A bus and a truck collided in California resulting in a large
number of casualties, including many Canadians and citizens of five
States. Four victims brought suits in California state courts for
damages exceeding $1,000,000 against the bus and truck drivers and
the truck owner (all Oregon citizens), and the bus company, a
California corporation. Before these cases were tried or other
suits brought, petitioner insurance company, an Illinois
corporation, brought this action in the nature of interpleader in
the Federal District Court in Oregon against the drivers, the bus
company, truck owner, and each prospective claimant, asserting that
it had insured the truck driver against bodily injury liability to
the extent of $10,000 per person and $20,000 per occurrence. It
paid the latter sum into court, and asked that all claims against
it and the insured be established only in this single proceeding,
and that it be discharged from all further obligations under its
policy, including its duty to defend the truck driver in lawsuits
arising from the accident. Alternatively, it asked to be relieved
of all liability on the policy, claiming that the policy excluded
from coverage accidents such as the one involved here, resulting
from the insured's operation of a truck owned by and being used in
the business of another. Jurisdiction was based on general
diversity of citizenship and 28 U.S.C. § 1335, which,
inter
alia, vests the district courts with jurisdiction in an
interpleader action where a corporation has issued an insurance
policy if two or more "adverse claimants, of diverse citizenship"
claim "or may claim" to be entitled to money or the benefits
arising under a policy and if the plaintiff has paid the amount due
into the court's registry. An injunction was issued providing that
all suits against the insurance company and its insured and (on the
bus company's motion) the bus company and its driver be prosecuted
in the interpleader proceeding. On interlocutory appeal, the Court
of Appeals reversed, holding that, in States like Oregon which do
not permit
Page 386 U. S. 524
"direct action" suits against an insurance company, federal
interpleader may not be invoked until the claims against the
insured have been reduced to judgment, since persons with
unliquidated tort claims are not "claimants" within the meaning of
§ 1335.
Held:
1. The diversity requirement of 28 U.S.C. § 1335 is satisfied
here, and the federal courts have jurisdiction, since that
provision requires only "minimal diversity,"
i.e.,
diversity of citizenship between two or more claimants, without
regard to the circumstance that other rival claimants may be
co-citizens, and "minimal diversity" is permissible under Article
III of the Constitution. Pp.
386 U. S.
530-531.
2. Section 1335 authorizes interpleader where adverse claimants
"may claim" benefits, and petitioner insurance company need not
wait until claimants against the insured have reduced their claims
to judgment before seeking to invoke the benefits of the
interpleader statute. Pp.
386 U. S.
531-533.
3. An injunction barring the prosecution of suits against the
insurance company and the alleged tortfeasors outside the confines
of the interpleader proceeding was not authorized by 28 U.S.C. §
2361, the scope of the litigation being vastly more extensive than
the deposited proceeds of the insurance policy which constituted
the "fund." Pp.
386 U. S.
533-537.
(a) This is not a case where the effect of the interpleader is
to confine the litigation to a single forum and proceeding, as
where rival claims are limited to the fund itself. P.
386 U. S.
534.
(b) The fortuitous circumstance that one of the prospective
defendants happens to be insured should not limit the other
plaintiffs to the forum selected by the insurance company. Pp.
386 U. S.
534-535.
(c) The insurance company's interest, which is confined to its
$20,000 fund, is fully vindicated when the court restrains
claimants from seeking to enforce against the insurance company any
judgment obtained against the insured except in the interpleader
proceeding itself. The District Court had no power in that
proceeding to control claimants' lawsuits against the insured or
other alleged tortfeasors. P.
386 U. S.
535.
(d) Interpleader was never intended to serve as a "bill of
peace" and solve all the problems of multi-party litigation arising
out of a mass tort. Pp.
386 U. S.
535-536.
363 F.2d 7, reversed and remanded.
Page 386 U. S. 525
MR. JUSTICE FORTAS delivered the opinion of the Court.
Early one September morning in 1964, a Greyhound bus proceeding
northward through Shasta County, California, collided with a
south-bound pickup truck. Two of the passengers aboard the bus were
killed. Thirty-three others were injured, as were the bus driver,
the driver of the truck, and its lone passenger. One of the dead
and 10 of the injured passengers were Canadians; the rest of the
individuals involved were citizens of five American States. The
ensuing litigation led to the present case, which raises important
questions concerning administration of the interpleader remedy in
the federal courts.
