Section 66-514 of the Arkansas statutes, upon which Mrs. Edna M. Hughes relies in support of her claim now under consideration provides that whenever an insurance company shall fail to pay the amount due under a policy within the time specified therein, it shall be liable in addition to the amount due under the policy for a penalty of 12% and for a reasonable attorney's fee to be fixed by the court. With regard to that statute in Tollett v. Phoenix Assurance Co. of New York, D.C.Ark., 147 F. Supp. 597, 604, this Court said: "The statute is highly penal and is to be strictly construed.
The obvious and salutary purpose of the pertinent statutes is to protect an innocent stakeholder not only from multiple liability but from the hazards, trouble, vexation and expense arising from a dispute over entitlement to a fund in the hands of the interpleader. Goad v. Goad, 238 Ark. 12, 377 S.W.2d 822; Underwriters at Lloyd's v. Nichols, 363 F.2d 357 (8th Cir. 1966); New York Life Ins. Co. v. Miller, 139 F.2d 657 (8th Cir. 1944); Hunter v. Federal Life Insurance Co., 111 F.2d 551 (8th Cir. 1940); Tollett v. Phoenix Assurance Co. of New York, 147 F. Supp. 597 (D.C. Ark. 1956). The record in this case discloses that:
The facts, as disclosed by the record, belie the District Court's reasoning that any liabilities of appellants are doubly contingent, depending on ultimate judgments being rendered against an insolvent Sheffield. The threat of multiple liability is very real and imminent and interpleader should lie herein. The late District Judge Lemley, in Tollett v. Phoenix Assur. Co., W.D.Ark., 1956, 147 F. Supp. 597, 605, spoke of the 1948 interpleader act as follows: "* * * The Federal Interpleader Act, 28 U.S.C.A. § 1335, which is a remedial statute and to be liberally construed, was designed not only to protect stakeholders from double or multiple liability but also to protect them from the trouble and expense of double or multiple litigation.
National Liberty Ins. Co. of America v. Police Jury, 96 F.2d 261, 263 (5th Cir. 1938); United States for Use and Benefit of Magnolia Petroleum Co. v. H.R. Henderson Co., 126 F. Supp. 626, 638 (W.D. Ark. 1955). See also Tollett v. Phoenix Assur. Co., 147 F. Supp. 597, 604 (W.D. Ark. 1956). As to the attorneys' fees, they are another matter.
" Stamps, 363 S.W.3d at 6 (citing to R.J. "Bob" Jones Excavating Contractor, Inc., 920 S.W.2d 483). Accordingly, "where the plaintiff, after filing suit for one sum, amends [her] complaint so as to demand a lesser sum, and the insurance company admits liability for such lesser amount, the statute is not applicable." Tollett v. Phoenix Assurance Co. of N.Y., 147 F. Supp. 597, 604 (W.D. Ark. 1956) (citing De Soto Life Ins. Co. v. Jeffett, 196 S.W.2d 243 (Ark. 1946); Trinity Universal Ins. Co. v. Smithwick, 222 F.2d 16 (8th Cir. 1955)); see R.J. Bob Jones Excavating Contractor, Inc., 920 S.W.2d at 486-87; Armco Steel Corp. v. Ford Constr. Co., 372 S.W.2d 630; Life & Cas. Co. v. Sanders, 292 S.W. 657, 658-59 (1927); Queen of Ark. Ins. Co. v.Millham, 145 S.W. 540, 540 (1912). Although Ms. Spilker cites to Silvey as a bright-line rule that allows recovery of the penalty and attorney's fees whenever a lawsuit is filed (Dkt. No. 44, at 5), Stamps and the cases cited herein recognize an exception that is applicable.
In addition, the history of the interpleader statute indicates that its primary intent was to protect stakeholders such as Great American from conflicting claims and multiple liability, not to ensure that all potential claimants receive an equal share of the interpleaded funds. See, e.g., Libby, McNeill Libby v. City Nat'l Bank, 592 F.2d 504 (9th Cir. 1978); Dakota Livestock Co. v. Keim, 552 F.2d 1302 (8th Cir. 1977); New York Life Ins. Co. v. Welch, 297 F.2d 787 (D.C. Cir. 1961); Tollett v. Phoenix Assurance Co. of N.Y., 147 F. Supp. 597 (D.Ark. 1956). Moreover, the record in this action indicates that other funds may be available from other sources, including the insurance company Defendants herein; to help satisfy the claims of those Defendants who received later judgments against Spraycraft or its related companies.
This is therefore a proper case for payment of an attorney's fee from the fund interpleaded. New York Life Ins. Co. v. Miller, 139 F.2d 657 (8th Cir. 1944); National Life Acc. Ins. Co. v. Bruce, 309 F. Supp. 1314 (W.D.Mo. 1970); Tollett v. Phoenix Assur. Co. of N.Y., 147 F. Supp. 597, 605-06 (W.D.Ark. 1956). The amount of the fee should be modest, both in view of the relatively routine services involved and in order not to deplete the fund, which belongs to the claimants, not to the stakeholder.
Interpleader is an equitable remedy designed to give relief to a stakeholder who cannot assemble all of the adverse claimants in a state court to settle the controversy in one proceeding, and the remedy should be liberally construed to protect stakeholders not only from multiple liability but also to protect them from the trouble and expense of multiple litigation. Tollett v. Phoenix Assur. Co. of N Y, 147 F. Supp. 597 (W.D.Ark. 1956). See also Douglas-Guardian Warehouse Corp. v. Ramy Seed Co., 271 F.2d 24 (8th Cir. 1959).
See, e.g., Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 52 (Tex. 1997).See Tollett v. Phoenix Assurance Co. of New York, 147 F.Supp. 597, 603 (W.D.Ark.1956) ("[I]t is not always to the best interest of the claimants to the proceeds of an insurance policy for an interpleader suit to be filed too quickly, particularly in view of the fact that when an insurer does interplead, the fund may be charged with the costs and with an attorney's fee, which might be avoided by the insurer's waiting a reasonable time before filing its bill."); Franklin L. Best, Jr., Reforming Interpleader: The Need for Consistency in Awarding Attorneys' Fees, 34 BAYLOR L.REV. 541, 564 (1982) ("The stakeholder's delaying litigation may not only be acceptable, it may be preferable. In particular, delay may be beneficial in increasing the likelihood of amicable settlement and thus in avoiding the expense of litigation.").
This statute is penal in nature and is to be construed strictly. State Farm Mutual Automobile Ins. Co. v. Pennington, 215 F. Supp. 784. It has been held that where the insured sues for an amount less than previously demanded, or when the suit itself constitutes the original demand, and the insurance company confesses liability for the amount sued for, then the insured is not entitled to the allowance of a penalty or to an attorneys fee. Tollett v. Phoenix Assur. Co. of New York, 147 F. Supp. 597. If an insured demands more than he is entitled to recover, he is not entitled to attorney's fees or penalty. Peacock Peacock, Inc. v. Stuyvesant Ins. Co., 332 F.2d 499; State Farm Mutual Automobile Ins. Co. v. Pennington, 215 F. Supp. 784; Farm Bureau Casualty Ins. Co. v. Brigance, 234 Ark. 172, 351 S.W.2d 417. The main purpose of this penal statute is to reimburse the plaintiff for expenses incurred in enforcing the contract.