If a North Carolina county sets up a public transportation authority under Article 25 of Chapter 160A, does the county still have legal responsibility when the authority signs a contract or causes an injury?

Plain-English summary

North Carolina's public transportation director asked whether a county that created a public transportation authority under Article 25 of Chapter 160A retained liability for the authority's contracts and torts. The Attorney General answered yes.

The opinion says the Act permits a “municipality,” defined to include a county, city, or town, to create an authority to provide public transportation. The authority can sue and be sued and can acquire, hold, and sell property under G.S. 160A-579. Even with those corporate powers, the Attorney General concludes that it remains an agency of the municipality that created it. The opinion states that this agency relationship “would subject the municipality to liability arising out of contracts and torts of the Authority.”

The opinion draws on Greensboro-High Point Airport Authority v. Johnson, which concerned another authority with corporate powers. It says a transportation authority likewise performs functions a municipality could have performed itself. The opinion does not address an enabling resolution, an insurance arrangement, or what legal change might alter the liability rule.

Currency note

This opinion applies Article 25 as the Attorney General read it in 1984. Check current statutes and controlling decisions for a present liability question.

Historical context: what the AG concluded

The opinion describes a transportation authority as a quasi-municipal corporation. It says such an authority is neither a private corporation nor a political territorial subdivision. Corporate powers alone do not change the opinion's conclusion that the authority remains an agency of its creating municipality within Article 25.

The Attorney General's answer addresses the municipality's exposure for the authority's contracts and torts. It does not decide whether a particular claim succeeds, whether immunity applies, or whether a specific contract or tort fell within the authority's powers.

Background and statutory framework

Article 25 authorized municipalities to create transportation authorities to provide a public transportation system. The opinion reads the Article as allowing an authority to perform the construction, maintenance, and management work that its municipality could have done. G.S. 160A-579 gave the authority powers including the ability to sue and be sued and to hold property.

The Attorney General relied on the state Supreme Court's airport-authority decision as a comparable example. The result stated in this opinion is that an authority's corporate status and powers do not sever the agency relationship with the municipality that created it.

Common questions

Did corporate status release the creating county from liability?

No. The opinion says the authority remains an agency of its creating municipality despite its corporate powers, subjecting that municipality to liability arising from the authority's contracts and torts.

Can the authority itself be sued?

The opinion says G.S. 160A-579 gives the authority the right to sue and be sued. It does not work out how liability would be apportioned in a particular lawsuit.

Would changing the county's enabling resolution remove liability?

The opinion does not analyze an enabling resolution or say what change could alter the result. Its answer is based on its reading of Article 25 and the authority's agency relationship with the creating municipality.

Does the opinion discuss insurance or immunity defenses?

No. Its conclusion concerns the municipality's liability relationship to the authority under the statute, without evaluating a specific defense or insurance policy.

Source

• Landing page: https://ncdoj.gov/opinions/public-transportation-authorities/

Citations

• Article 25 of Chapter 160A of the General Statutes
• N.C.G.S. § 160A-579
• Greensboro-High Point Airport Authority v. Johnson, 226 N.C. 1, 36 S.E.2d 803 (1945)
• McCulloch v. Maryland, 4 Wheat., 316

Original opinion text

Subject:

Requested By: David D. King, Director Public Transportation, North Carolina Department of Transportation

Question: Does a County Which Establishes a Public Transportation Authority Pursuant to Article 25 of Chapter 160-A of the General Statutes Retain Any Liability With Respect to Contracts and Torts of the Authority?

Conclusion: Yes.

The North Carolina Public Transportation Authorities Act (Article 25 of Chapter 160A of the General Statutes) authorizes a municipality (defined to include any county, city or town) to create a transportation authority for the purpose of providing an adequate and convenient public transportation system for the municipality. G.S. 160A-579 sets forth the general powers of such a transportation authority, and those powers include the right to sue and be sued and the right to purchase, hold, and sell property, both real and personal.

A review of all the statutes contained in Article 25 of Chapter 160A of the General Statutes relating to public transportation authorities leaves no doubt that the legislature intended that such a transportation authority could perform for a municipality all things necessary for the construction, maintenance, and management of public transportation facilities which the municipality itself could have done.

A public transportation authority is neither a private corporation nor a political territorial subdivision, but instead it is a quasi-municipal corporation "of a type known since McCulloch v. Maryland, 4 Wheat., 316, and commonly used in this and other states to perform ancillary functions in government more easily and perfectly by devoting to them, because of their character, special personnel, skill and care." Greensboro-High Point Airport Authority v. Johnson, 226 N.C. 1, 36 S.E.2d 803 (1945). In Airport Authority v. Johnson, supra, the case involved a statute which expressly created the Greensboro-High Point Airport Authority as a body politic and corporate with power to "purchase, acquire, establish, construct, own, control, lease, equip, improve, maintain, operate and regulate airports or landing fields within Guilford County; . . . to sue and be sued; to acquire by purchase lands for construction and maintenance and operation of airports . . . ."

In accordance with the previous decision of the North Carolina Supreme Court in a similar instance, it is clear that while a public transportation authority created pursuant to Article 25 of Chapter 160A has rights granted to it as a body corporate and politic, such an authority remains, in the context of the Article, an agency of the municipality which created it. Such an agency relationship between the authority and the creating municipality would subject the municipality to liability arising out of contracts and torts of the Authority.

RUFUS L. EDMISTEN
Attorney General

Thomas H. Davis, Jr.
Assistant Attorney General