STATEMENT OF THE CASEThis action was commenced by the service of a Summons and Complaint upon the sole defendant, Edward J. Shannon, by Judy Kay Pierce and Raymond Pierce ("Pierce") on April 4, 1996, concerning a two vehicle accident occurring at approximately 10:00 O'clock p.m. April 19, 1995 in McKenzie County, North Dakota. The defendant, Edward J. Shannon ("Shannon") was the driver of the other vehicle involved in the subject accident. Shannon's answer to plaintiffs' complaint was served and filed on May 31, 1996 which contained several affirmative defenses, including the defense that Pierces' injuries and damages were caused in whole or in part by the negligence of other persons and not Edward Shannon.
After a period of discovery, Defendant Shannon, on September 16, 1996, moved the District Court, upon stipulation of the parties, for leave to serve a third-party action against Hulstrand Construction, Inc., ("Hulstrand") as a third-party defendant pursuant to Rule 14 N.D.R.Civ.P. The District Court entered its order granting leave to Shannon to serve a third-party action against Hulstrand by order dated September 17, 1996. The third-party summons and complaint was served upon Hulstrand on October 22,1996 and Hulstrand's answer to Shannon's third-party complaint was served November 20,1996. (Third-party complaint at appendix pp.31-35)
The third- party complaint against Hulstrand contained a number of claims involving negligence concerning Hulstrand's conduct when constructing the roadway, which conduct, was alleged to have caused Shannon's car to have been led without warning into an unsafe area of the roadbed under construction where Shannon's car was unavoidably caught in ruts and loose gravel which then caused Shannon's car to be led into the path of and collide with the oncoming Pierce vehicle.
Before answering the third-party complaint, Hulstrand did not file or serve any Rule 12 N.D.R.Civ.P. motion objecting to being joined as a party or alleging such joinder may be violative of North Dakota's modified comparative fault statutes Chapter 32-03.2 N.D.C.C..
Hulstrand's answer is dated November 20, 1996 and does not raise any specific defenses or objection to being named as a third-party defendant to the lawsuit. Specifically, Hulstrand made no procedural objection whatsoever to being added as a third-party defendant as a violation of North Dakota's modified comparative fault statutes Section 32-03.2-02 N.D.C.C. (Hulstrand's answer at appendix pp. 36-40)
Subsequent to Hulstrand being added as a third-party defendant which occurred in November 1996, for the next 18 months, Hulstrand and Shannon participated in depositions and other formal discovery in the lawsuit.
In June 1998 Shannon's insurer authorized the payment of policy limits, in part, to avoid the impending trial and the chance of a judgment being entered against Shannon for more than policy limits, and in part to clear the way for litigation or settlement of the third-party action. After a month of exchanging letters to confirm the settlement a formal stipulation for dismissal of only Pierces' claims was drafted, circulated and signed as dated August 6, 1998.
The August 6, 1998 stipulation for settlement and dismissal of Pierces' claims contained specific language agreed to by all parties, including Hulstrand, that the third-party action would not be dismissed, where it stated:
"That the third-party claim of Edward J. Shannon against Hulstrand Construction will be reserved and specifically not be dismissed at this time"
(August 6, 1998 stipulation at appendix pp. 54-55)
Subsequent to the August 6, 1998 stipulation for settlement and dismissal of Pierces' main action, Hulstrand, by separate stipulation, signed August 10, 1998, stipulated to vacate the trial date in favor of an additional 6 month period to finish discovery and requested the District Court to set a new trial date for the trial of the third-party action. This stipulation signed by Shannon and Hulstrand recites Shannon's payment to settle the action with the Pierces and the reservation of Shannon's third-party claims against Hulstrand for future trial, where this stipulation stated:
"1. That the main action involving the claims made by plaintiffs Judy Kay Pierce and Raymond Pierce have been fully compromised, settled and paid by defendant and third-party plaintiff Edward J. Shannon leaving only the claims existing between Edward J. Shannon as third-party plaintiff and Hulstrand Construction, Inc., as third-party defendant to be litigated in this action."
(August 10, 1998 stipulation at appendix pp. 49-51)
Thereafter, approximately one month after Hulstrand signed these two stipulations for dismissal of Pierces' action and for preservation of the third-party action, Hulstrand, by motion dated October 26, 1998, moved the District Court for summary judgment based primarily upon procedural grounds alleging Hulstrand's improper joinder as a third-party defendant in violation of North Dakota's modified comparative fault statute 32-03.2-02 N.D.C.C.. (Motion and brief in support of motion at appendix pp. 57-67)
Shannon resisted this motion for summary judgment with his brief in opposition and the filing of numerous affidavits, expert deposition testimony and fact witness deposition testimony supporting the claim, that at the time and place of the subject accident, Hulstrand had that day installed a large culvert across the dirt roadbed and had allowed an unmarked
ridge of gravel and fill to form over the buried culvert which then caused Shannon's vehicle to be caught and drawn into the path of the oncoming Pierce vehicle. (See affidavits and brief in opposition at appendix pp. 71-99)
The Honorable William W. McLees did then hold a hearing before the District Court, McKenzie County on December 4, 1998 on Hulstrand's motion for summary judgment and by memorandum opinion dated January 15, 1999 the trial court granted Hulstrand's motion for summary judgment on procedural grounds of improper joinder based upon the trial court's interpretation of North Dakota's modified comparative fault statute Section 32-03.2-02 N.D.C.C.. (January 15, 1999 Memorandum and Order at appendix pp. 104-126)
Shannon then filed an objection to Hulstrand's statement of costs and disbursements and requested a hearing by motion dated April 8, 1999 whether the proposed order for dismissal should be "with prejudice" where Hulstrand was dismissed from the Pierce litigation on a procedural basis and not on the merits. (Objection at appendix pp. 130-133)
Before the District Court held its hearing on whether Hulstrand's dismissal should be "with prejudice", Shannon's insurer, Farmers Alliance Mutual Insurance Company, started a subrogation action against Hulstrand to recoup all or part of the settlement paid by Farmers Alliance to the Pierces which settled all claims and liability of all parties, including those claims which Pierces could have made against Hulstrand. This subrogation action is dated March 29, 1999 and was brought pursuant to 32-38-01 N.D.C.C. which action was served upon Hulstrand March 31, 1999. Hulstrand has served its answer dated May 3, 1999 to this subrogation action which is on hold pending the outcome of this appeal. (Subrogation complaint and Hulstrand's answer at appendix pp. 200-209, 210-213)
The Honorable William W. McLees held a telephonic hearing before the District Court, McKenzie County on July 2, 1999 on the issue of the form of Hulstrand's dismissal and Shannon's objections to Hulstrand's statement of costs and disbursements. The trial court by memorandum decision and order dated July 13,1999 granted Hulstrand's motion for the dismissal to be "with prejudice" and entered costs of litigation against Shannon in the sum of $3093.38. (July 13, 1999 Memorandum Opinion and Order at appendix pp. 147-148) Notice of entry of judgment was then made by Hulstrand on August 2, 1999 and notice of appeal was served and filed by Shannon in this action on September 1, 1999 with Shannon posting a supersedeas bond dated September 10,1999 and the trial court then approving bond and staying execution by order of October 6, 1999. This matter is now on appeal to the North Dakota Supreme Court.
