Enlow & Son, Inc. v. Higgerson

• Decision Date: 25 April 1960
• Docket Number: No. 5069,5069
• Citation: 113 S.E.2d 855,201 Va. 780
• Court: Virginia Supreme Court
• Parties: ENLOW & SON, INCORPORATED, LEWIS K. KESSER AND R. A. EMANUELSON v. L. HAROLD HIGGERSON AND IVAN HIGGERSON, PARTNERS TRADING AS HIGGERSON BROTHERS. Record

Page 855

113 S.E.2d 855

201 Va. 780

ENLOW & SON, INCORPORATED, LEWIS K. KESSER AND R. A. EMANUELSON v. L. HAROLD HIGGERSON AND IVAN HIGGERSON, PARTNERS TRADING AS HIGGERSON BROTHERS.

Record No. 5069.

Supreme Court of Appeals of Virginia

April 25, 1960.

Louis B. Fine, Jerrold G. Weinberg and Gordon E. Campbell (Fine, Fine, Legum, Weinberg & Schwan, on brief), for the appellants.

Richard B. Kellam and James N. Garrett (Kellam & Kellam, on brief), for the appellees.

JUDGE: EGGLESTON

EGGLESTON, C.J., delivered the opinion of the court.

L. Harold Higgerson and Ivan Higgerson, partners trading as Higgerson Brothers and sometimes hereafter referred to as the plaintiffs, filed a motion for judgment against Enlow & Son, Incorporated, Lewis K. Kesser and R. A. Emanuelson, sometimes hereinafter referred to as the defendants, to recover damages for the breach of a written contract dated July 1, 1955, whereby it was alleged that Enlow, as principal, and Kesser and Emanuelson, as sureties, were bound to the plaintiffs for the performance of certain construction work on a portion of a state highway running through the city of Portsmouth. After demurrers had been overruled and the defendants had answered and filed a counterclaim, on their motion the case was transferred to the equity side of the court. The evidence was heard by a commissioner who filed a report holding that the defendants were indebted to the plaintiffs under the provisions of the contract in the sum of $25,701.82, and disallowing the counter-claim. The amount which the commissioner found to be due included the cost of completing the project and a guaranteed profit of $3,000 claimed under the terms of the contract. From a decree overruling the defendants' exceptions to the report and entering judgment thereon, they have appealed.

The factual background is this: On June 6, 1955, the State Highway Department entered into a contract with T. E. Ritter Corporation for the construction of a highway between High Street and Gosport Road in the city of Portsmouth. Ritter sublet a part of the work to Higgerson Brothers. Higgerson Brothers, being desirous of subcontracting the work which they had undertaken, began negotiations with Enlow to undertake this work. There was a conference between L. Harold Higgerson, on the one hand, and Herman A. Enlow, Lewis K. Kesser and R. A. Emanuelson, the principal officers of Enlow & Son, Incorporated, in Kesser's office. After some discussion the contract which is copied in the margin ¹ was written by Kesser, a member of the local bar, and executed by the parties.

'ENLOW AND SON, INCORPORATED

U'By H. A. Enlow (SEAL)

President

U'R. A. Emanuelson

U'Lewis K. Kesser

'HIGGERSON BROTHERS

U'By Harold Higgerson (SEAL)'

At the time the contract was entered into Higgerson Brothers had been duly licensed and issued a certificate of registration as a contractor under the provisions of Code, § 54-113 ff. When the question arose as to whether Enlow & Son, Incorporated, was similarly registered, Enlow and Kesser assured Higgerson that application had been made for such registration and that the proper certificate would be obtained. It later developed that while Kesser had made application for registration on June 21, 1955, action on the application was deferred until October 20, when it was approved and a certificate issued.

Pursuant to the terms of the agreement, Enlow promptly began work on the project and continued with it until March 30, 1956, when work had to be suspended until certain paving had been done by Ritter Corporation, the principal contractor. This paving was completed the latter part of June, at which time it was in order for Enlow to resume work on the project. Although the project was about 90% completed, Enlow refused to resume work. At the trial Enlow undertook to justify its refusal by saying that Higgerson Brothers had refused to continue advancing payrolls on the job, as required by the terms of the written contract. Higgerson Brothers, on the other hand, contended that Enlow quit the work because it was not profitable and Enlow had other work it preferred to do. At any rate, on July 2, Higgerson Brothers wrote Enlow calling upon the latter to complete the project and saying that unless it did so, Higgerson Brothers would have the work completed at the cost of Enlow. When Enlow still refused to resume work Higgerson Brothers employed other contractors to complete the work.

