C.C. Walker Grading & Hauling, Inc. v. S.R.F. Management Corp.

316 S.E.2d 298, 311 N.C. 170, 1984 N.C. LEXIS 1733

• Court: Supreme Court of North Carolina
• Decided: June 5, 1984
• Docket: 77A84
• Status: Published

Opinion

MARTIN, Justice.

Plaintiff appeals as of right, pursuant to N.C.G.S. 7A-30, from an opinion of the Court of Appeals which notes a dissent but does not include a dissenting opinion. We take this opportunity to set forth the relevant portion of an amendment to the North Carolina Rules of Appellate Procedure adopted by this Court on 3 November 1983, effective with notices of appeal filed in the Supreme Court on and after 1 January 1984:

Rule 16 of the North Carolina Rules of Appellate Procedure appearing at 287 N.C. 671, 720 entitled “SCOPE OF Review of Decisions of Court of Appeals” is amended as follows:

3. A new subparagraph (b) to be entitled “Scope of Review in Appeal Based Solely Upon Dissent” is hereby adopted as follows:

(b) Scope of Review in Appeal Based Solely Upon Dissent. Where the sole ground of the appeal of right is the existence of a dissent in the Court of Appeals, review by the Supreme Court is limited to a consideration of those issues which are specifically set out in the dissenting opinion as the basis for that dissent and are properly presented in the new briefs required by Rule 14(d)(1) to be filed in the Supreme Court. Other questions in the case may properly be presented to the Supreme Court through a petition for discretionary review, pursuant to Rule 15, or by petition for writ of certiorari, pursuant to Rule 21.

309 N.C. 830 (1983).

The intent of this provision is to further ensure that in appeals of right based solely upon dissent, review by this Court shall be limited to those questions on which there was division in the intermediate appellate court. Such review has never been in tended for claims on which that court has rendered unanimous decisions. State v. Campbell, 282 N.C. 125, 191 S.E. 2d 752 (1972); Hendrix v. Alsop, 278 N.C. 549, 180 S.E. 2d 802 (1971).

Where an appeal of right is taken to this Court based solely on a dissent in the Court of Appeals and the dissenter does not set out the issues upon which he bases his disagreement with the majority, the appellant has no issue properly before this Court. Such appeals are subject to dismissal. Application of this procedural amendment to the case at bar precludes further review by appeal of right.

Nevertheless, in this case, we deem it preferable to certify for discretionary review, on our own motion, the following determinative questions: (1) Did the Court of Appeals err in finding that plaintiff was a “general contractor” within the statutory definition and that the services rendered at Sitting Rock Farms between March and June 1979 were governed by the statute? (2) If plaintiffs noncompliance with the above requirement does not bar recovery, does defendant Helen Stanley share liability with defendant S.R.F. Management Corporation for the spring 1979 improvements on the property?

We answer each of these issues in the affirmative and reverse the decision of the Court of Appeals.

[2J With regard to the statutory provision at issue, this Court has held:

The purpose of Article 1 of Chapter 87 of the General Statutes, which prohibits any contractor who has not passed an examination and secured a license as therein provided from undertaking to construct a building costing $20,000.00 or more, is to protect the public from incompetent builders. When, in disregard of such a protective statute, an unlicensed person contracts with an owner to erect a building costing more than the minimum sum specified in the statute, he may not recover for the owner’s breach of that contract. This is true even though the statute does not expressly forbid such suits. 53 C.J.S. Licenses § 59 (1948); 33 Am. Jur. Licenses §§ 68-72 (1941); Annot., Failure of artisan or construction contractor to procure occupational or business license or permit as affecting validity or enforcement of con tract. 82 A.L.R. 2d 1429 (1962); 5 Williston Contracts (Revised Edition 1937) § 1630; 6 Williston Contracts, Ibid. § 1766; 6A Corbin Contracts §§ 1510-1513.

Builders Supply v. Midyette, 274 N.C. 264, 270, 162 S.E. 2d 507, 510-11 (1968).

N.C.G.S. 87-1 (Cum. Supp. 1983) defines a “general contractor” as:

For the purpose of this Article any person or firm or corporation who for a fixed price, commission, fee or wage, undertakes to bid upon or to construct or who undertakes to superintend or manage, on his own behalf or for any person, firm or corporation that is not licensed as a general contractor pursuant to this Article, the construction of any building, highway, public utilities, grading or any improvement or structure where the cost of the undertaking is thirty thousand dollars ($30,000) or more, shall be deemed to be a “general contractor” engaged in the business of general contracting in the State of North Carolina.

This section shall not apply to persons or firms or corporations furnishing or erecting industrial equipment, power plant equipment, radial brick chimneys, and monuments.

This section shall not apply to any person or firm or corporation who constructs a building on land owned by that person, firm or corporation when such building is intended for use by that person, firm or corporation after completion.

(Emphases ours.)

