State Farm Fire & Casualty Company v. Tashire

PETITIONER:State Farm Fire & Casualty Company
RESPONDENT:Tashire
LOCATION:United States Food and Drug Administration

DOCKET NO.: 391
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 386 US 523 (1967)
ARGUED: Feb 14, 1967 / Feb 15, 1967
DECIDED: Apr 10, 1967

Facts of the case

Question

  • Oral Argument – February 15, 1967
  • Audio Transcription for Oral Argument – February 15, 1967 in State Farm Fire & Casualty Company v. Tashire

    Audio Transcription for Oral Argument – February 14, 1967 in State Farm Fire & Casualty Company v. Tashire

    Hugo L. Black:

    Number 391, State Farm Fire & Casualty Company against Kathryn Tashire and others.

    Mr. Skopil.

    Otto R. Skopil, Jr.:

    Mr. Justice Black, may it please the Court.

    I represent State Farm Fire and Casualty Company, the original plaintiff in the case, which was filed under Section 1335 of the code as a bill in the nature of interpleader.

    Just by way of brief background I think the complaint, which is a part of the record reveals most of these facts.

    That Mr. Glasgow, one of the named defendants in the original complaint was the owner of a certain pickup automobile, which he used in his own business to travel to the San Francisco, California area from Medford, Oregon for the purpose of picking up furniture at auction sales and then returning to the Medford area, his home for the purpose of disposing of such merchandise.

    Mr. Glasgow was not insured.

    He had no insurance, no liability insurance coverage on his vehicle.

    Mr. Clark one of the other main defendants who is the insured of State Farm Fire and Casualty Company, as a friend of Mr. Glasgow was invited to go along on the particular trip to San Francisco, Mr. Clark at that time being unemployed and proceeded to travel with Mr. Glasgow.

    At a point some distance north of Redding, Mr. Glasgow, the owner of the vehicle asked Mr. Clark, the State Farm insured whether or not he wouldn’t drive the vehicle for a period of time.

    Mr. Clark honoring such request commenced to drive the vehicle and shortly after he undertook this responsibility, there was a collision which occurred between the Glasgow vehicle been driven by Mr. Clark and a Pacific Greyhound bus, such accident having occurred from all of the investigation on what would be the Greyhound side of the road and not the Clark side of the road.

    Glasgow has no insurance.

    Mr. Clark is insured with State Farm Fire and Casualty Company with a total coverage applicable to this situation of $20,000.

    Shortly after that the lawsuits are beginning to be filed and after the first five have been filed, the total tort relief exceeds a million dollars, a million one hundred and ten thousand dollars.

    There were some 37 claimants, 35 passengers in the bus, and the bus actually traveled over an embankment and as a result the injuries were rather severe in some instances and I think three deaths as a result of the particular collision.

    So State Farm —

    Potter Stewart:

    And these claimants are bus passengers, other survivors?

    Otto R. Skopil, Jr.:

    Yes.

    Potter Stewart:

    Against whom, against Mr. Clark, Mr. Glasgow and Greyhound?

    Otto R. Skopil, Jr.:

    Against Mr. Clark, Mr. Glasgow and Greyhound.

    One correction I’d like to make Your Honor and that is the claimants are not only the passengers of the bus, but they also of course include Mr. Glasgow who is a passenger in his own vehicle.

    Potter Stewart:

    His own vehicle.

    Otto R. Skopil, Jr.:

    And also Pacific Greyhound Lines, who of course, this claim might be remote but they do claim a right to the proceeds which they were required to pay to their own employee Mr. Nauta, the driver of the bus and they also claim damage to their personal property, the damage to the bus itself.

    So the parties, all parties except Clark were named as defendants because they are claimants to the Farm, which of course State Farm Fire and Casualty has, by virtue of the policy, which it had issued.

    So the two questions which are raised, one —

    Justice Bernnan:

    [Inaudible] but the money came in court —

    Otto R. Skopil, Jr.:

    Yes the —

    Justice Bernnan:

    [Inaudible] liability to that extent?

    Otto R. Skopil, Jr.:

    Well, we admit liability – we can’t admit liability on the part of the Mr. Clark of course are insured but we do tendered the $20,000 in the court and it is deposit, has been on the deposit with the registry of the court since January 1965, as a matter of fact.

    Byron R. White:

    If his liability, if your insured liability as established then you admit your liability or you don’t admit coverage either, do you?

    Otto R. Skopil, Jr.:

    No, no.

    Byron R. White:

    So you deny every, you deny not only his liability but coverage?

    Otto R. Skopil, Jr.:

    Yes, our tender in the court is based upon on the condition that there’s coverage extended to Mr. Clark and the reason for that question and the reason that the action is brought in the nature of the bill and interpleader is this.

    As I’ve indicated, Mr. Glasgow was the owner of the vehicle, which was been driven by Mr. Clark.

