Vaughn v. North Carolina Dept. of Human Resources

• Decision Date: 11 July 1978
• Docket Number: No. 7710IC568,7710IC568
• Citation: 37 N.C.App. 86,245 S.E.2d 892
• Court: North Carolina Court of Appeals
• Parties: Linda D. VAUGHN v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES.

Page 892

245 S.E.2d 892

37 N.C.App. 86

Linda D. VAUGHN v. NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES.

No. 7710IC568.

Court of Appeals of North Carolina.

July 11, 1978.

Powe, Porter, Alphin & Whichard by Charles R. Holton, Durham, for the claimant.

Atty. Gen. Rufus L. Edmisten by Asst. Atty. Gen. Ralf F. Haskell, Raleigh, for the State.

MORRIS, Judge.

This case came before this Court styled as an appeal. No appeal lies from an interlocutory order of the Industrial Commission. There is a right of appeal only from a final order. G.S. 7A-29. In the interests of judicial economy, we have treated the "appeal" as a petition for writ of certiorari and have granted the same.

The Department has excepted to every one of the Commission's findings of fact. A finding of fact by the Industrial Commission is binding on appeal if it is supported by any competent evidence. Crawford v. Board of Education, 3 N.C.App. 343, 164 S.E.2d 748 (1968), affirmed 275 N.C. 354, 168 S.E.2d 33 (1969). We have thoroughly reviewed the evidence introduced in the two hearings. We have found competent evidence to support every finding of fact save one. Assignments of error Nos. 2 through 8 are, therefore, without merit.

The Commission found that the Durham County Board of Social Services consisted of three members; one appointed by the county commissioners, one appointed by the North Carolina Social Services Commission, and the third selected by the first two. This procedure is set out in G.S. 108-9(a). Contrary to the Industrial Commission's finding, the record indicates that the actual number of county board members is five. The selection, therefore, would have been pursuant to G.S. 108-9(b) with both the Social Services Commission and the county commissioners selecting two rather than one board member. We will not reverse the order of the Commission for harmless error. To warrant reversal, the error must be material and prejudicial. Board of Education v. Lamm, 6 N.C.App. 656, 171 S.E.2d 48 (1969), affirmed 276 N.C. 487, 173 S.E.2d 281 (1970). The error of which the Department complains is obviously harmless and does not warrant reversal because the procedure and proportion are the very same. Assignment of error No. 1 is overruled.

Assignments of error Nos. 9 through 15 focus upon one crucial question: Were Thomas Hogan, Director of the Durham County Department of Social Services, and his subordinates acting as agent and sub-agents for the State Social Services Commission in placing James Mason in the home of Linda Vaughn? Both parties acknowledge and concede that if Thomas Hogan was acting as agent for the Commission, then the other employees were also acting as agents under theories of sub-agency.

This case is before us to review the order of the Industrial Commission which held that it had jurisdiction to hear the claim. G.S. 143-291 is the jurisdictional statute. It provides that the Industrial Commission can hear claims based upon the "negligent act of any officer, employee, involuntary servant or agent of the State while acting within the scope of his office, employment, service, agency or authority . . . ." G.S. 143-291. The parties stipulated that Hogan was an employee of the county. There is no evidence to suggest that Hogan is either an officer or an involuntary servant. Thus, the remaining question is whether Hogan is an agent of the State. Additionally, we note that the claimant did not object to the Commission's holding that Hogan was not an employee of the State. If Hogan was acting as an agent of the State, the Industrial Commission does have jurisdiction to hear the claim; if not, then the Commission is without jurisdiction.

There are two essential ingredients in the principal-agent relationship: (1) Authority, either express or implied, of the agent to act for the principal, and (2) the principal's control over the agent. See Sharpe v. Bradley Lumber Company, 446 F.2d 152 (4th Cir. 1971), cert. denied, 405 U.S. 919, 92 S.Ct. 946, 30 L.Ed.2d 789 (1972); Julian v. Lawton, 240 N.C. 436, 82 S.E.2d 210 (1954); Seavey, Handbook on the Law of Agency (1964), § 11, at 21. The agent must have authority to act on behalf of the principal. It would be manifestly unjust to hold one party liable for the actions taken by another person if that person did not have authority to act for him. Just as "authority" (or, as some courts have termed it, "appointment") justifies holding the principal liable, "control" is the element which distinguishes a true "agency" status from some other status such as that of a true independent contractor. The nature and degree of control which the principal exercises over the agent is often determinative of whether there is a principal-agent relationship. In the case of the "borrowed servant", for example, whether the acts of the "borrowed servant" create liability will depend upon "who has the primary right of control when the act is performed. . . ." Sell, Agency (1975), § 97, at 88.

