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AMERICAN FIDELITY FIRE INSURANCE COMPANY v. ATHENS STOVE WORKS

DECEMBER 04, 1985

AMERICAN FIDELITY FIRE INSURANCE COMPANY
v.
ATHENS STOVE WORKS, INC., AND GREENVILLE PRODUCTS COMPANY, INC.



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 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 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 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 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 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 85-7-191.

 I.

 DID THE TRIAL COURT ERR IN DISMISSING ATHENS' CLAIM FOR FAILURE TO INTERVENE IN THE PRIOR KNIGHT ...


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