One who acts as a general contractor must be licensed pursuant to N.C.G.S. 87-10 (Cum. Supp. 1983), which provides, in part, as follows:

[T]he [Licensing] Board shall issue to the applicant a certificate to engage as a general contractor in the State of North Carolina, as provided in said certificate, which may be limited into five classifications as the common use of the terms are known — that is,

(1) Building contractor, which shall include private, public, commercial, industrial and residential buildings of all types;

(la) Residential contractor, which shall include any general contractor constructing only residences which are required to conform to the North Carolina Uniform Residential Building Code (Vol. 1-B);

(2) Highway contractor;

(3) Public utilities contractors, which shall include those whose operations are the performance of construction work on the following subclassifications of facilities: . . .

(4) Specialty contractor, which shall include those whose operations as such are the performance of construction work requiring special skill and involving the use of specialized building trades or crafts

N.C.G.S. 87-13 provides for a criminal penalty for violation of the licensing requirement:

Any person, firm or corporation not being duly authorized who shall contract for or bid upon the construction of any of the projects or works enumerated in G.S. 87-1, without having first complied with the provisions hereof, or who shall attempt to practice general contracting in this State . . . shall be deemed guilty of a misdemeanor and shall for each such offense of which he is convicted be punished by a fine of not less than five hundred dollars ($500.00) or imprisonment of three months, or both ....

This Court has held that the statute must be strictly construed because of the criminal penalties imposed, and its scope may not be extended by implication beyond the meaning of the language so as to include offenses not clearly described. Vogel v. Supply Co. and Supply Co. v. Developers, Inc., 277 N.C. 119, 177 S.E. 2d 273 (1970); Sand and Stone, Inc. v. King, 49 N.C. App. 168, 270 S.E. 2d 580 (1980); Fulton v. Rice, 12 N.C. App. 669, 184 S.E. 2d 421 (1971). Construing a statute requiring the licensing of real estate brokers and salesmen, the Court has taken care to note:

Any violation of its provisions is declared to be a criminal offense. For this reason, and for the further reason that it is a statute restricting to a special class of persons the right to engage in a lawful occupation, the act must be strictly construed so as not to extend it to activities and transactions not intended by the Legislature to be included. Milk Producers Co-op v. Dairy, 255 N.C. 1, 20, 120 S.E. 2d 548; State v. Mitchell, 217 N.C. 244, 7 S.E. 2d 567; State v. Harris, 213 N.C. 758, 197 S.E. 594.

McArver v. Gerukos, 265 N.C. 413, 417, 144 S.E. 2d 277, 280 (1965).

Defendants argue that the legislature, by the use of the words “grading or any improvement,” intended to include the activities undertaken by plaintiff in this case. We do not agree. The guiding principle of statutory construction has been articulated as follows by Justice Barnhill:

A word or phrase or clause or sentence may vary greatly in color and meaning according to the circumstances of its use. Towne v. Eisner, 245 U.S. 418, 62 L.Ed. 372. It is axiomatic, therefore, that a provision in a statute must be construed as a part of the composite whole and must be accorded only that meaning which other modifying provisions and the clear intent and purpose of the act will permit. Its meaning must sound a harmonious—not a discordant—note in the general tenor of the law.

Watson Industries v. Shaw, Comr. of Revenue, 235 N.C. 203, 210, 69 S.E. 2d 505, 511 (1952).

This Court has already applied the above principle to construe the word “improvement” in N.C.G.S. 87-1 as follows:

The term “improvement” does not have a definite and fixed meaning. Cities Service Gas Co. v. Christian, 340 P. 2d 929 (Okl. 1959). “The word ‘improvement’ is a relative and very comprehensive term, whose meaning must be ascertained from the context and the subject matter of the instrument in which it is used.” 42 C.J.S., Improvement, p. 416. The word is sometimes used to refer to any enhancement in value, particularly in relation to non-structural changes to land. Mazel v. Bain, 272 Ala. 640, 133 So. 2d 44 (1961). But where, as here, it is used in context with the words building and structure, its meaning is otherwise. As used here it connotes the performance of construction work and presupposes the prior existence of some structure to be improved.

Vogel v. Supply Co. and Supply Co. v. Developers, Inc., supra, 277 N.C. at 132, 177 S.E. 2d at 281-82.

We hold, following the reasoning in Vogel, that the term “improvement” as used in N.C.G.S. 87-1 has no application to the facts in this case where the word is used with reference to land.

Applying this same analysis, we further conclude that the “grading” intended for coverage by the statute and the “grading” undertaken by this plaintiff are clearly distinguishable. Construed in the context of the language of N.C.G.S. 87-1 and -10, quoted above, the word “grading” connotes an activity which is a part of, or preparatory for, work properly termed “building and construction.” See generally 13 Am. Jur. 2d Building and Construction Contracts § 131 (1964).

Plaintiff has described his occupation as follows:

The bulk of my earlier work was the same kind of work I did for Sitting Rock Farms, that is, I would clear overgrown land for cultivation, removing stumps and bushes, pushing off undergrowth into gulleys, built terraces, farm roads and ponds. We then cultivated the cleared land, seeding and fertilizing it as pasture. That is exactly what I did at Sitting Rock Farms in that period of 1978-79. No engineering or surveying was involved setting grades. ... We made no attempt whatsoever to change the general contours of the hills as that would have disturbed the fertile topsoil too much, but we would put in terraces and channels for runoff so that the planted pastures would be stable. After completing this phase I came back with farm tractors, plowing and harrowing. Then I fertilized it and seeded it with seed, usually furnished by Mr. Stanley. On the dam, which was really a separate contract of $10,000.00, I raised the existing pond dam about 10 feet, which enlarged the existing smaller pond to an area of about an acre and a half. We built farm roads through the pastures.

