Interpleader

What is Interpleader?

A complaint for Interpleader is a legal action that intervenes when multiple individuals or entities claim the same asset or financial interest.  A neutral third party, known as the stakeholder, steps in and transfers the disputed asset or funds to the court’s custody. The court then determines the rightful owner or beneficiary. The stakeholder’s primary objective is to protect itself from conflicting claims and eliminate any potential liability.

Interpleader comprises two distinct phases. The initial phase involves assessing the stakeholder’s interest in the asset or funds and determining if they are liable for any claims. If the stakeholder lacks any interest or is not liable, the court orders them to transfer the asset or funds to the court’s possession. At this point, the stakeholder is no longer involved in the case, and the parties involved proceed to determine the true owner or beneficiary. In some cases, the court may even compensate the stakeholder for their efforts.

The subsequent phase involves a legal battle between the parties involved. The defending parties engage in internal discussions and arguments, while the plaintiff (the initiator of the case) confronts other parties who also claim a share of the asset or funds. The plaintiff must present evidence and arguments to support their claims against both the plaintiff and the defending parties.

Let’s delve into some practical examples of interpleader and its application in various legal scenarios:

**Insurance Claims:** An insurer filed an interpleader claim to determine the appropriate beneficiary for insurance benefits. The claim involved a deceased individual (insured) and a contingent beneficiary. The court ultimately ruled in favor of the contingent beneficiary.

**Dividend Disputes:** A corporate secretary sued the personal administrator of an estate for failing to distribute dividends from the stock shares. The stakeholder intervened in the case, suspecting potential double liability by the administrator for the disputed funds.

**Third-Party Assets:** An interpleader was employed to determine the rightful owner of an asset or property that was held by a third party who was not directly involved in the dispute. 

An insurer informed the new wife of the insured that the change of beneficiary in the life policy was effective, and she was the sole beneficiary. However, the insurer refused to pay out the funds due to a claim from the insured’s ex-wife, who had been named the beneficiary before the divorce. The ex-wife sued the insurer for judgment, asserting her rightful claim. The court ruled in favor of the new wife, declaring her the rightful beneficiary. Consequently, the insurer was not permitted to charge their attorney for their services, as they were merely a stakeholder in the interpleader proceedings.

In another case, a court awarded equal shares to the widow and son of the deceased in a bank’s interpleader action concerning the deceased’s IRA.

The clerk of court filed a claim in an interpleader between the landowner and the school board regarding funds deposited.

An action by an endorser to interplead the drawer and drawee for a check that was charged against the drawee’s account and allegedly had a forged endorsement was not strictly an interpleader action but rather “in nature of interpleader” to prevent multiple lawsuits. The drawee could counterclaim against the drawer, asserting their liability for paying the forged check on which the endorser had signed.

Experience Matters

Litigating and protecting your rights in an interpleader case doesn’t have to be a stressful experience. If you need help with your legal matter, don’t hesitate to contact an experienced litigation lawyer like Andrew J. Pascale at 877-667-1211, who serves Altamonte Springs.  This blog does not constitute legal advice and is for illustrative purposes only.