interpleader
An interpleader is a way for a party who holds property (a stakeholder ) to initiate a suit between all claimants, who are parties claiming a right to that property. An interpleader allows the stakeholder to bring all claimants into the same action , instead of litigating against claimants in separate actions. By bringing an interpleader action, a stakeholder can have claimants litigate among themselves, determine which claimants have a rightful claim to the property, and avoid multiple liability .
For example, A holds one million dollars. B and C each claim to be the sole owner of the money that A possesses. Without an interpleader, A could be sued by B and C in two separate actions, potentially losing both actions, and incurring double liability to a total of two million dollars (one million to B and one million to C). An interpleader brings B and C into the same action where B and C would litigate who the rightful sole owner of the money is, and A would only have to face either B or C.
An interpleader is a type of joinder device available in a civil action , and can be brought by either the plaintiff or the defendant .
In federal actions, interpleader actions are governed by either Rule 22 of the Federal Rules of Civil Procedure or 28 U.S. Code §1335 , depending on the amount in controversy and the diversity of citizenship among the parties and claimants. State procedure rules and laws govern interpleader actions for state actions.
[Last reviewed in April of 2023 by the Wex Definitions Team ]
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