Firpo v. Murphy

Action to recover a broker’s commission. The complaint recites that defendants became indebted to plaintiff’s assignors, Rucker & Tarp, a copartnership, in the sum of $770 for and as a commission for the securing of a lease of a certain apartment house.

The complaint was demurred to upon the ground that it did not sufficiently appear therefrom whether at the time the alleged cause of action arose, plaintiff’s assignor or its salesman, who handled the transaction, were duly licensed under and pursuant to the provisions of the act of the legislature regulating such brokers and salesmen, approved May 22, 1919. (Stats. 1919, p. 1252, amended in 1921; Stats. 1921, pp. 1294, 1295.)

The demurrer was overruled.

Defendants answering denied specifically the allegations of the complaint and as a second defense alleged on in

Judgment went in favor of plaintiff, and defendants appeal.

It is admitted that a tenant was obtained and a lease executed. As ground for reversal, however, defendants claim that as the evidence shows without conflict that the transaction was handled by a salesman employed by Rucker & Tarp,. who held no license, that plaintiff, therefore, cannot recover as the contract is unlawful and contrary to the policy of express law. They also claim that as the contract was not in writing, no recovery can be had thereon. Lack of evidence to sustain the amount of the judgment is also assigned as error. If there is merit in defendants’ first contention the other objections raised become unimportant. The evidence shows without conflict that one Thomas L. Ricks was employed by Rucker & Tarp as a salesman. He had previously been employed as such by another firm in the year 1922, and was duly licensed as a salesman for such firm. He entered the employ of Rucker & Tarp about October or November of that year, but no surrender of his license as a salesman of his former employer was ever had as provided for by statute. Under his new employment he acted as salesman to negotiate leases and the sale of real estate. In the performance of these duties he procured employment from defendant Murphy to obtain a tenant for a certain apartment' house owned by him. He was instructed by his employers to carry on the negotiations between the parties and come to an agreement. The only connection that Rucker & Tarp, his employers, had in the transaction was that they kept in touch with the negotiations as reported by Ricks. After the tenant had been obtained and the lease executed, there was a dispute between the owner and Rucker as to the amount of the compensation to be paid, there being no express agreement by the parties upon' the subject. There is evidence in the record to show that Murphy was willing to pay the sum of five hundred dollars, but objected to paying the amount equivalent to the first month’s

[1] It is therefore manifest from the various provisions of the act that the law charges the employer with knowledge of the fact whether his salesman has or has not a license and contemplates that no business can be conducted by a broker through a salesman acting in his behalf until a license is procured by him or reissued when there has been a change in the employment of the salesman. [2] The statute in question is one designed for the protection of the public. It is in keeping with the statutes of a similar character regulating the pawnbrokerage business and certain professions.

[3] Whenever a statute is made for the protection of the public a contract in violation of its provisions is void. The Pawnbrokers Act provides that it is a misdemeanor to carry on the business of pawnbroker without a license. (Pen. Code, secs. 338, 339.)

[4] While there is no express declaration in these sections that the transactions condemned are unlawful, or that no recovery shall be had thereon in the event that the provisions are violated, still it has been held that they, being designed for the protection of the public, and a penalty prescribed for a violation thereof, that such penalty is the equivalent of an express prohibition, and that a contract made contrary to the terms thereof is void, and further that whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case. (Levinson v. Boas, 150 Cal. 185 [11 Ann. Cas. 661, 12 L. R. A. (N. S.) 575 , 88 Pac. 825 ].)

The principle is in accord with the positive provisions of our Civil Code which makes that unlawful which is either contrary to the express provision of law, or contrary to the policy of express law, though not in terms prohibited. (Gardner v. Tatum, 81 Cal. 370 [ 22 Pac. 880 ]; Civ. Code, sec. 1667.)

[5] The rule is universally established that where a broker fails to procure the license required by law to carry on his business he cannot recover commissions for acts as such. (Whitfield v. Huling, 50 Ill. App. 179 ; Richardson v. Brix, 94 Iowa, 626 [ 63 N. W. 325 ]; Young v. Denning, 52 Kan. 629 [ 35 Pac. 207 ]; Buckley v. Humason, 50 Minn. 195 [ 36 Am. St. Rep. 637 , 16 L. R. A. 423 , 52 N. W. 385 ].)

In some of the states courts have allowed the recovery of a commission by a nonlicensed broker where the license laws are enacted solely as revenue measures, in 'which case it has been held that such laws have no effect on the rights of the parties inter se.

[6] That situation is not here presented. The cause of action here relied upon is founded on the violation of a state law. Plaintiff’s assignor having carried on its business in violation of law any rights arising out of such unlawful transaction can form no proper cause of action.

Counsel for respondent seeks to avoid the effect of this rule by claiming that plaintiff’s assignor having so far as it was concerned complied with the requirement of the act with reference to its license, that its assignee can properly maintain the action.

If such a contention could be maintained it would in a measure destroy the very purpose of the creation of the act.

The partnership did violate the law in failing to see to it that its salesman had a license before it permitted him to do business in its behalf. The interest of the copartnership in the transaction is tainted with all the illegality which

The judgment is reversed.

Cashin, J., and Knight, J., concurred.

A petition by respondent to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on June 1, 1925.

All the Justices concurred.