Everything about Interpleader totally explained
Interpleader is a form of action originally developed under
equity jurisprudence. It allows a
plaintiff to initiate a
lawsuit in order to compel two or more other parties to
litigate a dispute. An interpleader action originates when the plaintiff holds property on behalf of another, but doesn't know to whom the property should be transferred. It is often used to resolve disputes arising under
insurance contracts.
Usage
In an interpleader action, the party initiating the litigation, normally the plaintiff, is termed the
stakeholder. The money or other property in controversy is called the
res. All defendants having a possible interest in the subject matter of the case are called
claimants.
Application
For example, suppose a person dies with a
life insurance policy. However, the insurance company knows there will be a dispute over who should receive the proceeds. The insurance company can file an interpleader action. The insurance company is the stakeholder, the claimants are the persons who might be beneficiaries under the policy, and the cash value of the policy benefit is the
res. Under the proceeding as originally developed, the stakeholder would deposit the
res with the court, and then the defendants would have their claims adjudicated by the court. Statutory modifications to the procedure (varying, of course, by jurisdiction) sometimes allow the stakeholder to retain the
res pending final disposition of the case.
History
Formerly a plaintiff had to disavow any claim to the
res in order to avail himself of the interpleader remedy, but this requirement has also been relaxed or abolished in most jurisdictions. A plaintiff may now argue that neither of the claimants has a right to the property at issue. For example, a person dies with a life insurance policy that excludes coverage for suicide. Two people come forward claiming to be the beneficiary named in the policy. The insurance company believes that the deceased committed suicide, but the claimants believe the death was by accident. The insurance company could interplead the two claimants and simultaneously deny the claims.
Different types of interpleader in U.S. practice
Interpleader actions in the
United States district courts are authorized by . This is known as statutory interpleader. Statutory interpleader is different from rule interpleader. Statutory interpleader allows for a stakeholder to have broader federal jurisdiction.
Interpleader is also allowed by the Federal Rules of Civil Procedure Rule 22. Rule 22 is known as rule interpleader. Rule interpleader is allowed where there's complete
diversity and the amount in controversy exceeds 75,000 dollars. These requirements satisfy . Rule interpleader gives fewer rights to a stakeholder than statutory interpleader.
See
(External Link
) for the Federal Rules of Civil Procedure.
Rule 22. Interpleader (Current Version)
(
a)Grounds.
(1) By a Plaintiff. Persons with claims that may expose a plaintiff to double or multiple liability may be joined as defendants and required to interplead. Joinder for interpleader is proper even though:
(A) the claims of the several claimants, or the titles on which their claims depend, lack a common origin or are adverse and independent rather than identical; or
(B) the plaintiff denies liability in whole or in part to any or all of the claimants.
(2) By a Defendant. A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim.
(b) Relation to Other Rules and Statutes.
This rule supplements — and doesn't limit — the joinder of parties allowed by Rule 20. The remedy this rule provides is in addition to — and doesn't supersede or limit — the remedy provided by,, and . An action under those statutes must be conducted under these rules.
Further Information
Get more info on 'Interpleader'.
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