STATEMENT OF THE FACTS
This action arose out of an automobile accident which occurred on a road under construction on North Dakota Highway 58 in western McKenzie County, North Dakota on the late evening hours of April 19, 1995 when Edward J. Shannon ("Shannon") lost control of his vehicle in an area of fresh loose gravel and fill and there crossed into the oncoming path of a vehicle occupied by Raymond Pierce and his wife Judy Pierce ("Pierce"). Judy Kay Pierce was very severely injured in this accident.
Hulstrand Construction, Inc., ("Hulstrand") is a North Dakota corporation which was awarded the bid to repair a ten mile stretch of Highway 58 extending starting just North of Fairview, Montana and running parallel to the North Dakota - Montana border to a point just South of the Missouri river near Fort Union Federal Historic site in Western McKenzie County, North Dakota.
On April 19, 1995, at the place on the road bed of the accident, Hulstrand, that afternoon, had finished laying a new culvert across the entire roadbed and had backfilled the culvert with fill and gravel. It is undisputed that in the evening hours Hulstrand operated no flag personnel, pilot car or other electric lighting devices at night along this stretch of construction. It is Shannon's allegation, disputed by Hulstrand, that at the location of the culvert installation, Hulstrand had no signs, cones, or other markers warning of this specific area of fresh construction. Hulstrand contends it did comply with all required regulations and standards for proper signage for the construction and specifically for the area where the accident occurred by the newly laid culvert.
Shannon alleges that on April 19, 1995, at the area where the culvert had just been installed, large ridges and ruts of loose fill had formed by 10:00 p.m. that night caused by traffic wearing away at the loose fill around the culvert, which road obstruction grabbed his wheels and unavoidably forced Shannon into the path of the oncoming Pierce vehicle. In response to Hulstrand's motion for summary judgment, Shannon filed several affidavits from other drivers who experienced similar problems at that same location the same evening of April 19, 1995. (See affidavits of Colin Livers, Greg Breuer and Dick Johnson filed in opposition to Hulstrand's motion for summary judgment at appendix pp. 74-79)
Because of the very severe injuries Judy Pierce sustained in the accident, to protect its insured Shannon from any judgment in excess of the policy limits of $300,000, Farmers Alliance Insurance Company authorized the payment of policy limits with the understanding that Hulstrand would not be released from the litigation where it was expected the third-party claim would be litigated from then on as the only remaining and separate action. Here, at the time of the signing of the August 6, 1998 stipulation for settlement for preservation of the third-party action, Hulstrand was aware Shannon was settling the main action by payment of policy limits of $300,000.00. It was also about this time that time that Hulstrand entered into the August 10, 1998 stipulation which recites the settlement with the Pierces and affirmed preservation of the third-party claim, where it states: ...leaving only the claims existing between Edward J. Shannon as third-party plaintiff and Hulstrand Construction, Inc., as third-party defendant to be litigated in this action." (See August 10, 1998 stipulation at appendix pp. 49-51)
Pierces signed the Release of Claims document on August 10, 1998 and the August 6, 1998 and August 10, 1998 stipulations between Shannon and Hulstrand were filed with the trial court to continue the old trial date and set new deadlines final pretrial motions and discovery. (See Order vacating trial date and continuing discovery at appendix pp. 52-53)
It is undisputed that Hulstrand, in its briefs filed with the trial court has admitted the settlement entered into with the Pierces by Shannon's insurer paying policy limits of $300,000.00, did also settle and extinguish all claims the Pierce's might have had against Hulstrand. (See Hulstrand's statement to the trial court in its brief at appendix p. 63)
On May 27, 1999 at the request of Shannon's counsel, Robert Savage, the Pierces signed an addendum to the release of all claims signed last August 1998, wherein the Pierces specifically stated it was their intent last August 1998 when they settled their action that such settlement also settled any claims the Pierces may have asserted against Hulstrand. This addendum was offered as an exhibit at the hearing before the trial court on July 2, 1999, however, the trial court ruled this exhibit was not relevant and sustained Hulstrand's objection to the exhibit. (See copy of addendum to release at appendix pp. 144-146)
ISSUES PRESENTED FOR REVIEW
ISSUE ONE:
Whether Hulstrand's Dismissal as Third-Party Defendant was Proper or was an Abuse of Discretion?ISSUE TWO: Whether Trial Court's Dismissal of Hulstrand With Prejudice was Proper or was an Abuse of Discretion?
LAW AND ARGUMENT
ISSUE ONE:
Whether Hulstrand's Dismissal as Third-Party Defendant was Proper or was an Abuse of Discretion?
A.
Summary of Argument
The initial issue on appeal is whether the trial court abused its discretion by granting Hulstrand a summary judgment of dismissal on procedural grounds that Hulstrand's joinder was prohibited by North Dakota's modified comparative fault statutes Chapter 32-03.2 N.D.C.C.
Shannon's position before the trial court remains the same in this appeal that Hulstrand waited for two years after joinder to object to such joinder and seek dismissal, wherein, Hulstrand objected: (1) only after signing a stipulation providing for the preservation of the third-party action for trial; and (2) only after Shannon had paid plaintiffs Pierces $300,000.00 to settle all claims including any claims the Pierces could have asserted against Hulstrand.
