North Carolina State Ports Authority v. Lloyd A. Fry Roofing Co.

240 S.E.2d 345, 294 N.C. 73, 1978 N.C. LEXIS 1187

• Court: Supreme Court of North Carolina
• Decided: January 24, 1978
• Docket: 42
• Status: Published

Opinion

LAKE, Justice.

The Superior Court gave judgment on the pleadings dismissing the plaintiff’s action against Dickerson for the reason that the plaintiff’s claim is barred by the statute of limitations, having accrued more than three years prior to the institution of this action on 7 August 1973.

Such judgment on the pleadings is proper if, but only if, it appears upon the face of the complaint that the plaintiff’s right to recover is barred by the lapse of time properly pleaded. Speas v. Ford, 253 N.C. 770, 117 S.E. 2d 784 (1961); Nowell v. Hamilton, 249 N.C. 523, 107 S.E. 2d 112 (1959); Mobley v. Broome, 248 N.C. 54, 102 S.E. 2d 407 (1958); Latham v. Latham, 184 N.C. 55, 113 S.E. 623 (1922); Stubbs v. Motz, 113 N.C. 458, 18 S.E. 387 (1893); McIntosh, North Carolina Practice and Procedure, 2d Ed., § 373; G.S. 1A-1, Rule 12. Otherwise, the question is a mixed question of law and fact, the plaintiff having the burden of proving that his action was brought within the time allowed by the applicable statute, but having the right to offer such proof. Stubbs v. Motz, supra. As stated in McIntosh, “When the statute has been properly pleaded, it raises an issue of fact to be tried by a jury; and no reply is necessary by the plaintiff, but if it appears on the face of the complaint that the action is barred, and defendant pleads the statute, and there is nothing to show that the bar does not operate, the Court may decide the question upon the facts admitted.” McIntosh, North Carolina Practice and Procedure, 2d Ed., § 373.

In the third claim for relief set forth in the complaint, the plaintiff alleges it contracted with Dickerson for the construction of the two buildings, including the roofs thereon, “in accordance with plans and specifications outlined by the plaintiff, and Dickerson broke this contract, as the result of which breach the roofs leaked.”

The plaintiff’s only prayer for relief under its first claim set forth in the complaint is against Fry and United Pacific Insurance Company upon their guaranty bond. In this portion of the complaint, the plaintiff alleges that the leaks in the roofs were caused by the use of defective materials or by improper installation thereof. If this claim for relief be deemed to allege a cause of action against Dickerson, it is clearly for a breach of the same contract which is the subject of the third claim for relief and adds nothing thereto.

In the second claim for relief set forth in the complaint, the plaintiff alleges “roofing work” on these buildings was performed in the summer of 1967 by Scott under the supervision of Dickerson, that Scott and Dickerson negligently failed to allow the roofs (i.e., the subsurface portions thereof) to dry properly before applying the roofing material or failed to allow the roofing material itself to dry properly before installing it, and that the leaks in the roofs were caused by this negligent failure to exercise proper care and workmanship in the construction of the roofs.

Ordinarily, a breach of contract does not give rise to a tort action by the promisee against the promisor. Insurance Co. v. Sprinkler Co., 266 N.C. 134, 146 S.E. 2d 53 (1966); Toone v. Adams, 262 N.C. 403, 137 S.E. 2d 132 (1964); Greene v. Laboratories, Inc., 254 N.C. 680, 120 S.E. 2d 82 (1961); Council v. Dickerson’s, Inc., 233 N.C. 472, 64 S.E. 2d 551 (1951). It is true that there are many decisions of this and other courts holding a promisor liable in a tort action for a personal injury or damage to property proximately caused by his negligent, or wilful, act or omission in the course of his performance of his contract. Insurance Co. v. Sprinkler Co., supra; Jewell v. Price, 264 N.C. 459, 142 S.E. 2d 1 (1965); Toone v. Adams, supra; Shearin v. Lloyd, 246 N.C. 363, 98 S.E. 2d 508 (1957); Pinnix v. Toomey, 242 N.C. 358, 87 S.E. 2d 893 (1955); Insurance Co. v. Parker, 234 N.C. 20, 65 S.E. 2d 341; Council v. Dickerson’s, Inc., supra; Powers v. Trust Co., 219 N.C. 254, 13 S.E. 2d 431 (1941); Williamson v. Dickens, 27 N.C. 259 (1844). See also: Corbin on Contracts, § 1019; Prosser, Law of Torts, 4th Ed., § 1. However, such decisions by this Court, which have been brought to our attention, appear to fall into one of four general categories:

(1) The injury, proximately caused by the promisor’s negligent act or omission in the performance of his contract, was an injury to the person or property of someone other than the promisee. See: Pinnix v. Toomey, supra, Council v. Dickerson’s, Inc., supra.

(2) The injury, proximately caused by the promisor’s negligent, or wilful, act or omission in the performance of his contract, was to property of the promisee other than the property which was the subject of the contract, or was a personal injury to the promisee. See: Insurance Co. v. Sprinkler Co., supra (promisee’s merchandise damaged by water as the result of negligence in the installation of a sprinkler system); Jewell v. Price, supra (promisee’s house burned as the result of negligence in the installation of a furnace); Toone v. Adams, supra (baseball umpire injured by an irate spectator allegedly due to the Club owner’s failure to supply adequate protection); Shearin v. Lloyd, supra (medical malpractice).

(3) The injury, proximately caused by the promisor’s negligent, or wilful, act or omission in the performance of his contract, was loss of or damage to the promisee’s property, which was the subject of the contract, the promisor being charged by law, as a matter of public policy, with the duty to use care in the safeguarding of the property from harm, as in the case of a common carrier, an innkeeper or other bailee. See: Insurance Co. v. Parker, 234 N.C. 20, 65 S.E. 2d 341 (1951) (automobile stolen from a parking lot inviting public patronage).

(4) The injury so caused was a wilful injury to or a conversion of the property of the promisee, which was the subject of the contract, by the promisor. See: Williamson v. Dickens, supra (conversion of notes by a bailee for collection); Simmons v. Sikes, 24 N.C. 98 (1841) (conversion or wilful destruction of a canoe by a bailee).

It may well be that this enumeration of categories in which a promisor has been held liable in a tort action by reason of his negligent, or wilful, act or omission in the performance of his con tract is not all inclusive. However, our research has brought to our attention no case in which this Court has held a tort action lies against a promisor for his simple failure to perform his contract, even though such failure was due to negligence or lack of skill.

In the present case, according to the complaint, Dickerson contracted to construct buildings, including roofs thereon, in accordance with agreed plans and specifications. It is alleged that Dickerson did not so construct the roofs. If that be true, it is immaterial whether Dickerson’s failure was due to its negligence, or occurred notwithstanding its exercise of great care and skill. In either event, the promisor would be liable in damages. Conversely, if the roofs, as constructed, conformed to the plans and specifications of the contract, the promisor, having fully performed his contract, would not be liable in damages to the plaintiff even though he failed to use the degree of care customarily used in such construction by building contractors. Thus, the allegation of negligence by Dickerson in the second claim for relief set forth in the complaint is surplusage and should be disregarded. Consequently, the only basis for recovery against Dickerson, alleged in the complaint, is breach of contract and the Court of Appeals was in error in its view that the complaint “alleges an action in tort” against Dickerson.

The complaint alleges, “During the summer of 1968, the construction of these buildings was completed.” It also alleges, “Roofing work on these two buildings was performed during the summer of 1967.” Assuming that this latter allegation is intended to mean that all of the roofing work was completed during the summer of 1967, and further assuming, as the complaint alleges, that such work was improperly performed, so that the roofs were not built in accordance with the plans and specifications, the plaintiff’s cause of action against Dickerson did not accrue in the summer of 1967 but in the summer of 1968 when Dickerson finished its work on the entire building. Dickerson’s contract was for the construction of a building (actually two buildings). So long as the building was still under construction by Dickerson, defects therein were subject to correction by Dickerson and would not give rise to a cause of action by the plaintiff for breach of contract. A building contractor is not subject to suit instantaneously whenever his employee negligently fastens a beam or a shingle in place. Thus, the plaintiff’s alleged cause of action for breach of contract accrued “during the summer of 1968.”

