What happens in an interpleader?
In an interpleader action, a party who knows two or more other parties are making a claim on some asset controlled by the party can ask the court to decide who has what rights to the asset, deposit the asset into the custody of the court or a third party and remove itself from the litigation.
What does it mean to Interplead funds?
Interpleader is defined as an equitable remedy now governed by statute, whereby a holder of money such as an escrow deposits funds or property with the Court.
Who files an interpleader?
An interpleader is a civil action filed by a “stakeholder,” often a life insurance company, that is facing competing claims over benefits that are due.
What is the difference between Impleader and interpleader?
Impleader is available only to defendants, not plaintiffs, unlike the similar interpleader action. Plaintiffs may however implead when a defendant counterclaims, because the plaintiffs is then the counter defendant.
Who can file interpleader suit?
Sec 88 provides that where two or more persons claim adversely to one another, the same debt, sum of money or other property, movable or immovable, from another person, who claims no interest therein, other than for charges or costs, and who is ready to pay or deliver it to the rightful owner, such other person may ...
When may a person deliver an interpleader notice?
Where any person ('the applicant'), alleges that he is under any liability in respect of which he is or expects to be sued by two or more parties making adverse claims ('the claimants'), in respect thereto, the applicant may deliver a notice called an 'interpleader notice', to the claimants.
What is an example of interpleader?
A way for a holder of property to initiate a suit between two or more claimants to the property. If, for example, A holds property that he knows he does not own, but that both B and C are claiming, A can sue both B and C in an interpleader action, where B and C could litigate who actually owns the property.
What is an Impleader action?
Impleader is a process by which a third party is brought into a lawsuit by a defendant. The third party becomes a participant in the lawsuit and is known as a third party defendant.
What does the word Interplead mean?
Definition of interplead intransitive verb. : to go to trial with each other in order to determine a right on which the action of a third party depends.
What is the Rule 18?
Rule 18(a) allows unlimited joinder of claims by a plaintiff or a counterclaiming defendant. Law and equity having been merged, this means that legal and equitable claims may be joined, either independently or in the alternative.
What is a third party complaint?
"Third-party complaint." — A third-party complaint is a claim that a defendant party may, with leave of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent's claim.
What is Impleader claim?
The process by which a defendant brings a third party into a lawsuit because the third party may be liable for all, or part, of the claim that the plaintiff has brought against the defendant. This process does not create substantive rights against third parties.
What does the word Interplead mean?
Definition of interplead intransitive verb. : to go to trial with each other in order to determine a right on which the action of a third party depends.
What is an Impleader action?
Impleader is a process by which a third party is brought into a lawsuit by a defendant. The third party becomes a participant in the lawsuit and is known as a third party defendant.
What is the definition of cross claim?
A cross-complaint, also called “crossclaim,” is an independent action brought by a party against a co-party, the original plaintiff, or someone who is not yet a party to the lawsuit.
What is permissive intervention?
(b) Permissive Intervention. (1) In General. On timely motion, the court may permit anyone to intervene who: (A) is given a conditional right to intervene by a federal statute; or. (B) has a claim or defense that shares with the main action a common question of law or fact.
What is an interpleader in life insurance?
Interpleader is a legal proceeding involving a stakeholder, usually a life insurance company or a trustee, who is holding funds but is uncertain as to who is the rightful payee. It is not unusual for life insurers to face competing claims from different individuals who each claim to be the rightful beneficiary of a life insurance policy. Life events may also create doubt as to the rightful payee – the Supreme Court was called upon several years ago to determine who was entitled to life insurance benefits under a policy that named the insured’s spouse as the named beneficiary. But the insured had divorced his wife several years earlier and lived in a state that had enacted a uniform law that automatically negates spousal life insurance beneficiary designations upon the entry of a divorce judgment. As a result, the life insurer did not know whether to pay the ex-wife or the contingent beneficiaries, the children of the decedent. The wife ultimately won that case because of the federal ERISA (Employee Retirement Income Security Act) law’s preference for the beneficiary named in the records maintained by the plan administrator. However, that result was not foreordained.
What happens in an interpleader action?
What occurs in an interpleader action is that the party holding the funds files a complaint with a court and names the potential beneficiaries. Soon after the complaint is filed, the funds at issue are deposited with the clerk of the court and the parties are left to assert their claims against one another before the court, which ultimately decides on the rightful beneficiary or the proper allocation of the proceeds. If one of the potential claimants fails to take any action, the other claimants receive the life insurance or trust proceeds by default.
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Interpleader Law and Legal Definition
Interpleader is the procedure when two parties are involved in a lawsuit over the right to collect a debt from a third party, who admits the money is owed but does not know which person to pay.
What is an interpleader action?
In an interpleader action, a party who knows two or more other parties are making a claim on some asset controlled by the party can ask the court to decide who has what rights to the asset, deposit the asset into the custody of the court or a third party and remove itself from the litigation.
What is the bill of interpleader?
At common law, the bill of interpleader required: The same thing, debt, or duty must be the res claimed by all the claimants; All the adverse titles or claims must be dependent or derived from a common source; The stakeholder must not have or claim any interest it the res,
What is the first stage of an interpleader?
The first stage determines if the stakeholder is entitled to an interpleader and if he, she or it should be discharged from liability. The second stage is like an action at law to determine which of the claimants is entitled to the res.
What is the name of the party in an interpleader case?
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.
How many states have interpleader?
There are requirements before interpleader will lie and the relief is available in Federal Court (if the other jurisdictional requirements are met) and all fifty states, though there are variations in methods in the various states. At common law, the bill of interpleader required:
Is joining for interpleader proper?
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.
Can a defendant seek interpleader?
A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim. Note that the requirement of common origin of claims is not required under Federal Rule 22.
Definition and Examples of Interpleader
- An interpleader is a legal procedure that determines the rightful owner of money or property claimed by two or more parties.1 Custodians of such money and property use the procedure when they face, or may face, multiple lawsuits from the claimants. Let’s say a person dies and three surviving family members claim to be the rightful beneficiary of th...
Understanding An Interpleader
- A “stakeholder” is the custodian of disputed money and property. A stakeholder can be an association, corporation, firm, or person. Stakeholders seeking interpleader action can’t have an interest in the property they hold. For example, a trustee may seek interpleader action in the disposition of an estate in which they are not entitled to inherit any money or property.2 Stakeho…
Pros and Cons of Interpleader Actions
- Pros Explained
1. Stakeholders avoid multiple lawsuits: Interpleader action can prevent a stakeholder from facing multiple lawsuits over the same money or property. 2. Court rules on ownership: The process relieves the stakeholder of the burden of deciding which claimant should receive the money or p… - Cons Explained
1. Depleted stakes: Often, a stakeholder can’t simply unload a money or property dispute by seeking interpleader. A court may require the stakeholder to remain in the case until it makes a final ruling, so the plaintiff must continue to retain attorneys. If the court grants the stakeholder r…
The Bottom Line
- Stakeholders can use an interpleader action to settle a dispute over money or property. But the procedure favors the stakeholder, at the expense of the claimants. A defendant in an interpleader case may need to hire an attorney to present a case that will convince the court that they are the rightful owner. When the court rules for a defendant, they may have to pay the attorney fees and …