Accordingly, it is Shannon's position that Hulstrand is equitably estopped from seeking any dismissal of the third-party action wherein, Hulstrand has been unjustly enriched at Shannon's expense. Further, as the third-party action sought only to establish the separate percentage of several liability Hulstrand had for the accident, the remaining third-party action did not violate North Dakota's comparative fault statute 32-03.2-02 N.D.C.C.. Finally, after settlement and dismissal of the main claim, the only action remaining at the time of Hulstrand's motion for dismissal, was the third-party action in which Hulstrand was a proper
defendant, and accordingly, the facts of this case are different than the Target decision relied upon by Hulstrand as grounds for its dismissal from the third-party action.
B. Hulstrand was Estopped to Dismiss Third-Party Action
The elements and policies for equitable estoppel are well set forth by this Court in Minex Resources, Inc., v. Morland, 518 N.W.2d 682, 687-688 (N.D. 1994) as follows:
Equitable estoppel is codified at Section 31-11-06 N.D.C.C.:
"Estoppel by declaration, act, or omission.When a party, by his own declaration, act, or omission, intentionally and deliberately has led another to believe a particular thing true and to act upon such belief, he shall not be permitted to falsify it in any litigation arising out of such declaration, act, or omission."
We have characterized equitable estoppel as "the loss of a right or property because of acts or representations inconsistent with the right which are relied on by another to his detriment." Cranston v. Winters, 238 N.W.2d 647, 650 (N.D. 1976). We have on numerous occasions delineated the elements of equitable estoppel:
"'Based as it is upon a consideration of the facts in light of equitable considerations, public policy, fair dealing, and the like, the basic elements of an equitable estoppel, insofar as it relates to the person being estopped, are: (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct will be acted upon by, or will influence, the other party or persons; and (3) knowledge, actual or constructive, of the real facts. Insofar as related to the party claiming the estoppel, the elements are: (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon, of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.'"
Farmers Cooperative Association of Churchs Ferry v. Cole, 239 N.W.2d 808, 813 (N.D. 1976), quoting Robert A. Brazener, Annottation, Comment NotePromissory Estoppel as Basis for Avoidance of Statute of Frauds, 56 A.L.R.3d 1037, 1041-1042 (1974). See also, In Re Estate of Helling, 510 N.W.2d 595 (N.D. 1994); O'Connell v. Entertainment Enterprises, Inc., 317 N.W.2d 385 (N.D. 1982).
(Minex, 518 N.W.2d at pp. 687-688)
On the subject of unjust enrichment, this court in Hector v. Metro Centers, Inc., 498 N.W.2d 113, 121 (N.D. 1993) quoted with approval from the text of § 886 B Restatement (Second) of Torts in Sayler v. Holstrom, 239 N.W.2d 276, 280 (N.D. 1976) as follows:
"(1) If two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both, he is entitled to indemnity from the other if the other would be injustly enriched at his expense by the discharge of the liability.
"(2) Instances in which indemnity is granted under this principle include the following:
* * * * * *
"(b)" The indemnitee acted pursuant to directions of the indemnitor and reasonably believed the directions to be lawful;
"(c)" The indemnitee was induced to act by a misrepresentation on the part of the indemnitor, upon which he justifiably relied; . . ."
See also, Accord, Hector v. Metro Centers, Inc., 498 N.W.2d 113, 121 (N.D. 1993).
Applying the above law to the undisputed facts of this case, the record reflects that after being served with the third-party complaint on October 1996, Hulstrand did not make
any affirmative defense or Rule 12 N.D.R.Civ.P. motion objecting to being joined as a third-party defendant.
When it came time for settlement, Hulstrand had knowledge through its attorneys, Shannon's insurer was paying to settle the main action and that it was Shannon's intent to proceed with the third-party action to establish the percentages of separate liability for both Shannon and Hulstrand. Here, the August 6, 1998 stipulation for settlement signed by Hulstrand specifically states:
"That the third-party claim of Edward J. Shannon against Hulstrand Construction will be reserved and specifically not be dismissed at this time."
(See appendix at pp. 49-51)
Subsequent to signing the August 6, 198 stipulation, Hulstrand also signed a second stipulation on August 10, 1998 prepared concurrently with the paperwork for the settlement and dismissal of Pierce's main action, by which stipulation Hulstrand acknowledged the main Pierce action has been settled by payment from Shannon leaving only the claims existing between Shannon and Hulstrand to be litigated, where the stipulation signed by Hulstrand August 10, 1998 states(1):
1. The main action involving the claims made by Judy Kay Pierce and Raymond Pierce have been fully compromised, settled and paid by defendant and third-party plaintiff Edward J. Shannon leaving only the claims existing between Edward J. Shannon as third-party plaintiff and Hulstrand Construction, Inc., as third-party defendant to be litigated in this action.
(See appendix at pp. 49-51)
Pursuant to these stipulations signed by Hulstrand and filed with the trial court, Shannon paid $300,000.00 to Pierces and the trial court entered the dismissal with prejudice of Pierce's main lawsuit. Here, Hulstrand has made several judicial admissions(2) that this dismissal also included any claims Pierces could have made against Hulstrand involving the subject accident.
It was only after Hulstrand was aware Pierces' claims had been fully released and settled, did Hulstrand make its first objection to being named a third-party defendant by Hulstrand's motion for summary judgment of dismissal made October 26, 1998.
At the December 4th hearing on Hulstrand's motion for dismissal, Shannon's counsel complained to the trail court that Hulstrand was equitably estopped to now seek dismissal and that the remaining third-party action was now a separate matter in which Shannon wished to establish Hulstrand's percentage of separate liability. (See transcript at pp. 177-180)
From the above undisputed chronology of facts and events, Shannon's reliance upon Hulstrand's signature to the several stipulations was reasonable and in good faith. Here, Shannon settled the Pierce action expecting to then litigate Hulstrand's separate percentage of liability and contribution to the mutual settlement. If Hulstrand had any objection to the total amount of damages to be apportioned in the third-party action, Hulstrand could also raise such issue in the third-party litigation.
