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    "judges": [
      "Judge EAGLES concurs.",
      "Judge COZORT concurs in part and dissents in part."
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    "parties": [
      "THE STATE OF NORTH CAROLINA ex rel, STATE ART MUSEUM BUILDING COMMISSION, Plaintiff v. THE TRAVELERS INDEMNITY COMPANY, Defendant"
    ],
    "opinions": [
      {
        "text": "LEWIS, Judge.\nIn December 1989, the State, acting on behalf of the State Art Museum Building Commission (hereafter the \u201cBuilding Commission\u201d or the \u201cCommission\u201d), instituted this action to recover on a performance bond issued by defendant, the Travelers Indemnity Company (hereafter \u201cTravelers\u201d), as surety for Middlesex Construction Corporation (hereafter \u201cMiddlesex\u201d). The State had earlier secured a judgment of $373,603.18 against Middlesex, which judgment remains unpaid. In June 1991 the trial court granted partial summary judgment in favor of the State regarding Travelers\u2019 affirmative defenses of the statute of limitations, the statute of repose, laches, and discharge. In February 1992 the trial court entered summary judgment in favor of the State for the full amount of the Middlesex judgment plus interest. Travelers now appeals from both summary judgment orders, and the State appeals from the February 1992 order on the issue of the amount of interest awarded. ,\nIn June 1977 the State contracted with Middlesex to serve as general contractor for the construction of the North Carolina Museum of Art. At that time Middlesex procured a performance bond from Travelers in compliance with the contract instructions to bidders. By July 1981 Middlesex had completed and had been paid for about 99% of the work. However, in November 1981 the State declared Middlesex to be in default due to its failure to complete \u201cpunch list\u201d work at the museum. Travelers was notified of the breach, but opted not to take over the remaining work. The State hired another contractor to complete the job.\nIn March 1982 Middlesex filed suit against the Building Commission for breach of contract, and after dismissals and appeals, again filed suit against the Building Commission in January 1984. Travelers was notified of the lawsuit, but was not made a party to it. In March 1988 the court filed its judgment, which resulted in a net recovery for the Building Commission against Middlesex in the amount of $373,603.18. Middlesex\u2019s insolvency and failure to pay the judgment precipitated the present action against Travelers as their surety.\nIn this appeal we must review two summary judgment orders from the trial court. First, Travelers appeals from the 25 June 1991 order dismissing its affirmative defenses. Second, Travelers and the State both appeal from the 14 February 1992 order awarding the State the amount of the judgment originally entered against Middlesex plus interest. At the outset we note that summary judgment is only appropriate where there are no genuine issues of material fact. N.C.G.S. \u00a7 1A-1, Rule 56(c) (1990). After reviewing the various arguments before us, we conclude that in both instances the trial court correctly granted summary judgment for the State. However, we partially reverse the second summary judgment order on the issue of the amount of interest awarded to the State.\nI. Travelers\u2019 appeal from Order of 25 June 1991\nIn its summary judgment order of 25 June 1991 the trial court dismissed Travelers\u2019 affirmative defenses of the statute of limitations, the statute of repose, and laches. Although at the trial level Travelers argued that the State is no longer exempt from the running of time limitations, in oral argument before the Court of Appeals Travelers conceded that the case of Rowan County Board of Education v. United States Gypsum Co., 332 N.C. 1, 418 S.E.2d 648 (1992), is dispositive on this issue. Travelers proceeded with its argument that the State\u2019s action was proprietary and not governmental, thereby rendering it subject to the time limitations in accordance with Rowan.\nWe begin with a review of Rowan. Historically the government has been exempt from the running of various time limitations under the doctrine of nullum tempus occurrit regi, or \u201ctime does not run against the king.\u201d See Rowan, 332 N.C. at 6, 418 S.E.2d at 652. However, N.C.G.S. \u00a7 1-30 states that \u201c[t]he limitations prescribed by law apply to civil actions brought in the name of the State, or for its benefit, in the same manner as to actions by or for the benefit of private parties.