The litigation began when four of the injured passengers filed
suit in California state courts, seeking damages in excess of
$1,000,000. Named as defendants were Greyhound Lines, Inc., a
California corporation; Theron Nauta, the bus driver; Ellis Clark,
who drove the truck, and Kenneth Glasgow, the passenger in the
truck, who was apparently its owner as well. Each of the individual
defendants was a citizen and resident of Oregon. Before these cases
could come to trial and before other suits were filed in California
or elsewhere, petitioner State Farm Fire & Casualty Company, an
Illinois corporation, brought this action in the nature of
interpleader in the United States District Court for the District
of Oregon.
Page 386 U. S. 526
In its complaint, State Farm asserted that, at the time of the
Shasta County collision, it had in force an insurance policy with
respect to Ellis Clark, driver of the truck, providing for bodily
injury liability up to $10,000 per person and $20,000 per
occurrence, and for legal representation of Clark in actions
covered by the policy. It asserted that actions already filed in
California and others which it anticipated would be filed far
exceeded in aggregate damages sought the amount of its maximum
liability under the policy. Accordingly, it paid into court the sum
of $20,000 and asked the court (1) to require all claimants to
establish their claims against Clark and his insurer in this single
proceeding and in no other, and (2) to discharge State Farm from
all further obligations under its policy -- including its duty to
defend Clark in lawsuits arising from the accident. Alternatively,
State Farm expressed its conviction that the policy issued to Clark
excluded from coverage accidents resulting from his operation of a
truck which belonged to another and was being used in the business
of another. The complaint, therefore, requested that the court
decree that the insurer owed no duty to Clark and was not liable on
the policy, and it asked the court to refund the $20,000
deposit.
Joined as defendants were Clark, Glasgow, Nauta, Greyhound
Lines, and each of the prospective claimants. Jurisdiction was
predicated upon 28 U.S.C. § 1335, the federal interpleader statute,
[
Footnote 1] and upon general
diversity
Page 386 U. S. 527
of citizenship, there being diversity between two or more of the
claimants to the fund and between State Farm and all of the named
defendants.
An order issued requiring the defendants to show cause why they
should not be restrained from filing or prosecuting
"any proceeding in any state or United States Court affecting
the property or obligation involved in this interpleader action,
and specifically against the plaintiff and the defendant Ellis D.
Clark."
Personal service was effected on each of the American
defendants, and registered mail was employed to reach the 11
Canadian claimants. Defendants Nauta, Greyhound, and several of the
injured passengers responded, contending that the policy did cover
this accident and advancing various arguments for the position that
interpleader was either impermissible or inappropriate in the
present circumstances. Greyhound, however, soon switched sides and
moved that the court broaden any injunction to include Nauta and
Greyhound among those who could not be sued except within the
confines of the interpleader proceeding.
When a temporary injunction along the lines sought by State Farm
was issued by the United States District Court for the District of
Oregon, the present respondents moved to dismiss the action and, in
the alternative, for a change of venue -- to the Northern District
of California, in which district the collision had occurred. After
a hearing, the court declined to dissolve the temporary injunction,
but continued the motion for a change of venue. The injunction was
later broadened to include the protection sought by Greyhound, but
modified to
Page 386 U. S. 528
permit the filing -- although not the prosecution -- of suits.
The injunction, therefore, provided that all suits against Clark,
State Farm, Greyhound, and Nauta be prosecuted in the interpleader
proceeding.
On interlocutory appeal, [
Footnote 2] the Court of Appeals for the Ninth Circuit
reversed. 363 F.2d 7. The court found it unnecessary to reach
respondents' contentions relating to service of process and the
scope of the injunction, for it concluded that interpleader was not
available in the circumstances of this case. It held that, in
States like Oregon which do not permit "direct action" suits
against insurance companies until judgments are obtained against
the insured, the insurance companies may not invoke federal
interpleader until the claims against the insured, the alleged
tortfeasor, have been reduced to judgment. Until that is done, said
the court, claimants with unliquidated tort claims are not
"claimants" within the meaning of § 1335, nor are they "persons
having claims against the plaintiff" within the meaning of Rule 22
of the Federal Rules of Civil Procedure. [
Footnote 3]
Id.
