Morgenroth & Associates, Inc. v. Town of Tilton, 80-313

• Decision Date: 12 June 1981
• Docket Number: No. 80-313,80-313
• Citation: 121 N.H. 511,431 A.2d 770
• Parties: MORGENROTH & ASSOCIATES, INC. v. TOWN OF TILTON. MORGENROTH & ASSOCIATES, INC. v. TOWN OF NORTHFIELD. MORGENROTH & ASSOCIATES, INC. v. STATE of New Hampshire.
• Court: New Hampshire Supreme Court

Page 770

431 A.2d 770

121 N.H. 511

MORGENROTH & ASSOCIATES, INC. v. TOWN OF TILTON.

MORGENROTH & ASSOCIATES, INC. v. TOWN OF NORTHFIELD.

MORGENROTH & ASSOCIATES, INC. v. STATE of New Hampshire.

No. 80-313.

Supreme Court of New Hampshire.

June 12, 1981.

Stanton E. Tefft, of Bedford (Daniel J. Harkinson, Bedford, on brief and orally), for Morgenroth & Associates, Inc.

James D. O'Neill, of Laconia, by brief and orally, for Town of Tilton.

Falardeau, Mahan & Franks, Tilton (George J. Falardeau, Tilton, on brief), waived oral argument for Town of Northfield.

Gregory H. Smith, Atty. Gen. (E. Tupper Kinder, Asst. Atty. Gen., on brief and orally), for the State.

DOUGLAS, Justice.

The plaintiff, Morgenroth & Associates, Inc., seeks to recover from the defendants, the Towns of Tilton and Northfield and the State of New Hampshire, the cost of preparing engineering plans for the construction of sewerage systems in those towns. The Superior Court (Batchelder, J.) granted the defendants' motions to dismiss for lack of jurisdiction under RSA 491:8 because the pleadings failed to allege an express or implied in fact contract with the State. The plaintiff appeals arguing 1) that RSA 491:8 abrogates the State's sovereign immunity for contracts implied in law as well as for express and implied in fact contracts; 2) that it has alleged a contract implied in fact; and 3) that the trial court erred in dismissing the action against the towns based on RSA 491:8. We hold that the trial court correctly ruled that it did not have jurisdiction to hear claims against the State based on implied in law contracts, but hold that the plaintiff has made out a claim for an implied in fact contract. We further hold that the court erred in dismissing the action against the towns based on RSA 491:8. Accordingly, we reverse and remand.

In 1968 the plaintiff entered into contracts with the defendant towns to do certain preconstruction engineering work for the construction of a separate sewerage system for each town. Those contracts were expressly conditioned upon the towns' receipt of grant money from the U.S. Department of Housing and Urban Development. The funding for the work did not become available, and all parties agree that the plaintiff has no cause of action based on those contracts.

The facts beyond that point are in dispute. The plaintiff alleges that, after the federal funding became unavailable, it made arrangements with the New Hampshire Water Supply and Pollution Control Commission (WSPCC) and the towns to proceed with the design phase of the project at the same time the towns looked elsewhere for construction grant funds. In 1970, the towns appropriated the funds needed for the preconstruction engineering work at town meetings attended by the plaintiff and the WSPCC. The plaintiff alleges that all parties understood that it was to do the work and that it would be paid when the money became available.

The plaintiff further alleges that it performed the work, periodically consulting with the WSPCC and companies referred to it by the towns, and, in 1972, it turned over its plans and drawings for both systems to the WSPCC. In turn, the WSPCC gave the plans to another engineering company, which used the plans in another project to build an interceptor running the length of the Winnipesaukee River Basin.

Through the administrative procedures of the WSPCC, the plaintiff sought compensation for the work it had done. When that approach proved unsuccessful, the plaintiff brought suit to recover compensation against the Town of Northfield and the State in Merrimack County Superior Court and against the Town of Tilton in Belknap County Superior Court. The cases were consolidated, and Batchelder, J. granted the defendants' motions to dismiss the actions against all defendants based on lack of jurisdiction under RSA 491:8. The plaintiff appeals.

