Sample v. Morgan, 116A84
| Decision Date | 28 August 1984 |
| Docket Number | No. 116A84,116A84 |
| Citation | 311 N.C. 717,319 S.E.2d 607 |
| Parties | C. E. SAMPLE t/a Sample Construction Company v. Patrick H. MORGAN and wife, Irene S. Morgan. |
| Court | North Carolina Supreme Court |
O.C. Abbott, Elizabeth City, for plaintiff-appellant.
Trimpi, Thompson & Nash by C. Everett Thompson, Elizabeth City, for defendants-appellees.
The record discloses the following facts pertinent to the resolution of the issues presented:
By complaint filed 15 January 1981, plaintiff, a licensed building contractor, alleged that he and defendants entered into a contract for the purpose of building a residential dwelling for defendants; that the total cost of the building was $139,998.90; that defendants had paid plaintiff the sum of $120,331.82; and that defendants had refused to pay the balance due in the amount of $19,667.08.
In their answer, filed 27 January 1981, defendants admitted entering into a contract with the plaintiff for the purpose of building a residential dwelling; that the cost of the dwelling was $139,998.90; and that plaintiff had been paid $120,331.82. Defendants denied owing plaintiff any amount. Defendants amended their complaint on 13 February 1981, substituting for the original sum of $120,331.82 the new sum of $121,114.61, representing the amount they had admitted paying to the plaintiff.
On 1 October 1981 defendants moved for summary judgment. In response to defendants' motion, plaintiff submitted affidavits disclosing inter alia that he had a general contractor's license limited to $125,000.00 on any single project; that the original estimated cost of the project was $115,967.81; that during the course of construction, defendants requested certain modifications totalling an additional cost of $24,075.97; and that defendants purchased some of these materials, although they were charged to plaintiff's account, and that he had no control over the prices paid for them. On 24 May 1982, the trial judge denied defendants' motion for summary judgment.
Finally, on 26 August 1982, defendants moved to amend their answer alleging:
1. That pursuant to N.C.G.S. § 87-1, et seq., the plaintiff is not entitled to recover any sums of money from the defendants in that the plaintiff was not properly licensed to construct a project as alleged in the complaint in that plaintiff was licensed as a general contractor only up to a cost of $125,000.00 and the defendants plead this as a bar to plaintiff's claim.
2. That plaintiff is barred on its claim and plaintiff's claim is void and unenforceable on account of the statute of frauds.
The case was tried before a jury. Following presentation of the plaintiff's evidence and again at the close of all the evidence, defendants moved for "dismissal" pursuant to Rule 50 of the North Carolina Rules of Civil Procedure, 1 arguing that plaintiff had shown by his own evidence that "he was licensed [as a general contractor] for $125,000.00" and that "the cost of the undertaking exceeded the statutory amount in that plaintiff's (sic) claimed his undertaking was in excess of $130,000.00." The trial judge reserved ruling on the motions and submitted the case to the jury. The jury returned a verdict in favor of the plaintiff in the amount of $11,000.00. Defendants moved for judgment notwithstanding the verdict and this motion was granted. From this judgment, plaintiff appealed to the Court of Appeals. That court affirmed the judgment below, holding that "a contractor who violates statutory licensing requirements may not enforce a construction contract against an owner." 66 N.C.App. at 340, 311 S.E.2d at 48. The Court of Appeals then concluded, "On this record plaintiff cannot collect more than $125,000.00 on his contract with defendants." Id.
Judge Eagles, in his dissenting opinion, took the position that "a licensed general contractor has complied with Chapter 87 when the contractor is licensed throughout the negotiation, contracting and construction process, the estimated construction cost under the original contract is within the dollar limits of his license, and any subsequent variations from the plans and specifications of the original contract are at the initiation of the other party and are merely acquiesced in by the contractor." Id. at 341, 311 S.E.2d at 48.
Plaintiff contends that the trial judge erred in granting defendants' motion for judgment n.o.v., thereby barring his recovery of an amount in excess of what he had already received. Plaintiff's general contractor's license is limited to the amount of $125,000.00 on any single project. The jury awarded plaintiff $11,000.00 which, together with the amount he had been paid, would total an amount well in excess of the $125,000.00 limit on his license. 2
Defendants take the position that plaintiff is barred from recovery of any amount on his claim.