Page 386 U. S. 529
at 10. In accord with that view, it directed dissolution of the
temporary injunction and dismissal of the action. Because the Court
of Appeals' decision on this point conflicts with those of other
federal courts [
Footnote 4] and
concerns a matter of significance to the administration of federal
interpleader, we granted certiorari. 385 U.S. 811 (1966). Although
we reverse the decision of the Court of Appeals upon the
jurisdictional question, we direct a substantial modification of
the District Court's injunction for reasons which will appear.
Page 386 U. S. 530
I
Before considering the issues presented by the petition for
certiorari, we find it necessary to dispose of a question neither
raised by the parties nor passed upon by the courts below. Since
the matter concerns our jurisdiction, we raise it on our own
motion.
Treines v. Sunshine Mining Co., 308 U. S.
66,
308 U. S. 70
(1939). The interpleader statute, 28 U.S.C. § 1335, applies where
there are "Two or more adverse claimants, of diverse citizenship. .
. ." This provision has been uniformly construed to require only
"minimal diversity," that is, diversity of citizenship between two
or more claimants, without regard to the circumstance that other
rival claimants may be co-citizens. [
Footnote 5] The language of the statute, the legislative
purpose broadly to remedy the problems posed by multiple claimants
to a single fund, and the consistent judicial interpretation
tacitly accepted by Congress, persuade us that the statute requires
no more. There remains, however, the question whether such a
statutory construction is consistent with Article III of our
Constitution, which extends the federal judicial power to
"Controversies . . . between Citizens of different States . . .
and between a State or the Citizens thereof, and foreign States,
Citizens or Subjects."
In
Strawbridge v.
Curtiss, 3 Cranch 267 (1806), this Court held that
the diversity of citizenship statute required "complete diversity":
where co-citizens appeared on both sides of a dispute,
Page 386 U. S. 531
jurisdiction as lost. But Chief Justice Marshall there purported
to construe only "The words of the act of congress," not the
Constitution itself. [
Footnote
6] And, in a variety of contexts, this Court and the lower
courts have concluded that Article III poses no obstacle to the
legislative extension of federal jurisdiction, founded on
diversity, so long as any two adverse parties are not co-citizens.
[
Footnote 7] Accordingly, we
conclude that the present case is properly in the federal
courts.
II
We do not agree with the Court of Appeals that, in the absence
of a state law or contractual provision for
Page 386 U. S. 532
"direct action" suits against the insurance company, the company
must wait until persons asserting claims against its insured have
reduced those claims to judgment before seeking to invoke the
benefits of federal interpleader. That may have been a tenable
position under the 1926 [
Footnote
8] and 1936 interpleader statutes. [
Footnote 9] These statutes did not carry forward the
language in the 1917 Act authorizing interpleader where adverse
claimants "may claim" benefits as well as where they "are claiming"
them. [
Footnote 10] In 1948,
however, in the revision of the Judicial Code, the "may claim"
language was restored. [
Footnote
11] Until the decision below, every court confronted by the
question has concluded that the 1948 revision removed whatever
requirement there might previously have been that the insurance
company
Page 386 U. S. 533
wait until at least two claimants reduced their claims to
judgments. [
Footnote 12] The
commentators are in accord. [
Footnote 13]
Considerations of judicial administration demonstrate the
soundness of this view which, in any event, seems compelled by the
language of the present statute, which is remedial and to be
liberally construed. Were an insurance company required to await
reduction of claims to judgment, the first claimant to obtain such
a judgment or to negotiate a settlement might appropriate all or a
disproportionate slice of the fund before his fellow claimants were
able to establish their claims. The difficulties such a race to
judgment pose for the insurer, [
Footnote 14] and the unfairness which may result to some
claimants, were among the principal evils the interpleader device
was intended to remedy. [
Footnote 15]
III
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. Still less was Greyhound
Lines entitled to have that order expanded so as to protect itself
and its driver, also alleged to be tortfeasors, from suits brought
by its passengers in various state or federal courts. Here, the
scope of the litigation, in terms of
Page 386 U. S. 534
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 interpleader is to confine the total litigation to a
single forum and proceeding. One such case is where a stakeholder,
faced with rival claims to the fund itself, acknowledges -- or
denies -- his liability to one or the other of the claimants.
