Federal Life Insurance v. Looney

Mr. Justice Baker delivered the opinion of the court. A bill of interpleader and the decree based thereon is not a proceeding in rem, and the Circuit Court did not acquire jurisdiction over Looney by publication or service of the bill. Gary v. Northwestern Mut. Aid Ass'n. 87 Iowa 25. The Court had jurisdiction of Mrs. Payne when the decree was entered, for she had demurred to the bill, but had not over Looney, for his appearance was not entered until a year after the decree of interpleader had been entered. The decree entered April 8, 1909, regarded as a decree of inter-pleader, was premature and erroneous; premature because the Court had no jurisdiction over Looney, and erroneous, first, because before it was entered a judgment or decree for the amount due on the policy had been entered in the Chancery Court at Nashville in favor of Looney and Mrs. Payne and against appellant in a suit in which that Court had jurisdiction of the parties and of the subject-matter. Maclennan on Interpleader, 46; Union Bank v. Kerr, 2 Md. Chap. 460; Home Life Ins. Co. v. Caulk, 86 Md. 385. In McKinney v. Kuhn, 59 Miss. 187, it was said: “It is well settled both by reason and authority, that one who asks the interposition of a court of equity to compel others claiming property in his hands to interplead, must do so before putting them to the test of trials at law.” After judgment against him by part of the defendants, it is impossible for the interpleader to occupy a position of strict neutrality between the parties. Home Life Ins. Co. v. Caulk, supra. Second, because the bill does not admit liability for the full amount claimed. It appears from the amendment to the bill that Mrs. Payne had recovered judgment against the complainant for $1,277.92 as a penalty under the laws of Tennessee on the ground that the refusal of the Federal Insurance Co. to pay the loss' was not in good faith. The statute authorizing such a penalty was held valid by the United States Supreme Court. Supreme Ruling v. Snyder, 227 U. S. 497. The bill admits liability for the amount of the policy and interest, less $215.71 due complainant, which is not disputed, but admits no liability for the penalty, although the transcript attached to the amendment to the bill shows the judgment for the penalty. Looney in his answer claimed the amount decreed to him by the Tennessee Supreme Court, $3,171.75, less a credit of $583.66, the amount collected by him from the Federal Life Insurance Co., with interest from March 17, 1909, the date of the judgment of affirmance in the Supreme Court of Tennessee. Mrs. Payne in her answer claimed $2,Ill.85, the amount awarded her by the Chancery Court at Nashville, and $1,277.92, the penalty given her by the decree of that Court. The amounts so claimed amount to $6,561.52, a sum greatly in excess of the amount admitted by complainant and paid into court. The amount due cannot be the subject of controversy in an interpleader suit, and the difference between the amount claimed and the sum which plaintiff admitted and paid into court presents an insuperable objection to the prosecution of this suit as an interpleader. B. & O. R. Co. v. Arthur, 90 N. Y. 234; Maclennan on Interpleader, 72. The bill cannot be sustained as a bill of interpleader, and the Circuit Court did not err in refusing to allow complainant solicitor’s fees and costs. The order of October '21, 1910, fixing the Master’s fees at $600 recites that it was heard upon “the certificate of the Master concerning his fees.” Such a certificate is not called for by the praecipe nor is it contained in the transcript. We cannot therefore say that the Court erred in fixing the Master’s fees at $600. We will not attempt to decide what head of equity jurisdiction the Circuit Court exercised in entering the decree appealed from, but will only consider the question whether the complainant is harmed or prejudiced by the decree. The decree gives complainant both the credits it claims, the credit for the amount due from the assured on the policy, and the credit for the amount collected by Looney from complainant in garnishment proceedings. The question whether the domicile of the assured was at Nashville or Chicago was adjudicated in the suit in Tennessee, and by that adjudication appellant is bound. We are unable to see that appellant could successfully defend a suit by Looney and Mrs. Payne on the transcript of the Tennessee judgment or decree, and therefore think that the decree in this case is not prejudicial or harmful to appellant. We think that the Court erred in refusing to direct the Master to make his report in accordance with and within the scope of the order of reference. If the scope of an order of reference is to be extended or limited, it must be done by order of the court, not by the arbitrary action of the master; otherwise the proceeding is a trap for the party who, relying on the order of reference, refuses to offer evidence as to matters not within the scope of the reference; but we think that for the reasons stated appellant was not prejudiced by the order complained of. For the same reasons we think appellant was not prejudiced by the filing of a cross-bill by Mrs. Payne, or the refusal of the Court to strike the same from the files. The record is, we think, free from prejudicial error and the decree is affirmed. Affirmed.