Matchett v. Gould

This question is determinative of the instant appeal: Did the trial judge correctly

Plaintiff sues as assignee of Prank B. Gotham who conducted business under the name Crane Service Company (herein referred to as Crane). Defendants Jerry Gould and Henry Matthews operate under the name G- & M Brick Company (later designated herein as G & M). Crane was in “the equipment and demolition equipment rental business” and G & M in the “business of buying and selling salvage brick.” The Glendale Unified School District was the owner of two brick buildings which it desired to raze. Bids for demolition and removal of same were invited. The representatives of Crane and G & M conferred together and arrived at an oral agreement that Crane should make a bid of $3,349.99, said sum to be a payment to the school district for all salvage; this amount apparently represented the excess of the estimated value of all salvageable material over the cost of recovering the same and disposing of materials which could not be salvaged. Under their agreement G & M were to furnish the $3,349.99 for payment to the district. The bid was made and accepted, whereupon Crane entered into a written contract with the district and also paid for and posted a public works bond and a faithful performance bond. G & M supplied the $3,349.99 as agreed. Crane thus became the contractor so far as the school district was concerned. But Crane and G & M rearranged the deal between themselves. All salvageable bricks and other materials were to belong to G & M. They hired Crane Service Company cranes “by the hour to take down the brick and load them out bn the G & M trucks for transportation to G & M yard.” These were “manned and maintained” cranes, for whose services Crane was to be paid by G & M the reasonable value. G & M were to supply their own labor to strip the building of other salvageable materials and haul them away; G & M to own all salvage and “receive the revenue therefrom in its entirety.” It was also agreed that Crane would remove and dispose of all concrete and rough grade the site, for which G & M were to pay Crane $5,500. The job was completed. Bach of the parties “worked on their respective portions of the job independently, and . . . they did not share control.” The reasonable value of the

Fraenkel v. Bank of America, 40 Cal.2d 845 , 848 [ 256 P.2d 569 ], states the purpose of the legislation more broadly: “That law was enacted for the safety and protection of the public against imposition by persons inexperienced in contracting work, and for the prevention of fraudulent acts by contractors resulting in loss to subcontractors, materialmen, employees, and owners of structures. (Loving & Evans v. Blick, 33 Cal.2d 603 , 609 [ 204 P.2d 23 ]; Franklin v. Nat C. Goldstone Agency, 33 Cal.2d 628 , 632 [ 204 P.2d 37 ].)” Moreover, ‘"The invasions it makes on constitutional rights are not [to] be carried farther than is necessary to protect the public from the evils intended to be removed, unless the language compels such meaning and such effect is reasonably calculated to secure the legitimate objects for which the power is exercised. ’ ” (Joseph v. Drew, 36 Cal.2d 575 , 581 [ 225 P.2d 504 ].) Indeed, the statute is to be strictly construed. (Oddo v. Hedde, 101 Cal.App.2d 375 , 383 [ 225 P.2d 929 ].)

Cases which uphold the right of one partner to recover his share of moneys earned in a venture conducted without the required license are: Denning v. Taber, 70 Cal.App.2d 253 , 257 [ 160 P.2d 900 ]; Norwood v. Judd, 93 Cal.App.2d 276 , 286 [ 209 P.2d 24 ]; Galich v. Brkich, 103 Cal.App.2d 187 , 191 [ 229 P.2d 89 ] ; Wold v. Luigi Consentino & Sons, 109 Cal.App.2d 854 , 857-858 [ 241 P.2d 1032 ]; Wilson v. Stearns, 123 Cal.App.2d 472 , 481 [ 267 P.2d 59 ]. (In each of them, except the Wold case, a hearing was denied by the Supreme Court; no application was made in Wold.) The Denning and Nor-wood cases proceed upon the basis that the illegality has spent its force when the point of dissolution and accounting is reached and that enforcement of a promise, express or im

Wold v. Luigi Consentino & Sons, supra, 109 Cal.App.2d 854 , dealt with a joint venture whose weakness lay in the fact that, although each individual was licensed, there was no license to act jointly as required, by section 7029, Business and Professions Code. At page 857: “Remembering that each of the joint venturers was duly licensed as a contractor and that only the license to act jointly was lacking, that the contract which the joint venturers were to perform was completed and paid for by the owners, that the defendant partnership received into its possession, and still retains, the profits of the venture, and that this is an action, not against the owners for whose protection in the main part the statute requiring the license was enacted, and that because the joint venturers were licensed so as to bring to the performance of the contract the skill, knowledge and responsibility which in main part the licensing statute was enacted to assure to those with whom they dealt, we think that the decision must be controlled by application of the rule laid down in Galich v. Brkich, 103 Cal.App.2d 187 [ 229 P.2d 89 ], which was decided after the trial court’s decision in this ease.”

Respondent argues that these cases are not controlling because no joint venture was alleged or proved at bar. Certainly there was no such allegation or finding; at least not in specific terms. And there is no fund to be divided. But defendants received and disposed of all salvage and kept all profits derived therefrom. They have also had materials and labor worth $6,683.57 furnished by plaintiff for their benefit and for which they refuse to pay. We apprehend

The court relied in part upon Gatti v. Highland Park Builders, Inc., 27 Cal.2d 687 [ 166 P.2d 265 ], which does support the Wilson ruling. Plaintiffs there sued for the reasonable value of services rendered in furnishing carpenter labor for the construction of certain houses. Plaintiffs Albert Gatti

As above indicated, the exact legal status of the arrangement between the parties is not a determinant in these situations ; it is not necessary that there be a partnership or joint venture or any other specifically named relationship. The necessity of doing justice through forestalling unjust enrichment is the controlling consideration.

While this is true, another approach to the problem is equally satisfying in its result. The parties in effect assigned the school district contract to G & M and made Crane a subcontractor; the subcontractor has done his job and defendant refuses to pay. While there was no formal assignment, defendant put up the money and took over the ultimate benefit of the contract—the ownership and disposition of the salvageable material. While Crane remained liable to the city upon his contract and the posted bonds, he ceased to have any control over the operation except to work for G & M in the salvaging of brick, removing concrete, rough grading the site, etc. This he did independently, “and they did not share control.” All the profits went to G & M; Crane was entitled to nothing except the agreed price for labor and materials furnished by him. That this arrangement constituted an assignment so far as they were concerned is indicated by the holding in Bergin v. van der Steen, 107 Cal.App.2d 8 , 16 [ 236 P.2d 613 ], for “it is the substance and not the form of a transaction which determines whether an assignment was intended.” The contractor’s licensing statute is designed inter alia “for the prevention of fraudulent acts by contractors resulting in loss to subcontractors, materialmen, employees, and owners of structures.” (Fraenkel v. Bank of America, supra, 40 Cal.2d 845 at 848; emphasis added.) When a subcontractor is placed in the class of those for whose protection the law was enacted, he is removed from the imputation of pari delicto (Hedlund v. Sutter Med. Serv. Co., 51 Cal.App.2d 327 , 333 [ 124 P.2d 878 ]; Robertson v. Hyde, 58 Cal.App.2d 667 , 672 [ 137 P.2d 703 ]; 12 Cal.Jur.2d, §103, p. 302), and thus enabled to maintain an action for recovery of what is justly due him.

The trial court did not decide and it is not necessary for us to determine the exact relationship which the parties bore

The judgment is reversed with instructions to render judgment for plaintiff as prayed.

Wood (Parker), J., and Vallée, J., concurred.

Respondents’ petition for a hearing by the Supreme Court was denied May 25, 1955. Spence, J., was of the opinion that the petition should be granted.