Johnson v. Bd. of Rd. Com'rs of Ontonagon Cnty.

• Decision Date: 27 February 1931
• Docket Number: No. 21.,21.
• Citation: 253 Mich. 465,235 N.W. 221
• Parties: JOHNSON v. BOARD OF ROAD COM'RS OF ONTONAGON COUNTY.
• Court: Michigan Supreme Court

253 Mich. 465

235 N.W. 221

JOHNSON

v.BOARD OF ROAD COM'RS OF ONTONAGON COUNTY.

No. 21.

Supreme Court of Michigan.

Feb. 27, 1931.

Error to Circuit Court, Ontonagon County; George O. Driscoll, Judge.

Action by Walter Johnson against Board of County Road Commissioners of Ontonagon County. Judgment for plaintiff, and defendant brings error.

Judgment vacated, and case remanded.

Argued before the Entire Bench. Galbraith & McCormack, of Calumet (Joseph M. Donnelly, of Ontonagon, of counsel), for appellant.

Van Slyck & Bay, of Ontonagon (E. L. Kennedy, of Rhinelander, Wis., of counsel), for appellee.

NORTH, J.

Plaintiff sued defendant to recover damages for injuries sustained by plaintiff in consequence of his being struck by defendant's snowplow. At the time of the accident defendant's snowplow in charge of its employee was being used to remove the snow from trunk line M-26 in Ontonagon county. This work was being done by defendant under contract with the state highway commissioner. Plaintiff had verdict and judgment. Defendant has appealed.

Incident to a motion for directed verdict both at the close of plaintiff's case and at the close of all the proofs, and also incident to its motion for a new trial, defendant urged that it was entitled to a directed verdict because at the time of the accident it was engaged in the exercise of a governmental function. Defendant relies upon Gunther v. Board of Road Commissioners of Cheboygan County, 225 Mich. 619, 196 N. W. 386, and other decisions of like character. On the other hand, plaintiff contends that the case cited is not applicable and controlling for two reasons: (1) That the statute under which the contract with the state highway commissioner was made is materially different than that involved in the Gunther Case; and (2) defendant in the instant case derived a profit from performance of its contract and therefore cannot claim exemption from liability on the ground that it was engaged in the performance of a governmental function. In this particular plaintiff relies upon Foss v. City of Lansing, 237 Mich. 633, 212 N. W. 952, 52 A. L. R. 185, and other like authorities.

The contract in the instant case was entered into under Act No. 17, Pub. Acts 1925 (vol. 1, §§ 4425, 4426, Comp. Laws 1929). In part it provides: ‘The state highway commissioner is hereby authorized to contract with boards of county road commissioners, township boards, or with any other person, persons, firm or corporation for the construction, improvement and maintenance of trunk line highways, or he may do such work on state account.’ Section 4426. The contract under which defendant was operating in the Gunther Case was entered into under section 4, Act No. 19, Pub. Acts 1919 (vol. 1, § 4418, Comp. Laws 1929), which in part reads: Contracts and agreements between the state highway commissioner and the boards of county road commissioners, the boards of commissioners of the good roads districts, and the township boards of any township, providing for the construction, improvement and maintenance of roads in accordance with the provisions hereof, are hereby expressly authorized.'

The important change affected by the 1925 act was that the entire cost of constructing, improving, and maintaining trunk line highways was placed upon the state, thereby relieving the counties and townships of the portion of such cost imposed upon them by the 1919 act. Appellee's counsel point out that the above-quoted portion of the 1925 act expressly authorizes contracts with private persons, firms, or corporations; and that this provision was not contained in the quoted portion of section 4, Act No. 19, Pub. Acts 1919. But the power of the commissioner to enter into contracts with bidders other than the governmental agencies named is necessarily implied from section 9 of the 1919 act, as amended by Act No. 257, Pub. Acts 1921 (vol. 1, § 4423, Comp. Laws 1929). It is there provided that the governmental agencies named in section 4 may contract with the state highway commissioner for performing work of this charter under the commissioner's direction and supervision ‘at any price below that of the lowest responsible bidder.’ We do not think the enactment of the 1925 statute was intended to or did result in any material change affecting the liability or nonliability of defendant. At common law a governmental agency in the performance of a governmental function did not become liable in damages for its negligent performance. 43 C. J. 921, 922, citing many decisions of this and other courts of last resort. Statutes imposing liability in such cases are in derogation of common law and therefore are strictly construed. Miller v. City of Detroit, 156 Mich. 630, 121 N. W. 490,132 Am. St. Rep. 537,16 Ann. Cas. 832. While the contention now under consideration was not there presented, it may be noted that since the enactment of the 1925 statute we have said in Re Moross v. Hillsdale County, 242 Mich. 277, 218 N. W. 683, that a county could not be held liable for damages resulting from the negligent manner in which its county road commissioners carried on the governmental function of constructing or repairing highways.

The further question is presented by plaintiff's contention that defendant cannot claim exemption from liability because it was performing this service under a contract for a consideration and a resulting profit. Defendant herein at the time of the accident was operating under a cost-plus contract with the state highway commissioner. The contract contains two paragraphs providing for actual reimbursement to defendant for expenditures incurred in the work. The third paragraph provides fixed rentals for use of equipment furnished and used by defendant. The fourth paragraph contains the following provision: ‘To pay to said party of the second part as an overhead and supervision charge an amount equal to 5.5 per cent of the total paid under paragraphs one, two and three above, plus an amount equal to 5.5 per cent of the cost to the state of materials purchased by it and furnished to second party for use in the performance of this contract.’ Plaintiff contends that by reason of the provisions in the fourth paragraph it must be concluded that a profit would result to the defendant from performance of work under this contract; and that by reason thereof defendant should be held to be engaged in a commercial enterprise rather than in the performance of a govermental function.

This contract in several particulars is decidedly unlike those usually consummated with independent contractors. It requires the defendant herein to ‘appoint a superintendent of maintenance satisfactory to the party of the first part, who shall * * * perform said work at the...