\u201d N.C.G.S. \u00a7 1-30 (1983). In Rowan the Supreme Court clarified the application of the doctrine of nullum tempus in light of section 1-30. The Court stated that:\nWe now clarify the status of this doctrine in this jurisdiction: nullum tempus survives in North Carolina and applies to exempt the State and its political subdivisions from the running of time limitations unless the pertinent statute expressly includes the State.\n332 N.C. at 8, 418 S.E.2d at 653. However, Rowan maintained a governmental versus proprietary distinction to use in reviewing actions of the State. If the State was acting in a proprietary capacity, the time limitations do apply unless the relevant statute excludes the State. Id. at 9, 418 S.E.2d at 654. If the State\u2019s action was governmental, the time limitations do not apply unless the applicable statute expressly includes the State. Id. Thus, if we determine that the State was acting in its governmental capacity in constructing the art museum, then the time limitations did not apply and did not preclude the present suit against Travelers since the relevant statutes do not expressly include the State. See N.C.G.S. \u00a7 1-52(1), -(6) (Cum. Supp. 1992) (three year statute of limitations for contract actions and for actions against sureties); N.C.G.S. \u00a7 l-50(5)(b)l., -7. (Cum. Supp. 1992) (six year statute of repose for actions to recover for breach of contract to construct an improvement to real property and for actions against sureties).\nGenerally, the State acts in its governmental capacity when it is \u201cpromoting or protecting the health, safety, security or general welfare of its citizens.\u201d Rhodes v. Asheville, 230 N.C. 134, 137, 52 S.E.2d 371, 373 (1949). A court may also consider whether or not the State\u2019s action is for the \u201ccommon good of all\u201d and therefore governmental, or for pecuniary profit and therefore proprietary.\nVaughn v. County of Durham, 34 N.C. App. 416, 420, 240 S.E.2d 456, 459 (1977), disc. rev. denied, 294 N.C. 188, 241 S.E.2d 522 (1978) (citation omitted).\nThe Legislature established the Art Museum Building Commission and authorized it to receive public as well as private funds towards the cost of building the museum. N.C.G.S. \u00a7 143B-58 (1990). The State points out that the General Assembly appropriated a total of over ten million dollars for the construction of the art museum. Travelers, however, relies on the fact that the Commission was authorized to receive private funds in its argument that the State was acting in its proprietary capacity.\nWe hold that the mere receipt of private funds does not render the State\u2019s actions proprietary, especially in light of the large appropriation of public funds in this case. A lawsuit to recover lost public funds is consistent with a governmental purpose. In Rowan the Court concluded that the Board of Education \u201cwas acting in a governmental capacity when it brought suit to recover lost tax money expended in the construction of public schools . . . .\u201d 332 N.C. at 16, 418 S.E.2d at 658. Similarly, we hold that the State was acting in its governmental capacity in suing to recover tax money lost in the construction of the art museum. Although the establishment and maintenance of the public schools in Rowan was obviously a governmental task, we believe the establishment of an art museum is also governmental in purpose. We note that the art museum is open for the education and enjoyment of the general public. The State\u2019s interest in providing cultural resources and educational opportunities renders the creation of an art museum a governmental function. \u201cLife without industry is guilt and industry without art is brutality.\u201d John Ruskin, Lectures on Art 3, The Relation of Art to Morals (Feb. 23, 1870).\nBecause we find the State\u2019s action in building the art museum was governmental, and because the applicable time limitations do not expressly include the State, we hold the doctrine of nullum tempus is applicable. The trial court properly granted summary judgment to the State on Travelers\u2019 affirmative defenses.\nII. Appeal from Judgment of 14 February 1992\nA. Travelers\u2019 appeal\nTravelers also appeals from the summary judgment order of 14 February 1992, claiming that it was discharged and that questions of material fact existed to preclude summary judgment. Travelers argues it was discharged because of the time limitation found in the contract itself and because the State had actually accepted the project from Middlesex.\nTravelers argues the State failed to bring the present action within the time period set forth in the contract. Article 28 of the \u201cGeneral Conditions of the Contract,\u201d entitled \u201cPerformance Bond,\u201d stipulates that \u201c[i]n all bonds, the provision that no suit, action, or proceedings by reason of any default whatsoever shall be brought on this bond after so many months shall be fixed at twelve (12) months.