State Highway Commission v. LA REYNOLDS COMPANY

Annotate this Case

159 S.E.2d 198 (1968)

272 N.C. 618

STATE HIGHWAY COMMISSION, Plaintiff, v. L. A. REYNOLDS COMPANY and Continental Casualty Company, Defendants.

No. 439.

Supreme Court of North Carolina.

February 2, 1968.

*201 Atty. Gen. T. W. Bruton, Deputy Atty. Gen. Harrison Lewis, Trial Attorney Eugene A. Smith and Assoc. Atty. John R. Surratt, Winston-Salem, for plaintiff appellant.

Hudson, Ferrell, Petree, Stockton, Stockton & Robinson by W. F. Maready, Winston-Salem, *202 for defendant appellee, L. A. Reynolds Co.

Blackwell, Blackwell, Canady, Eller & Jones, Winston-Salem, for defendant appellee, Continental Cas. Co.

BOBBITT, Justice.

Plaintiff did not except to any of the court's findings of fact. Indeed, the judgment recites these facts were "judicially stipulated." Plaintiff's assignments of error are based solely on its exceptions to the court's conclusions of law and judgment.

"An exception to a judgment raises the question whether any error of law appears on the face of the record. This includes the question whether the facts found and admitted are sufficient to support the judgment, * * *." Moore v. Owens, 255 N.C. 336, 121 S.E.2d 540; 1 Strong, North Carolina Index 2d, Appeal and Error § 26.

Facts established by findings (12), (13) and (14), quoted in our preliminary statement, may be summarized as follows: Reynolds' operations were conducted pursuant to and in accordance with its contract with the Commission and under the supervision of the Commission's resident engineer and two inspectors. Whatever damage was done to the restaurant building arose out of the ordinary and customary use by Reynolds "of standard and accepted machinery and road-building equipment used in the work in accordance with standard and accepted methods and techniques in the road construction industry."

There is no allegation or contention that Reynolds' operations were conducted in a negligent manner. Plaintiff bases its case entirely on what it contends to be the contractual obligations of defendants.

The Commission, in the proceeding instituted by it, did not seek to condemn any portion of the land on which the restaurant building was located. The landowners, in their "Amendment to Answer," asserted the damages to their building resulting from highway construction work in the area constituted a taking of their building for highway purposes. Thus, the landowners' claim for compensation for the taking of their building was a new action of the nature now denominated "inverse condemnation." With reference to the building, the landowners recovered on the ground the Commission, having taken their property by virtue of its right of eminent domain, was obligated to pay just compensation therefor.

The doctrine of "inverse condemnation," as established in this jurisdiction, is as follows: Where private property is taken for a public purpose by a governmental agency having the power of eminent domain and no procedure provided by statute affords an applicable or adequate remedy, the owner, in the exercise of his constitutional rights, may maintain an action to obtain just compensation therefor. McKinney v. High Point, 237 N.C. 66, 74 S.E.2d 440; Eller v. Board of Education, 242 N.C. 584, 89 S.E.2d 144; Sale v. Highway Commission, 242 N.C. 612, 89 S.E.2d 290; Cannon v. Wilmington, 242 N.C. 711, 89 S.E.2d 595; Rhyne v. Town of Mount Holly, 251 N.C. 521, 112 S.E.2d 40; Guilford Realty & Insurance Co. v. Blythe Brothers Co., 260 N.C. 69, 131 S.E.2d 900; Midgette v. Highway Commission, 260 N. C. 241, 132 S.E.2d 599; City of Charlotte v. Spratt, 263 N.C. 656, 140 S.E.2d 341; Sherrill v. North Carolina State Highway Commission, 264 N.C. 643, 142 S.E.2d 653.

Whether the landowners' said "inverse condemnation" action was a proper cross action in the Commission's condemnation *203 proceeding is not presented. In this connection, see City of Charlotte v. Spratt, supra. Suffice to say, the landowners' said action was pleaded and prosecuted to final judgment.