Hulstrand's conduct shows a course of conduct reasonably calculated to convey the impression Hulstrand did not object to its joinder and plan by Shannon to first pay off Pierces to control the amount of damages and then sort out how much of such settlement, if any, Hulstrand was responsible for to Shannon. Ultimately, it was a course of conduct reasonably calculated to have Shannon pay off Hulstrand's liability in reliance upon the continuance of the third-party action and any motion for summary judgment by Hulstrand was expected by Shannon to test the sufficiency of Shannon's mounting evidence of Hulstrand's negligence contributing to the accident and not on any issue of joinder after two years of discovery, stipulation and litigation in the third-party action.
Accordingly, all of the elements of equitable estoppel are present as characterized by this Court in the Minex(3) decision, citing to the prior decisions, In Re Estate of Helling(4), Farmers Cooperative Assoc. of Churchs Ferry(5) and Entertainment Enterprises, Inc.(6). Where elements of equitable estoppel are present § 31-11-06 N.D.C.C. codifying equitable estoppel now applies to Hulstrand and forms a solid basis for the reversal of the trial court's order dismissing Hulstrand from the third-party action. From the above authorities, it should be clear to this Court on appeal that the trial court abused its discretion by not holding Hulstrand
was equitably estopped from seeking a dismissal on the procedural grounds of improper joinder.
C. This Case Involving Hulstrand Is Distinguishable From Target(7)
Hulstrand and the trial court both cite this Court's 1992 decision in Target Stores v. Automated Maintenance, 492 N.W.2d 899 (N.D. 1992) as the sole basis for Hulstrand's dismissal with prejudice as a defendant to the then remaining third-party action. In Target, this Court interpreted North Dakota's modified negligence statutes Chapter 32-03.2 in concert with N.D.C.C. § 32-38-01(2) to hold that under the facts of Target Section 32-03.2-02 precludes any third-party action by a defendant against a non-sued potential tortfeasor who did not act in concert in causing the alleged tort. (Copy of § 32-03.2-02 at appendix p. 214)
The facts and status of the litigation of this action are much different than those in Target, and accordingly, these differentiating factors mandate a different result.
In Target: (1) the deadline for amending the pleadings for Target to assert a direct claim had expired; (2) Target had stated on the record it did not intend on making any direct claim against Pioneer/Eclipse(8); and (3) most importantly, there was no agreement or settlement between Target and the defendant (third-party plaintiff) in that action. See, Target 492 N.W.2d at 901.
Here, the affidavit of Dick Simonton, as Pierces' attorney, states at the time of settlement, Pierces had not foreclosed the option of bringing a direct action against Hulstrand. (See appendix at p. 72) Further, and most importantly, Hulstrand's motion comes after the main action had been fully settled and dismissed with prejudice. The only action remaining was the third-party action reserved by stipulation between Shannon and Hulstrand. The dismissal of an action with prejudice not only terminates a particular action, but also the right of action upon which it is based. Mongeon v. Burkebile, 55 N.W.2d 445, 451 (N.D. 1952). A claim for contribution is separate and distinct action from the underlying tort and flow not from tort but from the judgment and settlement which has been reached. Butz v. Werner, 470 N.W.2d. 224, 225-226 (N.D. 1991).
Here, Butz is a 1991 decision which postdates the 1987 legislative changes which now make up North Dakota's modified comparative fault system. The Butz decision is applicable to point out that at the time Hulstrand made its motion for dismissal, the main action no longer existed. The only action which then existed was Shannon's action to establish the separate and several percentage of negligence of Hulstrand. This remaining action is not violative of Section 32-03.2-02 where Shannon seeks only to establish the separate and several liability of Hulstrand and not the joint and several liability of Hulstrand.
Here, if the ruling and analysis of the trial court is affirmed, many defendants will be forced not to settle cases in favor of trying the action to a jury asking them to reduce that named defendant's liability in favor of assigning that percentage of liability to the "empty chair" in the courtroom. Such a system is legally impractical and unfair in a system of laws which prides itself on promoting settlements among litigants and providing a remedy for every substantial wrong. See, Whetham v. Bismarck Hospital, 197 N.W.2d 678, 681-682 (N.D. 1972) citing, Dillon v. Legg, 441 P.2d 912, 68 Cal.2d 728 (Cal. Sup.Ct. 1968) Accord, Marmouth School Dist. No.12 of Slope County v. Hall, 260 N.W. 411, 416 (N.D. 1935).
The better rule, which will promote settlements and provide a fair remedy for all concerned is the rule this court stated with approval in Hector v. Metro Center, Inc., 498 N.W.2d 113 (N.D. 1993).
Hector involved the owners of optioned adjacent property bringing an action against the owner, contractor and subcontractor of adjoining land for damages for the unauthorized placement of large amounts of fill dirt on the plaintiff's property. The developer, Airport Plaza, had contracted with Meinecke-Johnson Company for the construction of a shopping center on the subject adjoining property and Meinecke-Johnson then contracted with Northern Improvement Company to do the dirt work for the shopping center. The removed dirt by Northern Improvement was placed on the adjoining Hector land and Hector sued for damages for the tort of trespass. Both Northern Improvement and Meinecke-Johnson sought and obtained indemnity from Airport Plaza, who told the contractors where to dump the dirt. Airport Plaza on appeal asserted that, as joint tortfeasors, Meinecke-Johnson and Northern Improvement were not entitled to indemnity. This Court disagreed stating the following rules and analysis:
Airport Plaza contends that the trial court erred in entering a judgment of indemnity against Airport Plaza in favor of Meinecke-Johnson and Northern Improvement. Airport Plaza asserts that, as joint tortfeasors, Meinecke-Johnson and Northern Improvement are not entitled to indemnity.
In Sayler v. Holstrom, 239 N.W.2d 276, 280-281 (N.D. 1976), this court said, quoting Steuber v. Hastings Shearing & Sheet Metal Co., 153 N.W.2d 804, 808 (N.D. 1967):
"[T]he right of a person exposed to liability and compelled to pay damages on account of the negligent or tortuous act of another to indemnity from the latter* * *does not apply where
both parties are joint tortfeasors, or are in pari delicto, as where the act of each of the parties contributed to cause the injury."
This court also quoted Hendrickson v. Minnesota Power & Light Company, 258 Minn. 368, 104 N.W.2d 843, 848-849 (1960):
"'Although the modern view, prevailing in this state, does not preclude indemnity among joint tortfeasors, the situations in which it is allowed are exceptional and limited. A joint tort-feasor may generally recover indemnity only in the following situations:
* * * * * *
"'(2) Where the one seeking indemnity has incurred liability by action at the direction, in the interest of, and in reliance upon the one sought to be charge.'"