    The vehicle was being operated in another person’s business namely Mr. Glasgow’s business.

    So one of the exclusion of all of our policies, if you’re operating a non-owned automobile in the business of another it comes within exclusion under your policy, you know, just as, if I were driving laundry truck for a certain laundry company.

    My coverage will not apply while I was operating a non-owned vehicle in somebody else’s business.

    So that’s the basis for the coverage question and that’s the reason of course that Mr. Clark is named in the situation because we do have a contractual question between Mr. Clark and State Farm Fire and Casualty under the coverage question.

    Now, the two questions which I’ve really been raised and the ones, which State Farm is concerned there have been some side issues raised as the result of Greyhound having been named as a party defendant, which I feel have no bearing on the questions which are actually before the Court.

    The first issue of course is the jurisdiction of the subject matter itself.

    I think the reading of the opinion of the Ninth Circuit will reveal that they indicated that the action and nature of interpleader must be dismissed for lack for jurisdiction over the subject matter.

    So that is the first question which has been raised and was not a question actually upon which this matter was appealed in the Ninth Circuit but was the ruling of the Ninth Circuit after a consideration of the case.

    The second issue and I’ll deal with them separately consist of whether or not there is jurisdiction over the Canadian residents.

    11 of the passengers in the Greyhound bus were Canadian residents, so that question has been raised and was the question that actually this matter went down to the Ninth Circuit on.

    First, with reference to the jurisdiction of the subject matter as I’ve indicated, we rely on the provisions of Section 1335 of the code which actually really requires three jurisdictional facts as I read that particular provision.

    First of all, it requires a person, firm or a corporation who has in his custody money or property of the value of $500 or more or having issued a policy of insurance in the value of an amount of $500 or more.

    In this situation as I’ve indicated, there’s an insurance policy issued in the amount of $20,000 coverage for this particular incident.

    Secondly, the diversity of citizenship for the claimants as defined in the statute of 1335 and you’ll note that a reading of that statute actually defines the diversity of citizenship as being that referred to in Section 1332 and of course we have that situation in our case.

    There were 11 Canadian subjects, there were 10 Washington residents, there were 9 Oregon residents, there were 7 California residents and I think 1 Montana resident and a south or north Dakota resident.

    So actually we come within the third subdivision of Section 1332 and that is subdivision three of subsection A, and that is citizens of different states and in which foreign states or citizens or subjects thereof are additional parties.

    So we have the diversity of citizenship in that each of the claimants or I should say that the claimants are diverse in citizenship and as indicated, we have Canadians, we have — people from the State of Washington, people from the State of Oregon, California and two other States Montana and South Dakota.

    So the diversity of citizenship is obviously present which is required under the provisions of 1335 as defined in 1332.

    The third requirement of course —

    Potter Stewart:

    Don’t spend any undue time on this, but what kind of diverse citizenship is required under the statute?

    Just that the defendants have to be diverse from each other or –?

    Otto R. Skopil, Jr.:

    Right.

    Potter Stewart:

    Or diverse from the plaintiff?

    Otto R. Skopil, Jr.:

    No, diverse from each other.

    All it’s required is that the claimants be diverse from one another.

    Potter Stewart:

    Or at least two of them —

    Otto R. Skopil, Jr.:

    Right, correct.

    Potter Stewart:

    Because 7 of these people are from California.

    Otto R. Skopil, Jr.:

    Yes.

    Potter Stewart:

    There don’t have to be complete diversity among the —

    Otto R. Skopil, Jr.:

    No, there just has to be diversity and that there has to be a diversity between claimants but not complete diversity.

    Justice Bernnan:

    Now the State Farm [Inaudible]

    Otto R. Skopil, Jr.:

    Well, State Farm, now I can’t speak for Geryhound, the State Farm is an Illinois Corporation and of course authorized to do business in the State of Oregon and —

    Justice Bernnan:

    Well, I gather as to State Farm [Inaudible]

    Otto R. Skopil, Jr.:

    Yes.

    Justice Bernnan:

    All of them?

    Otto R. Skopil, Jr.:

    Perhaps I think 1397 just answers the question which has been asked by Your Honor because it says in any civil action of interpleader or in the nature of interpleader under Section 1335 of this Title maybe brought in the judicial district in which one or more of the claimants reside.

    Now, the venue situation perhaps I think I’m sure that there has been some mention made in the amicus curiae brief of this fact that is that we’re trying to go for money, which of course as far as State Farm is concerned we’re only interested in getting our $20,000 in the court.

    If we owe the money that the property or the bundle may distributed inequitable distribution to each of the claimants that the multiplicity of suits will be eliminated and that of course double vexation will be eliminated.

    Byron R. White:

    But that means that anytime there are more than one claimant then an insurance company could say that we’ll pick the court and every — all the claimants must come in and claim against this fund here not anywhere else, that’s the really the result, isn’t it?