Although the Commission was obligated to the landowners for the taking of their restaurant building as determined by final judgment, the facts found by Judge Gambill and set forth in the judgment fail to disclose any obligation of Reynolds to the landowners for whatever damage was done to their building on account of its operations.

While not necessary to decision of the precise question then presented, this Court, in opinion by Ervin, J., in Moore v. Clark, 235 N.C. 364, 70 S.E.2d 182, said: "A contractor who is employed by the State Highway and Public Works Commission to do work incidental to the construction or maintenance of a public highway and who performs such work with proper care and skill cannot be held liable to an owner for damages resulting to property from the performance of the work. The injury to the property in such a case constitutes a taking of the property for public use for highway purposes, and the only remedy available to the owner is a special proceeding against the State Highway and Public Works Commission under G.S. § 136-19 to recover compensation for the property taken or damaged. Yearsley v. W. A. Ross Const. Co., 309 U.S. 18, 60 S. Ct. 413, 84 L. Ed. 554; Burt v. Henderson, 152 Ark. 547, 238 S.W. 626; Marin Municipal Water Dist. v. Peninsula Paving Co., 34 Cal. App. 2d 647, 94 P.2d 404; Maezes v. City of Chicago, 316 Ill.App. 464, 45 N.E.2d 521; Moraski v. T. A. Gillespie Co., 239 Mass. 44, 131 N.E. 441; Garrett v. Jones, 200 Okl. 696, 200 P.2d 402; Svrcek v. Hahn, Tex.Civ.App., 103 S.W.2d 840; Panhandle Cost. Co. v. Shireman, Tex.Civ. App., 80 S.W.2d 461. But if the contractor employed by the State Highway and Public Works Commission performs his work in a negligent manner and thereby proximately injures the property of another, he is personally liable to the owner therefor. Broadhurst v. Blythe Brothers Co., 220 N.C. 464, 17 S.E.2d 646; Burt v. Henderson, supra; Moraski v. T. A. Gillespie Co., supra. See, also, in this connection: 63 C.J.S. Municipal Corporations § 1259(d)." It is noted that Moore v. Clark, supra, was decided prior to the decisions cited above relating to "inverse condemnation."

The statement quoted from the opinion of Ervin, J., in Moore v. Clark, supra, is pertinent to decision herein. We adopt it as authoritative in this jurisdiction.

In addition to the decisions cited by Ervin, J., attention is directed to those considered below.

In Tidewater Const. Corp. v. Manly, 194 Va. 836, 75 S.E.2d 500, the landowners alleged the contractor, while engaged in the construction of a tunnel, had damaged their building by the removal of its subjacent support. It was admitted that the contractor was not guilty of negligence in the construction of the tunnel and that it performed the work thereon strictly in accordance with the plans and specifications embraced in its contract with the Tunnel Commission, a governmental agency vested with the right of eminent domain. A judgment in favor of the landowners was reversed. Whittle, J., for the Supreme Court of Appeals of Virginia, said:

"If this were not the rule (i. e., if the contractor were liable under these circumstances), the State or subdivisions thereof having the power to condemn private property for public use, would find it difficult to secure bids from contractors. The contractor's bid is based upon the theory that the public agency has a legal right to submit its plans and specifications for the work to be performed, and that if he performs the work in accordance with the *204 plans and specifications he will incur no liability in the absence of negligence. The public agency and not the contractor is the party clothed with the power of eminent domain, and if there is to be any special or unforeseen liability attached to the exercise of this power then it should be borne by the agency as an incident to the peculiar power.

