Klaber v. Maryland Casualty Co.

• Decision Date: 05 March 1934
• Docket Number: No. 9734.,9734.
• Citation: 69 F.2d 934,106 ALR 617
• Parties: KLABER et al. v. MARYLAND CASUALTY CO.
• Court: U.S. Court of Appeals — Eighth Circuit

106 ALR 617, 69 F.2d 934 (1934)

KLABER et al. v. MARYLAND CASUALTY CO.

No. 9734.

Circuit Court of Appeals, Eighth Circuit.

March 5, 1934.

Emmet S. Brumbaugh, of Omaha, Neb. (Joseph P. Gray and Leo Fried, both of Omaha, Neb., on the brief), for appellants.

John L. Barton, of Omaha, Neb. (Raymond M. Crossman, Alfred C. Munger, Herbert E. Story, John C. Thomas, and Varro H. Rhodes, all of Omaha, Neb., on the brief), for appellee.

Before STONE, SANBORN, and VAN VALKENBURGH, Circuit Judges.

SANBORN, Circuit Judge.

The appellee, Maryland Casualty Company, on July 18, 1931, issued its policy of automobile liability insurance to Fay Watson, Ray Watson, and Thomas Watson, copartners doing a trucking business in Nebraska, Kansas, and elsewhere, under the name of Watson Bros. Transfer Company. The insurance was "against loss from liability imposed by law upon the assured for damages on account of bodily injuries including death resulting therefrom, accidentally suffered or alleged to have been suffered by any person or persons caused by or through the ownership, maintenance or operation of any automobile * * *," etc. The limit of liability for one person so killed or injured was $5,000, and for all persons so injured or killed in a single accident, $10,000. Under the policy the casualty company was obligated to investigate all accidents and claims covered, and to defend in the name and on behalf of the assured all suits thereon, and to pay, regardless of the limit of liability, the expense (including court costs and interest on judgments after entry) incurred by it in such investigation and defense; the company reserving the right to settle any claims or suits. It was also provided that the insolvency or bankruptcy of the assured should not release the company from the payment of damages for injuries or death sustained or loss occasioned within the coverage of the policy, and that the prepayment of any judgment recovered against the assured upon a claim covered by the policy should not be a condition precedent to any right of action against the company, "but the Company is bound to the extent of its liability under this policy to pay and satisfy such judgment; and an action may be maintained upon such judgment by the injured person, or his or her heirs or personal representatives, as the case may be, to enforce the liability of the Company as in this policy set forth and limited."

The liability of the company was made subject to the condition that no action should lie against it to recover upon any claim or for any loss "unless brought after the amount of such claim or loss shall have been fixed and rendered certain either by final judgment against the assured after trial of the issue or by agreement between the parties with the written consent of the Company. * * *"

Under an indorsement required by the state of Kansas, the company agreed "to pay any final judgment for personal injury, including death resulting therefrom * * * caused by any and all motor vehicles operated by the assured * * * within the limits set forth * * *," and further agreed "that upon its failure to pay any such final judgment, such judgment creditor may maintain an action in any court of competent jurisdiction to compel such payment. Nothing contained in the policy or any indorsement thereon nor the violation of any of the provisions thereof by the assured, shall relieve the company from liability hereunder or from the payment of any such judgment."

It therefore appears that what the company, by the terms of its policy, agreed to do was: (1) To investigate all claims made against the assured falling within the coverage of the policy, and to defend all suits brought upon such claims. (2) To pay, within the limits and subject to the conditions of the policy, any claim against the assured covered by the policy, when the amount of the claim had been fixed (a) by a final judgment against the assured, or (b) by agreement between the claimant and the assured, with the written consent of the company.

