DeArmon v. B. Mears Corp., 253PA84

• Citation: 325 S.E.2d 223,312 N.C. 749
• Decision Date: 30 January 1985
• Docket Number: No. 253PA84,253PA84
• Court: United States State Supreme Court of North Carolina
• Parties: Edd W. DeARMON, Jr., Administrator of the Estate of William Amarillo v. B. MEARS CORPORATION, a Florida Corporation, Richard Hensel and Marilyn Hensel, d/b/a Hensel & Sons, and Allen F. Canady.

Page 223

325 S.E.2d 223

312 N.C. 749

Edd W. DeARMON, Jr., Administrator of the Estate of William Amarillo v. B. MEARS CORPORATION, a Florida Corporation, Richard Hensel and Marilyn Hensel, d/b/a Hensel & Sons, and Allen F. Canady.

No. 253PA84.

Supreme Court of North Carolina.

Jan. 30, 1985.

DeLaney, Millette & McKnight by Steven A. Hockfield, Charlotte, for plaintiff-appellee.

Parker, Poe, Thompson, Bernstein, Gage & Preston by William E. Poe and Irvin W. Hankins III, Charlotte, for defendant-appellant B. Mears Corp.

EXUM, Justice.

This appeal presents two questions. The first is whether the trial court made sufficient findings of fact to support its conclusions that it had personal jurisdiction over defendant B. Mears Corporation. We conclude that it did not. The second is whether the trial court correctly denied this defendant's motion to dismiss under Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. We conclude that it did. We therefore reverse and remand in part and affirm in part.

I.

This is a wrongful death action arising out of an accident which occurred on Interstate 95 in Robeson County on 23 December 1979. According to the complaint, plaintiff's intestate was killed when he was struck by a 1971 Peterbilt tractor truck being operated by defendant Allen F. Canady. Plaintiff filed summons without complaint on 22 December 1981, which he followed with an unverified complaint on 31 December 1981 in which he alleged Canady's negligence and that Canady was the agent of defendant B. Mears Corporation (hereinafter Mears).

On 1 March 1982 Mears moved to dismiss for lack of personal jurisdiction and failure to state a claim upon which relief can be granted under Civil Procedure Rules 12(b)(2) and 12(b)(6), respectively. In support of these motions, Mears submitted an affidavit stating that the tractor on the date of the collision was leased to Richard and Marilyn Hensel doing business as Hensel & Sons, and that Canady was not and had never been Mears' employee. A copy of the lease was attached to the affidavit. On 11 March 1982 plaintiff filed an amended complaint in which he joined Richard and Marilyn Hensel as additional defendants and alleged "on information and belief" that at the time of the collision the Hensels were leasing the tractor from Mears and that Canady was operating the truck as agent "of the Hensels."

On 14 April 1982 defendant filed answers to plaintiff's interrogatories which, in substance were as follows: Mears did not carry liability insurance on the Peterbilt tractor at the time of the accident because the tractor "was leased to Richard and Marilyn Hensel, d/b/a Hensel & Sons who were to provide insurance as lessees under the lease." The Hensels did carry liability insurance covering the tractor with Firemens Mutual, but the policy number, amount of coverage, and effective date of the policy was unknown. Mears had no knowledge as to the whereabouts or address of the driver, Allen Canady. At the time of the accident Mears did not own or operate the Peterbilt tractor "under any motor carrier certificate or license of the Interstate Commerce Commission."

On 3 September 1982 plaintiff's counsel filed an affidavit stating that Mears was the registered owner in Florida of the Peterbilt tractor involved in the accident. He attached a certified copy of the Florida vehicle registration certificate in support of the affidavit.

Mears' motion to dismiss came on for hearing before the trial court on 22 September 1982. After considering all of the above evidence, the trial court denied the motion to dismiss on both grounds asserted, making the following findings of fact and conclusions of law in support of his ruling:

1. Summons with Order Extending Time was issued in this action on December 22, 1981.

2. The defendant B. Mears Corp. was served by certified mail, return receipt requested, on January 4, 1982 in accord with the North Carolina Rules of Civil Procedure.

3. A Complaint was filed and Delayed Service of Complaint and the Complaint was issued on December 31, 1981 and served by certified mail, return receipt requested on January 15, 1982.

4. The acts complained of occurred in the State of North Carolina on December 23, 1979.

5. That on December 23, 1979, the 1972 Peterbilt tractor referred to in plaintiff's Complaint and alleged to have been involved in the accident, forming the basis of this action, was registered in the State of Florida and was titled in the name of B. Mears Corp. on December 23, 1979.

