State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523 (1967)
Jurisdiction over non-resident claimants is limited to the interpleaded fund in a federal interpleader action to consolidate in one court and one action all claims against the fund.
In a collision with a truck, two passengers on a Greyhound bus were killed and another 33 passengers were injured. They were residents of five different states as well as Canada. The bus driver, the truck driver, Greyhound, and the owner of the truck all were Oregon residents. Four victims brought a personal injury claim against those defendants in California federal court, based on diversity jurisdiction, and sought damages of over $100,000. State Farm Fire, which was an Illinois corporation that insured the truck driver, brought an interpleader action in Oregon federal court. The insurer asked the court to discharge it from further obligations under its policy after it paid the limit of its policy liability of $20,000 into the court and asked it to require all of the victims to establish their claims against the truck driver and the fund in a single proceeding.
Greyhound and its driver sought to establish that they could not be sued except within the interpleader proceeding, although they had been joined as defendants in the California case. The court granted an injunction that required the plaintiffs to bring all of their claims against all four defendants into the interpleader action.
- Abe Fortas (Author)
- Earl Warren
- Hugo Lafayette Black
- William Orville Douglas
- Tom C. Clark
- John Marshall Harlan II
- William Joseph Brennan, Jr.
- Potter Stewart
- Byron Raymond White
Interpleader is appropriate under 28 U.S.C. Section 1335 in situations when there are two or more adverse claimants of diverse citizenship. It has been interpreted to mean that diversity needs to be established only between two or more claimants, even if other claimants are not diverse. State Farm should not be required to wait to bring its interpleader action until the claimants had obtained judgments against its insured, since the first claimant to prevail might be able to gain access to all or most of the policy fund. Both the insurer and the claimants would be harmed if this rule applied. While the injunction generally was proper, it was drafted too broadly because the litigation extended beyond issues that the fund was designed to cover. The existence of an insurance policy for one of the defendants should not be allowed to shape the course of the overall litigation, in which other parties might ultimately be found accountable. As a result, the injunction should be modified such that the interpleader actions contains only the claims that have been made against the insurer's policy fund.Case Commentary
Interpleader actions can be brought under 28 U.S.C. 1335 or Federal Rule of Civil Procedure 22. The former means is preferred, and service under it is nationwide rather than statewide, as in the latter means. The threshold amount under the statute is only $500, compared to the amount under the FRCP of $20,000. Rules on diversity jurisdiction and venue also are more generous under the statute. Rule 22 is largely useful when all of the claimants are residents of the same state.
U.S. Supreme CourtState Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523 (1967)
State Farm Fire & Casualty Co. v. Tashire
Argued February 115, 1967
Decided April 10, 1967
386 U.S. 523
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
"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.
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.