EX PARTE WATER WORKS BD. OF GULF SHORES

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Docket Number

86-183.

Attorney(S)

Larry B. Childs of Cabaniss, Johnston, Gardner, Dumas O'Neal, Birmingham, Cecil G. Chason of Chason Underwood, Foley, for petitioner. L. Graves Stiff III of Starnes Atchison, Birmingham, Norborne C. Stone, Jr., of Stone, Granade, Crosby Blackburn, Bay Minette, for respondents.

Judges

ALMON, Justice.

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Smart Summary

Factual and Procedural Background

The Water Works Board of the Town of Gulf Shores filed a complaint on April 30, 1986, against The Travelers Indemnity Company, the surety on a contractor's performance bond, and Perry Hand and Associates, Inc., the supervising engineer. The complaint arose from a contract between Harmon Contracting Company, Inc. (the principal on the bond) and the Water Works Board, with Hand declaring Harmon in default on March 17, 1986. Prior to this, on February 17, 1986, Harmon had filed a separate action in Jefferson County against the Water Works Board, Hand, and others concerning the same contract. Travelers contended that the Jefferson County court had exclusive jurisdiction due to Harmon's prior suit and moved in the Baldwin County Circuit Court for dismissal, transfer, or stay of the Water Works Board's complaint. The Baldwin County court granted a transfer to Jefferson County. The Water Works Board petitioned for a writ of mandamus to challenge the transfer.

Legal Issues Presented

Whether the Circuit Court of Baldwin County was an appropriate venue for the Water Works Board's action against Travelers and Perry Hand.
Whether the prior suit filed by Harmon in Jefferson County conferred exclusive jurisdiction on that court over the Water Works Board's claim against Travelers.
Whether the Water Works Board's claim against the surety (Travelers) was a compulsory counterclaim in Harmon's Jefferson County suit.
Whether a writ of mandamus is the proper remedy to challenge the transfer of the case from Baldwin County to Jefferson County.

Arguments of the Parties

Travelers Indemnity Company's Arguments

The Jefferson County Circuit Court acquired exclusive jurisdiction over the dispute because Harmon, the principal on the bond, had already filed suit there.
The Water Works Board should have filed its claim against Travelers as a counterclaim in Harmon's Jefferson County action.
Since the surety (Travelers) and its principal (Harmon) are effectively interchangeable for purposes of the dispute, the absence of Harmon as a defendant in the Water Works Board's suit is irrelevant.
Requested dismissal, transfer, or stay of the Water Works Board's action in Baldwin County.

Water Works Board's Arguments

The venue in Baldwin County was proper because Travelers and Hand conduct business there through agents.
The Water Works Board may proceed against the surety without first exhausting remedies against the principal.
The claim against Travelers is not a compulsory counterclaim to Harmon's Jefferson County suit because Travelers was not a party to that action.
The transfer of the case was improper and a writ of mandamus should issue to reverse it.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Ex parte Parker, 413 So.2d 1105 (Ala. 1982)	Transfer is the appropriate relief for improper venue under Rule 82(d), A.R.Civ.P.	Supported that a transfer is only proper if venue is improper; here venue was proper in Baldwin County, so transfer was improper.
Ex parte Maness, 386 So.2d 429 (Ala. 1980)	Transfer is not authorized except for improper venue.	Reinforced that the circuit court erred in transferring the case on grounds other than improper venue.
Medical Service Admin. v. Dickerson, 362 So.2d 906 (Ala. 1978)	Transfer is limited to improper venue situations.	Used to confirm the limits on transfer authority.
Alabama Bank Trust Co. v. Garner, 225 Ala. 269, 142 So. 568 (1932)	A claimant may proceed against a surety without first exhausting remedies against the principal.	Supported the Water Works Board's right to sue Travelers independently of Harmon.
Dampskibsak-tieselskabet Habil v. United States Fid. Guar. Co., 142 Ala. 363, 39 So. 54 (1904)	Same principle as above regarding suretyship claims.	Reinforced the Water Works Board's ability to sue the surety directly.
Abercrombie v. Knox, 3 Ala. 729 (1843)	Suretyship claims may proceed independently of principal’s liability claims.	Supported the Water Works Board's position on independent claims against the surety.
Fidelity Cas. Co. of New York v. DeLoach, 280 Ala. 497, 195 So.2d 789 (1967)	Same principle regarding surety claims without prior action against principal.	Used to affirm the Water Works Board's right to sue Travelers without Harmon's involvement in this suit.
Ewing v. Bay Minette Land Co., 232 Ala. 22, 166 So. 409 (1936)	Consistent with principles on surety liability and independent claims.	Supported the Water Works Board's procedural rights.
Corona v. Southern Guaranty Ins. Co., 294 Ala. 184, 314 So.2d 61 (1975)	Claim against a party not involved in a prior suit is not a compulsory counterclaim.	Confirmed that Water Works Board’s claim against Travelers was not a compulsory counterclaim in Harmon's suit.
Smith v. Charles E. Jay Co., 292 Ala. 513, 296 So.2d 885 (1974)	Definition and boundaries of compulsory counterclaims.	Supported the court’s conclusion that the claim against Travelers was not compulsory in Harmon's case.
Ex parte Joiner, 486 So.2d 402 (Ala. 1986)	Mandamus is appropriate to correct improper transfer of a case.	Justified issuance of the writ to reverse the transfer from Baldwin to Jefferson County.
Ex parte City of Huntsville Hospital Bd., 366 So.2d 684 (Ala. 1978)	Mandamus as a remedy for improper judicial actions such as erroneous venue transfer.	Supported the court’s decision to grant mandamus relief.