In support of his position, plaintiff would have us consider, as did Judge Eagles in his dissenting opinion, the following facts: plaintiff's original estimate, after negotiations with defendants, was $115,000.00, a figure well within the plaintiff's authorized license limit. Although plaintiff acquiesced in defendants' requested additions and changes made during the course of the construction, which additions and changes substantially increased the cost of the structure, plaintiff took no part in defendants' decision to modify the original plans. Thus, argues plaintiff, he should not be required to bear the costs of modifications which inured solely to the benefit of the defendants and which were incurred solely as a result of their request for variations of the original plan.
Plaintiff's arguments are persuasive. However, our interpretation of Chapter 87, its purpose and underlying policy, together with our recent decision in Brady v. Fulghum, 309 N.C. 580, 308 S.E.2d 327 (1983), dictates our rejection of the arguments of both parties.
G.S. § 87-10, provides in pertinent part:
[T]he holder of an unlimited license shall be entitled to engage in the business of general contracting in North Carolina unlimited as to the value of any single project, the holder of an intermediate license shall be entitled to engage in the practice of general contracting in North Carolina but shall not be entitled to engage therein with respect to any single project of a value in excess of four hundred twenty-five thousand dollars ($425,000), the holder of a limited license shall be entitled to engage in the practice of general contracting in North Carolina but the holder shall not be entitled to engage therein with respect to any single project of a value in excess of one hundred twenty-five thousand dollars ($125,000) and the license certificate shall be classified as hereinafter set forth.
* * *
* * *
The Board shall conduct an examination, either oral or written, of all applicants for license to ascertain the ability of the applicant to make a practical application of his knowledge of the profession of contracting, under the classification contained in the application, and to ascertain the qualifications of the applicant in reading plans and specifications, knowledge of estimating costs, construction, ethics and other similar matters pertaining to the contracting business and knowledge of the applicant as to the responsibilities of a contractor to the public and of the requirements of the laws of the State of North Carolina relating to contractors, construction and liens. If the results of the examination of the applicant shall be satisfactory to the Board, then the Board shall issue to the applicant a certificate to engage as a general contractor in the State of North Carolina, as provided in said certificate,.... (Emphasis added.)
N.C.Gen.Stat. § 87-10 (1981) (amended 1982).
Clearly the statute contemplates a differing level of expertise for those applying for and receiving a license in the three enumerated categories. In enacting this statute, the legislature reasonably determined that as the cost of a structure increased, there would be additional demands of expertise and responsibilities from the contractor. To permit a general contractor to recover amounts in excess of the allowable limit of his license would vitiate the intended purpose of this statute: to protect the public from incompetent builders. We therefore hold that a general contractor is entitled to recover only up to that amount authorized by his license. In the present case plaintiff is entitled to recover from the defendants an amount not to exceed $125,000.00.
In so holding we reject defendants' position that a contractor who constructs a project, the value of which exceeds the amount of his license, may not recover in any amount for the owner's breach of contract, or for the value of the work and services furnished or materials supplied under the contract on a theory of unjust enrichment. To the extent that Helms v. Dawkins, 32 N.C.App. 453, 232 S.E.2d 710 (1977) and cases cited therein so hold, those cases are overruled. Nor do we believe, as defendants contend, that our holding today is inconsistent with the rationale or result in Brady v. Fulghum, 309 N.C. 580, 308 S.E.2d 327. In that case we expressly rejected the doctrine of "substantial compliance" with the general contractor's licensing statute. The substantial compliance doctrine essentially favored an equitable result following a case by case analysis. In Brady we elected to adopt a "bright line" rule, requiring strict compliance with the licensing provisions of G.S. § 87-1, et seq., "[i]n recognition of the essential illegality of an unlicensed contractor's entering into a construction contract for which a license is required...." Id. at 585, 308 S.E.2d at 331. Likewise, by today's holding we have rejected plaintiff's argument that he is entitled to full recovery because he substantially complied with the Chapter 87 licensing requirements. Our decision in Brady, however, does not support defendants' contention that since...
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