Fillmore Products, Inc. v. Western States Paving, Inc.
| Citation | 561 P.2d 687 |
| Decision Date | 07 March 1977 |
| Docket Number | No. 14500,14500 |
| Parties | FILLMORE PRODUCTS, INC., a Utah Corporation, Plaintiff and Appellant, v. WESTERN STATES PAVING, INC., a Utah Corporation, and United States Fidelityand Guaranty Company, Defendants and Respondents. |
| Court | Supreme Court of Utah |
Dexter L. Anderson, Fillmore, for plaintiff and appellant.
Phillip L. Foremaster, St. George, for defendants and respondents.
The plaintiff seeks reversal of a summary judgment granted in favor of the defendant, Western States Paving, Inc., a general contractor, on construction contracts entered into between the parties for the construction of a sewer system for the Town of Ferron, Utah. The complaint alleged in three causes of action that (1) the defendant failed to pay the plaintiff $34,738.39 for materials furnished and work and labor performed under the contracts, (2) that plaintiff incurred special damages in the sum of $35,000.00, and (3) that said defendant failed to pay $5,495.00 for equipment rental not related to the two construction contracts. The complaint also alleged that the other defendant, United States Fidelity and Guaranty Co., which guaranteed payment for work and materials, was liable on the payment bond in the sum of $34,738.39. Defendants answered and defendant Western counterclaimed alleging breach of contract and damages totaling $90,086.55.
The defendant filed a motion for summary judgment asking the court to dismiss the complaint for the reason that the plaintiff did not allege in its complaint that it was a licensed contractor in Utah and also because plaintiff in fact was not a licensed contractor and therefore could not enforce the contracts against the defendants. The District Court granted the motion with respect to the first two causes of action and plaintiff appeals therefrom.
It is undisputed from an affidavit filed by plaintiff's president in opposition to defendants' motion for a summary judgment that the plaintiff was not organized to engage in the business of construction work nor was it plaintiff's intention to ever engage in the construction business at any time subsequent to its entering into the single transaction with the defendant Western on the Ferron Town Sewer System Project. Plaintiff is a Utah corporation organized to engage in the business of buying and selling lumber and alfalfa hay products, quarrying and selling lava rock products and operating a patio paver and landscaping products manufacturing plant. At no time has the plaintiff held itself out to the public as a licensed contractor under the Utah Contractors' Licensing Statute 1 to engage in the business of construction work.
Defendants argue that to allow enforcement of these contracts by plaintiff would be contrary to the policy of the law to protect the public from unlicensed contractors entering into construction contracts and performing construction work when they do not possess the necessary expertise and competence to do so.
Licenses are required basically for one of two purposes: to protect the public against fraud, incompetence, illegality, or irresponsibility; or to solely or primarily raise revenue.
If the purpose of licensing is to protect the public, then the general rule in this State is that the party who does not obtain a license, but is required to do so, cannot obtain relief to enforce the terms of his contract--including payment thereunder--even though there are other penalties imposed against him expressly by statute including criminal sanctions. This general rule is announced and discussed, inter alia, in Two Utah cases. 2 And there is no doubt that the purpose of the licensing statute relating to contractors, supra, is protection of the public. 3
But this court has recognized the harshness of declaring contracts of non-licensees void or unenforceable. In Mosley v. Johnson, supra, though payment to the unlicensed well driller was denied, Mr. Justice Ellett in writing for the majority opinion stated that the penalty prohibiting an unlicensed person 'from recovering in the courts is severe enough' (emphasis added). And Mr. Justice Crockett, in his dissent, though he does not quarrel with the decision in Olsen v. Reese, supra, on its facts, emphasizes that under the circumstances of Mosley v. Johnson 'it is inequitable and unjust to rule as a matter of law on summary judgment that the defendant can take the benefit of the plaintiff's labor and refuse to pay for it.'
This court has not applied the general rule of denying relief to unlicensed persons mentioned above inflexibly or too broadly. 4 Nor do we now. Corbin 5 has stated:
Where it is clear that the statute requires...
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