\u201d According to Travelers, instituting an action within 12 months of default was a condition precedent to the suit itself. Thus, the State\u2019s failure to sue within 12 months of Mid-dlesex\u2019s 1981 default discharged Travelers\u2019 obligation on the bond.\nWe agree with the State that the provision does not apply to this case. We interpret the provision to mean that if a performance bond contains any sort of time limitation, that time limitation will be set at 12 months. However, the performance bond in this case contains no time limitation at all. Suing on the bond within 12 months was therefore not a condition precedent.\nTravelers also argues it was discharged because the State had accepted the project from Middlesex. In the 1988 Judgment against Middlesex the court found that the State \u201c \u2018accepted\u2019 the building subject to completion of \u2018punch list\u2019 work to be specified. This \u2018acceptance\u2019 was only a conditional acceptance.\u201d Travelers argues the condition became satisfied when the replacement contractor finished the punch list work, and the State\u2019s acceptance thereby became final.\nThe State emphasizes that its acceptance was made conditional upon the completion of a 50-page list of \u201cpunch work\u201d items. The fact that another contractor later completed the work did not preclude suit against Middlesex for its default, did not have the effect of rendering the State\u2019s acceptance final as to Middlesex, nor did it have the effect of discharging the surety of its obligation. Furthermore, as the State points out, Travelers\u2019 responsibility related to the entire contract, not just the punch list work, and the judgment against Middlesex included damages for various other items. We conclude that neither the provision in the contract nor the State\u2019s conditional acceptance of the project discharged Travelers from its obligations.\nTravelers also argues summary judgment was inappropriate in this case because there are issues of material fact to be resolved. Travelers claims that genuine issues exist over whether the cost of the work left to be completed after Middlesex\u2019s default was less than the amount of retainage held by the State. Other issues, according to Travelers, are whether the various damages awarded against Middlesex were properly assessed against Travelers, and whether the Art Museum Building Commission exists.\nTravelers points out that it actually cost the State less to complete the punch list work than the amount of retainage it withheld. Thus, Travelers claims it has no liability under the performance bond because the State was not damaged by the default.\nAccording to the contract, upon default the contractor and the surety become responsible for \u201c[a]ll costs and charges incurred by the Owner, together with the costs of completing the work under the contract . . . .\u201d Thus, notwithstanding the actual cost of completing the punch list work, if all the costs and expenses together exceeded the amount of the retainage, the State could properly recover the excess cost from Middlesex and Travelers. The State points out that the trial court allowed Middlesex credit for the amount of retainage in computing the damages awarded. The amount of the judgment represents excess costs associated with remedial contract costs, faulty work, and liquidated damages. We find no genuine issues of material fact regarding the amount of the judgment rendered against Middlesex and charged to Travelers.\nTravelers claims genuine issues exist regarding the assessment of the damages against Travelers, specifically regarding the amount paid to the replacement contractor. We find this contention meritless. As stated above, the contract stipulates that Travelers, as surety, is responsible for all costs incurred due to Middlesex\u2019s default. \u201cThe obligation of the surety is ordinarily measured by the obligation of the principle.\u201d Colonial Acceptance Corp. v. Northeastern Printcrafters, Inc., 75 N.C. App. 177, 179, 330 S.E.2d 76, 77 (1985). We note that the court carefully itemized its judgment against Middlesex, crediting Middlesex for any sums it was due, and only charging against it costs incurred as a result of its default. Travelers is clearly liable for the full amount of the Middlesex judgment.