State Ex Rel. State Art Museum Building Commission v. Travelers Indemnity Co.

432 S.E.2d 419, 111 N.C. App. 330, 1993 N.C. App. LEXIS 803
CourtCourt of Appeals of North Carolina
DecidedAugust 3, 1993
Docket9210SC408
StatusPublished
Cited by5 cases

This text of 432 S.E.2d 419 (State Ex Rel. State Art Museum Building Commission v. Travelers Indemnity Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. State Art Museum Building Commission v. Travelers Indemnity Co., 432 S.E.2d 419, 111 N.C. App. 330, 1993 N.C. App. LEXIS 803 (N.C. Ct. App. 1993).

Opinions

LEWIS, Judge.

In December 1989, the State, acting on behalf of the State Art Museum Building Commission (hereafter the “Building Commission” or the “Commission”), instituted this action to recover on a performance bond issued by defendant, the Travelers Indemnity Company (hereafter “Travelers”), as surety for Middlesex Construction Corporation (hereafter “Middlesex”). The State had earlier secured a judgment of $373,603.18 against Middlesex, which judgment remains unpaid. In June 1991 the trial court granted partial summary judgment in favor of the State regarding Travelers’ affirmative defenses of the statute of limitations, the statute of repose, laches, and discharge. In February 1992 the trial court entered summary judgment in favor of the State for the full amount of the Middlesex judgment plus interest. Travelers now appeals from both summary judgment orders, and the State appeals from the February 1992 order on the issue of the amount of interest awarded. ,

[333]*333In June 1977 the State contracted with Middlesex to serve as general contractor for the construction of the North Carolina Museum of Art. At that time Middlesex procured a performance bond from Travelers in compliance with the contract instructions to bidders. By July 1981 Middlesex had completed and had been paid for about 99% of the work. However, in November 1981 the State declared Middlesex to be in default due to its failure to complete “punch list” work at the museum. Travelers was notified of the breach, but opted not to take over the remaining work. The State hired another contractor to complete the job.

In March 1982 Middlesex filed suit against the Building Commission for breach of contract, and after dismissals and appeals, again filed suit against the Building Commission in January 1984. Travelers was notified of the lawsuit, but was not made a party to it. In March 1988 the court filed its judgment, which resulted in a net recovery for the Building Commission against Middlesex in the amount of $373,603.18. Middlesex’s insolvency and failure to pay the judgment precipitated the present action against Travelers as their surety.

In this appeal we must review two summary judgment orders from the trial court. First, Travelers appeals from the 25 June 1991 order dismissing its affirmative defenses. Second, Travelers and the State both appeal from the 14 February 1992 order awarding the State the amount of the judgment originally entered against Middlesex plus interest. At the outset we note that summary judgment is only appropriate where there are no genuine issues of material fact. N.C.G.S. § 1A-1, Rule 56(c) (1990). After reviewing the various arguments before us, we conclude that in both instances the trial court correctly granted summary judgment for the State. However, we partially reverse the second summary judgment order on the issue of the amount of interest awarded to the State.

I. Travelers’ appeal from Order of 25 June 1991

In its summary judgment order of 25 June 1991 the trial court dismissed Travelers’ affirmative defenses of the statute of limitations, the statute of repose, and laches. Although at the trial level Travelers argued that the State is no longer exempt from the running of time limitations, in oral argument before the Court of Appeals Travelers conceded that the case of Rowan County Board of Education v. United States Gypsum Co., 332 N.C. 1, 418 S.E.2d 648 (1992), is dispositive on this issue. Travelers proceeded [334]*334with its argument that the State’s action was proprietary and not governmental, thereby rendering it subject to the time limitations in accordance with Rowan.

We begin with a review of Rowan. Historically the government has been exempt from the running of various time limitations under the doctrine of nullum tempus occurrit regi, or “time does not run against the king.” See Rowan, 332 N.C. at 6, 418 S.E.2d at 652. However, N.C.G.S. § 1-30 states that “[t]he limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties.” N.C.G.S. § 1-30 (1983). In Rowan the Supreme Court clarified the application of the doctrine of nullum tempus in light of section 1-30. The Court stated that:

We now clarify the status of this doctrine in this jurisdiction: nullum tempus survives in North Carolina and applies to exempt the State and its political subdivisions from the running of time limitations unless the pertinent statute expressly includes the State.

332 N.C. at 8, 418 S.E.2d at 653. However, Rowan maintained a governmental versus proprietary distinction to use in reviewing actions of the State. If the State was acting in a proprietary capacity, the time limitations do apply unless the relevant statute excludes the State. Id. at 9, 418 S.E.2d at 654. If the State’s action was governmental, the time limitations do not apply unless the applicable statute expressly includes the State. Id. Thus, if we determine that the State was acting in its governmental capacity in constructing the art museum, then the time limitations did not apply and did not preclude the present suit against Travelers since the relevant statutes do not expressly include the State. See N.C.G.S. § 1-52(1), -(6) (Cum. Supp. 1992) (three year statute of limitations for contract actions and for actions against sureties); N.C.G.S. § l-50(5)(b)l., -7. (Cum. Supp. 1992) (six year statute of repose for actions to recover for breach of contract to construct an improvement to real property and for actions against sureties).

Generally, the State acts in its governmental capacity when it is “promoting or protecting the health, safety, security or general welfare of its citizens.” Rhodes v. Asheville, 230 N.C. 134, 137, 52 S.E.2d 371, 373 (1949). A court may also consider whether or not the State’s action is for the “common good of all” and therefore governmental, or for pecuniary profit and therefore proprietary.

[335]*335Vaughn v. County of Durham, 34 N.C. App. 416, 420, 240 S.E.2d 456, 459 (1977), disc. rev. denied, 294 N.C. 188, 241 S.E.2d 522 (1978) (citation omitted).

The Legislature established the Art Museum Building Commission and authorized it to receive public as well as private funds towards the cost of building the museum. N.C.G.S. § 143B-58 (1990). The State points out that the General Assembly appropriated a total of over ten million dollars for the construction of the art museum. Travelers, however, relies on the fact that the Commission was authorized to receive private funds in its argument that the State was acting in its proprietary capacity.

We hold that the mere receipt of private funds does not render the State’s actions proprietary, especially in light of the large appropriation of public funds in this case. A lawsuit to recover lost public funds is consistent with a governmental purpose. In Rowan

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State Ex Rel. State Art Museum Building Commission v. Travelers Indemnity Co.
432 S.E.2d 419 (Court of Appeals of North Carolina, 1993)

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Bluebook (online)
432 S.E.2d 419, 111 N.C. App. 330, 1993 N.C. App. LEXIS 803, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-state-art-museum-building-commission-v-travelers-indemnity-ncctapp-1993.