Citation. 386 U.S. 523 (1967)
Brief Fact Summary.
Plaintiff brought an interpleader action, requesting that all lawsuits involving their insurance coverage of the truck driver be consolidated into one proceeding.
Synopsis of Rule of Law.
Under 28 U.S.C. § 1335, an insurance company does not have to wait for claimants to obtain a judgment against the insured before interpleading the group.
Four bus passengers (Defendants) were injured when a bus collided with a truck and sued Greyhound Lines Inc., the bus driver, the truck driver, and the truck owner, in a California state court. Before this lawsuit went to trial, State Farm Fire & Causality Co. (Plaintiff) brought an interpleader action in federal court requesting that all actions brought against it through the insurance policy Plaintiff had with the truck driver be consolidated into this one proceeding.
Is an insurance company required to wait until all persons asserting claims have reduced judgments before bringing an interpleader action?
No, the insurance company is not required to wait. The injunction was improper and the decision of the Court of Appeals is reversed and the case remanded.
First, the Court ruled that 28 U.S.C. § 1335 required only minimal diversity of citizenship, meaning the case was properly brought in federal court. Next, the Court determined that under the language of 28 U.S.C. § 1335, the Plaintiffs did not have to wait for the claims to be reduced to a judgment before bringing an interpleader. However, the Court further determined that the lower court exceeded its authority in extending the injunction to Greyhound Lines Inc., the bus driver, and the truck driver because they were not related to the claims against the insurance fund.