RSA 491:8 partially abrogates the State's sovereign immunity by conferring jurisdiction upon the superior court to decide claims against the State "founded upon any express or implied contract with the state." The plaintiff argues that the term "implied contract" encompasses both implied in fact contracts and implied in law contracts. An implied in fact contract is a true contract that is not expressed in words; the terms of the parties' agreement must be inferred from their conduct. 1 A. Corbin, Contracts § 18 (1963); Restatement of Contracts § 5, comment a (1932); 1 S. Williston, A Treatise on the Law of Contracts § 3 (1957). An implied in law contract, on the other hand, is not a contract but is a legal remedy imposed by a court "without reference to the assent of the obligor, (arising) from the receipt of a benefit the retention of which is unjust, and requiring the obligor to make restitution." Presby v. Bethlehem Village District, 120 N.H. 493, 495, 416 A.2d 1382, 1383 (1980) (quoting, State v. Haley, 94 N.H. 69, 72, 46 A.2d 533, 535 (1946)). Technically, only implied in fact contracts may be called "implied contracts;" implied in law contracts are more accurately called "quasi-contracts." 1 A. Corbin, Contracts § 19 (1963); Restatement of Contracts § 5, comment a (1932); 1 S. Williston, A Treatise on the Law of Contracts § 3A (1957). Courts, however, including this one, have used the phrase "implied in law contract" when referring to a quasi-contract. Presby v. Bethlehem Village District, supra, 120 N.H. at 495, 416 A.2d at 1383. Because the statutory words "implied contract" may refer either to implied in fact contracts only or also to implied in law contracts, the phrase is ambiguous.

In construing the ambiguous language of a statute, this court must determine the legislature's intent. Silva v. Botsch, 120 N.H. 600, 601, 420 A.2d 301, 302 (1980); Corson v. Brown Prods., Inc., 119 N.H. 20, 23, 397 A.2d 640, 642 (1979). Although there is no legislative history to guide us in interpreting RSA 491:8, the reports of the Judicial Council can be an acceptable source of information on legislative intent. See Corson v. Brown Prods., Inc., supra at 23, 397 A.2d at 642; 2 A C. Sands, Sutherland Statutory Construction § 48.11 3rd ed. rev. 1973.

In 1950 the Judicial Council, pursuant to the authority conferred on it by the legislature, Laws 1945, 169:1 (current codification at RSA 494:3), recommended enactment of a statute abrogating State sovereign immunity for claims based on express or implied contracts and submitted a draft bill to the legislature. N.H. Judicial Council, The Third Report 42 (1950). The law as originally enacted did not follow the Judicial Council's recommendation with regard to implied contracts. N.H. Judicial Council, The Fourth Report 34 (1952); see Laws 1951, 243:1. In 1952, the Judicial Council renewed its recommendation, commenting "It seems probably that the refusal to confer general authority upon the Superior Court in actions founded upon contract was due to some misconception as to the nature of an implied contract. An implied contract in its essential characteristics is not different from an express contract except that some terms must be implied. In any suit founded on contract, either express or implied, recovery depends upon the existence of a contract. The fact that some of the terms may be implied or inferred from the conduct of the parties does not alter the basic character of the action."

N.H. Judicial Council, The Fourth Report 34 (1952). That explanation and the examples that followed show that the judicial council understood an "implied contract" to be an implied in fact contract. Id.; see 1 A. Corbin, Contracts § 18 (1963); Restatement of Contracts § 5 comment a (1932); 1 S. Williston, A Treatise on the Law of Contracts § 3 (1957). The legislature subsequently followed the recommendation of the Judicial Council and amended RSA 491:8 to include "implied contracts." Laws 1953, 83:1. From this sequence of events, we conclude that the legislature intended to adopt the Judicial Council's interpretation of "implied contract," which is limited to an implied in fact contract.

Having concluded that the superior court has authority under RSA 491:8 to hear only those claims against the State based on implied in fact contracts, we must determine whether the plaintiff had made out such a claim. Based on the plaintiff's pleadings and offer of proof, the trial court concluded that the plaintiff sought damages based on a contract implied in law. The court correctly determined that it had no jurisdiction under RSA 491:8 to hear a claim based on an implied in law contract and, accordingly, granted the defendants' motions to dismiss. In evaluating the propriety of the trial court's action, we must assume that all the facts alleged by the plaintiff are true and construe all reasonable inferences from those facts favorably to the plaintiff. Lawton v. Great Southwest Fire Ins. Co., 118 N.H. at 610, 392 A.2d at 578.

The plaintiff's pleadings against each of the parties are essentially the same. They allege that the plaintiff performed the work "in reliance" on acts and representations of the towns and WSPCC, that the defendants

"... were aware that Plaintiff was doing the work; that upon completing the work Plaintiff submitted the resulting plans to the Commission; that inasmuch as the work ... concerns sewage treatment, and was...