Preferred Risk Mutual Insurance v. Greer

289 F. Supp. 261, 1968 U.S. Dist. LEXIS 9019
CourtDistrict Court, D. South Carolina
DecidedSeptember 4, 1968
DocketCiv. A. No. 68-251
StatusPublished
Cited by6 cases

This text of 289 F. Supp. 261 (Preferred Risk Mutual Insurance v. Greer) is published on Counsel Stack Legal Research, covering District Court, D. South Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Preferred Risk Mutual Insurance v. Greer, 289 F. Supp. 261, 1968 U.S. Dist. LEXIS 9019 (D.S.C. 1968).

Opinion

OPINION and ORDER

DONALD RUSSELL, District Judge.

This is an interpleader action, filed under Rule 22(1), Federal Rules of Civil Procedure,1 by an insurance carrier of limited liability, against its assured, the assured’s son, and five claimants who assert claims of substantial amounts against the assured as a result of injuries sustained in an automobile accident for which it is alleged the assured and his son are liable. The plaintiff insurer, setting forth a willingness to pay over to the several claimants against its assured the full amounts of its policy for division among them as the Court may determine, thus conceding the liability of its assured to the extent of its coverage, has paid such sum into the registry of this Court. On that showing, it secured a restraining order against any actions against it by any of the claimants.2

The assured and his son have common citizenship with the five claimants, i. e., that of South Carolina. The diversity necessary to sustain jurisdiction herein depends on diversity between the plaintiff and all the defendants, all of whom are citizens of South Carolina. Jefferson Standard Life Insurance Co. v. Smith (D.C.S.C.1956) 161 F.Supp. 679.

Several of the claimants named as defendants have answered, demanding strict proof of plaintiff’s allegations as to the limits of its policy. They, also, have, with their answers, filed cross-complaints against plaintiff’s assured and his son. The cross-complaints set forth a cause of action between citizens of the same State. The plaintiff, along with the assured and his son, has moved to dismiss such cross-complaints.

[263]*263The right of the plaintiff to oppose the maintenance in this Court of the cross-complaints may be prejudiced, as the defendants-claimants argue, by its invocation of the jurisdiction of this Court; but the objections by the assured to the jurisdiction of this Court to adjudicate these cross-complaints on the other hand, cannot be dismissed by any such argument. The claims asserted in such cross-complaints considerably exceed in amount the limits of plaintiff’s policy. If sustained, these could well result in substantial recoveries against the assured personally, considerably in excess of the plaintiff’s limits. In an endeavor to protect himself from judgments in excess of the policy limits herein, the assured with his own funds had already settled one of the personal injury claims herein for $17,500 (which is almost double the policy limits herein). Two of the remaining claims are death claims. The assured is a person of independent means responsive to judgment. By his motion to dismiss the cross-complaints, he demands the right to have the claims against him, set up by residents of the same State as he, tried and disposed of in the courts of the State of their common citizenship and he objects to the jurisdiction of this Court to try such claims. He is entitled to such right under the authority of State Farm Fire & Cas. Co. v. Tashire (1967) 386 U.S. 523, 87 S.Ct. 1199, 18 L.Ed.2d 270.3

The Tashire Case involved a statutory action of interpleader but the principles therein enunciated are equally applicable to actions under Rule 22. While sustaining the right of an insurer in a suit very similar to the instant one to invoke the interpleader jurisdiction, the Court there emphasized that, where the claims exceed the insurance limits and the alleged tortfeasor is solvent, the claimants cannot and will not be compelled to litigate their claims in the interpleader proceedings. In reversing the District Court which had sought to adjudicate the underlying claims themselves, the Court stated, “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.” 386 U.S. at p. 535, 87 S.Ct. at p. 1206. As the commentator in 46 N. C.L.Rev. 83, 86, observes, this decision limits the use of interpleader to proration of the funds deposited with the Court and does not admit its use “as a joinder device to bring trials on liability into a single court” and leaves injured parties free to bring their actions on liability, in whatever courts they choose.4

This decision in Tashire it may be noted, accords with the opinion of Professor Chafee, who was for long the leading exponent of federal interpleader jurisdiction, as to the proper scope of federal interpleader. In 49 Yale L.J. 377, 420, he argued that “interpleader should not extend to trials on liability”. This conclusion, also, naturally follows from the repeated holdings that jurisdiction in interpleader can only extend to the fund deposited in court and cannot embrace in personam jurisdiction on issues of liability that go beyond the fund. Knoll v. Socony Mobil Oil Company (C.C.A.Kan.1966) 369 F.2d 425, 429, cert. den. 386 U.S. 977, 87 S.Ct. 1173, 18 L.Ed.2d 138, reh. den. 386 U.S. 1043, 87 S.Ct. 1490, 18 L.Ed.2d 618; 389 U.S. 893, 88 S.Ct. 18, 19 L.Ed.2d 212; Preston Corporation v. Raese (D.C.W.Va.1964) 236 F.Supp. 135, 144, cert. den. 389 U.S. 931, 88 S.Ct. 294, 19 L.Ed.2d 283, aff. Kelly v. Raese, 4 Cir., 377 [264]*264F.2d 263; Metropolitan Life Insurance Company v. Enright (D.C.Cal.1964) 231 F.Supp. 275, 278; Consolidated Underwriters of S. C. Ins. Co. v. Bradshaw (D.C.Ark.1955) 136 F.Supp. 395, 397-398.

Accepting the premise that the individual claimants could not be compelled to litigate their claims against the insured and his son in the interpleader proceedings, the question posed here is whether the insured, and his son have a like right to demand that the issue of their liability be tried elsewhere? I think they do. There are certain obvious disadvantages to them in trying the issue of liability in the interpleader action. Their insurer, by filing the action, has indicated that it concedes liability to the full extent of its policy. However, the Court may seek to immunize this concession, it must infect any proceeding in this Court and cannot but prejudice the insured and his son in presenting a defense of non-liability. Further, the existence of insurance protection, even though limited, is present in the interpleader action. Under South Carolina law, the defendant is entitled to strict non-disclosure of such insurance in an action upon the claims herein. American Fidelity Fire Insurance Company v. Hood (D.C.S.C.1965) 37 F.R.D. 17, 20-21. Perhaps, by regrouping parties and severance, by rephrasing pleadings, by providing separate trials, the Court might moderate, if not eliminate, these difficulties. The simplest course, however, and the one assuring that there will be no improper prejudice of the assured’s rights, is to compel the litigation of the underlying claims herein in court proceedings between the claimants, on the one hand, and the assured and his son, on the other, in the State Court. This conclusion is in accord with the well-reasoned opinion in Travelers Indemnity Company v. Greyhound Lines, Inc., supra.

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Bluebook (online)
289 F. Supp. 261, 1968 U.S. Dist. LEXIS 9019, Counsel Stack Legal Research, https://law.counselstack.com/opinion/preferred-risk-mutual-insurance-v-greer-scd-1968.