim for the proceeds of a $13,000 Civil Service Commission insurance policy. Robert Brent Craven is the defendant in the cross-claim which charges that he wrongfully influenced his father to make him that policy's beneficiary. The $13,000 at issue has already been paid to the son.²

The motion to strike the cross-claim is grounded squarely upon the assertion that a valid cross-claim must involve a dispute over the interpleader fund. The fund itself marks the "outer limits of the controversy" according to the defendant Robert Craven. The defendant urges the applicability of Northern Natural Gas Co. v. Grounds, 292 F.Supp. 619 (D.Kan.), rev'd in part, aff'd in part, 441 F.2d 704 (10th Cir.), cert. denied, 404 U.S. 951, 92 S.Ct. 268, 30 L. Ed.2d 267 (1971), rehearing denied, 404 U.S. 1065, 92 S.Ct. 732, 30 L.Ed.2d 754 (1972).

The Northern Gas decisions did indeed flatly conclude that:

"In interpleader actions, however, the `subject matter of the action' is not a set of facts, a transaction or other occurrence which gives rise to litigation, but a specific identified fund or property. Claims must not only `relate' to that property, but be asserted against it . . .." 292 F.Supp., at 640.

Both the district and circuit decisions cited State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 87 S.Ct. 1199, 18 L.Ed.2d 270 (1967) as authority for the proposition that a cross-claim must be asserted against the interpleader fund. The Tashire case involved a mass tort in which a bus and truck collided. Nearly three dozen persons were injured. Four of the injured filed suit for damages in excess of $1,000,000. The insurance carrier for the truck driver asserted it had a maximum liability of $20,000. The insurance company interplead the $20,000 seeking an injunction requiring all claims against the driver to be asserted in one suit. In the alternative the company claimed the driver violated a provision of the policy freeing the carrier from any duty, and it therefore sought return of the $20,000.

As a result of motions by several parties the district court enjoined prosecution of lawsuits by anyone except in the interpleader forum. The circuit reversed on grounds not here relevant. The Supreme Court reversed the circuit ruling and modified the district court order. The Supreme Court concluded:

"The fact that State Farm had properly invoked the interpleader jurisdiction under § 1335 did not, however, entitle it to an order both enjoining prosecution of suits against it outside the confines of the interpleader proceeding and also extending such protection to its insured, the alleged tortfeasor. . . . Here, the scope of the litigation, in terms of parties and claims, was vastly more extensive than the confines of the `fund,' the deposited proceeds of the insurance policy. In these circumstances, the mere existence of such a fund cannot, by use of interpleader, be employed to accomplish purposes that exceed the needs of orderly contest with respect to the fund.

"There are situations, of a type not present here, where the effect of the interpleader is to confine the

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