28 U.S.C.S. § 1335 applies where there are two or more adverse claimants, of diverse citizenship. Section 1335 has been uniformly construed to require only "minimal diversity," that is, diversity of citizenship between two or more claimants, without regard to the circumstance that other rival claimants may be co-citizens. Section 1335 requires no more.
Following an accident between a bus and an automobile, multiple injured passengers brought suits against multiple defendants. Petitioner, the insurance company of one of the defendants, the driver of the automobile, brought the interpleader action to consolidate all claims against the available proceeds of the policy. Jurisdiction was based on general diversity of citizenship and the federal interpleader statute (28 U. S. C. § 1335). The lower court granted an injunction prohibiting the prosecution of any claims against petitioner outside of the interpleader action and extended that injunction to include several other defendants in the underlying action. The injunction was dissolved on appeal since state law and the insurance policy prevents the injured passengers from suing the insurer until judgment is obtained against the insured. The appellate court ruled that the passengers are not yet "claimants" of the insurer in order to institute an interpleader.
Could the defendants institute a direct action for interpleader against the insurer without having to wait for judgment against the insured?
The court, on its own initiative, discussed the jurisdictional requirement of diversity in the interpleader statute. It held that only "minimal diversity," that is, diversity of citizenship between two or more claimants, without regard to the circumstance that other rival claimants may be cocitizens is required to permit an injunction and consolidate the claims against petitioner. The court rejected the argument that petitioner had to wait for those claims to be reduced to a judgment. The court held, however, that the lower court exceeded its authority in extending the injunctive protection to the other defendants in the underlying action, who were not related to the fund of insurance proceeds.