Trentman Co. v. Brown

147 So. 14 | La. | 1932

Lead Opinion

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] This is a suit for the recovery of commissions accrued for the selling of certain real estate. The principal defense relied upon, and that sustained by the trial judge, is that the plaintiffs, at the time they negotiated the sales, had not complied with and been licensed under the provisions of Act No. 236 of 1920.

To this defense plaintiffs urge: (1) That Act No. 236 of 1920 is unconstitutional because it has two objects, both of which are covered by the title and both included in the body of the act; (2) that the act excludes from its provisions persons holding a power of attorney from the owner, and that they held such a power of attorney; (3) that the act does not deny the right to recover to a broker who has not qualified under the act before doing the business but does so before bringing his suit; and (4) it is also urged that the act does not graduate the license as required by the Constitution.

I. Article 10, § 8 (page 84), Const. 1921, which provides that "license taxes may be classified, graduated or progressive" (and which, incidentally, does not seem to require that they must be), has no application except to license taxes for raising revenue. The sum required for a license to conduct the business regulated by the act is what the act declares it to be (section 14), a fee for the issuance of the license, which shall not exempt the licensee from paying the regular license or occupational taxes levied by state, parish, or municipality.

II. Whatever the form given to the act and to its title, the substance of it all is that the act undertakes to regulate brokers who negotiate the purchase and sale of real estate and business chances. The act might have undertaken to regulate all brokers, or other brokers than those named, without violating the unity of purpose required by the Constitution. But the act did not undertake to regulate any other brokers than those who negotiate the purchase and sale of real estate and business chances; and there is nothing in the Constitution requiring it to do so.

It is clearly within the province of the Legislature to classify and group and regulate such businesses as in its opinion should be classified and grouped and regulated together. And when it does so, it is not for the courts to say that such businesses should be classified and grouped in a different manner and regulated by separate acts. We think the act is not open to the objection that it violates the unity rule of the Constitution.

III. The act (section 2) declares that its provisions shall not apply to those who "as owner or lessor, shall either individually or through an employee or representative not otherwise engaged in the real estate business perform any of the acts aforesaid with reference to property owned by them," nor to persons "holding a duly executed power of attorney from the owner for the sale, leasing or rental of real estate," nor to an attorney at law rendering services to a client.

Reading these provisions together, we think that the person "holding a duly executed power of attorney from the owner" means one "not otherwise engaged in the business of real estate," who is acting as the "alter ego" of an owner in an isolated transaction. It does not mean that one who is engaged in the business of real estate broker may exempt himself from the operation of the act by taking in each instance a power of attorney from the owner whose property he is seeking to sell. If the act meant this, it would soon be worthless as a piece of legislation, for brokers would then in all cases take some formal power of attorney, instead of an informal authority to sell, as they do now. And in this case plaintiffs are engaged generally in the real estate business; and the fact that their contract with the owner made them the "exclusive selling agents * * * with the power, purpose, and exclusive right, in their discretion, to sell according to the attached contract [which provided that the final deed should be executed by the owner]," does not change the situation. They were not the persons "holding a power of attorney" contemplated by the act, but were purely and simply brokers engaged in selling real estate for the owner, though with the exclusive right to do so.

IV. The act provides that it shall be unlawful to engage in the business it purposes to regulate without complying with its provisions. It further provides that any one who has not been licensed in accordance with its provisions shall not be allowed to recover for any fee, claim, or charge for brokerage in the courts of the state. The fact that the act prescribes a heavy penalty for any violation of its provisions does not detract from the force of this provision. That provision appears to us clear and unequivocal; and we cannot give to it the forced construction contended for by plaintiffs, to wit, that the unlawfulness of the transaction at the time it was entered into is, in effect, wiped out by a subsequent compliance with the provisions of the act.

"No principle of law is better settled than that a party to an illegal contract or an illegal transaction cannot come into a court of law and ask it to carry out the illegal contract or to enforce rights arising out of the illegal transaction." Wise v. Radis, 74 Cal. App. 765, 242 P. 90, 94.