Sayler v. Holstrom, supra, 239 N.W.2d at 280. See also Restatement (Second) of Torts Sec. 886 B:
"(1) If two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both, he is entitled to indemnity from the other if the other would be injustly enriched at his expense by the discharge of the liability.
* * *
Hector, 498 N.W.2d at 121.
Here, as Shannon has discharged Hulstrand's liability by making full settlement of Pierces' action, Hulstrand stands to be unjustly enriched if Shannon's now separate action is not allowed to proceed to establish Hulstrand's separate percentage of liability for the accident. This is especially true where Hulstrand entered into stipulations reasonably calculated to lead Shannon into settling with the Pierces thereby relieving Hulstrand of any liability to the Pierces for the accident.
Allowing Shannon the right to proceed in its action to determine Hulstrand's separate percentage of fault and contribution for the accident is in harmony with the language and intent of Section 32-03.2-02 where this section does not eliminate several liability for tort
but only joint and several liability (with the only exception being joint tort-feasors who are shown to have acted in concert to cause the injury).
Here, Shannon's claim against Hulstrand is to determine only Hulstrand's separate percentage of liability for causing the accident. Shannon is entitled to maintain such action under the analysis of the Hector case and application of § 886B Restatement (Second) of Torts to avoid Hulstrand being unjustly enriched where Shannon's settlement also settled any potential liability Hulstrand had from Pierces for the accident.
Regardless whether Hulstrand was a proper third-party defendant when added to the lawsuit in October 1996, Hulstrand became a proper defendant for purposes of determining its sole percentage of several liability when Shannon settled the main action in August 1998. Allowing a separate action to determine the several liability and percentage of contribution back to a defendant who has first paid to settle all claims is a fair rule in harmony with § 886B Restatement (Second) of Torts and is not violative of Section 32-03.2-02 N.D.C.C. which still allows for determination of several liability among tort feasors.
Accordingly, for the reasons set forth above, the trial court committed reversible error and abused its discretion by dismissing Hulstrand after Shannon had first paid to settle and dismiss Pierces' main action.
ISSUE TWO:
Whether Trial Court's Dismissal of Hulstrand With Prejudice was Proper or was an Abuse of Disretion?
A.
Summary of Argument
Assuming the trial court's dismissal of Hulstrand was proper, there remains the issue whether the trial court abused its discretion and committed reversible error where the trial court ruled(9) such dismissal must be "with prejudice". This ruling came after Shannon's insurer, who had pad $300,000.00 to Pierces on behalf of Shannon to settle the action had started a subrogation action(10) against Hulstrand as a backup action after the trial court had issued its first ruling of January 15, 1999, dismissing Hulstrand as a third-party defendant to the Pierce action.
Because the trial court's dismissal was based on a finding Hulstrand had been improperly joined as a party pursuant to Rule 14 N.D.R.Civ.P. and was not a dismissal based on the merits of Shannon's claim against Hulstrand, it follows, pursuant to the United States Supreme Court's decision in Costello v. United States(11) and the North Dakota Supreme Court's decision of Associated General Contractors of North Dakota v. Local No. 580(12), Citing Costello, that any procedural dismissal involving a defect of pleadings or parties which did not go the merits of the action must be a dismissal "without prejudice" that will prove no bar to another suit. (Costello interpreted and applied language of Rule 41(b) Federal Rules of Civil Procedure whereas Associated General Contractors, interpreted Rule 41(b) as adopted without change from the federal rule in North Dakota)
Further, as Shannon's insurer has a separate statutory right to bring a subrogation action against Hulstrand pursuant to 32-38-01(5) N.D.C.C., (See copy of statute at appendix p. 250) any right of Hulstrand to be dismissed from the Pierce action on procedural grounds has to be done in such a manner as not to prejudice the legal rights given to Shannon's insurer (Farmers Alliance) by statute to seek a determination of Hulstrand's pro rata liability and collect that amount from Hulstrand. Accordingly, the trial court abused its discretion by its dismissal of Hulstrand "with prejudice" where such dismissal might foreclose the right of Shannon's insurer from maintaining a subrogation action pursuant to separate statute § 32-38-01(5) N.D.C.C..
B.
Procedural Dismissals Not Rendered "On the Merits" Pursuant to Rule 41(b) should be "Without Prejudice"
It is undisputed that Shannon attempted to join Hulstrand under the provisions of Rule 14 N.D.R.Civ.P. which is unquestionably a procedural rule for adding a party as a third-party defendant to a lawsuit. The trial court's order of September 17, 1996 granting Shannon leave to serve a third-party complaint to join Hulstrand to the action, was also a procedural ruling and was not a ruling "on the merits" pertaining to Hulstrand's alleged negligence in causing the automobile accident on April 19, 1995.
Rule 14 N.D.R.Civ.P. regarding third-party practice, like Rule 19 N.D.R.Civ.P. regarding joinder of parties, are both procedural rules regarding adding additional parties to pending litigation to ensure a just adjudication of any lawsuit.
Here, any dismissal of Hulstrand from the present action (whether by Rule 12 for lack of jurisdiction, Rule 19 for failure to join a party or, as here, by Rule 56 Motion for Summary
Judgment) is governed by the provisions of Rule 41 N.D.R.Civ.P. regarding dismissal of actions, which rule states in relevant part:
RULE 41. DISMISSAL OF ACTIONS
. . .
(2) By Order of Court. Except as provided in paragraph (1), an action may not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court considers proper. If a counterclaim has been pleaded by a defendant before service of the plaintiff's motion to dismiss, the action may not be dismissed against the defendant's objection unless the counterclaim can remain pending for independent adjudication by the court. Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.(b) Involuntary Dismissal - Effect Thereof. For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against the defendant. Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction, or for failure to join a party under Rule 19, operates as an adjudication upon the merits.
(c) Dismissal of Counterclaim, Cross-Claim, or Third-Party Claim. The provisions of this rule apply to the dismissal of any counterclaim, cross-claim, or third-party claim. A voluntary dismissal by the claimant alone pursuant to paragraph (1) of subdivision (a) of this rule shall be made before a responsive pleading is served or, if there is none, before the introduction of evidence at the trial or hearing.
