American Fidelity Fire Ins. Co. v. Athens Stove Works, Inc., 55311

• Decision Date: 04 December 1985
• Docket Number: No. 55311,55311
• Citation: 481 So.2d 292
• Parties: AMERICAN FIDELITY FIRE INSURANCE COMPANY v. ATHENS STOVE WORKS, INC., and Greenville Products Company, Inc.
• Court: Mississippi Supreme Court

Page 292

481 So.2d 292

AMERICAN FIDELITY FIRE INSURANCE COMPANY v. ATHENS STOVE WORKS, INC., and Greenville Products Company, Inc.

No. 55311.

Supreme Court of Mississippi.

Dec. 4, 1985.

Ron A. Yarbrough, Ott & Purdy, Jackson, for appellant.

William R. Fortier, Fred C. Permenter, Jr., Smith, Elliott, Fortier & Permenter, Ripley, for appellees.

En Banc.

SULLIVAN, Justice, for the Court:

This is an appeal from the judgment of the Circuit Court of Tippah County, Mississippi, dismissing the claim by Athens Stove Works, Inc., ("Athens"), upon a private construction bond for failure to intervene in a previously filed action on the bond, but granting summary judgment to Greenville Products Company, Inc., ("Greenville"), who intervened in the action filed by Athens on the ground that the answer filed by the surety, American Fidelity Fire Insurance Company ("American Fidelity"), raising the defense of the prior action was not timely filed. American Fidelity appeals from the summary judgment granted to Greenville, and Athens cross-appeals on the dismissal of its action against American Fidelity.

On May 26, 1981, Athens Stove Works, Inc. filed suit against American Fidelity Fire Insurance Company and Marko Planning Company ("Marko"), on a private construction bond brought under Mississippi Code Annotated Sec. 85-7-189. Athens alleged that it had provided electric ranges to Marko for use in constructing the bonded project and that Athens had not been fully paid. The next day, Greenville Products Company, Inc. filed a motion to intervene under Sec. 85-7-191 Mississippi Code Annotated (1972), alleging that it had sold to Marko refrigerators for which it had not been fully paid. On June 27, 1981, American Fidelity filed an answer and a demurrer to the complaint of Athens only. The basis of the demurrer was an interpleader suit which was filed in Federal District Court on November 21, 1980. American Fidelity requested an abatement of the suit by Athens pending the outcome of the Federal case, and further argued that because Ripley Elderly Associates had filed a counterclaim in the federal district court, that the federal action represented the first suit against American Fidelity on the bond so that the Athens suit should be dismissed under the "one action only" provision of Sec. 85-7-191.

Over one year later, on October 1, 1982, American Fidelity filed an answer and a demurrer to Greenville's action. In this answer, American Fidelity prayed for an abatement of this action pending the outcome of the federal court action and for the first time raised the existence of a separate state court suit filed by one James Knight in the Circuit Court of Tippah County on January 6, 1981. As to Greenville, American Fidelity alleged that the Knight suit was the first suit against American Fidelity on the bond and that all other claims must be joined in the Knight action. American Fidelity sought to have Greenville dismissed for failure to join in the Knight action. On October 13, 1982, Greenville moved to strike American Fidelity's answer for failure to timely reply to its complaint, to which American Fidelity responded that Greenville was estopped from complaining of the tardy answer because Greenville had not taken a default judgment against American Fidelity prior to the answer.

American Fidelity then filed a motion to dismiss both the Athens and the Greenville actions on February 3, 1983, on the basis that their failure to intervene in the Knight action, in which a final judgment was rendered on January 21, 1983, barred them under Sec. 85-7-191 from maintaining any subsequent suit on the same surety bond. Athens and Greenville replied to the motion to dismiss, contending that strict application of the "one action only" rule would leave them with no other remedy at law.

On September 22, 1983, some seven months after final judgment was rendered in the Knight suit, the circuit judge sustained Greenville's motion to strike American Fidelity's answer for an untimely response, and entered a summary judgment in favor of Greenville against American Fidelity. At the same time, the trial judge dismissed Athens' complaint for failure to join in the Knight action as required by Sec. 85-7-191.