\nFinally, Travelers claims genuine issues exist as to whether the State Art Museum Building Commission is still a viable entity. Travelers claims the Commission was terminated according to N.C.G.S. \u00a7 143B-61.1 (1990), which provides that the Commission expires when it submits its final report. Travelers concedes that the Commission has not submitted a final report, but argues that its failure to meet regularly over the past ten years has somehow satisfied the requirement of filing a final report.\nSection 143B-61.1 states that the Building Commission expires when it makes its final report, and that it must make such final report \u201c120 days after the final resolution of all cases or claims in which the Commission is a party or that are brought under G.S. \u00a7 143-135.3 regarding the State Art Museum.\u201d According to this statute, the Commission may not submit its final report until the resolution of the present action. Even comatose, the Building Commission exists.\nB. The State\u2019s Appeal\nThe State argues that the trial court erred in awarding interest on the Middlesex judgment only from 28 December 1989, the date this action was filed, instead of from 28 March 1988, the date of the filing of the final judgment against Middlesex. The State points out that the judgment against Middlesex stipulated that the State was entitled to \u201cinterest at the rate provided by law from the date of filing of this judgment until paid.\u201d According to the State, as surety Travelers should be held liable for the full amount of the judgment against Middlesex, including the amount of interest awarded therein. See Martin v. Hartford, 68 N.C. App. 534, 537, 316 S.E.2d 126, 128, disc. rev. denied, 311 N.C. 760, 321 S.E.2d 140 (1984) (surety\u2019s liability same as principal\u2019s as long as does not exceed amount of bond).\nTravelers, on the other hand, emphasizes that the State elected not to sue Travelers when it brought suit against Middlesex. No claim was asserted against Travelers until the filing of this action in December 1989. Travelers contends that saddling it with interest which had accrued before it was even sued would amount to an award of pre-filing interest.\nA judgment entered against a principal is conclusive and binding upon the surety even though the surety was sued separately from the principal. George v. Hartford Accident and Indemnity Co., 102 N.C. App. 761, 765-66, 404 S.E.2d 1, 3 (1991), modified and aff\u2019d, 330 N.C. 755, 412 S.E.2d 43 (1992) (citation omitted). The following passage further explains this situation:\nWhere the very condition of the bond is the performance of a judgment against the principal, or that the surety will pay all damages that may be awarded in an action brought against the principal, or will answer for the principal in respect to some charge which the law lays on him, there is no question as to the conclusiveness, as against the surety, of a judgment against the principal, if binding upon the latter and free from fraud and collusion, assuming, of course, that it is the kind of judgment contemplated by the surety\u2019s undertaking.\n102 N.C. App. at 766, 404 S.E.2d at 3 (quoting 74 Am. Jur. 2d Suretyship \u00a7 153 (1974)). Because a surety is liable for the full amount of the judgment against the principal, we hold that Travelers should be liable for the full amount of the judgment, which included interest from the date of the judgment, 28 March 1988. For this reason, we must reverse that portion of the judgment allowing interest only from December 1989.\nIn conclusion, we affirm the summary judgment order of 25 June 1991 dismissing Travelers\u2019 affirmative defenses, and we affirm the 17 February 1992 summary judgment order on all issues except the amount of interest awarded. On that issue we reverse and remand to the trial court for entry of judgment in accordance with this opinion.\nAffirmed in part, reversed in part and remanded.\nJudge EAGLES concurs.\nJudge COZORT concurs in part and dissents in part.",
        "type": "majority",
        "author": "LEWIS, Judge."
      },
      {
        "text": "Judge COZORT\nconcurring in part and dissenting in part.\nI concur with all of the majority opinion except that portion which reverses the trial court\u2019s decision to award interest from 28 December 1989 instead of from 28 March 1988. I believe the trial court was correct on the issue of interest, and I vote to affirm that portion of the judgment as well. For that reason, I respectfully dissent, in part.",
        "type": "concurring-in-part-and-dissenting-in-part",
        "author": "Judge COZORT"
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    "attorneys": [
      "Attorney General Lacy II. Thornburg, by Special Deputy Attorney General T. Buie Costen, and Assistant Attorney General Teresa L. White, for the State.",
      "Burns, Day & Presnell, P.A., by Lacy M. Presnell III, Daniel C. Higgins, and Susan F. Vick, for defendant."