Based on the foregoing findings of fact, the Court makes the following conclusions of law:

1. Sufficient grounds exist for the exercise of personal jurisdiction by this Court over the defendant B. Mears Corp.

2. Plaintiff's Complaint stated a claim upon which relief can be granted and, as there exists a genuine issue of material fact, the defendant B. Mears Corp. is not entitled to judgment as a matter of law.

The Court of Appeals affirmed. We allowed Mears' petition for further review on 6 July 1984.

II.

The only basis asserted by plaintiff for the exercise of personal jurisdiction over Mears is that the operator of the tractor at the time of the accident was acting as Mears' agent. Plaintiff relies entirely on N.C.G.S. § 1-75.4(3) which gives jurisdiction to the courts of this state over persons properly served "in any action claiming injury to person or property or for wrongful death within or without this state arising out of an act or omission within this state by the defendant." Plaintiff argues that Mears committed an act within this state through its alleged agent Canady, operator of the tractor.

In order to establish the agency relationship plaintiff relies entirely on N.C.G.S. § 20-71.1(b) which provides that in an action such as this one:

Proof of the registration of a motor vehicle in the name of any person, firm or corporation, shall ... be prima facie evidence of ownership and that such motor vehicle was then being operated by and under the control of a person for whose conduct the owner was legally responsible, for the owner's benefit, and within the course and scope of his employment.

Mears, on the other hand, relies entirely on its evidence that Canady was not and never has been its employee or agent and that the tractor Canady was operating was under lease to a third party under the terms of which that party had full, exclusive control over its operation.

Mears' evidence, if believed, establishes the absence of any agency relationship between it and the driver Canady at the time of the accident. Generally the bailor of equipment either gratuitously or for hire is not responsible to third parties for the bailee's negligent use of the bailed equipment where all control of the equipment has been relinquished to the bailee by the bailor. Shapiro v. Winston-Salem, 212 N.C. 751, 194 S.E. 479 (1938) (truck and driver loaned by city to third party; held city not liable for death caused by driver of truck). "It is accepted law that the relationship of lessor and lessee is not that of principal and agent." Brown v. Ward, 221 N.C. 344, 347, 20 S.E.2d 324, 326 (1942).

Even when an owner of a truck leases both the truck and driver to another, the operator of the truck is not thereafter the agent of the owner if by the terms of the lease itself or other circumstances the owner relinquishes all right to control the truck's operation. Peterson v. McLean Trucking Company, 248 N.C. 439, 103 S.E.2d 479 (1958), and cases therein cited.

Weaver v. Bennett, 259 N.C. 16, 129 S.E.2d 610 (1963), did not, as the Court of Appeals intimated in the opinion below and as plaintiff now argues, limit this rule to situations where the lessee of the truck was operating under an Interstate Commerce Commission franchise. This was one important circumstance which led the Court to conclude in these cases that the driver was the agent of the lessee-interstate franchisee, but the Court also emphasized the terms of the leases themselves in reaching this conclusion. In Roth v. McCord, 232 N.C. 678, 680, 62 S.E.2d 64, 66 (1950), the Court noted, in addition to the fact that the lessee was an interstate franchisee:

(2) It is stipulated in the lease contract that while they are in the service of the Motor Lines, the vehicle and its driver shall be under the exclusive supervision, control, and direction of the lessee. The all-inclusive extent of this right of control is spelled out in the lease in detail. As the Motor Lines has contracted, so is it bound.

The basis for decision was repeated in the Weaver Court's analysis of Roth. In Peterson, moreover, the Court emphasized the terms of the lease agreement in concluding the driver was not the agent of the owner-lessor. It referred expressly to provisions:

(1) Whereby lessor-owner leased truck and drivers to lessee; (2) Provisions whereby lessee took complete control of truck for the particular trip involved; (3) Stipulation that the lessee would attach its identification mark on the truck, and (4) specifying the above with particularity.

248 N.C. at 442, 104 S.E.2d at 483. That the lessee of truck and driver operates under an interstate franchise is simply one circumstance, among many other possible circumstances, including the lease terms themselves, which may tend to show an agency relationship exclusively between the lessee and driver.

In cases where the owner of equipment leases both the equipment and operator to another under circumstances wherein the owner retains control over the manner in which the equipment is to be operated, this Court has concluded that the operator may be the agent of the owner-lessor. See, e.g., Weaver v. Bennett, 259 N.C. 16, 129 S.E.2d 610 (lessor leased both backhoe and skilled operator for construction job; lessor agreed to maintain insurance to protect against claims for damage caused by backhoe); Leonard v. Tatum and Dalton Transfer Co., 218 N.C. 667, 12 S.E.2d 729 (1940) (truck and...