Both American Fidelity and Athens appeal. American Fidelity assigned as error:

(1) The trial court erred in entering judgment against American Fidelity in favor of Greenville because the court lacked subject matter jurisdiction over Greenville's claim.

Athens assigned as error:

(1) The trial court's dismissal of Athens' claim for failure to join in the Knight suit as required by Sec. 85-7-191.

I.

DID THE TRIAL COURT ERR IN DISMISSING ATHENS' CLAIM FOR

FAILURE TO INTERVENE IN THE PRIOR KNIGHT SUIT

FILED UNDER Sec. 85-7-191?

The private work bond statute, Mississippi Code Annotated Sec. 85-7-185 (1972), et seq., establishes that only one cause of action is permitted against the surety's bond. Mississippi Code Annotated Sec. 85-7-191 (1972) provides:

When suit is so instituted by any person only one action shall be brought and any person entitled to sue may upon application intervene and be made a party to said suit; however, such intervention must occur within the time limited for such person to bring an original action. (emphasis added)

The only case construing this statute is USF&G Co. v. Dedeaux, 168 Miss. 794, 152 So. 274 (1934). This Court stated that:

Section 2279, Code 1930, (predecessor of 87-5-191) provides that but one suit shall be brought under such a bond and that when one person entitled to sue has brought suit, all other persons interested may intervene, and by Section 2281, Code 1930, (predecessor of Sec. 85-7-195), it is enacted that the parties interested shall be summoned as provided by section 2264, Code 1930, (predecessor of Sec. 85-7-145), which is the general section governing the summoning of parties touching controversies respecting statutory liens.

The Dedeaux court pointed out a significant discrepancy between private and public bond actions as follows:

It is not required by the statutes in respect to suits on bonds by subcontractors, the private bonds given by them to the principal contractor, that publication shall be made as mentioned in section 5976, Code 1930, (predecessor of Sec. 31-5-13), which applies only to suits on the public bond given by the principal contractor. Apparently the same reasons exist for the requirement of publication where a private subcontractor's bond is involved, but the Legislature did not so enact and we are not authorized to supply the omission by judicial construction, which, of course, would plainly be judicial legislation. (emphasis added)

Finally, the Dedeaux court noted that:

Since the statute expressly provides that only one suit shall be brought, it follows necessarily that the first suit instituted in a court of competent jurisdiction, competent both as to subject-matter and as to parties, must be the suit which must be allowed to determine all the issues and claims, and, since it appears from the certified exhibits that the chancery court in Lauderdale county had first obtained competent jurisdiction, any subsequent suit should be abated and dismissed, and all the parties remitted to the first suit for the adjudication of their rights under the bond.

168 Miss. at 798-99, 152 So. at 274-75.

Athens contends that as an interested party it should have been summoned in the Knight suit and, as it was not, it was not required to intervene. Athens further argues that American Fidelity was the one party in a position to know how many people have sued on the bond and where, and, therefore, American Fidelity had an affirmative duty to notify both Athens and Greenville of any prior suit.

Prior to amendment in 1962, the identical language was used in the public bonds statute as in the private bonds statute to establish that only one suit may be maintained upon a surety bond. In construing this parallel statute, this Court, in Travelers Indemnity Co. v. Munro Oil and Paint Co., 364 So.2d 667 (Miss.1978), noted that the statutory requirement of publication of the pendency of a suit on the public bond is jurisdictional in nature and therefore may be raised on appeal, even though not raised in assignment of error to the circuit court. This Court cited U.S.F.&G. Co. v. Mobley, 143 Miss. 512, 108 So. 501 (1926), to the effect that lack of such publication constitutes fatal error:

This notice seems to be in the nature of due process, and whether the failure to publish the notice in Jefferson County was pleaded in abatement, or called to the attention of the court in any other way, cannot be deemed a waiver, for the reason that the statute requires that there be one suit, and that the necessary parties are to be brought in by such publication, and therefore, no valid decree could be rendered under the statute unless its essential requirements are complied with by the court. Id. at 518, 108 So. at 502.

Munro, 364 So.2d at 668.

As Dedeaux cogently points out, no logical reason...