Equity Jurisdiction, Bill of interpleader. Equity Pleading and Practice, Hearing on bill of interpleader and answer.
If upon the hearing of a bill of interpleader it appears that there is an obligation of the plaintiff to one of the defendants which is connected with the subject matter of the alleged controversy between the defendants and which cannot be determined in litigation to which the defendants alone are parties, the bill must be dismissed, because a decree ordering the defendants to interplead and allowing the plaintiff to retire, which would be necessary if the suit were maintained, would relieve the plaintiff from all further liability to either defendant touching the subject matter of the bill.
By a failure to join issue upon the answers to a bill of interpleader the plaintiff admits all facts properly averred in such answers.
In answer to a bill of interpleader brought by a life insurance company against one to whom it had issued a policy of endowment insurance in the sum of $25,000, which had matured, and one who claimed the policy as an assignee, the insured admitted that he had placed the policy in the possession of the assignee, but alleged that it was to secure a loan of $6,000 only, and the assignee in his answer alleged that he for eight years had held the policy and an assignment of it as security for a loan of $21,500, that the plaintiff had known of the assignment from the time when it was made "and always has recognized the same," that his right to claim the $21,500 from the plaintiff did not depend solely upon the validity of the assignment as between him and the assured, but also upon the fact that, through representations and warranties of the plaintiff that the assignment was valid, he had been induced to advance and had advanced the sum in question. The plaintiff did not join issue on the answers but moved for a decree upon the bill and answers. Held, that the bill should be dismissed, because upon the allegations of the answers, which must be taken to be admitted, it appeared that there was a claim against the plaintiff which could not be adjudicated in an issue between the defendants only.
BRALEY, J.
The plaintiff asks by a bill of interpleader for protection against suits by the defendants to recover the proceeds of a policy in which it disclaims any interest, and, on filing the bill, irregularly paid the money into court to abide the result between the rival claimants. If, however, an obligation to one of the defendants connected with the assignment of the policy which cannot be determined in a litigation between themselves has been incurred, no decree allowing the company to retire and ordering them to interplead should be entered. It is settled that such a decree is an adjudication relieving the plaintiff from all further liability to either claimant. National Life Ins. Co. v. Pingrey, 141 Mass. 411, 413. Killian v. Ebbinghaus, 110 U.S. 568, 572. The defendants having denied some of the material allegations, the plaintiff, before it could be discharged, was required to show affirmatively that the bill could be maintained. Bristol Savings Bank v. Holley, 77 Conn. 225. City Bank v. Bangs, 2 Paige, 570. Bolton v. Williams, 4 Bro. Ch. 297. But not having joined issue, the averments of fact in the answers must be treated as admitted. Perkins v. Nichols, 11 Allen, 542.
It appears that the defendant Cook, who is the assured and the alleged assignor, denies the execution of the assignment of the policy, although he admits his liability for a part of the indebtedness for which it was taken as security. The defendant Stanley, the alleged assignee and creditor, while relying on the assignment, further avers that he was induced to lend the money through the representations and warranty of the plaintiff that the instrument was valid. This question, upon which we express no opinion, cannot be litigated on a bill of interpleader. Welch v. Boston, 208 Mass. 326, 327, 328. The plaintiff is not entitled to the aid of a court of equity to forestall an action at law by the assignee where there is no privity of contract between itself and the owners of the proceeds as alleged in the bill. First National Bank of Morristown v. Bininger, 11 C.E. Green, 345. Crawshay v. Thornton, 7 Sim. 391; S.C. 2 Myl. Cr. 1.
It is urged, however, under the decision in Salisbury Mills v. Townsend, 109 Mass. 115, that, even if it may be responsible in damages, the plaintiff would have no right to reimbursement from the proceeds, the distribution of which depends upon the title of the claimants, and the fund is to be treated as not affected by any cause of action arising from its conduct. The controversy in Salisbury Mills v. Townsend arose over the right of the defendants severally to a dividend on certain shares of the plaintiff's capital stock which had been fraudulently transferred on the books of the corporation by the trustee of one of the claimants to the other claimant. It was decided, that, whether the corporation could be held liable to the party defrauded for permitting the transfer where it had constructive notice from the wording of the certificate that the shares were held in trust, did not prevent the court from determining on a bill of interpleader to whom the dividend rightfully belonged. See Loring v. Salisbury Mills, 125 Mass. 138. But the corporation had not acknowledged the right of either claimant to the stock or to the dividend. It was a mere stakeholder as to the dividend. The plaintiff in the present case having expressly recognized the title of the assignee as valid, it voluntarily aided him in so far as it was able to the prejudice of the policy holder. If the defendants are ordered to interplead and the assignee prevails, the plaintiff irrespective of the outcome is relieved at least from the burden of an independent suit based on its warranty and representations, and it having ceased to be a mere depositary indifferent to the result, the decree dismissing the bill must be affirmed with costs. National Security Bank of Boston v. Batt, 215 Mass. 489. Marvin v. Ellwood, 11 Paige, 365. Lincoln v. Rutland Burlington Railroad, 24 Vt. 639.
Ordered accordingly.