This rule gives broad discretion to the trial Court whether any involuntary dismissal made pursuant to Rule 41(b) should be "with" or "without" prejudice. The Rule does provide some default operative provisions that unless otherwise specified, any involuntary dismissal (except for jurisdiction or failure to join a party under Rule 19 N.D.R.Civ.P.) shall be an adjudication upon the merits. The use of default operative provisions of Rule 41(b) and the language giving the trial Court broad discretion to specify any dismissal to be "without prejudice" has been noted by legal Scholars and the Courts as an attempt to vest Rule 41 N.D.R.Civ.P. with enough flexibility and equity to cover most of the foreseeable reasons, grounds or circumstances justifying involuntary dismissal of an action. Courts interpreting Rule 41(b), particularly the United States Supreme Court, have stated that the exceptions qualifying for dismissal without prejudice should be broadly construed to support and affirm the common-law rule that procedurally based dismissals, which do not reach the merits and abate the action, must be rendered to be dismissals without prejudice.
In Costello v. United States, 365 U.S. 265, 285, 81 S. Ct. 534, 544-545 (1961) the United States Supreme Court was asked to consider a dismissal under Rule 41(b) where Costello's citizenship proceeding had been dismissed because no affidavit of good cause as required by the proceeding had been filed. Here, the Supreme Court interpreted the "for lack of jurisdiction" exception language under Rule 41(b) broadly to include those dismissals which prevent the Court from going forward to determine the merits of any claim:
"We regard the exception as encompassing those dismissals which are based on a plaintiff's failure to comply with a precondition requisite to the Court's going forward to determine the merits of his substantive claim."
Costello at 365 U.S. at 285, 81 S.Ct. at 544-545
In Costello the Supreme Court noted that at common-law, a dismissal on any grounds not going to the merits was not ordinarily a bar to a subsequent action of the same claim, and accordingly, refused to discern in Rule 41(b) a purpose to change this common-law principle.
In light of the Costello decision, Courts have recognized that Rule 41(b) does not apply to enter dismissals "with prejudice" in situations in which a case is dismissed because of some initial bar to reaching the merits of the plaintiff's claims. See e.g., Saylor v. Lindsley, 391 F.2d 965, 969 (C.A.2d 1968), on remand, 302 F. Supp. 1174 (D.C.N.Y. 1969); Nasser v. Isthmian Lines, 331 F.2d 124, 127 (C.A.2d 1964); See also Vol. 9, Wright & Miller, FEDERAL PRACTICE AND PROCEDURE, Section 2373 (1998).
North Dakota, even prior to the Costello decision, has also followed this common-law rule requiring procedural dismissals which do not reach the merits to be "without prejudice" where it has been held, at least since 1950, that any dismissal of an action under statute, which does not result in a final determination of the merits of the action, is to be a dismissal "without prejudice", leaving the plaintiff free to institute another action. See, 28-0801 N.D.R.C. 1943; Nicholson v. Roop 62 N.W.2d 473, 476 (N.D. 1954) citing Westerso v. City of Williston, 77 N.D. 251, 257, 42 N.W.2d 429 (1950).
Subsequent to the above 1950 North Dakota decisions, the Federal Rules of Civil Procedure were adopted almost without change in North Dakota. The North Dakota Supreme Court has considered and affirmed the United States Supreme Court's liberal interpretation of mandating procedural dismissals be "without prejudice" under Rule 41(b), as held in the Costello decision, in light of the common-law rule holding that a procedural based dismissal, which did not reach the merits, must be a dismissal without prejudice.
The controlling North Dakota Supreme Court decision for this issue now on appeal is Associated General Contractors of North Dakota v. Local No. 580(13), 278 N.W.2d 393, 400 (N.D. 1979) wherein, giving the North Dakota Supreme Court rendered its holding and interpretation and application of Rule 41(b) N.D.R.Civ.P. regarding dismissals made for any reason not going to the merits of the action:
We now must determine whether or not the dismissal was properly granted with prejudice. An involuntary dismissal under Rule 41(b) may operate as an adjudication on the merits and be granted with prejudice. However, when a dismissal is granted based upon lack of jurisdiction or for failure to join a party under Rule 19, the dismissal does not operate as an adjudication on the merits and cannot be granted with prejudiced. Rule 41(b), N.D.R.Civ.P.
In Costello v. United States, 365 U.S. 265, 286, 81 S.Ct. 534, 545, 5 L.Ed.2d 551 (1961), the United States Supreme Court quoted with approval from Hughes v. United States, 4 Wall. 232, 237, 18 L.Ed. 303 (1866), that if a "first suit was dismissed for a defect of pleadings, or parties . . . or was disposed of on any ground which did not go to the merits of the action, the judgment rendered will prove no bar to another suit'". The United States Supreme Court in Costello, supra 365 U.S. at 286, 81 S.Ct. at 545 further stated that Rule 41(b) was not intended to change the common-law principle enunciated in Hughes, supra, "with respect to dismissals in which the merits could not be reached for failure of the plaintiff to satisfy a precondition".
In Douglas v. Douglas, 238 Ga. 452, 233 S.E.2d 195, 197 (1977), the court adopted the following rationale from Wright & Miller's analysis of the Costello decision, found at 9 Wright & Miller, Fed.Prac. & Proc.: Civil § 2373, p. 237 (1971):
"'In the light of the Costello decision, courts have recognized that Rule 41(b) does not apply in situations in which a case is dismissed because of some initial bar to reaching the merits of the plaintiff's claims, such as that plaintiffs failed to give
bond for costs. On a similar principle it has been held that dismissals that do not reach the merits as for want of jurisdiction or because the action was premature or it was brought by the wrong plaintiff must be without prejudice.'"
In Meyers v. Westland Oil Co., 96 F.Supp. 667 (D.C.N.D. 1949), the court held that a dismissal granted because a suit was not brought by the real party in interest does not operate as an adjudication on the merits and should be dismissed without prejudice.
The district court's dismissal because AGC is not the real party in interest was a dismissal for lack of jurisdiction over the proper parties to a suit. See Myers, supra 96 F.Supp. at 670. Because the court's dismissal was for lack
of jurisdiction, we conclude that it did not operate as an adjudication on the merits and it should have been granted without prejudice, pursuant to Rule 41(b), N.D.R.Civ.P.