At that time, an action for breach of contract, regardless of the nature of the breach, was barred by the statute of limitations after three years from the time the cause of action accrued. G.S. 1-52(1). This action was instituted 7 August 1973. Consequently, had there been no change in the applicable statute of limitations, this action would have been barred and, since this appeared on the face of the complaint, the judgment of the Superior Court would have been correct.

On 21 July 1971, G.S. l-15(b) was ratified and took effect. It provides:

“(b) Except where otherwise provided by statute, a cause of action, other than one for wrongful death, having as an essential element bodily injury to the person or a defect in or damage to property which originated under circumstances making the injury, defect or damage not readily apparent to the claimant at the time of its origin, is deemed to have accrued at the time the injury was discovered by the claimant, or ought reasonably to have been discovered by him, whichever event first occurs; provided that in such cases the period shall not exceed ten years from the last act of the defendant giving rise to the claim for relief.” (Emphasis added.)

Prior to the enactment of G.S. 145(b), the plaintiff’s alleged cause of action for breach of contract by Dickerson accrued and the statute of limitations began to run when Dickerson’s purported performance of the contract was completed, irrespective of the facts, if they be facts, that the defect in the roofs which constituted the breach of contract was then neither known nor “readily apparent” to the plaintiff and the roofs did not actually leak until a substantial time thereafter. Sellers v. Refrigerators, Inc., 283 N.C. 79, 194 S.E. 2d 817 (1973); Matthieu v. Gas Co., 269 N.C. 212, 152 S.E. 2d 336 (1967); Jewell v. Price, supra.

In McCrater v. Engineering Corp., 248 N.C. 707, 710, 104 S.E. 2d 858 (1958), Justice Johnson, speaking for the Court, said: “[I]t is well settled that the time within which an action may be brought may be enlarged as to pending causes not barred, and that such legislation [extending the time] is not deemed retroactive and does not impair vested rights.” (Emphasis added.) To the same effect, see: Wilkes County v. Forester, 204 N.C. 163, 167 S.E. 691 (1933) and McIntosh, North Carolina Practice and Procedure, 2d Ed., § 275.

The Court of Appeals was of the opinion that G.S. l:15(b) does not apply to actions for breach of contract. In this we think the Court of Appeals was in error. See, Lauerman, “The Accrual and Limitation of Causes of Actions for Nonapparent Bodily Harm and Physical Defects in Property in North Carolina,” 8 Wake Forest Law Review 327. The statute, by its terms, applies to any cause of action (other than one for wrongful death, and except where otherwise provided by statute) if an “essential element” thereof is a defect in property, which defect originated under circumstances making it “not readily apparent to the claimant” at the time of its origin. In the present case, the alleged breach of the contract by Dickerson consists of a defect in the roofs. Thus, “A defect in *** property” is “an essential element” of the plaintiff’s cause of action. If this defect “originated under circumstances making it not readily apparent to the claimant at the time of its origin,” G.S. l-15(b) applies to the plaintiff’s cause of action and extends the time for the institution of such action, provided Dickerson completed its purported performance of its contract less than three years prior to 21 July 1971 when this statute took effect.

It does not appear upon the face of the complaint either (1) that the defect in the roofs was readily apparent to the plaintiff at the time of its origin, or (2) that Dickerson’s work on the buildings was finished prior to 21 July 1968 (three years prior to the effective date of G.S. l-15(b). G.S. 145(b) does not apply to this action for breach of contract unless both of these questions are resolved in favor of the plaintiff; that is: (1) The defect in the roofs originated under circumstances making it not readily apparent to the plaintiff at the time of its origin, and (2) Dickerson’s work in performance of its contract was completed on or after 21 July 1968. Since the inapplicability of G.S. 145(b) does not appear upon the face of the complaint, the judgment on the pleadings that the plaintiff’s alleged cause of action against Dickerson for breach of contract was barred by the statute of limitations was erroneously entered. The plaintiff is entitled to an opportunity to prove both (1) the defect was not so apparent to it, and (2) Dicker son’s work upon the buildings was not completed prior to 21 July 1968.

