Architectural Graphics and Const. Services, Inc. v. Pitman

• Decision Date: 23 July 1982
• Citation: 417 So.2d 574
• Parties: ARCHITECTURAL GRAPHICS AND CONSTRUCTION SERVICES, INC. v. Robert E. PITMAN and Wallace R. Belcher. 81-531.
• Court: Alabama Supreme Court

Page 574

417 So.2d 574

ARCHITECTURAL GRAPHICS AND CONSTRUCTION SERVICES, INC. v. Robert E. PITMAN and Wallace R. Belcher.

81-531.

Supreme Court of Alabama.

July 23, 1982.

T. Schram Woodroof of Woodroof & Woodroof, Athens, for appellants.

William A. Owens, Jr. of Malone, Owens, Hancock & Totten, Athens, for appellees.

SHORES, Justice.

This is an appeal by plaintiff Architectural Graphics and Construction Services, Inc., a corporation, from a summary judgment in favor of defendants Robert E. Pitman and Wallace R. Belcher. We affirm.

On August 21, 1978, Robert E. Pitman accepted a proposed contract from Eric Merkt, proprietor of Architectural Graphics and Construction Services, for the construction of a veterinary clinic in Athens, Alabama. The building was to be constructed by Merkt's company at an estimated cost of $111,000.00 on property owned by Pitman. Upon execution of the contract and prior to the beginning of construction, Pitman obtained a loan secured by a real estate mortgage in the amount of $116,000.00 to purchase the land and pay Merkt for construction of the building.

Subsequent to the execution of the contract and prior to the completion of the building, Pitman took in a partner, Wallace R. Belcher, and Merkt incorporated his construction company, now Architectural Graphics and Construction Services, Inc. (AGCS).

Upon completion of the building, Pitman and Belcher moved into the building and were informed by AGCS that an additional amount was owed on the cost of the building. At that point, Pitman and Belcher told AGCS that several areas of the building were either defective or had not been built according to the plans and specifications. With the understanding that the requested repairs would be made, Pitman and Belcher executed a promissory note and real estate mortgage to AGCS, dated October 15, 1979, in the amount of $18,736.97. Pitman and Belcher, claiming AGCS then failed to make any repairs, refused to pay the note.

AGCS filed suit on the promissory note against Pitman and Belcher, demanding judgment in the amount of $18,736.97, plus interest and attorney's fees. Defendants filed an answer and counterclaim in which they denied owing any money to AGCS and claimed damages for breach of contract, breach of warranties, and fraud.

Pitman and Belcher filed a motion for summary judgment, asserting that AGCS was operating without a license at the time the contract and note were executed, in violation of Ala.Code 1975, § 34-8-1, et seq. The contract entered into by the parties was, therefore, void and the note and mortgage given as partial payment were unenforceable. Neither Eric Merkt, individually, nor AGCS, as a corporation, was licensed to do business as a general contractor by the Alabama State Contractors Licensing Board until January 30, 1980, some three months after the note was executed.

The trial court granted defendants' motion for summary judgment and dismissed their counterclaim along with the original complaint. AGCS filed a motion to set aside the summary judgment, alleging that the original contract was entered into by Eric Merkt, d/b/a Architectural Graphics and Construction Services, while the suit was filed in the name of the corporation. This motion was denied, ¹ and plaintiff's appeal followed. We affirm.

The single issue raised is whether the note and mortgage given by Pitman and Belcher to AGCS as partial payment of the contract are valid.

Appellant admits that it did not have an Alabama general contractor's license at the time of the contract, and concedes that its contract with appellees is unenforceable, but argues that this does not prevent recovery on the note.

A "general contractor" is defined in Ala.Code 1975, § 34-8-1, to be "one, who, for a fixed price, commission, fee or wage, undertakes to construct or superintend the construction of any building, highway, sewer, grading or any improvement or structure where the cost of the undertaking is $20,000.00 or more." Section 34-8-2 requires any person desiring to do business as a general contractor to obtain a license from the Alabama State Contractors Licensing Board. Section 34-8-6 prohibits any person, firm, or corporation not duly authorized from engaging in the business of general contracting in this state; violation is subject to punishment as a misdemeanor. It is undisputed that both Merkt and AGCS fell within the definition of a "general contractor," and that the contract exceeded $20,000.00.

This Court has held that § 34-8-1, et seq., Ala.Code 1975, is not a law enacted solely for revenue purposes, but rather is regulatory legislation designed to protect the public against incompetent contractors and to assure properly built structures which are free from defects and dangers to the public. Cooper v. Johnston, 283 Ala. 565, 219 So.2d 392 (1969). In furtherance of that policy, this Court has also held that a contract by an unlicensed "general contractor," as defined in § 34-8-1, is null and void as a violation of that public policy. Such contracts are illegal and unenforceable by the unlicensed general contractor. Hawkins v. League, 398 So.2d 232 (Ala.1981); Tucker v. Walker, 293 Ala. 589, 308 So.2d 245 (1975).

This rule has been applied to deny recovery where the action was based on...