Matternes v. City of Winston-Salem

209 S.E.2d 481, 286 N.C. 1, 1974 N.C. LEXIS 1174

• Court: Supreme Court of North Carolina
• Decided: November 26, 1974
• Docket: 74
• Status: Published

Opinions

LAKE, Justice.

Upon this appeal, we do not reach the question of whether the city was negligent or otherwise broke its contract with the Board of Transportation, formerly called the State Highway Commission. The trial court granted summary judgment for the city on the ground that if the city, having so contracted with the Board of Transportation, failed in all of the respects alleged in the complaints, the plaintiffs have no cause of action against the, city for the death, personal injuries and damages resulting from any or all of such failures.

The liability of a city or town for damages for- injuries sustained by a user of its streets, due to the defective condition of'the street, nothing else appearing, was thus stated by Justice Parker, later Chief Justice, speaking for this Court in Smith v. Hickory, 252 N.C. 316, 113 S.E. 2d 557:

“The governing authorities of a town or city, have the duty imposed upon them by law of exercising ordinary care .to maintain its streets and sidewalks in a condition reason-aibly safe for those who use them in a proper manner. Liability arises only for a negligent breach of duty, and for this reason it is necessary for a complaining party to show, more than the existence of a defect in the street or sidewalk and the injury * *

To the same effect, see: Waters v. Roanoke Rapids, 270 N.C. 43, 153 S.E. 2d 783; Mosseller v. Asheville, 267 N.C. 104, 147 S.E. 2d 558; Faw v. North Wilkesboro, 253 N.C. 406, 117 S.E. 2d 14; Gettys v. Marion, 218 N.C. 266, 10 S.E. 2d 799; Bailey v. Winston, 157 N.C. 252, 72 S.E. 966; Fitzgerald v. Concord, 140 N.C. 110, 52 S.E. 309; Bunch v. Edenton, 90 N.C. 431. By virtue of applicable statutes, a different ru’e applies, nothing else appearing, when the street on which the injury occurred is a part of the State highway system. G.S. 160A-297 (a) provides:

“Streets under authority of Board of Transportation.— (a) A city shall not be responsible for maintaining streets or bridges under the authority and control of the Board of Transportation, and shall not be liable for injuries to persons or property resulting from any failure to do so.” (Emphasis added.)

G.S. 136-45 provides:

. “General purpose of law: control, repair and maintenance of highways. — The general purpose of the laws creating the Board of Transportation is that said Board of Transportation shall take over, establish, construct, and maintain a statewide system of hard-surfaced and other dependable highways * * * and for the further purpose of permitting the State to assume control of the State highways, repair, construct, and reconstruct and maintain said highways at the expense of the entire State, and to relieve the counties and cities and towns of the State of this burden.”

G.S. 136-47 provides:

“Routes and maps; objections; changes. — The designation of all roads comprising the State highway system as proposed by the Board of Transportation shall be mapped, and * * * the * * * street-governing body of each city or town in the State shall be notified of the routes that are to be selected and made a part of the State system of highways; and if no objection or protest is made by the * * * street-governing body of any city or town in the State within 60 days after the notification before mentioned, then and in that case the said roads or streets, to which no objections are made, shall be and constitute links or parts of the State highway system * * *.”

G.S. 136-66.1 provides:

“Responsibility for streets inside municipalities. — Responsibility for streets and highways inside the corporate limits of municipalities is hereby defined as follows:

(1) The State Highway System. — The State highway system inside the corporate limits of municipalities shall consist of a system of major streets and highways necessary to move volumes of traffic efficiently and effectively from points beyond the corporate limits of the municipalities through the municipalities and to major business, industrial, governmental and institutional destinations located inside the municipalities. The Board of Transportation shall be responsible for the maintenance, repair, improvement, widening, construction and reconstruction of this system. * * *

(2) The Municipal Street System. — In each municipality the municipal street system shall consist of those streets and highways accepted by the municipality which are not a part of the State highway system. The municipality shall be responsible for the maintenance, construction, reconstruction, and right-of-way acquisition for this system.

(3) Maintenance of State Highway System by Municipalities. — Any city or town, by written contract with the Board of Transportation, may undertake to maintain, repair, improve, construct, reconstruct or widen those streets within municipal limits which form a part of the State highway system. * * * All work to be performed by the city or town under such contract or contracts shall be in accordance with Board of Transportation standards, and the consideration to be paid by the Board of Transportation to the city or town for such work, whether in money or in services, shall be adequate to reimburse the city or town for all costs and expenses, direct or indirect, incurred by it in the performance of such work * *

G.S. 136-41.3 provides:

“Use of funds; records and annual statement; excess accumulation of funds; contracts for maintenance, etc., of streets. — * * * The Board of Transportation within its discretion is hereby authorized to enter into contracts with municipalities for the purpose of maintenance, repair, construction, reconstruction, widening or improving streets of municipalities. And the Board of Transportation in its discretion may contract with any city or town which it deems qualified and equipped so to do that the city or town shall do the work of maintaining, repairing, improving, constructing, reconstructing, or widening such of its streets as form a part of the State highway system * *