Court's Reasoning and Analysis

The court analyzed the procedural posture and venue rules governing the case. It recognized that the Water Works Board's suit involved claims against a surety on a contractor's performance bond and an engineer, distinct from the prior suit filed by the principal contractor, Harmon, in Jefferson County. The court emphasized that venue was proper in Baldwin County because both Travelers and Hand conducted business there through agents. Transfer of venue is only authorized for improper venue, and since Baldwin County was a proper venue, the transfer was improper. Additionally, the court held that the Water Works Board was entitled to sue the surety without first exhausting remedies against the principal, and that the claim against Travelers was not a compulsory counterclaim in Harmon's Jefferson County suit because Travelers was not a party to that action. Given that the transfer was improper, the court determined that mandamus was the appropriate remedy to correct the trial court's error.

Holding and Implications

The court granted the writ of mandamus and ordered that the case not be transferred from Baldwin County to Jefferson County.

The direct consequence is that the Water Works Board's action against Travelers and Perry Hand must proceed in Baldwin County. The ruling enforces proper venue principles and affirms the right to sue a surety independently of the principal. The opinion does not establish new precedent but clarifies the application of existing venue and suretyship law in this context.

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Ex parte The WATER WORKS BOARD OF the TOWN OF GULF SHORES. (In re The WATER WORKS BOARD OF the TOWN OF GULF SHORES v. THE TRAVELERS INDEMNITY COMPANY and Perry Hand Associates, Inc.)

ALMON, Justice.

This is a petition for a writ of mandamus regarding a transfer of the instant case from the Circuit Court of Baldwin County to the Circuit Court of Jefferson County. This suit involves a claim against a surety on a contractor's performance bond; the case was transferred essentially because the principal on the bond had previously filed an action in Jefferson County arising out of the same contract.

The Water Works Board of the Town of Gulf Shores filed the instant complaint on April 30, 1986, against The Travelers Indemnity Company as surety on a contract bond whereby Travelers and Harmon Contracting Company, Inc., bound themselves to the faithful performance of a contract between Harmon and the Water Works Board. This complaint also named as a defendant Perry Hand and Associates, Inc., the engineer supervising performance by Harmon for the Water Works Board. Hand declared Harmon in default on the contract on March 17, 1986.

On or about February 17, 1986, Harmon had filed an action in Jefferson County against the Water Works Board, Hand, and three of Harmon's suppliers. Travelers takes the position that the Jefferson County Circuit Court thereby acquired exclusive jurisdiction of the dispute and, thus, that the Water Works Board should have instituted the instant action as a counterclaim in Harmon's action. As Travelers states in its summary of its argument, "Since the identity of the surety (Travelers) and its principal (Harmon) are interchangeable for purposes of the dispute between the Board and Harmon, the fact that Harmon was not named as a defendant in the second action is irrelevant."

We note initially that Travelers' motion in the Baldwin County Circuit Court sought as relief alternatively a dismissal, a transfer, or a stay of the instant action, and that the circuit court granted relief in the form of a transfer. A transfer is the appropriate relief for improper venue. Ex parte Parker, 413 So.2d 1105 (Ala. 1982); Rule 82(d), A.R.Civ.P. Venue of this action was indisputably proper in Baldwin County, because both Travelers and Hand do business by agent in Baldwin County. Code 1975, § 6-3-7. A transfer is not authorized except for improper venue. Ex parte Maness, 386 So.2d 429 (Ala. 1980); Medical Service Admin. v. Dickerson, 362 So.2d 906 (Ala. 1978).

The Water Works Board correctly points out that it may proceed against the surety on the bond without first exhausting its remedies against the principal. Alabama Bank Trust Co. v. Garner, 225 Ala. 269, 142 So. 568 (1932); Dampskibsak-tieselskabet Habil v. United States Fid. Guar. Co., 142 Ala. 363, 39 So. 54 (1904); Abercrombie v. Knox, 3 Ala. 729 (1843); see Fidelity Cas. Co. of New York v. DeLoach, 280 Ala. 497, 195 So.2d 789 (1967); Ewing v. Bay Minette Land Co., 232 Ala. 22, 166 So. 409 (1936).

Because Travelers was not a party to Harmon's Jefferson County suit, the Water Works Board's claim against Travelers is not a compulsory counterclaim to be filed in Harmon's suit. Corona v. Southern Guaranty Ins. Co., 294 Ala. 184, 314 So.2d 61 (1975); Smith v. Charles E. Jay Co., 292 Ala. 513, 296 So.2d 885 (1974).

Mandamus is the appropriate remedy where a trial court has improperly transferred a cause. Ex parte Joiner, 486 So.2d 402 (Ala. 1986); Ex parte City of Huntsville Hospital Bd., 366 So.2d 684 (Ala. 1978). Venue being proper in Baldwin County, the circuit court erred in transferring the cause and, therefore, the writ of mandamus is due to issue.

WRIT GRANTED.

MADDOX, BEATTY, HOUSTON and STEAGALL, JJ., concur.