[
Footnote 16] In this
situation, the fund itself is the target of the claimants. It marks
the outer limits of the controversy. It is, therefore, reasonable
and sensible that interpleader, in discharge of its office to
protect the fund, should also protect the stakeholder from
vexatious and multiple litigation. In this context, the suits
sought to be enjoined are squarely within the language of 28 U.S.C.
§ 2361, which provides in part:
"In any civil action of interpleader or in the nature of
interpleader under section 1335 of this title, a district court may
issue its process for all claimants and enter its order restraining
them from instituting or prosecuting
any proceeding in any
State or United States court
affecting the property, instrument
or obligation involved in the interpleader action. . . ."
(Emphasis added.)
But the present case is another matter. Here, an accident has
happened. Thirty-five passengers or their representatives have
claims which they wish to press against a variety of defendants:
the bus company, its driver, the owner of the truck, and the truck
driver. The circumstance that one of the prospective defendants
happens
Page 386 U. S. 535
to have an insurance policy is a fortuitous event which should
not of itself shape the nature of the ensuing litigation. For
example, a resident of California, injured in California aboard a
bus owned by a California corporation, should not be forced to sue
that corporation anywhere but in California simply because another
prospective defendant carried an insurance policy. And an insurance
company whose maximum interest in the case cannot exceed $20,000
and who, in fact, asserts that it has no interest at all, should
not be allowed to determine that dozens of tort plaintiffs must be
compelled to press their claims -- even those claims which are not
against the insured and which in no event could be satisfied out of
the meager insurance fund -- in a single forum of the insurance
company's choosing. There is nothing in the statutory scheme, and
very little in the judicial and academic commentary upon that
scheme, which requires that the tail be allowed to wag the dog in
this fashion.
State Farm's interest in this case, which is the fulcrum of the
interpleader procedure, is confined to its $20,000 fund. That
interest receives full vindication when the court restrains
claimants from seeking to enforce against the insurance company any
judgment obtained against its insured, except in the interpleader
proceeding itself. To the extent that the District Court sought to
control claimants' lawsuits against the insured and other alleged
tortfeasors, it exceeded the powers granted to it by the statutory
scheme.
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
17] Had
Page 386 U. S. 536
it been so intended, careful provision would necessarily have
been made to insure that a party with little or no interest in the
outcome of a complex controversy should not strip truly interested
parties of substantial rights -- such as the right to choose the
forum in which to establish their claims, subject to generally
applicable rules of jurisdiction, venue, service of process,
removal, and change of venue. 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. And only in
two reported instances has a federal interpleader court sought to
control the underlying litigation against alleged tortfeasors, as
opposed to the allocation of a fund among successful tort
plaintiffs.
See Commercial Union Insurance Co. of New York v.
Adams, 231 F.
Supp. 860 (D.C.S.D. Ind.1964) (where there was virtually no
objection and where all of the basic tort suits would, in any
event, have been prosecuted in the forum state), and
Pan
American Fire Casualty Co. v. Revere, 188 F.
Supp. 474 (D.C.E.D.La.1960). Another district court, on the
other hand, has recently held that it lacked statutory authority
to
Page 386 U. S. 537
enjoin suits against the alleged tortfeasor, as opposed to
proceedings against the fund itself.
Travelers Indemnity Co. v.
Greyhound Lines, Inc., 260 F.
Supp. 530 (D.C.W.D.La.1966).
In light of the evidence that federal interpleader was not
intended to serve the function of a "bill of peace" in the context
of multiparty litigation arising out of a mass tort, of the
anomalous power which such a construction of the statute would give
the stakeholder, and of the thrust of the statute and the purpose
it was intended to serve, we hold that the interpleader statute did
not authorize the injunction entered in the present case. Upon
remand, the injunction is to be modified consistently with this
opinion. [
Footnote 18]
Page 386 U. S. 538
IV
The judgment of the Court of Appeals is reversed, and the case
is remanded to the United States District Court for proceedings
consistent with this opinion.
It is so ordered.