These activities are best summarized as putting in pasture and are purely agricultural. 1 In its opinion, the Court of Appeals states: “The statute is equally applicable to the clearing and grading required for agricultural purposes as it is to the clearing and grading required for building purposes.” 63 N.C. App. at 172, 310 S.E. 2d at 616. We do not agree and decline to hold that plaintiff s activities were intended by the legislature to be subjected to the licensing requirements of Chapter 87 of the General Statutes of North Carolina.

Defendant Stanley argues there was no agency relationship between her and S.R.F. Management Corporation upon which to base her liability to plaintiff and points to the following portion of C.C. Walker’s deposition testimony.

Q. . . . And what, specifically, did you ever discuss about S.R.F. Management having authority to act as agent for Helen C. Stanley in connection with the engagement of work to be done at Sitting Rock Farms?

A. I don’t know nothing about no S.R.F. Management Corp.

Q. You’ve never heard of that before, or at the time you were making these contracts?

A. No, sir.

Q. And you, therefore, obviously have no information about S.R.F. Management Corp.?

A. No.

Q. A company you never heard of acting as agent of Helen C. Stanley do you?

A. No.

We note that throughout the fall of 1978 and spring of 1979, plaintiff dealt directly with neither defendant in this lawsuit in performing the services for which he seeks reimbursement. The constant and apparent source of authority was John Stanley or, at the latter’s direction, Cox, the foreman. After Helen’s purchase of the farm, there was no noticeable change in authority. John remained “in ultimate control.” Creditors who were aware of the corporate shift from Sitting Rock Farms, Inc. to S.R.F. Management Corporation were led to believe “that nothing had really changed.” Helen herself, as new owner of the property, made it clear that “what he [John] says goes,” expressing apparent approval and assent to the vast improvements taking place in the spring of 1979.

Where, as here, the defendant specifically denies the agency relationship and argues that plaintiff had no knowledge that the alleged agent existed, is the jury thereby precluded from considering the issue? The applicable law is clear and well settled:

The rule is thus stated in Reinhardt on Agency, secs. 89a to 92, especially in section 91: “The doctrine of estoppel as applying to agency may, therefore, be summarized that where a party holds out another as his agent, or has knowingly allowed such person to act for him in one or more similar transactions without objection, he will, as a general rule, be estopped to deny the agency, whether it in fact existed or not, if a third party, without knowing the real state of the matter, and acting in good faith, and as a reasonable man would act from the appearance of things as created by the supposed principal, relies upon the existence of the agency and deals with the supposed agent as such, if the transaction be within the real or apparent scope of the authority exercised.” But, “It is not necessary, however, that the principal’s assent or sanction be given in advance of the performance of the transaction which constitutes the subject-matter or purpose of the agency. If his assent be obtained after the transaction by a confirmation of the assumed relation, it is equally binding and efficacious. Such a confirmation of the authority of the supposed agent is called a ratification.” Reinhardt on Agency, sec. 96. This assent is equivalent to prior authority.

Trollinger v. Fleer, 157 N.C. 81, 87, 72 S.E. 795, 797 (1911). Where a principal accepts the benefits of unauthorized acts of his alleged agent, with knowledge that the agent was acting on his behalf, the principal thereby ratifies such acts and is bound thereby. Trust Co. v. Gill, State Treasurer, 286 N.C. 342, 211 S.E. 2d 327 (1975).

Pursuant to this analysis, we find that there is ample evidence from which a jury might conclude that after 1 January 1979 John Stanley acted as agent for defendant Helen Stanley. A careful and prudent person might perceive that John had the authority to contract for the spring 1979 work on the farm or that Helen had ratified these acts. There was a direct conflict between the plaintiff and the defendant in their testimony on this question, and it is for the jury to pass upon the evidence and to find the truth of the matter.

The above rule applies equally when a corporation holds out or permits a person to hold himself out as its agent. Moore v. W O O W, Inc., 253 N.C. 1, 116 S.E. 2d 186 (1960). See also 19 Am. Jur. 2d Corporations § 1164 (1965). Thus, a jury might find in this case that John Stanley, as president, acted to bind the S.R.F. Management Corporation in making and delivering the promissory note to plaintiff. The evidentiary facts of the lease agreement provision giving Helen, as lessor, responsibility for capital expenditures and the loan repayment agreement item wherein $60,000 was advanced to the trust for improvements to the farms are relevant to a jury determination of this issue.

The trial court erred in granting summary judgment for the defendant.

The decision of the Court of Appeals is reversed, and this case is remanded to that court for further remand to the Superior Court, Rockingham County, for proceedings not inconsistent with this opinion.

Reversed and remanded.

1 . Under the facts of this case, we are not faced with and do not decide the applicability of the statute to a contract for the construction of a farm dam for an amount of $30,000 or more.