Associated 278 N.W.2d at 400.
The above holding in Associated by the North Dakota Supreme Court reaffirms and applies this common-law rule that procedural dismissals not going to the merits are to be dismissals made "without prejudice" to Rule 41(b) N.D.R.Civ.P..
Here, it is clear that Hulstrand's motion for a summary judgment of dismissal, as well as the trial court's January 15, 1999 opinion granting dismissal, were both based on statutory procedural grounds as outlined in the Target decision. Hence, it is undisputed that Hulstrand was dismissed from the main action purely on a procedural basis. More importantly, it is clearly evident that before Hulstrand was dismissed from the action, no adjudication or determination had taken place involving the merits of Shannon's claim that Hulstrand was negligent in its conduct when constructing the subject road and the claim that whether such alleged negligent conduct contributed to the injuries sustained by Judy Pierce.
Although the trial court was briefed as to the applicability of Costello and related North Dakota authority, the trial court, in its memorandum decision wholly ignored the holding in Costello and held that Hulstrand's dismissal was to be "with prejudice".
Accordingly, based on North Dakota's long history and recognition of the common-law rule that a procedural dismissal not made on the merits is a dismissal to be made
"without prejudice", it follows that Hulstrand's dismissal as third-party defendant "with prejudice", was a clear mistake and an abuse of discretion by the trial court.
C.
Dismissal Should Not Have Been Given Res Judicata Effect
Having thus clearly identified Hulstrand's dismissal as being procedurally based on the Target Stores decision, it then follows for this Court to decide whether such dismissal is of the kind or quality "on the merits"(14) justifying this dismissal to be a bar and Res Judicata to any separate or subsequent action by Shannon or Shannon's insurance company against Hulstrand to collect some or all of the $300,000.00 Shannon's insurance company has now paid to Judy Pierce to settle the main action.
" Judicial actions must achieve a basic minimum quality to become eligible for Res Judicata effects. The traditional words used to describe this quality require that there be a judgment that is valid, final, and on the merits".
Volume 18, Wright & Miller, FEDERAL PRACTICE AND PROCEDURE, Section 4427 (1998)
Courts interpreting Rule 41(b) subsequent to the Costello v. United States (15) decision in 1961 have held that, (except for those instances where a penalty is imposed by dismissal with prejudice for failure to prosecute, or for failure to comply with the Rules or any order of the Court) involuntary dismissals made under Rule 41(b) for a procedural reason, which do not reach the merits must be, out of fairness to avoid Res Judicata effect, a dismissal entered "without prejudice". (See discussion of Costello decision in this brief Supra.) Here, applying this principle from Costello, the Courts have given the following statement as to why such procedural dismissals should be "without prejudice" and Res Judicata effect:
The requirement that a judgment, to be Res Judicata, must be rendered 'on the merits' guarantees to every plaintiff the right once to be heard on the substance of his claim. Thus, ordinarily, the doctrine may be invoked only
after a judgment has been rendered which reaches and determines 'the real or
substantial grounds of action or defense as distinguished from matters of practice, procedure, jurisdiction or form' . . .
Saylor v. Lindsley, 391 F.2d 965, 968 (C.A.2d 1968)
The North Dakota Supreme Court, which has wholly adopted the Costello doctrine for application to Rule 41(b) involuntary dismissals(16), has also held that fundamental fairness and a four (4) part test must be met before the doctrine of collateral estoppel or Res Judicata can be applied:
Four tests must be met before collateral estoppel will bar relitigation of a fact or issue involved in an earlier lawsuit: (1) Was the issue decided in the prior adjudication identical to the one presented in the action in question?; (2)Was there a final judgment on the merits?; (3) Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication?; and (4) Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue?
Hofsommer v. Hofsommer Excavating, Inc., 488 N.W.2d 380, 384 (N.D. 1992), citing, Armstrong v. Miller, 200 N.W.2d 282, 286-288 (N.D. 1972).
Here, in this case involving Hulstrand, no matter the legal or procedural arguments raised by Hulstrand, it is absolutely clear, that up to this point in the litigation Shannon never not had opportunity to hold Hulstrand to the merits of Shannon's claims regarding Hulstrand's alleged negligence in causing the accident. The testimony and evidence against Hulstrand gathered in discovery was summarized, documented and presented to the trial court in Shannon's response to Hulstrand's motion for summary judgment. (See affidavits and appendix pp. 74-79) This testimony and evidence, including expert testimony, provides a good faith basis for Shannon's allegations creating a triable issue of material fact whether: (1) Hulstrand did not properly sign the road at the site of the accident; (2) allowed ridges and ruts of gravel to form on the road where the culvert had been installed that day across the roadbed; and (3) failed to check on the road or provide safe passage to the public during the evening hours after dark when ridges and obstructions on the roadway are harder to see then during the daytime.
Here, as it is clear that Hulstrand's dismissal was entirely procedurally abating any ability of Shannon as yet to litigate the merits, the four part test to apply Res Judicata or collateral estoppel in North Dakota has not been met, it follows, that the trial court abused its discretion by granting Hulstrand a dismissal "with prejudice" thereby giving the dismissal probable Res Judicata effect.
The trial court's actions became more easily reviewable as a matter of law and de novo review by this Court where the trial court refused to consider how such dismissal "with prejudice" would cut off Farmers Alliance's (as Shannon's insurer) ability to maintain its subrogation action against Hulstrand pursuant to §32-38-01(5) N.D.C.C.. The effect of the changes to North Dakota's modified comparative fault statutes Chapter 32-03.2 to an insurer's rights of subrogation under §32-38-01(5) N.D.C.C. was not an issue decided in the Target decision. Further, the right of subrogation granted by statute in §32-38-01(5) N.D.C.C. is more specific then the general nature of the North Dakota comparative fault statutes which obviously needed interpretation in the Target decision. Accordingly, where there has been no legislative intent to abrogate the right of an insurer to its subrogation claim specifically granted in §32-38-01(5), (which claim exists separate and apart from the lawsuit in tort) this right of subrogation should have been protected and recognized by the trial court. Although this point was raised by Shannon's counsel, the trial entered Hulstrand's dismissal "without prejudice" thereby vesting it with probable Res Judicata effect on the pending subrogation action. (See transcript at appendix pp. 193-194)
The failure of the trial court to protect the statutory rights of Farmers Alliance to maintain its subrogation action is an error of law which requires reversal of the trial court as to the form of Hulstrand's dismissal which should have been entered, if at all, "without prejudice".