[
Footnote 1]
28 U.S.C. § 1335(a) provides:
"The district courts shall have original jurisdiction of any
civil action of interpleader or in the nature of interpleader filed
by any person, firm, or corporation, association, or society having
in his or its custody or possession money or property of the value
of $500 or more, or having issued a . . . policy of insurance . . .
of value or amount of $50 or more . . . if"
"(1) Two or more adverse claimants, of diverse citizenship as
defined in section 1332 of this title, are claiming or may claim to
be entitled to such money or property, or to any one or more of the
benefits arising by virtue of any . . . policy . . . , and if (2)
the plaintiff has . . . paid . . . the amount due under such
obligation into the registry of the court, there to abide the
judgment of the court. . . ."
[
Footnote 2]
28 U.S.C. § 1292(a)(1).
[
Footnote 3]
We need not pass upon the Court of Appeals' conclusions with
respect to the interpretation of interpleader under Rule 22, which
provides that
"(1) Persons having claims against the plaintiff may be joined
as defendants and required to interplead when their claims are such
that the plaintiff is or may be exposed to double or multiple
liability. . . ."
First, as we indicate today, this action was properly brought
under § 1335. Second, State Farm did not purport to invoke Rule 22.
Third, State Farm could not have invoked it in light of venue and
service of process limitations. Whereas statutory interpleader may
be brought in the district where any claimant resides (28 U.S.C. §
1397), Rule interpleader based upon diversity of citizenship may be
brought only in the district where all plaintiffs or all defendants
reside (28 U.S.C. § 1391(a)). And whereas statutory interpleader
enables a plaintiff to employ nationwide service of process (28
U.S.C. § 2361), service of process under Rule 22 is confined to
that provided in Rule 4.
See generally 3 Moore, Federal
Practice � 22.04.
With respect to the Court of Appeals' views on Rule 22, which
seem to be shared by our Brother DOUGLAS,
compare Underwriters
at Lloyd's v. Nichols, 363 F.2d 357 (C.A. 8th Cir.1966), and
A/S Krediit Bank v. Chase Manhattan Bank, 155 F. Supp.
30 (D.C.S.D.N.Y.1957),
aff'd, 303 F.2d 648 (C.A.2d
Cir.1962),
with National Casualty Co. v. Insurance Co. of North
America, 230 F.
Supp. 617 (D.C.N.D. Ohio 1964),
and American Indemnity Co.
v. Hale, 71 F. Supp.
529 (D.C.W.D. Mo.1947).
See also 3 Moore, Federal
Practice � 22.04, at 3008 and n. 4.
[
Footnote 4]
See, e.g., Travelers Indemnity Co. v. Greyhound Lines,
Inc., 260 F.
Supp. 530 (D.C.W.D.La.1966);
Commercial Union Insurance Co.
of New York v. Adams, 231 F.
Supp. 860 (D.C.S.D. Ind.1964);
Pan American Fire &
Casualty Co. v. Revere, 188 F.
Supp. 474 (D.C.E.D.La.1960);
Onyx Refining Co. v. Evans
Production Corp., 182 F.
Supp. 253 (D.C.N.D.Tex.1959). Although
Travelers and
Revere were brought in Louisiana, a State which authorizes
"direct action" suits against insurance companies, the statute was
not relied upon in
Travelers (
see 260 F. Supp. at
533, n. 3), and furnished only an alternative ground in
Revere (
see 188 F.Supp. at 482-483).
The only post-1948 case relied upon by the Court of Appeals and
respondents,
National Casualty Co. v. Insurance Co. of North
America, 230 F.
Supp. 617 (D.C.N.D. Ohio 1964), turns out to be of little
assistance with respect to statutory interpleader, since that court
denied statutory interpleader solely on the ground that all
claimants were citizens of Ohio, and hence lacked the required
diversity of citizenship.
Id. at 619.
[
Footnote 5]
See, e.g., Hanes v. Felder, 239 F.2d 868, 872-875 (C.A.
5th Cir.1957);
Holcomb v. Aetna Life Insurance Co., 255
F.2d 577, 582 (C.A. 10th Cir.),
cert. denied sub nom. Fleming
v. Aetna Life Insurance Co., 358 U.S. 879 (1958);
Cramer
v. Phoenix Mut. Life Ins. Co., 91 F.2d 141, 146-147 (C.A. 8th
Cir.),
cert. denied, 302 U. S. 739
(1937);
Commercial Union Insurance Co. of New York v.
Adams, 231 F.
Supp. 860, 863 (D.C.S.D. Ind.1964); 3 Moore, Federal Practice �
22.09, at 3033.
