It’s probably not essential to maintaining a federal statutory interpleader action, but it is advisable and no less cost-efficient.

The federal interpleader statute, 28 U.S.C. § 1335 – Interpleader, on its face suggests that a disinterested stakeholder seeking interpleader relief must first deposit the funds with the Clerk of the Court for the district court to acquire jurisdiction over the proceeding and grant relief to the stakeholder. However, Fed. R. Civ. P. 67 (and some local rules) prohibits any deposit with the Clerk until and unless the stakeholder presents a court order permitting the deposit. If a disinterested stakeholder cannot deposit funds without a court order and the court is without jurisdiction to issue such an order without a deposit having been made, then the relief afforded under § 1335 would be foreclosed to disinterested stakeholders in general. So what is a disinterested stakeholder to do?

Fortunately, the district courts do not routinely turn their backs on stakeholders. Some courts interpret the deposit requirement liberally as a prerequisite to maintaining jurisdiction over the second phase of an interpleader (resolution of the conflicting claims) as opposed to acquiring jurisdiction over the first phase (placing the fund before the court and discharging the stakeholder). Other courts consider the lack of a deposit as a jurisdictional defect that the stakeholder should be permitted to cure, and happily provide the order for deposit to be presented to the Clerk to facilitate the deposit pursuant to the rule.

The interpleader statute is to be liberally construed and applied to relieve disinterested stakeholders from present and future litigation concerning contested funds.[1] In this spirit, some courts have concluded that the deposit requirement is not a prerequisite to the court obtaining jurisdiction, but instead a condition of maintaining it.[2]

Other courts are unwilling to read the deposit prerequisite out of the statute. It seems they are equally unwilling, however, to dismiss an interpleader action for lack of prior deposit. Instead, these courts afford the stakeholder the opportunity to cure the defect, often by authorizing the deposit, often as a condition of discharge.[3]

So, it is unlikely that a district court would dismiss an interpleader action based on a delay in depositing the funds. But why risk it? It is probably more prudent to preempt the question by affirmatively seeking leave to deposit immediately after filing the interpleader complaint. The rules contain no prohibition against a pre-answer motion for leave to deposit funds with the Clerk of the Court. Also, the motion need not present significant additional expense; in fact, it is likely less costly than opposing a motion to dismiss based on lack of subject matter jurisdiction.