Edmonds v. Fehler & Feinauer Construction Co.
| Citation | 252 F.2d 639 |
| Decision Date | 07 February 1958 |
| Docket Number | No. 13171.,13171. |
| Parties | Charles R. EDMONDS, Appellant, v. The FEHLER & FEINAUER CONSTRUCTION COMPANY, Inc., a Kentucky Corporation, Appellee. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Charles E. Lester (of Lester & Riedinger), Newport, Ky., for appellant.
W. R. Seidenfaden, Newport, Ky., for appellee.
Before McALLISTER, MILLER and STEWART, Circuit Judges.
Appellant brought this action to recover damages for breach of a contract under which he had been employed to sell appellee's real estate. Appellee moved to dismiss the action on the ground that under the Kentucky statutes, there could be no recovery because appellant was not a licensed real estate broker. From the order of the district court granting the motion to dismiss, this appeal was taken.
Appellant was employed as the sales manager of appellee corporation, a company engaged in the development of a real estate subdivision. The company had entered into a written contract with appellant in which it agreed to pay him an amount of compensation equal to 2½% of the closing sales price of all housing units in the subdivision. In the contract, the company agreed specifically to appellant's employment as sales manager; and he agreed to perform such services as the corporation and its officers might require of him, and particularly to do and perform all of his duties as a sales manager — namely, to seek out, interview, and use his efforts to secure prospective purchasers for housing improvements in the development; to arrange financing; display model housing plans; secure contracts of purchase; and to do any and all things necessary to contract for the sale of, and disposition of, housing units in the development. Among other covenants, appellant agreed to devote his entire time, skill, and attention to the promotion and development of the subdivision, and to engage in no other form of employment during the term of the contract, or any similar form of employment on any other development than that of the company; and he further agreed not to do or perform any act contrary to the best interests of the company with respect to the subdivision. It was agreed between the parties that the contract should be in effect for five years from the date of its execution, unless sooner terminated by mutual agreement.
The complaint alleged that from the time of his employment until the employment contract was terminated by the appellee, the appellant negotiated the sale of all the appellee's housing units then ready for the market, and that he was paid compensation therefor by the appellee in accord with the terms of the employment agreement. The complaint further alleged that within the five-year term of the employment agreement, it was unilaterally terminated by the appellee, and that several houses were thereafter sold or ready for sale. It asked judgment for an amount equivalent to what his compensation would have been for the houses sold or ready for sale during the balance of the five-year term.
The Kentucky statute on which the district court based its order of dismissal is KRS (Kentucky Revised Statutes) 324.020, which provides:
"On and after the effective date of this Act June 1, 1942, it shall be unlawful for any person, copartnership, association or corporation to act as a real estate broker or real estate salesman or to advertise or assume to act as such real estate broker or real estate salesman, in any city of the first, second and third class, and within five miles from the corporate limits thereof, without a license issued by the Kentucky State Real Estate Commission."
KRS 324.320 provides:
"No person, copartnership, or corporation engaged in the business of acting in the capacity of a real estate broker or a real estate salesman in a city of the first, second and third class and within five miles of the corporate limits thereof of this state shall bring or maintain any action in the courts of this state for the collection of compensation for any services performed as a real estate broker or salesman without alleging and proving that such person, copartnership, or corporation was a duly licensed real estate broker or real estate salesman at the time the alleged cause of action arose."
There is no question but that the appellant's activities as sales manager were to be carried on within five miles of the corporate limits of a city of the second class in the State of Kentucky.
Appellant, however, relies upon an exception to the rule stated in KRS 324.020 in that he claims that he comes within the provisions of KRS 324.030, which provides:
The district court held that, under the foregoing provision, appellee corporation could, undoubtedly, by passing a resolution of its governing body, sell its own real estate without complying with KRS 324.020; but that when it employed an agent, it would be subject to the same law as an individual who employed an agent to make such sale. The court further declared that appellant was not a regular employee within the meaning of the statute, but, rather, a special employee retained for the sole purpose of disposing of the corporation's real estate.
A corporation acts through its agents. Appellant was acting as an agent of appellant corporation in the performance of acts and services under his contract with the company. Under KRS 324.030, the owner who performs such acts as selling or leasing real estate, owned or leased by him, is not subject to KRS 324.020; and a regular employee who carries out these acts or performs such services for the owner is not subject to KRS 324.020, "where such acts are performed in the regular course of, or as an incident to the management of such property and the investment in it."
Appellant was an employee of appellee corporation. According to the terms of the written contract between them, appellant covenanted, and was obliged to perform such services as the corporation and its officers might require of him, and particularly to do and perform all of his duties as sales manager of the real estate owned by the corporation, which included the obligations of seeking out and interviewing prospective purchasers for appellee's housing...
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