Fulton v. Rice

184 S.E.2d 421 (1971) 12 N.C. App. 669

Hugh B. FULTON
v.
Robert W. RICE.

No. 7130DC692.

Court of Appeals of North Carolina.

November 17, 1971.

Millar, Alley & Killian by Leon M. Killian, III, Waynesville, for plaintiff appellee.

Morgan, Ward & Brown by H. S. Ward, Jr., Waynesville, for defendant appellant.

VAUGHN, Judge.

The sole question raised on appeal is whether the defendant by entering into the instant contract became a general contractor within the meaning of G.S. § 87-1 and was thus barred from recovery on his counterclaim because of his failure to have the license required by Chapter 87 of the General Statutes.

The statute in effect at the time of the institution of this suit defined a "general contractor" as

"* * * one who for a fixed price, commission, fee or wage, undertakes to bid upon or to construct any building, highway, sewer main, grading or any improvement or structure where the cost of the undertaking is twenty thousand dollars ($20,000.00) or more and anyone who shall bid upon or engage in constructing any undertaking or improvements above mentioned in the State of North Carolina costing twenty thousand dollars ($20,000.00) or more shall be deemed and held to have engaged in the business of general contracting in the State of North Carolina.

"This section shall not apply to persons or firms or corporations furnishing or erecting industrial equipment, power plant equipment, radial brick chimneys, and monuments."

The plaintiff contends that in determining whether a contractor is a general contractor within the meaning of G.S. § 87-1, the court must look to the owner's total cost of the structure. If it exceeds the statutory amount, the contractor is a general contractor.

The defendant contends that the cost of the contractor's undertaking is determinative. This would, in most cases, be the contract price or the amount paid the contractor.

Certain principles of construction must be applied in arriving at a decision in this case. The statute before us imposes criminal penalties for its violation. G.S. § 87-13. It must be strictly construed and its scope may not be extended by implication beyond the meaning of its language so as to include offenses not clearly described. Vogel v. Reed Supply Co. and Supply Co. v. Da Pow Developers, Inc., 277 N.C. 119, 177 S.E.2d 273 (1970) (citing cases). It is also a statute restricting the practice of an otherwise lawful occupation to a special class of persons and as such it must be construed so as not to extend it to activities and transactions not intended by the legislature to be included. McArver v. Gerukos, 265 N.C. 413, 144 S.E.2d 277 (1965).

The statute defines a general contractor as "one who * * * undertakes to bid upon or to construct any building * * * or structure where the cost of the undertaking is twenty thousand dollars ($20,000.00) or more * * *." (emphasis added). These words must be construed strictly in favor of the defendant because the statute carries criminal penalties and is in derogation of the right to engage in a lawful occupation. Vogel v. Reed Supply Co. and Supply Co. v. Da Pow Developers, Inc., supra. The contractor is a general contractor if the cost of the undertaking exceeds $20,000.00. It is clear that the cost of the undertaking is determinative.

An undertaking is defined as, "[a]n engagement by one of the parties to a contract to the other, as distinguished from the mutual engagement of the parties to each other." Black's Law Dictionary, Rev. 4th Edition (1968).

The undertaking is the promise or engagement. The cost of the undertaking is therefore the cost of the promise or engagement. The contract price and the total cost of the building are frequently, if not usually, the same. But where this is not the case, to allow the owner's total cost of the building to be determinative, would leave the contractor at the mercy of the owner. In such a situation the contractor would have no control over the purchase of materials or other expenses which the owner might incur and no way of insuring that he did not exceed the statutory cost limitation and thus fall within the definition of a general contractor.

In the case before this Court, the cost of the contractor's undertaking was less than $20,000.00. He was not within the definition of "general contractor" in G.S. § 87-1 and therefore his counterclaim against plaintiff was not barred as a matter of law. The plaintiff's motion should have been denied.

Reversed.

MORRIS and PARKER, JJ., concur.