[
Footnote 6]
Subsequent decisions of this Court indicate that
Strawbridge is not to be given an expansive reading.
See, e.g., 43 U. S. v.
Letson, 2 How. 497, 554-556 (1844), expressing the view that,
in 1839, Congress had, in fact, acted to "rid the courts of the
decision in the case of
Strawbridge and Curtiss."
Id. at
43 U. S.
556.
[
Footnote 7]
See, e.g., American Fire & Cas. Co. v. Finn,
341 U. S. 6,
341 U. S. 10, n.
3 (1951), and
Barney v. Latham, 103 U.
S. 205,
103 U. S. 213
(1881), construing the removal statute, now 28 U.S.C. § 1441(c);
Supreme Tribe of Ben-Hur v. Cauble, 255 U.
S. 356 (1921), concerning class actions;
Wichita
R.R. & Light Co. v. Public Util. Comm., 260 U. S.
48 (1922), dealing with intervention by co-citizens.
Full-dress arguments for the constitutionality of "minimal
diversity" in situations like interpleader, which arguments need
not be rehearsed here, are set out in Judge Tuttle's opinion in
Haynes v. Felder, 239 F.2d at 875-876; in Judge Weinfeld's
opinion in
Twentieth Century-Fox Film Corp. v.
Taylor, 239 F.
Supp. 913, 918-921 (D.C.S.D.N.Y.1965), and in ALI, Study of the
Division of Jurisdiction Between State and Federal Courts 180-190
(Official Draft, Pt. 1, 1965); 3 Moore, Federal Practice � 22.09,
at 3033-3037; Chafee, Federal Interpleader Since the Act of 1936,
49 Yale L.J. 377, 393-406 (1940); Chafee, Interpleader in the
United States Courts, 41 Yale L.J. 1134, 1165-1169 (1932). We note
that the American Law Institute's proposals for revision of the
Judicial Code to deal with the problem of multi-party,
multi-jurisdiction litigation are predicated upon the
permissibility of "minimal diversity" as a jurisdictional
basis.
[
Footnote 8]
44 Stat. 416 (1926), which added casualty companies to the
enumerated categories of plaintiffs able to bring interpleader, and
provided for the enjoining of proceedings in other courts.
[
Footnote 9]
49 Stat. 1096 (1936), which authorized "bills in the nature of
interpleader," meaning those in which the plaintiff is not wholly
disinterested with respect to the fund he has deposited in court.
See Chafee, The Federal Interpleader Act of 1936: I, 45
Yale L.J. 963 (1936).
[
Footnote 10]
39 Stat. 929 (1917).
See Klaber v. Maryland Casualty
Co., 69 F.2d 934, 938-939 (C.A. 8th Cir.1934), which held that
the omission in the 1926 Act of the earlier statute's "may claim"
language required the denial of interpleader in the face of
unliquidated claims (alternative holding).
[
Footnote 11]
Although the Reviser's Note did not refer to the statutory
change or its purpose, we have it on good authority that it was the
omission in the Note, rather than the statutory change, which was
inadvertent.
See 3 Moore, Federal Practice � 22.08, at
3025-3026, n. 13. And it was widely assumed that restoration of the
"may claim" language would have the effect of overruling the
holding in
Klaber, supra, that one may not invoke
interpleader to protect against unliquidated claims.
See,
e.g., Chafee, 45 Yale L.J. at 1163-1167; Chafee, Federal
Interpleader Since the Act of 1936, 49 Yale L.J. 377, 418-420
(1940). In circumstances like these, the 1948 revision of the
Judicial Code worked substantive changes.
Ex parte
Collett, 337 U. S. 55
(1949).
[
Footnote 12]
See cases listed in
n 4.
[
Footnote 13]
3 Moore, Federal Practice � 22.08, at 3029-3025; Keeton,
Preferential Settlement of Liability-Insurance Claims, 70
Harv.L.Rev. 27, 41-42 (1956).
[
Footnote 14]
See Keeton,
op. cit. supra, n 13.
[
Footnote 15]
The insurance problem envisioned at the time was that of an
insurer faced with conflicting but mutually exclusive claims to a
policy, rather than an insurer confronted with the problem of
allocating a fund among various claimants whose independent claims
may exceed the amount of the fund. S.Rep. No. 558, 74th Cong., 1st
Sess., 2-3, 7, 8 (1935); Chafee, Modernizing Interpleader, 30 Yale
L.J. 814, 818-819 (1921).
