Opinion ID: 612077
Heading Depth: 2
Heading Rank: 3

Heading: Equity is Equality

Text: 38 Interpleader originated at common law, but the primary development and principles of interpleader occurred in equity where the use of interpleader was most common. Underwriters at Lloyd's v. Nichols, 363 F.2d 357, 360 (8th Cir.1966). In an interpleader where an insurer with limited contractual liability is exposed to claims that exceed that limit, the remedy draws on equitable principles and common sense: An interpleader in this situation will presumably result in the distribution of the limited fund by the interpleader court on some sort of ratable basis. Dan B. Dobbs, The Law of Remedies § 2.12, at 130 (1973). Specifically, the court will give each claimant a share of the fund proportionate to [his] share of the total judgment figure. Id.; see also Wright, Miller & Kane, FP & P § 1702, at 497, § 1705, at 513-14. Cf. State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 533-34, 87 S.Ct. 1199, 1205, 18 L.Ed.2d 270 (1967) (stating that interpleader may be used to establish orderly contest for limited fund so as to prevent early claimants from securing disproportionate slice). 39 Other circuits that have addressed similar cases have noted that interpleader may be used to achieve an orderly distribution of a limited fund. See, e.g., Farmers Irrigating Ditch & Reservoir Co. v. Kane, 845 F.2d 229 (10th Cir.1988) (suggesting that a disinterested stakeholder, but not the tortfeasor, may bring a complaint in interpleader to allow for pro rata distribution of a limited fund); General Elec. Credit Corp. v. Grubbs, 447 F.2d 286, 289 (5th Cir.1971) (recognizing that interpleader may be invoked where valid claims exceed a limited fund). In Cockerham v. Garvin, 768 F.2d 784 (6th Cir.1985), for example, a case that also involved the FMCRA, the injured employee settled with the tortfeasors for an amount that may have represented something less than the full value of his damages. See id. at 787 (describing the settlement as possibly discounted). As part of that settlement, the individual claimant placed $20,000 in escrow to cover the Government's claim under the FMCRA. See id. at 785. When the Government sought to recover the full amount due it, despite the possibility that the individual had accepted a discount, the Sixth Circuit noted that the Government's relationship to the fund was as a beneficiary. Id. at 787. Accordingly, the court held that equitable principles applied, and that the Government's settlement ought to be reduced to reflect any discount accepted by the individual claimant. See id. 40 [303 U.S.App.D.C. 41] In deciding whether an insurance company could bring a federal interpleader before the various claims had been brought to judgment, the Eighth Circuit looked for guidance to the work of Professor Zechariah Chaffee, who wrote a series of articles on interpleader in the earlier part of this century. See Underwriters at Lloyd's, 363 F.2d at 360 & n. 2. Professor Chaffee observed, and the court in Underwriters at Lloyd's agreed, that an insurance company 41 is no interloper in asking a unification of the numerous tort actions brought against [an] assured. Its request benefits the claimants as well as itself. Instead of a haphazard looting of a fund by the first comers, a bill in the nature of interpleader filed before numerous judgments have ripened assures a fair share of the insurance money to each victim and conforms to the principle, Equity is equality. 42 Underwriters at Lloyd's, 363 F.2d at 365 (quoting Chaffee, The Federal Interpleader Act of 1936: II, 45 Yale L.J. 1161, 1166 (1936)). 43 We fully agree. As the FMCRA is silent on the question of priority, and as equity is equality, we find that the proper course here is to distribute the limited fund on a ratable basis, such that each claimant receives a share of the fund proportionate to their share of the total judgment figure. Dobbs, The Law of Remedies § 2.12, at 130.