    Otto R. Skopil, Jr.:

    Well that has been the result and of course I think the purpose, I think we have to look to the purpose behind Section 1335 and I think this has been, I think fairly clearly stated by —

    Byron R. White:

    You say this is to obtain, even though you deny liability and even though the claimant has to establish liability of the insured, he still has to establish it in this Court in —

    Otto R. Skopil, Jr.:

    Yes, yes, that’s correct.

    But you could have brought this claim in –-

    Otto R. Skopil, Jr.:

    Well, no, we couldn’t do that.

    We have a — Mr. Clark is an Oregon resident; the insured is an Oregon resident.

    The policy is issued in the State of Oregon.

    State Farm, I think would be compelled to bring this action in the State of Oregon because we’d have to obtain personal service upon Mr. Clark in the state in which he resides and this was the only place that we could obtain the service.

    That of course is the challenge –-

    Otto R. Skopil, Jr.:

    Yes, because of the —

    Because it didn’t challenge the coverage?

    Otto R. Skopil, Jr.:

    If it didn’t challenge the coverage, then I think we could bring it in any one of the states in which any of the claimants reside as long as there were claimants in other states.

    Byron R. White:

    Even though, even there — even though there was no possibility of multiple liability, only multiple litigation?

    Otto R. Skopil, Jr.:

    Well, the question of multiple liability I think is a — if I’ve to answer the question, I think the purpose of the statute is first to eliminate multiplicity of actions, to allow for an equitable distribution of the fund.

    Byron R. White:

    So the answer is yes even though it’s just multiple litigation?

    Otto R. Skopil, Jr.:

    I think the courts have said this, yes.

    Otto R. Skopil, Jr.:

    I think there’s double vexation in this particular case because of course if Greyhound were sued particularly in the State of California and a judgment was obtained against Greyhound, they certainly would have a right of contribution back against the fund of the insurance company as a result of having insured Mr. Clark.

    So I think certainly there’s also double vexation in this situation.

    The fact that there are adverse claimants, I think that probably Judge Dillon in the Adams case which has been refer to probably best states it, which he says it might by the same reasoning we said that a 100 persons that adrift in the ocean with but one small lifeboat in sight were not adverse to each other.

    We fear however that the concept of non-adversity would dwindle in direct proportion to the number of swimmers reaching the boat, and certainly that’s the situation we have here.

    We have 37 claimants all of them want the $20,000 and all go adverse to one another and all we’re really asking in this situation is that the court entertain jurisdiction in the nature of interpleader so that they will eliminate of multiplicity of suits, eliminate double vexation and that there will be an equable apportionment of the fund among the claimants.

    Potter Stewart:

    Then what’s going to happen, if you’re right, then what happen next?

    Are there seriatim jury trials of each one of these plaintiffs action?

    Otto R. Skopil, Jr.:

    This is one of the questions, which I think probably the Court is aware of by virtue of the amicus curiae brief principally.

    Now, I think certainly with the power and authority that has been given to the, to our District Judges under the federal procedure that they certainly have wide power to either segregate issues, consolidate issues and certainly they are entitled to jury trial.

    We are not in anyway inferring that the claimants in the situation are not entitled to a jury a trial.

    Potter Stewart:

    Well isn’t each one of them entitled to a jury trial on the question of liability and damages?

    Otto R. Skopil, Jr.:

    If you’re going to follow the interpleader situation in order to have an orderly administration of —

    Potter Stewart:

    Or if the defendant of each case entitled to a jury trial and the question of liability, and damages and other issues like contributory negligence or whatever they may be?

    Otto R. Skopil, Jr.:

    Well, if the Court is going to assume jurisdiction under interpleader, the purposes to eliminate multiplicity of action to provide for a uniform reasonable apportionment of the fund.

    So I think we’re trying to eliminate the 35 lawsuits as well, it amounts to minimum 35 lawsuits and to do this we feel that the, of course that the District Court has power to do this and should have this power.

    Abe Fortas:

    I suppose these people at least theoretically have a cause of action against Greyhound and what you’re doing is to foreclose them from suing Greyhound in some other jurisdiction?

    Otto R. Skopil, Jr.:

    That’s not our intent at all Your Honor.

    It’s not our intent at all.

    Abe Fortas:

    If so what happens?

    Otto R. Skopil, Jr.:

    Well, I think we, State Farm happens to the apparently struck the wrong individual Greyhound.

    If Greyhound were not a solvent corporation and the possibility of recovery against them would not be as great as the plaintiffs apparently think it is and I know nothing about Greyhound situation, I’m sure we wouldn’t be here.

    Abe Fortas:

    Well, I should say —

    Otto R. Skopil, Jr.:

    But I don’t think the remedy should be determined by who the parties are involved, these are the — remedy is good or as not good as far as the situation is concerned.

    Hugo L. Black:

    We will recess now.

    Otto R. Skopil, Jr.:

    Thank you.