[
Footnote 16]
This was the classic situation envisioned by the sponsors of
interpleader.
See n
15,
supra.
[
Footnote 17]
There is not a word in the legislative history suggesting such a
purpose.
See S.Rep. No. 558, 74th Cong., 1st Sess. (1935).
And Professor Chafee, upon whose work the Congress heavily
depended, has written that little thought was given to the scope of
the "second stage" of interpleader, to just what would be
adjudicated by the interpleader court.
See Chafee,
Broadening the Second Stage of Federal Interpleader, 56 Harv.L.Rev.
929, 944-945 (1943). We note that, in Professor Chafee's own study
of the bill of peace as a device for dealing with the problem of
multiparty litigation, he fails even to mention interpleader.
See Chafee, Some Problems of Equity 149-198 (1950). In his
writing on interpleader, Chafee assumed that the interpleader court
would allocate the fund "among all the claimants who get judgment
within a reasonable time. . . ." Chafee, The Federal Interpleader
Act of 1936: II, 45 Yale L.J. 1161, 1165 (1936).
See also
Chafee, 49 Yale L.J. at 420-421.
[
Footnote 18]
We find it unnecessary to pass upon respondents' contention,
raised in the courts below but not passed upon by the Court of
Appeals, that interpleader should have been dismissed on the ground
that the 11 Canadian claimants are "indispensable parties" who have
not been properly served. The argument is that 28 U.S.C. § 2361
provides the exclusive mode of effecting service of process in
statutory interpleader, and that § 2361 -- which authorizes a
district court to "issue its process for all claimants" but
subsequently refers to service of "such process" by marshals "for
the respective districts where the claimants reside or may be
found" -- does not permit service of process beyond the Nation's
borders. Since our decision will require basic reconsideration of
the litigation by the parties, as well as the lower courts, there
appears neither need nor necessity to determine this question at
this time. We intimate no view as to the exclusivity of § 2361,
whether it authorizes service of process in foreign lands, whether,
in light of the limitations we have imposed on the interpleader
court's injunctive powers, the Canadian claimants are, in fact,
"indispensable parties" to the interpleader proceeding itself, or
whether they render themselves amenable to service of process under
§ 2361 when they come into an American jurisdiction to establish
their rights with respect either to the alleged tortfeasors or to
the insurance fund.
See 2 Moore, Federal Practice � 4.20
at 1091-1105.
MR. JUSTICE DOUGLAS, dissenting in part.
While I agree with the Court's view as to "minimal diversity,"
and that the injunction, if granted, should run only against
prosecution of suits against the insurer, I feel that the use which
we today allow to be made of the federal interpleader statute,
[
Footnote 2/1] 28 U.S.C. § 1335,
is, with all deference, unwarranted. How these litigants are
"claimants" to this fund in the statutory sense is indeed a
mystery. If they are not "claimants" of the fund, [
Footnote 2/2] neither are they in the category of
those who "are claiming" or who "may claim" to be entitled to
it.
Page 386 U. S. 539
This insurance company's policy provides that it will "pay on
behalf of the insured all sums which the insured shall become
legally obligated to pay." To date, the insured has not become
"legally obligated" to pay any sum to any litigant. Since nothing
is owed under the policy, I fail to see how any litigant can be a
"claimant" as against the insurance company. If that is doubtful,
the doubt is resolved by two other conditions:
(1) The policy states
"[n]o action shall lie against the company . . . until the
amount of the insured's obligation to pay shall have been finally
determined either by judgment against the insured after actual
trial or by written agreement of the insured, the claimant and the
company."
(2) Under California law, where the accident happened, and under
Oregon law, where the insurance contract was made, a direct action
against the insurer is not allowable until after a litigant
receives a final judgment against the insured. [
Footnote 2/3]
Thus, under this insurance policy as enforced in California and
in Oregon, a "claimant" against the insured can become a "claimant"
against the insurer only after final judgment against the insured
or after a consensual written agreement of the insurer, a litigant,
and the insured. Neither of those two events has so far happened.