    ],
    "corrections": "",
    "head_matter": "THE STATE OF NORTH CAROLINA ex rel, STATE ART MUSEUM BUILDING COMMISSION, Plaintiff v. THE TRAVELERS INDEMNITY COMPANY, Defendant\nNo. 9210SC408\n(Filed 3 August 1993)\n1. Limitations, Repose, and Laches \u00a7 5 (NCI4th); State \u00a7 2.2 (NCI3d)\u2014 building art museum \u2014 State acting in governmental capacity \u2014action to recover on performance bond not precluded by statute of limitations\nThe State was acting in its governmental capacity in constructing an art museum, even though the Building Commission was authorized to receive private as well as public funds; therefore, time limitations did not apply and did not preclude this suit against defendant surety to recover on a performance bond, since the relevant statutes did not expressly include the State.\nAm Jur 2d, Limitation of Actions \u00a7 412.\n2. Principal and Surety \u00a7 48 (NCI4th)\u2014 obligation on performance bond \u2014contract provision \u2014conditional acceptance of building \u2014 obligation not excused\nNeither a provision in the State\u2019s contract with the builder nor the State\u2019s conditional acceptance of the building project discharged defendant from its obligation on a performance bond, since the contract provision in question meant that, if a performance bond contained any sort of time limitation, that time limitation would be set at twelve months; the performance bond in this case contained no time limitation at all; suing on the bond within twelve months was therefore not a condition precedent; the State\u2019s acceptance of the project was made conditional upon the completion of a 50-page punch list; and the fact that another contractor later completed the work did not preclude suit against the general contractor for its default, did not have the effect of rendering the State\u2019s acceptance final as to the general contractor, and did not have the effect of discharging the surety of its obligation.\nAm Jur 2d, Contractors\u2019 Bonds \u00a7 191.\n3. State \u00a7 2.2 (NCI3d); Principal and Surety \u00a7 53 (NCI4th) \u2014 cost of work not done by contractor \u2014 amount of State\u2019s retainage \u2014amount paid to replacement contractor \u2014existence of State Art Museum Building Commission \u2014 no genuine issues of material fact\nIn an action to recover on a performance bond issued by defendant as surety for the general contractor who built the State Art Museum, there were no issues of material fact as to whether the cost of the work left to be completed after the general contractor\u2019s default was less than the amount of retainage held by the State, whether the trial court properly assessed against defendant the amount paid to the replacement contractor, and whether the State Art Museum Building Commission still existed.\nAm Jur 2d, Contractors\u2019 Bonds \u00a7\u00a7 222, 223.\n4. Principal and Surety \u00a7 52 (NCI4th)\u2014 liability of surety for interest \u2014surety liable for full amount of judgment against principal\nBecause a surety is liable for the full amount of the judgment against the principal, defendant, which issued a performance bond as surety for the general contractor who built the State Art Museum, should be liable for the full amount of the judgment against the general contractor, including the amount of interest awarded therein.\nAm Jur 2d, Contractors\u2019 Bonds \u00a7 226.\nJudge COZORT concurring in part and dissenting in part.\nAppeal by defendant from Judgment entered 25 June 1991 by Judge Narley Cashwell, and by both parties from Judgment entered 17 February 1992 by Judge Donald W. Stephens in Wake County Superior Court. Heard in the Court of Appeals 29 March 1993.\nAttorney General Lacy II. Thornburg, by Special Deputy Attorney General T. Buie Costen, and Assistant Attorney General Teresa L. White, for the State.\nBurns, Day & Presnell, P.A., by Lacy M. Presnell III, Daniel C. Higgins, and Susan F. Vick, for defendant."
  },
  "file_name": "0330-01",
  "first_page_order": 360,
  "last_page_order": 369
}
