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An equitable proceeding brought by a third person to have a court determine theownership rights of rival claimants to the same money or property that is held by thatthird person.

Interpleader is a form of equitable relief. Equitable remedies are ways for courts to

enforce rights other than by issuing a judgment for money damages. Interpleader isemployed when two or more parties seek ownership of money or property that is heldby a third party. The property in question is called the stake, and the third party who hascustody of it is called the stakeholder. The stakeholder is faced with a legal dilemma:giving the property to either one of the parties will likely lead to a lawsuit by the otherparty against the stakeholder and the new property owner.

Interpleader enables the stakeholder to turn the controversy over to a court and to bedismissed from the legal action. It is designed to eliminate multiple lawsuits over thesame stake and to protect the stakeholder from actual or potential multiple liability.Typically, interpleader will involve corporateSecuritiesor proceeds from insurance

policies.

The stakeholder initiates an interpleader by filing an action that states that he or she hasno claim to the money or property in controversy, and does not know to which claimantit should be lawfully delivered. The stakeholder must also establish the possibility ofmultiple lawsuits. The stakeholder then may be required to deposit the stake with thecourt, and notifies possible claimants that they can present their claims of ownership incourt for determination.

The court must decide whether the interpleader is proper. It has discretion to allow theinterpleader, and may deny the relief if the stake-holder is guilty

ofLaches(unreasonable delay) or was responsible for the creation of the adverseclaim. If the court grants the interpleader, the stakeholder is dismissed from the action.The rival claimants are given the right to litigate their claims, and they will be bound bythe decision of the court.

Interpleader is primarily a device of federalCivil Procedure. Two types of interpleaderare available in federal courts: one under the Federal Rules of Civil Procedure and oneunder federal statute. When interpleader is sought through rule 22 of the Federal Rulesof Civil Procedure, more than $10,000 must be at issue in the action, and the claimantsmust reside in the same state and must be citizens of a state other than the one inwhich the stakeholder is a citizen. The action can be tried where the stakeholderresides, where theCause of Actionarose, or where the claimants reside. Thestakeholder is not obligated to deposit the stake with the court, an important advantagewhen the property is used for purposes of investment and to generate income.

Interpleader authorized under 28 U.S.C.A. 1335 differs in several respects from rule22 interpleader. The dispute may involve as little as $500, at least two of the claimantsmust be from different states, and the citizenship of the stake-holder is immaterial. Thevenue, or place of trial, is anywhere that a claimant resides. At the time the suit is filed,

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the stakeholder must deposit the stake or post a bond in an amount equivalent to itsvalue.

Claimants in an interpleader proceeding may be permitted to assert additional claimsagainst each other or the stakeholder if they satisfy jurisdictional requirements and do

not unreasonably complicate or delay the action. Courts must decide, on the particularfacts of each case, whether such claims will be considered.