386 U.S. 523, 531 (1967)
Early one September morning in 1964, a Greyhound bus proceeding northward through Shasta County, California, collided with a southbound pickup truck.1 Two of the passengers aboard the bus were killed.2 Thirty-three others were injured, as were the bus driver, the driver of the truck and its lone passenger.3 One of the dead and 10 of the injured passengers were Canadians; the rest of the individuals involved were citizens of five American States.4
The litigation began when four of the injured passengers filed suit in California state courts, seeking damages in excess of $1,000,000.5 Named as defendants were Greyhound Lines, Inc., a California corporation; Theron Nauta, the bus driver; Ellis Clark, who drove the truck; and Kenneth Glasgow, the passenger in the truck who was apparently its owner as well.6 Each of the individual defendants was a citizen and resident of Oregon.7 Before these cases could come to trial and before other suits were filed in California or elsewhere, petitioner State Farm Fire & Casualty Company, an Illinois corporation, brought this action in the nature of interpleader in the United States District Court for the District of Oregon.8
In its complaint State Farm asserted that at the time of the Shasta County collision it had in force an insurance policy with respect to Ellis Clark, driver of the truck, providing for bodily injury liability up to $10,000 per person and $20,000 per occurrence and for legal representation of Clark in actions covered by the policy.9 It asserted that actions already filed in California and others which it anticipated would be filed far exceeded in aggregate damages sought the amount of its maximum liability under the policy.10 Accordingly, it paid into court the sum of $20,000 and asked the court to require all claimants to establish their claims against Clark and his insurer in this single proceeding and in no other, and to discharge State Farm from all further obligations under its policy — including its duty to defend Clark in lawsuits arising from the accident.11 Alternatively, State Farm expressed its conviction that the policy issued to Clark excluded from coverage accidents resulting from his operation of a truck which belonged to another and was being used in the business of another.12
Joined as defendants were Clark, Glasgow, Nauta, Greyhound Lines, and each of the prospective claimants.13 An order issued, requiring the defendants to show cause why they should not be restrained from filing or prosecuting any proceeding in any state or United States Court affecting the property or obligation involved in this interpleader action, and specifically against the plaintiff and the defendant Ellis D. Clark.14 When a temporary injunction along the lines sought by State Farm was issued by the United States District Court for the District of Oregon, the present respondents moved to dismiss the action and, in the alternative, for a change of venue to the Northern District of California.15 On interlocutory appeal, the Court of Appeals for the Ninth Circuit reversed.16 The Supreme Court granted certiorari.17
Whether the interpleader statute requires only minimal diversity among claimants to satisfy Article III of the Constitution?18
The interpleader statute, 28 U.S.C. § 1335, requires only minimal diversity of citizenship between two or more claimants, consistent with Article III, because the Constitution extends federal judicial power to controversies between citizens of different states so long as any two adverse parties are not co-citizens.19
Yes. The statute applies where there are two or more adverse claimants of diverse citizenship.20 In the established facts, State Farm Fire and Casualty Company is an Illinois corporation that brought the interpleader action in the District of Oregon.21 The individual defendants Ellis Clark, Theron Nauta, and Kenneth Glasgow are citizens and residents of Oregon.22 The claimants include Canadians plus citizens of five American States.23 This satisfies minimal diversity between claimants without regard to co-citizenship among others.24
The present case is properly in the federal courts.25
Related opinions on this issue
Justice Douglas concurred with the majority's determination that the federal interpleader statute requires only minimal diversity of citizenship between claimants to invoke jurisdiction under Article III.26 He explicitly agreed with the Court's view on this point.27 Douglas observed that the statute applies where there are two or more adverse claimants of diverse citizenship.28
Douglas dissented from the majority's application of the statute to the facts of the case, maintaining that the victims were not claimants against the insurer until their claims against the insured had been reduced to judgment.29 He concluded that the Court of Appeals should be affirmed because the litigants were not claimants to the fund in the statutory sense.30
Whether an insurance company may invoke federal interpleader before claims against its insured have been reduced to judgment in the absence of a state direct-action statute?31
Under 28 U.S.C. § 1335, an insurance company may invoke federal interpleader where adverse claimants may claim benefits under a policy of insurance even if the claims remain unliquidated, because the 1948 revision of the Judicial Code restored the may claim language that permits protection against anticipated claims exceeding the policy limits.32
Yes. State Farm asserted in its complaint that it had in force a policy providing bodily injury liability up to $10,000 per person and $20,000 per occurrence.33 It paid $20,000 into court.34 It alleged that actions already filed in California state courts seeking damages in excess of $1,000,000 plus anticipated additional suits far exceeded its maximum liability.35
The established facts show that four injured passengers had filed suit naming Ellis Clark as a defendant.36 Those claims had not been reduced to judgment before State Farm commenced the interpleader action in the District of Oregon.37
An insurance company may invoke federal interpleader before claims against its insured have been reduced to judgment.38
Related opinions on this issue
Justice Douglas dissented on this issue.39 He maintained that the victims are not claimants against the insurer until their claims against the insured have been reduced to judgment.40 The policy requires the insured's obligation to pay to be finally determined by judgment after trial or written agreement.41
Both California and Oregon law prohibit direct actions against the insurer until after such a judgment.42 Douglas emphasized that under the policy no action shall lie against the company until the amount of the insured's obligation has been finally determined.43 He concluded that the Court of Appeals should be affirmed because the litigants are not claimants to the fund in the statutory sense.44
Douglas argued that the insurance company cannot invoke interpleader to protect against unliquidated claims when state law bars direct actions.45
Whether a district court exercising interpleader jurisdiction may enjoin suits against the insured tortfeasor and other alleged tortfeasors outside the interpleader proceeding?46
The interpleader statute authorizes a district court to enjoin proceedings affecting the property or obligation involved in the interpleader action.47 However, that power is limited to protecting the stakeholder's interest in the fund.48 It does not extend to enjoining suits against the insured tortfeasor or other alleged tortfeasors whose liability may greatly exceed the deposited proceeds.49
No. State Farm's interest is confined to its $20,000 fund deposited in the District of Oregon.50 Yet the District Court issued and broadened an injunction restraining prosecution of suits against Ellis Clark, State Farm, Greyhound Lines, and Theron Nauta in any other court.51 The established facts demonstrate that the underlying litigation involved claims by thirty-five passengers or their representatives against Greyhound Lines, its driver Nauta, truck owner Glasgow, and driver Clark.52 Damages sought far exceeded the policy limits.53
The injunction therefore exceeded the statutory scheme by controlling lawsuits outside the fund.54
The district court exceeded its powers under the interpleader statute by enjoining suits against the insured and other alleged tortfeasors.55
Related opinions on this issue
Justice Douglas agreed that if an injunction is granted it should run only against prosecution of suits against the insurer and not against suits seeking to establish the liability of the insured tortfeasor.56 He joined the majority's limitation on the scope of injunctive relief available in interpleader.57
He noted that the policy promises to pay only sums the insured becomes legally obligated to pay.58 Douglas maintained that the injunction should not extend to suits against the insured because the victims are not yet claimants against the insurer.59 He concluded that the statutory scheme does not permit the insurer to control litigation against the tortfeasors themselves.60