INTERPLEADER
An equitable proceeding brought by a third person
to have a court determine the ownership rights of
rival claimants to the same money or property
that is held by that third person.
Interpleader is a form of equitable relief. Equi-
table remedies are ways for courts to enforce
rights other than by issuing a judgment for money
damages. Interpleader is employed when two or
more parties seek ownership of money or prop-
erty that is held by a third party. The property in
question is called the stake, and the third party
who has custody of it is called the stakeholder. The
stakeholder is faced with a legal dilemma: giving
the property to either one of the parties will
likely lead to a lawsuit by the other party against
the stakeholder and the new property owner.
Interpleader enables the stakeholder to turn
the controversy over to a court and to be dis-
missed from the legal action. It is designed to
eliminate multiple lawsuits over the same stake
and to protect the stakeholder from actual or
potential multiple liability. Typically, inter-
pleader will involve corporate SECURITIES or
proceeds from insurance policies.
The stakeholder initiates an interpleader by
filing an action that states that he or she has no
claim to the money or property in controversy,
and does not know to which claimant it should
be lawfully delivered. The stakeholder must also
establish the possibility of multiple lawsuits. The
stakeholder then may be required to deposit the
stake with the court, and notifies possible
claimants that they can present their claims of
ownership in court for determination.
The court must decide whether the inter-
pleader is proper. It has discretion to allow the
interpleader, and may deny the relief if the stake-
holder is guilty of LACHES (unreasonable delay)
or was responsible for the creation of the adverse
claim. If the court grants the interpleader, the
stakeholder is dismissed from the action. The
rival claimants are given the right to litigate their
claims, and they will be bound by the decision of
the court.
Interpleader is primarily a device of federal
CIVIL PROCEDURE. Two types of interpleader are
available in federal courts: one under the Federal
Rules of Civil Procedure and one under federal
statute. When interpleader is sought through
rule 22 of the Federal Rules of Civil Procedure,
more than $10,000 must be at issue in the action,
and the claimants must reside in the same state
and must be citizens of a state other than the one
in which the stakeholder is a citizen. The action
can be tried where the stakeholder resides, where
the CAUSE OF ACTION arose, or where the
claimants reside. The stakeholder is not obligated
to deposit the stake with the court, an important
advantage when the property is used for pur-
poses of investment and to generate income.
Interpleader authorized under 28 U.S.C.A.
§ 1335 differs in several respects from rule 22
interpleader. The dispute may involve as little as
$500, at least two of the claimants must be from
different states, and the citizenship of the stake-
holder is immaterial. The venue, or place of trial,
is anywhere that a claimant resides. At the time
the suit is filed, the stakeholder must deposit the
stake or post a bond in an amount equivalent to
its value.
Claimants in an interpleader proceeding may
be permitted to assert additional claims against
each other or the stakeholder if they satisfy juris-
dictional requirements and do not unreasonably
complicate or delay the action. Courts must
decide, on the particular facts of each case,
whether such claims will be considered.
CROSS-REFERENCES