In the present case, the Commission found that Hogan and the other named persons were agents simply because of the nomenclature used in the statute. G.S. 108-19(5) requires the county director to "act as agent of the Social Services Commission in relation to work required by the Social Services Commission in the county. . . ." G.S. 108-19(15) requires the county director to "accept children for placement in foster homes and to supervise placements for so long as such children require foster home care." The Commission concluded that since this duty was required work, the director was acting as "agent". The Department of Human Resources argues on appeal that accepting children for placement is work required by the legislature and that the director is, therefore, not an "agent". While the Commission's position could be sustained as it is, we believe that a more careful analysis strengthens the position taken.

We believe that the proper approach is to examine the realities of the situation as well as the nomenclature. We will first investigate the "authority" of the county director. As we noted above G.S. 108-19(5) requires him to "act as agent of the Social Services Commission in relation to work required by the Social Services Commission in the county." Furthermore, G.S. 108-19(15) requires him to "accept children for placement in foster homes . . . ." G.S. 108-19(3) requires the county director to "administer programs of public assistance established by this Chapter. . . ." G.S. 108-66, in the same chapter, establishes the State Foster Home Fund. This program funded the placement of the child, James Mason, in the home of Linda Vaughn. We believe that these statutory provisions clearly demonstrate the authority of Director Hogan to act on behalf of the Commission.

The next question is whether the director's authority to act on behalf of the Commission encompassed the placement of James Mason in the home of Linda Vaughn. In investigating the authority of an agent, one must determine the scope of that authority. If an agent exceeds the scope of his authority, it is obvious that his act will not be binding upon his principal. See Cordaro v. singleton, 31 N.C.App. 476, 229 S.E.2d 707 (1976). The most restrictive interpretation of the director's authority which can be reasonably supported is that, under G.S. 108-19(3) and (5), the director acts as agent for the Social Services Commission in administering the State Foster Home Fund, set up under G.S. 108-66, in Durham County. The county director is required to administer the State Foster Home Fund since it is a program of public assistance established by Chapter 108. The statute also deems the director an "agent" in relation to work required by the Commission in the county.

The record reveals that placement of James Mason was administered as part of the State Foster Home Fund. Thus, the placement of James Mason was within the scope of the director's authority. The State argues that the State Foster Home Fund is merely a program to reimburse the county for monies expended and that placement is completely foreign to the program. The statute, however, states that the Fund was established "for the purpose of providing assistance to needy children who are placed in foster homes by county departments of social services in accordance with the rules and regulations of the Social Services Commission." (Emphasis added.) G.S. 108-66. The statute, thus, clearly establishes a direct link between the needy child and the Commission rather than the disjointed process suggested in the brief for the Department. Thus, we conclude that, in placing James Mason in the home of Linda Vaughn, the director was acting within the scope of his authority in administering the State Foster Home Fund in Durham County.

We also agree with the Industrial Commission that the director's duties in accepting children for placement in foster homes are encompassed by G.S. 108-19(5) which requires the director to act as "agent" for the State. We note that the record reveals that a child who is denied foster services has the right to appeal that denial to the State Division of Social Services. If the placement of children in foster homes were not part of the work required by the Commission of Social Services, such an appeal would be a vain and meaningless act. If, on the other hand, placement were part of the required work, it would be logical to have a right of appeal. We do not think that such a determination is necessary to our decision in this case. We think that even under the more restrictive interpretation of the director's authority discussed in the preceding paragraph, there is ample evidence to support the conclusion that the director was acting within the scope of his authority in the placement of James Mason.

The crucial question in this case is whether the Social Services Commission had sufficient control over the director to support the conclusion that he was an "agent" of the State as that...