The fact that our statute has omitted an additional provision found in some other statutes, that no person coming within the provisions of the act shall be allowed to recover without alleging and proving that he was qualified under the act at the time his alleged cause of action arose, does not alter the matter. It simply means that our law-makers thought it proper to leave the matter to be urged as a defense instead of by demurrer; believing, possibly, that there were some who might not wish to urge a defense of that kind against an otherwise equitable claim. But this defendant has chosen to do so, and we are constrained to hold it good. The trial judge so thought, and we see no error.

Decree. For the reasons assigned the judgment appealed from is affirmed.

OVERTON, J., dissents on the ground that plaintiffs held a power of attorney to sell and come within the exception to the act.

On Rehearing.

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Addendum

On original hearing we held that the provision in section 2, Act No. 236 of 1920, which provides that said act "shall not apply to any person, firm, partnership, association, co-partnership or corporation, * * * holding a duly executed power of attorney from the owner for the sale, leasing or rental of real estate," has reference only to those persons, firms, etc., who are not otherwise engaged in the real estate business, and who act as the "`alter ego' of an owner in an isolated transaction."

In the brief filed in support of their application for rehearing, counsel for plaintiff say that while they do not concede that the court's holding on the constitutional question raised is correct, yet they do not care to reargue the case on that point. On this branch of the case we have nothing to say further than that we think our holding is correct and we adhere to it.

The point stressed in the application for rehearing, and now relied upon principally by plaintiffs, is that plaintiff held a power of attorney from the owner, and counsel say in their brief, "Under the plain language of the act, therefore appellants were not required to be licensed under its provisions." We granted a rehearing in order that we might consider this point further.

After a most careful consideration of the language of the act, construing all of its provisions together, and keeping in mind its evident purposes, our final conclusion is, and we hold, that even though plaintiffs did hold a "power of attorney" from the owner of the lots they are not exempt from the provisions of the act under the circumstances here disclosed. To hold otherwise would destroy the act, as we shall presently show.

The plaintiff concern has its domicile in Texas and, at the time these transactions took place, had an office in Shreveport, La. At the time its contract with Roberts, which was in writing, was entered into and for many years prior thereto, it was engaged in the business of selling real estate and made a specialty of handling subdivisions. It classed itself as a "Realtor" and was a member of the "National Real Estate Board." Just where it carried on its activities prior to coming to this state is not disclosed, but presumably in Texas, where it had its domicile, and there is no testimony that it handled any real estate here other than the subdivision owned by Roberts, which consisted of 405 lots. Mr. H.C. Trentman, a member of the plaintiff firm, testified that after entering into the contract with Roberts, his company sold all the lots of the subdivision and that to do so they "put on" what he referred to as "campaigns," which, as shown by the record, were extensively advertised in circulars printed and distributed at plaintiffs' expense. Plaintiffs' duty under the contract was to find purchasers for the lots and to have them enter into contracts of sale as per the stipulations and terms made by the owner. The sales contracts obtained by plaintiff from prospective purchasers provided that the price of lots should be paid in installments, and that in case the purchaser failed to pay all installments, the contract was at an end and another purchaser was to be found for the lot. In case the purchaser found by plaintiff paid all installments, then a deed conveying full title was to be executed by the owner in person. Plaintiffs were to and did receive compensation for their services, the nature and amount of which being immaterial. Section 2, Act No. 236 of 1920 defines the term "real estate broker" as follows:

"That a real estate broker within the meaning of this Act is any person, firm, partnership, association, co-partnership or corporation, who for a compensation or valuable considerationsells or offers for sale, buys or offers to buy, or negotiate thepurchase or sale or exchange of real estate, or who leases or offers to lease or rents or offers for rent, any real estate or the improvements thereon for others, as a whole or partialvocation." (Italics ours.)