On December 22, 1931, a truck belonging to the assured, being driven by one of its employees upon a public highway, collided with a bus owned and operated by the Interstate Transit Lines. The accident occurred near Hiawatha, Kan. The driver of the truck, the driver of the bus, and one bus passenger were killed and a number of bus passengers were injured. Another truck not belonging to the assured in some way became involved in the accident, and the driver of that truck and a passenger were or claim to have been injured. As a result of the accident and the deaths and injuries caused thereby, numerous claims were made and numerous suits brought against the assured, the investigation and defense of which were assumed by the company. The total demands for damages were very large and far in excess of $10,000. Finally, in a suit instituted by the appellant Klaber, who was the guardian of one of the bus passengers, against the assured, a final judgment of $4,000 was procured in the District Court of Douglas county, Neb. Execution upon this judgment was returned unsatisfied and a summons in garnishment was served upon the casualty company. Before the date fixed for disclosure, the company filed in the United States District Court for the District of Nebraska, its bill of interpleader under the Interpleader Act of 1926, title 28, § 41 (26), U. S. C. Appendix, page 2025, chapter 273, §§ 1-3, 44 Stat. 416 (28 USCA § 41 (26), naming as defendants the assured, the Interstate Transit Lines, the persons who had made or were making or might make claims against the assured for injuries or death, the plaintiffs in the various suits against the assured in which no final judgments had as yet been obtained, the appellant Klaber, who was the only judgment creditor of the assured at the time the bill was filed, and the other appellants, who were Klaber's counsel. The bill set up the policy, the happening of the accident, the resulting claims and suits against the assured in various jurisdictions brought by persons residing in various states, the recovery of the judgment against the assured by the appellant Klaber, the garnishment proceedings, the danger of the company's being harassed and held for a greater liability than that provided for in its contract, because of the various claims and suits in the several jurisdictions against its assured, and the payment into court by the company of the limit of its liability. The company asked that the defendants be required to interplead with respect to the fund deposited, and be enjoined from prosecuting their actions elsewhere.

The court entered the usual restraining order, the effect of which was to prevent all of the defendants from proceeding against the company or its assured in other courts or in other proceedings. The appellant Klaber and other defendants moved to dismiss the bill for want of equity. The company asked for a temporary injunction. The court denied the motions to dismiss the bill and enjoined the appellant Klaber and his counsel from continuing with his garnishment proceedings, and all other defendants from proceeding against the company, but permitted them to prosecute their claims and suits against the assured. From the order and decree denying the motions of appellants to dismiss the bill and granting the injunction, this appeal is taken.

Interpleader is an ancient equitable remedy which recognizes the right of a disinterested stakeholder, from whom several persons claim the same thing, debt, or duty, to have the conflicting claimants litigate the matter among themselves without embroiling him in their controversies. 15 R. C. L. 221; Pomeroy's Equity Jurisprudence (4th Ed.) vol. 4, § 1320; Story's Equity Jurisprudence (14th Ed.) vol. 2, § 1116; Standley v. Roberts, 59 F. 836, 841 (C. C. A. 8). The stakeholder applies to the court to protect him not only from having to pay or deliver the thing claimed to the several claimants, but also from the vexation of suits which are or may be instituted against him by them. The true origin of the jurisdiction is that there is no remedy at law or that the legal remedy is inadequate. The ground upon which the plaintiff comes into equity is that, claiming no right in the subject-matter himself, he is or may be vexed by having two or more suits brought by different persons going on against him at the same time, and therefore that justice requires that those persons, claiming that to which he makes no claim and with reference to which he has no interest except to rid himself of it, should settle their controversy among themselves and not with him or at his expense and hazard. Story's Equity Jurisprudence (14th Ed.) vol. 2, § 1118.

The essential elements of the equitable remedy of interpleader are: (1) The same thing, debt, or duty must be claimed by both or all the parties against whom the relief is demanded. (2) All their adverse titles or claims must be dependent, or be derived from a common source. (3) The plaintiff must not have nor claim any interest in the subject-matter. (4) He must have incurred no independent liability to either of the claimants and must stand perfectly indifferent between them, in the position merely of a stakeholder. Pomeroy's Equity Jurisprudence (4th Ed.) vol. 4, § 1322; Wells, Fargo & Co. v. Miner (C. C.) 25 F. 533. See, also, Calloway v. Miles (C. C. A. 6) 30 F.(2d) 14; Connecticut General Life Ins. Co. v. Yaw (D. C.) 53 F.(2d) 684.

A bill of interpleader cannot be maintained by any person who does not show two or more claimants in existence capable of interpleading. Story's Equity Jurisprudence (14th Ed.) vol. 2, § 1136; Alton & Peters v. Merritt, 145 Minn. 426, 177 N. W. 770; Maxwell v. Frazier, 52 Or. 183, 96 P. 548, 18 L. R. A. (N. S.) 102, 104. And the bill must show that each of the defendants claims a right, and such a right as they may interplead for. Story's Equity Jurisprudence (14th Ed.) vol. 2, § 1136; Pusey & Jones...