Thus, notwithstanding the above mentioned errors in its reasoning, the Court of Appeals reached the correct result in reversing the judgment of the Superior Court insofar as that judgment dismissed the plaintiff’s action against Dickerson.

The plaintiff did not petition this Court for review of the judgment of the Court of Appeals. Dickerson and Scott petitioned for review of that judgment “in part and only as to that Court’s reversal of the Trial Court judgment dismissing Plaintiff’s action in tort as to the Defendant Dickerson.” However, Rule 16 of the Rules of Appellate Procedure, 287 N.C. 671, 720, permits an appellant in the Court of Appeals (the plaintiff), who is the appellee in this Court, or a respondent to a petition for certiorari, to present in his brief in this Court, without a cross-assignment of error to the decision of the Court of Appeals, any question which he properly presented to the Court of Appeals. Scott, being presently before this Court by its own petition, Rule 16 permits the plaintiff to present in its brief in this Court the matter of the validity of the judgment of the Superior Court dismissing with prejudice the plaintiff’s action against Scott and also to present the plaintiff’s contentions that the ten-year statute of limitations (G.S. 1-47(2), applicable to actions on contracts under seal) or the six-year statute of limitations (G.S. 1-50(5), applicable to certain actions for injuries to property) are applicable to its action against Dickerson.

As the Court of Appeals observed, there is nothing in the record before us to indicate that the contract made by Dickerson with the plaintiff was a contract under seal. It is not so alleged in the complaint. Therefore, for the purposes of this appeal, it must be deemed a simple contract and the ten-year statute of limitations contained in G.S. 1-47(2) is not applicable. There was no error in the decision of the Court of Appeals upon this question.

Likewise, there was no error in the decision of the Court of Appeals that the six-year statute of limitations contained in G.S. 1-50(5) has no application to this action. That statute applies to an action “to recover damages for any injury to property, real or personal *** arising out of the defective and unsafe condition of an improvement to real property.” The complaint does not allege, and nothing in the record before us indicates, any injury to property arising out of any “defective and unsafe condition” of the roofs in question. That statute was designed to apply to actions such as Sellers v. Refrigerators, Inc., 283 N.C. 79, 194 S.E. 2d 817 (1973), and Jewell v. Price, 264 N.C. 459, 142 S.E. 2d 1 (1965), in which the plaintiff sued for damages for the burning of a dwelling by reason of defects in a furnace improperly installed by the defendant. It does not apply to an action, such as this, for a simple breach, by defective performance, of a contract to construct an improvement on real property.

There was also no error in dismissing the action against Scott. Scott asserted in its answer the defense that the complaint fails to state a claim upon which relief may be granted against it. In this, Scott was correct. Although the complaint states that the plaintiff seeks recovery against Scott “in tort for the negligent installation of the roofs on these two buildings,” it alleges that the defendant Scott was the roofing subcontractor of Dickerson, the general contractor, and that Scott failed properly to apply the roofing material, in consequence of which failure the roofs leaked. This is simply an allegation that Scott did not properly perform its contract with Dickerson and, for the reasons above set forth, does not allege a cause of action in tort in favor of the plaintiff against Scott.

As Scott asserts in its answer, it “did not enter into any contract with the plaintiff for the construction of the roofs and there exists no privity of contract between this answering defendant and the plaintiff.” The plaintiff may not sue Scott for the breach of Scott’s contract with Dickerson on the theory that the plaintiff is the third party beneficiary thereof, it being only an incidental beneficiary of such contract. In § 779D of his Treatise on Contracts, Professor Corbin states:

“Where A owes money to a creditor, or to several creditors, and B promises A to supply him with the money necessary to pay such debt, no creditor can maintain suit against B on this promise. The same is true in any case where A is under a contractual duty to C the performance of which requires labor or materials, and B promises A to supply him such labor or materials; C has no action against B on this promise.

