Interpleader is a legal procedure used when two parties claim the property or money of a common third party. It determines which party is entitled to the disputed assets. Only a stakeholder can initiate it, and it prevents multiple lawsuits involving the same stake. Two forms are available in federal civil proceedings, with different requirements for valuation and residency.
An interpleader is a legal procedure that is used when two parties claim the property or money of a common third party. It is a form of just compensation that is used to determine which party will be entitled to the disputed assets. In an interpleader action, these resources are called a stake and its keeper is known as a stakeholder. Persons who may be eligible for the share are referred to as eligible. While an interested party can use this action in any type of case, it is often used in response to disputes over insurance contracts, such as when a policyholder dies and it is unclear who will become the beneficiary.
Only a stakeholder can initiate an interpleader action. It formally begins when the stakeholder prepares a written complaint to the competent court. In the complaint, the plaintiff admits that he may owe the share to more than one party, but he does not know who is entitled to it. By allowing the court to adjudicate the dispute, the action prevents multiple lawsuits involving the same stake.
Claimants may file additional claims during the interpleader’s action that are separate from the stake, provided that the actions are related to the issue under dispute. Furthermore, the additional actions are necessary in order not to significantly delay the proceedings. Because the types of appeals brought by the action can vary widely, the judge in each case is given discretion as to whether or not to examine related issues.
Commonly, the parties employ the interlocutor in federal civil proceedings. Within the federal judicial system, there are two forms of this action available to interested parties. One falls under Article 22 of the Federal Rules of Civil Procedure; the other is permitted under 28 USCA § 1335.
The Rule 22 interpleader requires that the property in question must be valued at over $10,000 US Dollars (USD). It also requires that applicants reside in a jurisdiction other than the individual’s state of residence. The interlocutor who falls under 28 USCA § 1335, on the other hand, must file a claim worth $500 USD.
Furthermore, according to § 1335, the applicants must reside in different states. The stakeholder’s citizenship does not come into play under 28 USCA § 1335. When a stakeholder petitions under Rule 22, he must also submit a bond in an amount equivalent to the stake.
The interlocutor who falls within the scope of 28 USCA § 1335 may be heard in the court of any state in which at least one plaintiff resides. Stakeholders filing Rule 22 have a wider choice of jurisdictions. Article 22 can be filed in the state in which the claimant or the interested party resides or in which the dispute in question took place.
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