[
Footnote 2/4]
Page 386 U. S. 540
This construction of the word "claimant" against the fund is
borne out, as the Court of Appeals noted, by Rule 22(1) of the
Federal Rules of Civil Procedure. [
Footnote 2/5] That Rule, also based on diversity of
citizenship, differs only in the district where the suit may be
brought and in the reach of service of process, as the Court points
out. [
Footnote 2/6] But it
illuminates the nature of federal interpleader, for it provides
that only "persons having claims against the plaintiff [insurer]
may be joined as defendants and required to interplead."
Can it be that we have two kinds of interpleader statutes, as
between which an insurance company can choose: one that permits
"claimants" against the insurer ("persons having claims against the
plaintiff") to be joined and the other that permits "claimants"
against the insured to be joined for the benefit of the insurer
even though they may never be "claimants" against the insurer? I
cannot believe that Congress launched such an irrational
scheme.
The Court rests heavily on the fact that the 1948 Act contains
the phrase "may claim," while the 1926 and 1936 interpleader
statutes contained the phrase "are claiming." From this change in
language, the Court infers that Congress intended to allow an
insurance company to interplead even though a judgment has not been
entered against the insured and there is no direct action statute.
This inference is drawn despite the fact that the Reviser's Note
contains no reference to the change in wording or its purpose; the
omission is dismissed as "inadvertent." But it strains credulity to
suggest
Page 386 U. S. 541
that mention would not have been made of such a drastic change
if, in fact, Congress intended to make it. And, despite the change
in wording, under the 1948 Act, there must be
"adverse claimants . . . [who] are claiming or may claim to be
entitled to such money . . . or to any one or more of the benefits
arising by virtue of any . . . policy. . . ."
Absent a direct action statute, the victims are not "claimants"
against the insurer until their claims against the insured have
been reduced to judgment. Understandably, the insurance company
wants the best of two worlds. It does not want an action against it
until judgment against its insured. But, at the same time, it wants
the benefits of an interpleader statute. Congress could, of course,
confer such a benefit. But it is not for this Court to grant
dispensations from the effects of the statutory scheme which
Congress has erected.
I would construe its words in the normal sense and affirm the
Court of Appeals.
[
Footnote 2/1]
"(a) The district courts shall have original jurisdiction of any
civil action of interpleader or in the nature of interpleader filed
by any person, firm, or corporation, association, or society having
in his or its custody or possession money or property of the value
of $500 or more, or having issued a note, bond, certificate, policy
of insurance, or other instrument of value or amount of $500 or
more . . . if"
"(1) Two or more adverse claimants, of diverse citizenship as
defined in section 1332 of this title, are claiming or may claim to
be entitled to such money or property, or to any one or more of the
benefits arising by virtue of any note, bond, certificate, policy
or other instrument, or arising by virtue of any such obligation,
and if (2) the plaintiff has deposited such money or property . . .
into the registry of the court, there to abide the judgment of the
court. . . ."
[
Footnote 2/2]
Under the policy issued by State Farm, it promises
"[t]o pay on behalf of the insured all sums which the insured
shall become legally obligated to pay as damages because of (A)
bodily injury sustained by other persons . . . caused by accident
arising out of the ownership, maintenance or use, including loading
or unloading, of the owned automobile. . . ."
The insured will "become legally obligated to pay" only if he
has been found to be at fault for the accident, or if the victim's
claim has been settled in accord with the policy terms. The claim
against the insurance company is thus contingent on a finding that
the insured was at fault or a settlement. This is unlike the
situation where the insurance company has issued a policy, such as
a workmen's compensation policy, which insures the insured for
liability imposed in the absence of fault.
[
Footnote 2/3]
See Calif.Ins.Code § 11580(b)(2); Ore.Rev.Stat. §
23.230.
[
Footnote 2/4]
In those States having a direct action statute, allowing an
action against the insurer prior to judgment against the insured,
interpleader jurisdiction can be sustained absent a judgment
against the insured. The direct action statute gives the injured
party the status of a "claimant" against the insurer.
See,
e.g., Pan American Fire & Casualty Co. v.
Revere, 188 F.
Supp. 474, 482-483.
[
Footnote 2/5]
Rule 22(1) provides in part:
"Persons having claims against the plaintiff may be joined as
defendants and required to interplead when their claims are such
that the plaintiff is or may be exposed to double or multiple
liability."
[
Footnote 2/6]
See n 3 of the
Court's opinion.