The evidence accepted by the commissioner and the lower court is that the cost of completing the project was fair and reasonable and no serious contention to the contrary is advanced before us.

The main contention of the defendants is that the plaintiffs' claim 'is barred' because the contract upon which it is based was entered into in violation of Code, § 54-113 ff. The argument of the defendants runs thus: at the time the contract was executed, on July 1, 1955, Enlow & Son, Incorporated, had not been licensed as required by Code, § 54-113 ff., and the plaintiffs knew this; Code, § 54-128, made it unlawful for Enlow, while unlicensed, to undertake this work, and Section 54-142, as amended, made it unlawful for the plaintiffs 'knowingly' to receive or consider Enlow's bid to do the work; the registration and procurement of the license by Enlow subsequent to the execution of the contract did not remove the invalidity of the agreement, and hence the plaintiff's claim under the contract is barred. The defendants further say that the present case is not controlled byCohen v. Mayflower Corp., 196 Va. 1153, 86 S.E.2d 860, because in that case the plaintiff was an innocent party to the agreement in that he did not know that the defendant was unlicensed, whereas here the plaintiffs knew that Enlow was unlicensed and hence are in pari delicto with the latter.

We agree with the position of the defendants that if the agreement was invalid and unenforceable at the time of its execution it was not validated by the subsequent registration and procurement of a license by Enlow, in the absence of a statutory provision to that effect. See Corbin on Contracts, Vol. 6, § 1532, p. 1043; 53 C.J.S., Licenses, § 59-a, p. 714; Annotation, 118 A.L.R. 646, p. 659. Cf., Bain v. Boykin, 180 Va. 259, 23 S.E.2d 127.

But we do not agree with the contention that the parties are in pari delicto and for that reason the agreement is not enforceable by the plaintiffs. This contention overlooks the force and effect of the 1956 amendment to Code, § 54-142. As amended by the Acts of 1956, ch. 397, p. 450, the section reads:

' § 54-142. Any person not being duly authorized who shall contract for or bid upon the construction of any of the projects or works or any part thereof enumerated in § 54-113, without having first complied with the provisions hereof, or who shall attempt to practice general contracting or subcontracting in this State, except as provided for in this chapter, and any person presenting or attempting to file as his own the registration certificate of another or who shall give false or forged evidence of any kind to the Board or to any member thereof in maintaining a certificate of registration or who falsely shall impersonate another or who shall use an expired or revoked certificate, and any awarding authority, who knowingly receives or considers a bid from anyone not properly registered under this chapter, shall be deemed guilty of a misdemeanor.

'Provided that no person shall be entitled to assert this section as a defense to any action at law or suit in equity unless such person shall first affirmatively prove that notice of this section, prior to or upon the execution of the contract, has been given to the party who seeks to recover from such person.

'Provided, further, that nothing herein contained shall affect any contract entered into prior to July 1, 1956.' (Italics supplied.)

Prior to the amendment, which added the last two paragraphs to the section, both the person contracting for and bidding upon a construction contract without having procured the required license, and one 'who knowingly receives or considers a bid' from such unlicensed person, were guilty of a misdemeanor. The effect of the last paragraph added by the amendment is to remove the applicability of the section to the contract here involved which was 'entered into prior to July 1, 1956.'

At the oral argument before us counsel for the defendants argued that the last paragraph is intended to apply only to the next preceding paragraph which was likewise added by the amendment. But no such limitation is found in the language used.

While the amendment removed the prohibition against the plaintiffs' receiving and accepting Enlow's bid on July 1, 1955, it left unimpaired the provision in Code, § 54-128, ² making it unlawful for an unlicensed person 'to engage in, * * * general contracting or subcontracting in this State.' Thus the parties to the present agreement are not in pari delicto.

Since the amendment to the section affected the remedy and not the vested rights of the parties it was constitutionally valid. Upon this principle, in Bain v. Boykin, supra, 180 Va. 259, 23 S.E.2d 127, we upheld the constitutional validity of an amendment, operating retroactively, to the statute requiring the registration of one conducting a business under a fictitious name (Code, § 59-169 ff.), the effect of which amendment was to remove what would otherwise have been a bar to the prosecution of the suit.

Nor is the plaintiffs' right to enforce the contract barred because they knew at the time of its execution that Enlow had not been licensed as required by the statute. As is aptly said in Corbin on Contracts, Vol. 6, § 1540, p. 1070:

'If a bargain is illegal, not because a performance promised under it is an illegal performance, but only because the party promising it is forbidden by statute or ordinance to do so, the prohibition is aimed at that party only and he is the only...