
    GEORGE E. SIBLEY, as Assignee of Joseph Manning a Bankrupt, Appellant v. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, Impleaded with Mary R. Heather and Joseph Manning, Respondent.
    
      Interpleader—Motion in nature of—Crantablé on application of an answering defendant, setting up no adverse claim, the other defendants (one of them answering) claiming adversely to the plaintiff-—Terms of order, restraining the plaintiff and the other defendants, ordering instrument \'to be deposited—Conditions, interest on principal from the time it is claimed to run must be brought into court—Costs, order need not impose.
    
    In this action the complainant claimed a principal sum with interest thereon from a certain date to be due from the corporation defendant upon a contract made by it. That defendant answered the complaint admitting the claimed principal sum to be due under the contract to some person and that it had been due since the date from which interest was claimed; but alleging that the other defendants claimed the sum to be payable to them; that it was ignorant of the rights and interests of the plaintiff and the other defendants in said sum and of their equities in respect thereto, and had no means of ascertaining the same; that it had-not since the principal sum became due been able to make payments to any one with safety, and that when said principal sum became due it was ready and willing, and had ever since been ready and willing, to pay the same to the persons rightfully, lawfully and justly entitled to receive it; and praying that it might be allowed to pay into court the said principal sum; that thereupon the interest on which the indebtedness arose (a policy of insurance) be surrendered to it; that it be discharged from all liability thereon and that plaintiff and other defendants be restrained from prosecuting any action against it on said instrument or anything connected therewith.
    One of the other defendants also answered.
    On the complaint, the two answers, and an affidavit which set forth no additional material facts, the corporation defendant moved at a special term held at chambers, for the relief asked for in its answer. On such motion the court made the order set forth in the opinion. The order ■ imposed no costs, and did not require the interest on the principal sum to be brought into court.
    
      
      Held, 1st. That the court had no power to discharge the corporation defendant without payment of the interest claimed as well as the principal; that if it had an equitable defense to the claim for interest, it must remain a party to the action and set it forth by answer.
    2d. That the order below should be modified by requiring the corporation defendant to pay the principal sum with interest thereon from the day from which it was claimed to the date of the payment of the principal.
    3d. That the order as modified should be affirmed.
    Before Freedman and Ingraham, JJ.
    
      Decided October 25, 1888.
    The facts sufficiently appear in the head note and the opinion.—
    
      Roger Foster, attorney, and of counsel for appellant, argued:
    I. The court had no power to discharge the defendant from liability without the plaintiff’s consent. There is no provision of the code under which this can be done. The section authorizing a motion for interpleader only applies when a claim is made by a person not a party to the action. Code of Civil Procedure, § 820.
    II. The court should now require payment of interest upon the whole sum up to the date of the second deposit by the insurance company. The default of the respondent has delayed the trial until October pending the appeal. It is but just that it should pay interest during, this time. Its liability does not cease till it is rightfully discharged. As the order below was erroneous, that discharge is incomplete before proceedings have been taken under the order of this general term. Till then it is liable for interest.
    III. The order below should have directed the defendant insurance company to pay costs before its discharge. The only excuse for such an order as was made is to be found in §§ 731-740 of the code. They expressly provide (see § 731) that costs be paid up to the time of tender and payment into court. Code §§ 611-613. If the imposition of costs were in the discretion of the court, the conduct of the respondent in delaying its payment has been so inequitable as to make it justly liable.
    IY. The order was further erroneous inasmuch as it gives an injunction without requiring an undertaking by the insurance company. See Code of Civil Procedure, § 611.
    Y. There was no propriety in ordering a deposit of the policy of insurance in the clerk’s office. There is no authority for this except when an inspection is requested, as was not the case here. The deposit has put the plaintiff to inconvenience in his preparation for trial, and may prejudice his lien founded upon the possession of the policy.
    The counsel also made points in support of the legal liability of the defendant corporation to pay interest.
    
      Alexander & Oreen, attorneys, and James O. Janeway, of counsel for respondent, on the question decided, argued :—
    I. The plaintiff, by bringing this action, prevented the society from obtaining an interpleader order. The plaintiff was not appointed assignee until one day prior to the expiration of the tontine dividend period, to wit, October 1, 1887. He thereupon, and without giving the society sufficient opportunity to investigate the facts, and to determine upon a course that might safely be pursued, commenced his action by the service of a summons on the first 'of November. All persons claiming an interest to the fund resulting from this contract •of insurance were made parties, and the plaintiff thereby prevented the assurance society from obtaining an inter-pleader order under § 820 of the Code. Defendant could not file a bill in the nature of a bill of inter-pleader in equity, for the reason that such bill would be open to the objection of the pendency of another action. Nor has the plaintiff shown himself especially desirous of a speedy determination of the controversy, inasmuch as his complaint was served on the twenty-first of November, and his amended complaint on the sixth of January following. The verified answer of the defendant, the assurance society, avers that it has been ready and willing since the first of October, 1887, when the fund became due by the terms of the policy, to pay to the person or persons rightfully, lawfully and justly entitled to receive the amount due and payable under the said policy, and shows that by reason of ignorance of the rights and equities of the parties, it has been unable to make the payment with safety to itself or with regard to the rights and interests of its policyholders.
    No claim for interest was made by the defendants Mary R. Heather or Manning.
    The counsel also made points against the legal liability of the corporation defendant to pay interest.
   Per Curiam.

The complaint demands judgment against the defendant the Equitable Assurance Company for the amount due under the policy of insurance set up in the complaint with interest thereon from the 1st of October, 1887.

The corporation defendant presented a petition to the court whereby it admits that the amount named is due under the said policy and that it has been due since October 1,1887 ; and alleges that when said amount became due, it was ready and willing to pay the same to the person rightly entitled thereto but that it is ignorant of the rights of the several parties to the action and cannot with safety pay the same to any person; on that petition the court ordered that the said corporation may-pay the amount due without interest into, the Mercan-, tile Trust Co. to the credit of this action and that upon said payment the said corporation defendant be relieved and 'discharged from all liability to the plaintiff or any of the defendants herein; that the policy be deposited in the custody of the court subject to use by either of the parties to the action under the order of the court without prejudice to any lien that any of the parties may so have thereon, and that the plaintiff and other defendants be restrained from prosecuting the action and instituting any other action against the corporation defendant on account of said policy.

We do not think that the court had power by an order to discharge the corporation defendant from liability to the plaintiff without payment of the amount which was due upon the policy and interest from the 1st October, 1887. This interest was, under the complaint in this action, as much a part of the demand of the legal owner of the policy of insurance as the amount required to be paid by the policy.

If the company desired to relieve itself from the obligation to pay interest, it could have commenced an action for an interpleader. Instead of commencing such an action the company, after having refused to pay the plaintiff, did nothing until it was sued and in the meantime retained the money. So if in point of fact the company has an equitable defense against plaintiff’s claim for interest, it must remain a party to the action and set forth such defense by answer.

As the case stands at present the order should only be granted on the payment into court of the amount admitted to be due with interest up to the time of payment.

The order appealed from should be modified by requiring the defendant to pay the sum of $10>142 with interest thereon from October 1, 1887, to the date of the payment of the principal sum.

The appellant should have ten dollars costs and disbursements of this appeal.  