A "real estate salesman," as defined by the act, is one who is employed by a licensed "real estate broker" to sell or offer for sale real estate belonging to another.

Plaintiffs, when they came to this state, entered into a written contract with the owner of a subdivision, consisting of 405 lots, under which they were authorized to and did, for a compensation or valuable consideration, offer for sale and sell real estate. They maintained an office and were engaged in that business for more than eighteen months. They were therefore "real estate brokers," as defined by the act.

But plaintiffs say they acted under a power of attorney from the owner for the sale of real estate and were for that reason exempt from the provisions of the act.

A mandate or procuration, says the Civil Code, art. 2985, "is an act by which one person gives power to another to transact for him and in his name, one or several affairs." Any written instrument by which one person gives to another authority to act for him is a power of attorney. Plaintiffs are real estate brokers and had written authority from the owners of the lots of a subdivision to "sell said lots according to the attached copy of contract marked Exhibit B, to execute said contracts on behalf of the owner, to collect and enforce payments under the same." Plaintiffs were to "put on sales" of the lots and to pay all expenses of platting and marking the lots as well as all expenses for advertising, etc. But they were not authorized to execute deeds, which were to be signed by the owner. Paragraph 7 of the contract provides that:

"The owner agrees to execute all deeds by warranty deed to any lot or lots when paid for under the terms of the contract attached hereto and marked Exhibit B, and hereby authorizes the agents to execute for him contracts of sale on terms as provided in Exhibit B, as lots may be sold during the term of this contract, and the owner agrees to carry out all covenants of the contract attached hereto and marked Exhibit B," etc.

In the contract, Roberts is referred to as the owner and the Trentman Company as "agents," and it declares that the "owner is desirous of obtaining the services of the parties of the second part (Trentman Company) as selling agents of and for said property."

This contract conferred upon these plaintiffs power and authority to sell the property in the sense only that they were to find purchasers and make sales contracts with them in the name of the owner, the deeds to be executed by the owner when final payments were made. This written instrument is a power of attorney to sell real estate in the sense the term "to sell" is ordinarily used in real estate broking contracts.

The question is whether these real estate brokers are exempt from the provisions of Act No. 236 of 1920 by virtue of this power of attorney. If it be held that they are, then the act is a dead letter. If the Legislature meant to exempt from the provisions of the act all those, whether brokers or not, who hold written authority from the owners of real estate to negotiate sales therefor for compensation, it is hard to imagine any case where a real estate broker would not be exempt, because brokers, for their own protection and in order that they may have a basis on which to work, always get written authority from their clients to negotiate sales. If they do not do so as a practice, it would be within their power to defeat the purposes of the act and escape its provisions merely by securing written authority in every case to negotiate the sale.

We have said that the power of attorney held by these brokers was to negotiate the sales and not complete them. But even if they had been given full authority by the owner to complete the sales by executing deeds in the name of the owner, they would not be exempt. The exemption referred to was not intended to apply to persons who sell real estate as a business and who represent the owner either by negotiating sales or in consummating transactions, on commission or for compensation. The act was intended to have effect and the Legislature did not intend that its provisions could be defeated by the persons engaged in the business which it sought to regulate. The exemption was not intended to protect those engaged in selling real estate as a business.

A more reasonable and natural construction or interpretation of the term "power of attorney" as used in the act is that it means written authority to act in the place and stead of the owner in consummating a particular or isolated transaction for the convenience or accommodation of the principal. Article 2986 of the Civil Code provides that "mandate may take place in five different manners: For the interest of the person granting it alone; for the joint interest of both parties," etc.

The "power of attorney" referred to in the Act No. 236 of 1920 means that which is "for the interest of the person granting it alone," and not that which is for the "joint interest of both parties." The latter is the kind of a "power of attorney" granted by an owner to a broker to negotiate or to consummate sales for compensation.

Our original judgment is correct and is reinstated and made the final judgment of the court.

OVERTON, J., dissents.