Interstate Highway No. 40, including the Hawthorne Bridge, is part of the State highway system over which the Board of Transportation had and has authority. It is clear that, under the foregoing statutes, apart from its contract with the Board of Transportation, the city has no responsibility for the maintenance or the condition of the Hawthorne Bridge and no liability to any person injured by reason of any defect in its condition, not due to an act of the city, or by reason of any failure to remove snow and ice therefrom. In our opinion, it is equally clear that the above quoted provisions of G.S. 160A-297 (a) are intended to apply where there is no such contract and do not, per se, absolve a city from liability for injury, if any, imposed upon it by such contract. Consequently, the matters alleged in the complaints, assuming the allegations to be true, do not give to the plaintiffs a right of action against the city for the death of Mrs. Matternes, the injuries sustained by her daughter or the damage to the automobile and the medical expenses incurred by the father of the child, unless liability for these arises out of the contract between the city and the Board of Transportation.

The material portions of the contract are quoted above. It does not contain any specific provision as to the liability of either party thereto for injury or damage to users of the highway caused by defects therein or the accumulation of snow, ice or other substance thereon. It provides for the performance by the municipality of work, which, apart from the contract, the Board of Transportation would be under a duty to perform, and for the compensation to be paid to the city for such work. It provides that the work is to be performed by the city in accordance with the requirements of the Board of Transportation and under the general administrative control of its engineer. Such contract does not change the status of thé street from one which is a part of the State highway system to one which is part of the city system, and so bring it within the general rule, above quoted, concerning a city’s duty to travelers upon its streets. See, Taylor v. Hertford, 253 N.C. 541, 117 S.E. 2d 469. The status of the city under this contract is that of an employee of, or independent contractor with, the Board of Transportation.

It is to be observed that the plaintiffs do not complain of any act of the city which created, or increased the hazard of, any condition upon the Hawthorne Bridge or upon the highway of which it is a part. The question of a city’s liability for so doing, with or without a contract with the Board of Transportation, is not before us. The complaint is that the city did nothing; that is, that the city broke its contract with the Board of Transportation by failing to correct or to remove a dangerous condition not the result of any act of the city. The liability of the city to the Board of Transportation for such breach of the contract is not before us.

The question upon this appeal is, Can an individual user of a street, which is part of the State highway system, who sustains personal injuries or property damage as the result of a dangerous condition of such street, maintain an action for damages against a city which contracted with the Board of Transportation to repair or remove such condition and then did nothing whatsoever about it? The answer is, No.

The general rule is that one who is not a party to a contract may not maintain an action for its breach. The plaintiffs contend that they fall within the well recognized exception to the general rule which permits such an action to be maintained by a third party who is a beneficiary of the contract. The scope and effect of the third party beneficiary rule was clearly stated by Justice Huskins, speaking for this Court in Vogel v. Supply Co. and Supply Co. v. Developers, Inc., 277 N.C. 119, 177 S.E. 2d 273. There, we held that a summary judgment for the defendant should have been entered in a suit for breach of a construction contract, for the reason that the plaintiff was a mere incidental beneficiary of the contract and, as such, could not maintain an action for its breach. We said:

“The American Law Institute’s Restatement of Contracts provides a convenient framework for analysis. Third party beneficiaries are divided into three groups: donee beneficiaries, where it appears that the ‘purpose of the promisee in obtaining the promise of all or part of the performance thereof is to make a gift to the beneficiary’; creditor beneficiaries, where ‘no purpose to make a gift appears’ and ‘performance of the promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary’; and incidental beneficiaries, where the facts do not appear to support inclusion in either of the above categories. Restatement of Contracts § 133 (1932). While duties owed to donee beneficiaries and creditor beneficiaries are enforceable by them, Restatement of Contracts §§ 135, 136, a promise of incidental benefit does not have the same effect. ‘An incidenal beneficiary acquires by virtue of the promise no right against the promisor or the promisee.’ Restatement of Contracts § 147.

‡ ‡ ‡

“Restatement § 133 correctly states the law of this State and we therefore expressly approve the Restatement formula.”

To the same effect, see: Williston on Contracts, 3rd Ed., §§ 356, 402; Corbin on Contracts, §§ 776, 782; 17 Am. Jur. 2d, Contracts, §§ 305, 307.

The intention of the parties to the contract determines whether the plaintiff is a mere incidental beneficiary thereof. Vogel v. Supply Co. and Supply Co. v. Developers, Inc., supra; 17 Am. Jur. 2d, Contracts, §§ 304, 305, 307. “A third person cannot maintain an action upon a simple contract merely because he would receive a benefit from its performance or because he is injured by the breach thereof.” Kelly v. Richards, 95 Utah 560, 83 P. 2d 731, 129 A.L.R. 164.