“The foregoing is applicable to most cases of contracts between a principal building contractor and subcontractors. Such contracts are made to enable the principal contractor to perform; and their performance by the said subcontractor does not in itself discharge the principal contractor’s duty to the owner with whom he has contracted. The installation of plumbing fixtures or the construction of cement floors by a subcontractor is not a discharge of the principal contractor’s duty to the owner to deliver a finished building containing those items; and if after their installation the undelivered building is destroyed by fire, the principal contractor must replace them for the owner, even though he must pay the subcontractor in full and has no right that the latter shall replace them. It seems, therefore, that the owner has no right against the subcontractor, in the absence of clear words to the contrary. The owner is neither a creditor beneficiary nor a donee beneficiary; the benefit that he receives from the performance must be regarded as merely incidental.” (Emphasis added.)

Again, in § 787 of his Treatise, Professor Corbin states:

“A promise to pay money to a debtor for him to use in paying his debts is not a promise to pay the debt; and the creditor has no enforceable right. So, also, if the principal contractor contracts with a subcontractor for the supply of materials to be used by the former in erecting a structure, the owner is not a beneficiary of the subcontract. The same will ordinarily be true even though the subcontractor undertakes the incorporation of the materials into the structure, for the reason that this incorporation will not discharge the contractual duty of the principal contractor and the parties do not contemplate that it should. It is the principal contractor’s duty to erect and deliver the complete structure according to plans and specifications; and the subcontractor’s work does not discharge that duty to any extent. His work is merely a preliminary step that will enable the principal contractor to perform.”

The following cases, cited by Professor Corbin, are in accord with his observations: Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290 (1927); Carolus v. Arkansas Light & Power Co., 164 Ark. 507, 262 S.W. 330 (1924); Police Jury of St. Landry v. Alexander Gravel Co., 146 La. 1, 83 So. 316 (1919); and Majestic Mfg. Corp. v. Riso & Sons Bldg. Co., 27 N.Y.S. 2d 845, Aff'd, 27 N.Y.S. 2d 846, 261 App. Div. 1099 (1941).

In Cox v. Curnutt, 271 P. 2d 342 (Okla., 1954), a contractor employed a subcontractor to perform certain required cement work. The work was improperly done by the subcontractor, due, it is alleged, to his negligence. In a suit by the owner against both the general contractor and the subcontractor, the court held that the subcontract was not made for the owner’s benefit and, consequently, the owner had no action against the subcontractor for the defective performance of the work. Accord, National Cash Register Co. v. Unarco Industries, Inc., 490 F. 2d 285 (1974), as to subcontractor’s failure to perform.

In Vogel v. Supply Co. and Supply Co. v. Developers, Inc., 277 N.C. 119, 177 S.E. 2d 273 (1970), the landowner sued the subcontractor for breach of the latter’s contract with the general contractor of a construction project to supply and install materials therein. Speaking through Justice Huskins, this Court held the plaintiff was a mere incidental beneficiary of the construction subcontract and could not maintain an action against the subcontractor for its breach and thus the subcontractor’s motion for summary judgment should have been allowed, citing Corbin on Contracts, § 779D as authority.

Thus, as to the action of the plaintiff against Scott, we do not reach the question of whether the statute of limitations had run when the action was instituted.

The dismissal of the plaintiff’s action against Scott does not, of course, bar Dickerson’s cross-action against Scott for damages for the alleged breach of the subcontract in the event that Dickerson is ultimately held liable to the plaintiff for damages for breach of the general contract.

The Court of Appeals was, therefore, correct in affirming the judgment of the Superior Court dismissing the plaintiff’s action .against Scott and in reversing the judgment of the Superior Court dismissing the plaintiff’s action against Dickerson. The judgment of the Court of Appeals is, therefore, affirmed.

Affirmed.