CONCLUSION
Based upon the argument and authorities set forth above, Appellant Shannon has shown the trial court did abuse its discretion when it granted Hulstrand a summary judgment of dismissal where Hulstrand was equitably estopped from seeking such dismissal. Further, as Hulstrand's motion for dismissal came after Shannon had settled the main action based on stipulations signed by Hulstrand to preserve the third-party claim, where Shannon's third party action sought to establish the separate liability for purposes of contribution to the settlement, the facts of this case are procedurally and fundamentally different then in the Target case relied upon by the trial court for its dismissal of Hulstrand "with prejudice" from the lawsuit. Accordingly, Shannon seeks reversal of the trial court's order dismissing Hulstrand and the reinstatement of the third-party action.
In the alternative, even if this court affirms the trial court's dismissal of Hulstrand from the third-party action, where such dismissal did not go to the merits of the action, it follows based on the Costello decision and the common-law rule for dismissals based on purely procedural grounds, that the trial court did abuse its discretion by entering Hulstrand's dismissal as "with prejudice" giving probable Res Judicata effect to the judgment. Accordingly, in the alternative, if the dismissal of Hulstrand from the third-party action was not an abuse of discretion by the trial court, such dismissal must be ordered by this court to be "without prejudice" and with no Res Judicata effect to any subrogation action by Shannon's insurer against Hulstrand.
Dated this day of November, 1999.
| NEFF CRESAP EIKEN & IRIGOIN | |||||||
| a professional corporation | |||||||
| CHARLES L. NEFF I.D. #04023 | |||||||
| Attorneys for the Defendant and Third-Party Plaintiff Edward J. Shannon | |||||||
| 111 East Broadway, Drawer 1526 | |||||||
| Williston, ND 58802-1526 | |||||||
| Habedank Cumming Best & Savage | |||||||
| ROBERT J. SAVAGE I.D. #04575 | |||||||
| Attorneys for the Defendant and Third-Party Plaintiff Edward J. Shannon | |||||||
| 302 West Main, P.O. Box 1250 | |||||||
| Sidney, MT 59270 | |||||||
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
Judy Kay Pierce and Raymond Pierce,
Plaintiffs,vs.
Edward J. Shannon,
Appellant, Defendant and
Third-Party Plaintiff,AFFIDAVIT OF MAILING
Supreme Court No. 990271
vs. Hulstrand Construction, Inc.,
a North Dakota Corporation,
Appellee and
Third-Party Defendant.
STATE OF NORTH DAKOTA)
:ss
COUNTY OF WILLIAMS)
Stacy L. Haug, being first duly sworn, deposes and states:
That she is a person of legal age, a citizen of the United States and a resident of the state of North Dakota. That she is employed at the law firm of Neff Cresap Eiken & Irigoin, P.C., Williston, North Dakota, and is not a party to the above-entitled action.
That on November , 1999, she served a copy of the following documents:
Appellant's Brief and Appendix
by placing a true and correct copy thereof in an envelope addressed as follows:
Penny L. Miller, Clerk
Fred E. Whisenand
North Dakota Supreme Court
Crowley, Haughey, Hanson, Toole &
State Capital, Judicial Wing
Dietrich, P.L.L.P.
600 East Boulevard Avenue
P.O. Box 1206
Bismarck, ND 58505-0530
Williston, ND 58802-1206
and depositing the same, with postage prepaid, in the United States mail at Williston, North Dakota.
Stacy L. Haug
Subscribed and sworn to before me this day of November, 1999.
Notary Public
(seal) My Commission Expires:
1. The August 10, 1998 stipulation also states the parties agreed to vacate the trial date to allow Shannon and Hulstrand 6 months to complete discovery for use in any pretrial motions and trial.
2. See statements made by Hulstrand's attorney to Court in its brief to the trial court at appendix p. 63
3. Minex Resources, Inc., v. Morland, 518 N.W.2d 682, 687-688 (N.D. 1994)
4. In Re Estate of Helling, 510 N.W.2d 595, 597 (N.D. 1994)
5. Farmers Cooperative Association of Churchs Ferry v. Cole, 239 N.W.2d 808, 813
(N.D.1976)
6. O'Connell v. Entertainment Enterprises, Inc., 317 N.W.2d 385, 390 (N.D. 1982)
7. Target Stores v. Automated Maintenance, 492 N.W.2d 899 (N.D. 1992)
8. Pioneer/Eclipse Corporation was the Third-Party Defendant sued by Automated
Maintenance for alleged negligent design of the buffer machine which caught
fire.
9. See Trial Court's ruling of July 13, 1999 in response to Shannon's Motion for clarification as to status of the dismissal holding Hulstrand was to be dismissed "with prejudice".
10. On March 29, 1999 Farmers Alliance Mut. Ins. Co. commenced a subrogation action against Hulstrand in the District Court, McKenzie County.
11. Costello v. United States, 365 U.S. 265, 285, 81 S.Ct. 534, 544-545 (1961)
12. Associated General Contractors of North Dakota v. Local No. 580, 278 N.W.2d 393, 400 (N.D. 1979)
13. In this action Association of General Contractors sued local unions for allegedly violating collective bargaining agreements by entering into conflicting employment contracts. The District Court, Burleigh County, Gerald G. Glaser, J., dismissed the action and the association appealed.
14. "In order that a judgment may constitute a bar to another suit, it must be rendered in a proceeding between the same parties or their privies, and the point of controversy must be the same in both cases, and must be determined "on the merits". Hughes v. U.S., 1866, 4 Wall. (71 U.S.) 232, 237, 18 L.Ed. 303.
15. Costello v. United States, 365 U.S. 265, 81 S.Ct. 534, 5 L.Ed.2d 551 (1961)
16. See above discussion of Costello decision by the North Dakota Supreme Court, Supra in Associated General Contractors of North Dakota v. Local No. 580, 278 N.W.2d 393, 400 (N.D. 1979)