In Moch Co. v. Rensselaer Water Co., 247 N.Y. 160, 159 N.E. 896, it was held that an individual whose building is burned by reason of the inadequacy of water pressure at fire hydrants, in violation of the water company’s contract with the city, cannot maintain an action against the company, a result contrary to that, reached by this Court in Gorrell v. Water Supply Co., 124 N.C. 328, 32 S.E. 720. Speaking through Chief Justice Cardozo, the New York Court of Appeals said:

“In a broad sense it is true that every city contract, not improvident or wasteful, is for the benefit of the public. More than this, however, must be shown to give a fight of action to a member of the public not formally a party. The benefit, as it is sometimes said, must be one that is not merely incidental and secondary. * * * It must be primary and immediate in such a sense and to such a degree as to bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost. The field of obligation would be expanded beyond reasonable limits if less than this were to be demanded as a condition of liability. A promisor undertakes to supply fuel for heating a public building. He is not liable for breach of contract to a visitor who finds the building without fuel and thus contracts a cold. The list of illustrations can be indefinitely extended. The carrier of the mails under contract with the government is not answerable to the merchant who has lost the benefit of a bargain through negligent delay.”

Gorrell v. Water Co., supra, decided by a closely divided court and recognized in the majority opinion therein as contrary to the great weight of authority from other jurisdictions, is distinguishable from the present ease in that there the contract between the city and the water supply company granted to the company a franchise to carry on within the city a public utility business. One accepting and operating under such a franchise assumes duties and incurs obligations more extensive than those incurred by the promisor in an ordinary contract. See: Hayes v. Michigan Central R. R., 111 U.S. 228, 4 S.Ct. 369, 28 L.Ed. 410; Annot., 38 A.L.R. 403, 504, 536.

Also distinguishable from the present case are decisions holding that one injured by a defect in a city street may maintain an action against a street railroad company which contracted with the city to keep that portion of the street in repair. See: Fowler v. Chicago Railways, 285 Ill. 196, 120 N.E. 635; Phinney v. Boston Elevated Railway, 201 Mass. 286, 87 N.E. 490. In such case, as above noted, the city-promisee is, itself, subject to suit for negligent failure to maintain the street in a reasonably safe condition. If recovery were had against it by the injured party, the city could sue its promisor to recoup its loss. Thus the suit by the injured party against the promisor avoids needless circuity of action, the contract falls into the creditor-beneficiary classification and, under the rule of Lawrence v. Fox, 20 N.Y. 268, the action by the injured party may be maintained. In the present case, on the contrary, the injured party could not proceed against the State for the failure of the Board of Transportation to remove a dangerous condition not caused by any act of the Board.

The Restatement of Contracts § 145 states:

“A promisor bound to the United States or to a State or municipality by contract to do an act or render a service to some or all of the members of the public, is subject to no duty under the contract to such members to give compensation for the injurious consequences of performing or attempting to perform it, or of failing to do so, unless,

(a) an intention is manifested in the contract, as interpreted in the light of the circumstances surrounding its formation, that the promisor shall compensate members of the public for such injurious consequences, or

(b) the promisor’s contract is with a municipality to render services the non-performance of which would subject the municipality to a duty to pay damages to those injured thereby.”

The above quoted “policy” adopted by the State Highway Commission, predecessor to the Board of Transportation, shows it was not the purpose of this contract to shift to the city the ultimate responsibility for maintaining this bridge.

We think it clearly appears that the intention of the parties in making this contract was none other than to provide the most convenient and economical method for doing the necessary maintenance work on the highway and that the only beneficiaries contemplated were the parties to the contract themselves. Consequently, while all travelers upon Highway 1-40 would derive benefit from its being maintained in good condition, such benefit is incidental to the real purpose of the contract and is not of such a nature as to entitle one injured by the breach of the contract to sue for damages.

The cases upon which the plaintiffs place their chief reliance are distinguishable. Hotels, Inc. v. Raleigh, 268 N.C. 535, 151 S.E. 2d 35, differs from the present case in that there, as appears more clearly in the opinion upon rehearing, 271 N.C. 224, 155 S.E. 2d 543, the complaint alleged the city had adopted the stream which overflowed as a part of its storm sewer drainage system and also alleged affirmative acts of negligence by the city, which created an obstruction of the stream and caused the overflow from which the injury to the plaintiff resulted. In Council v. Dickerson’s, Inc., 233 N.C. 472, 64 S.E. 2d 551, the defendant, a contractor with the State Highway and Public Works Commission, was sued for damages from personal injury alleged to have been proximately caused by the defendant’s negligence “in pursuing an affirmative course of conduct, i.e., paving a highway.” There, as the Court expressly stated, the right of the plaintiff to sue the defendant for breach of the defendant’s contract with the State Highway and Public Works Commission was not before the Court. Pickett v. Railroad, 200 N.C. 750, 158 S.E. 398, is distinguishable from the present case in that, at the time of that decision, there was no statute in existence comparable to G.S. 160A-297 (a).

Assuming that the plaintiffs would be able to establish by evidence each of the alleged failures of the city to perform its contract with the Board of Transportation, the plaintiffs would not thereby establish a cause of action against the city. Consequently, there was no error in the allowance of the defendant’s motion for summary judgment.

Affirmed.

Chief Justice Bobbitt not sitting. Justice Higgins concurs in result.