Comet Theatre Enterprises v. Cartwright

• Decision Date: 14 March 1952
• Docket Number: No. 13017.,13017.
• Citation: 195 F.2d 80
• Parties: COMET THEATRE ENTERPRISES, Inc. v. CARTWRIGHT et al.
• Court: U.S. Court of Appeals — Ninth Circuit

195 F.2d 80 (1952)

COMET THEATRE ENTERPRISES, Inc. v. CARTWRIGHT et al.

No. 13017.

United States Court of Appeals Ninth Circuit.

March 14, 1952.

Maurice J. Hindin, Los Angeles, Cal., for appellant.

Tripp & Callaway, Los Angeles, Cal., for appellees.

Before DENMAN, Chief Judge, and STEPHENS and BONE, Circuit Judges.

DENMAN, Chief Judge.

This is an appeal from a judgment against Comet Theatre Enterprises, Inc., hereafter Comet, a California corporation, plaintiff in an action against appellees, citizens of Utah, on a common count for money had and received. Recovery was sought by Comet of money voluntarily paid to the defendants for their full performance of a contract for services of a supervisory nature rendered by the defendants to Comet in connection with the construction of the latter's drive-in theatre. Comet contends that it is entitled to judgment because, as admitted, the defendants were not licensed under California Business and Professions Code, Sections 7025-7031.

On the basis of the Findings of Fact below, we conclude that the defendants were contractors within the meaning of the Business and Professions Code. That Code required contractors to procure a license from a board created by the Act. The effect of the defendants' failure to get a license is stated in Loving & Evans v. Blick, 33 Cal.2d 603, 204 P.2d 23 where the California court held a contract made by an unlicensed contractor is illegal and void. The only provisions of the Act imposing sanctions on unlicensed persons are Section 7030 making failure to get a license a misdemeanor and Section 7031 providing that they cannot sue to recover compensation for services and goods furnished to another person.

There is no provision in the Act that when the unlicensed persons have completely performed a contract for agreed services and the person so benefited voluntarily has paid the agreed consideration he may recover back the money so paid. Here to add to the two specific provisions, to make effective the licensing requirement, a right in Comet to retain the value of the services of the appellees and also to recover back the fair amount Comet had paid for its services is not necessary to effectuate the policy of the statute. This seems a case for the application of the rule expressio unius est exclusio alterius. It differs from the case of Elmers v. Shapiro, 91 Cal.App.2d 741, 205 P.2d 1052, where a veteran who was overcharged on the purchase of his home was allowed to recover that amount from the seller even though he had paid the money voluntarily. There the Veterans' Housing Act which had been violated expressly provided that a purchaser could recover back overcharges.¹

Comet voluntarily paid the consideration for what it received, acting under a mistake of its legal rights under § 7031 which provides: "No person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action in any court of this State for the collection of compensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract." Had Comet when it paid appellees for their services known of its legal power under § 7031 to refuse payment and to set up that section as a perfect defense to any action brought by defendants, it then would have refused. Here is a clear case of a consummated illegal transaction where Comet acted under a mistake of law, much like the case of Harralson v. Barrett, 99 Cal. 607, 34 P. 342. There a mortgagor had agreed with his mortgagee to pay a mortgage tax prohibited by the California constitution. Payment was made under this invalid agreement and the court refused to allow the mortgagor a credit for this payment on the ground that if he voluntarily fulfills his promise to pay interest, it is through a mistake of law and he is bound by his own act.

To determine in this case the effect of Comet's mistake of law, we cannot find California decisions under §§ 7025-31 of the Business and Professions Code which have squarely decided the same issue. There are (1) cases where a business has been carried on illegally without a license and one of the participants has sued the other for an accounting of the profits after the illegal business is completed and (2) cases which have dealt with recovery back of performance by parties to contracts affected by kinds of illegality different from that in this case.

In the first class is Norwood v. Judd, 93 Cal.App.2d 276, 209 P.2d 24, where the parties were partners and carried on a contracting business without a license required by § 7028 of the Act here involved. All the business done by the partners had been completed. Judd who was to wind up the business agreed to give Norwood one-third of the partnership assets. Judd later refused to perform his promise claiming the illegality of the partnership contract. The court held that though the partnership agreement was illegal and one under which neither partner could sue for the other's non-performance, nevertheless that agreement not being malum in se and having been fully performed, the fact that it was illegal would not prevent the court's enforcing Judd's promise to his partner to give him his share of the assets.

Denning v. Taber, 70 Cal.App.2d 253, 160 P.2d 900, is another case of a court allowing one party an accounting of profits after the illegal contract — operation of a saloon business without a license — is consummated.

In the second class of cases, there are those which have denied recovery back and those which have allowed it. Among the former is Miller v. California Roofing, 55 Cal.App.2d 136, 130 P.2d 740, where the defendant had sold securities to its employee, ...