"This conclusion is amply supported by the authorities. The public agency or corporation causing the land to be condemned or the work to be done is primarily liable for injuries caused by the exercise of the power of eminent domain. Village of Glencoe v. Hurford, 317 Ill. 203, 148 N.E. 69; 20 C.J. 845, note 59, 29 [A] C.J.S., Eminent Domain, § 195. And this applies to property taken or damaged by a city, county or other political subdivision. Hulen v. City of Corsicana, 5 Cir., 65 F.2d 969, certiorari denied 290 U.S. 662, 54 S. Ct. 77, 78 L. Ed. 573; Coy v. City of Tulsa, D.C.Okl., 2 F. Supp. 411. A contractor or agent lawfully acting on behalf of a principal to whom the right of eminent domain has been accorded, in making a proposed public improvement, cannot be held personally liable for damages if such improvement is made without negligence on his part. Yearsley v. W. A. Ross Const. Co., 309 U.S. 18, 60 S. Ct. 413, 84 L. Ed. 554, 557; Burt v. Henderson, 152 Ark. 547, 238 S.W. 626; Marin Municipal Water Dist. v. Peninsula Paving Co., 34 Cal. App. 2d 647, 94 P.2d 404; Bondy v. Utah Const. Co., Sup., 23 N.Y.S.2d 125; Svrcek v. Hahn, Tex.Civ.App., 103 S.W.2d 840; Panhandle Const. Co. v. Shireman, Tex.Civ.App., 80 S.W.2d 461; 29 C.J.S., Eminent Domain, § 195, page 1098, note 41."

With reference to a similar factual situation, Jones, J., in Valley Forge Gardens v. James D. Morrissey, Inc., 385 Pa. 477, 123 A.2d 888, speaking for the Supreme Court of Pennsylvania, and in accord with numerous decisions cited, including Tidewater Const. Corp. v. Manly, supra, states: "(I)t has been uniformly held that in the absence of negligence or wilfully tortious conduct on the part of an independent contractor, he is not liable for injury to another's property which is caused by the performance of his contract with a governmental instrumentality in accordance with its plans and specifications." Accord: Myers v. United States, 9 Cir., 323 F.2d 580; Wood v. Foster and Creighton Co., et al., 191 Tenn. 478, 235 S.W.2d 1; Southeast Construction Co. v. Ellis, 233 Ark. 72, 342 S.W.2d 485; 40 C.J.S. Highways § 212(b) p. 208.

In our preliminary statement, we quoted provisions of Section 7.14 of the Standard Specifications and also provisions of the "Contract Bond." Plaintiff relies on the italicized portions thereof. However, these words must be considered in the context of the entire provision in which they appear. As often stated, "(t)he heart of a contract is the intention of the parties, which is to be ascertained from the expressions used, the subject matter, the end in view, the purpose sought, and the situation of the parties at the time." Gould Morris Electric Co. v. Atlantic Fire Insurance Co., 229 N.C. 518, 520, 50 S.E.2d 295, 297. Accord: Howland v. Stitzer, 240 N.C. 689, 84 S.E.2d 167; Sell v. Hotchkiss, 264 N.C. 185, 191, 141 S.E.2d 259, 264.

We agree with the legal conclusions set forth in Judge Gambill's judgment. In our view, and we so decide, it was not contemplated or intended that Reynolds should reimburse the Commission for any amount paid by the Commission in discharge of its own primary liability; and that reimbursement was contemplated and intended only in instances in which the Commission was called upon to discharge a liability to which it was subject on account of some wrongful act of Reynolds and for which Reynolds was primarily liable.

Under the factual situation before us, the obligation to the landowners was on the Commission, not on Reynolds. The *205 Commission cannot maintain an action against Reynolds for reimbursement for money paid by the Commission to discharge an obligation for which the Commission was, but Reynolds was not, legally liable.

In view of the conclusions reached, it is unnecessary to discuss the fact that defendants would not be obligated in any event for the amount of the judgment the landowners obtained against the Commission. It is simply noted that defendants have had no day in court in respect of the amount of the damages to the landowners' building that may have been caused by non-negligent operations of the contractor in the performance of its contract with the Commission.

For the reasons stated, the judgment from which plaintiff appeals is affirmed.