¶0 1. CONTRACTS--Validity--Violation of Statutes--Contracts Excepted. To the general rule that an act in violation of a statute or municipal ordinance forbidding it is void, there is the exception that when the statute or ordinance is for the purpose of raising revenue and does not make the act itself void, and the act is not malum in se nor detrimental to good morals.
2. BROKERS--Real Estate Agents--Failure to Pay License Tax--Effect on Contracts. A municipal ordinance, enacted for the declared purpose of raising revenue, provided that parties engaged as real estate agents should pay an annual license tax and that it should be unlawful for any person to conduct such business without having first paid the tax, and made the violation thereof a misdemeanor. An agent who had failed to pay the tax and secure a license brought suit to recover commissions on a sale made. The trial court held that such failure was no defense to the action. Held, not error.
Error from Oklahoma County Court; Sam Hooker, Judge.
Action by A. V. Snell, H. L. Paddock, and John Sherman, Jr., partners, against John R. Hughes. Judgment for plaintiffs, and defendant brings error. Affirmed.
DUNN, J.
¶1 This case presents error from the county court of Oklahoma county and is an action by the defendants in error, as partners in the real estate brokerage business conducted in Oklahoma City, against the plaintiff in error, John R. Hughes, to recover commission earned on a sale of certain real property. In the amended answer by the defendant filed in the said court it was alleged that the sale and the business out of which the same grew on the part of plaintiffs was prohibited and made unlawful by valid ordinances of the city of Oklahoma City, in that the said parties had failed to procure a license to permit them to carry on and engage in the business of real estate agents or brokers as required therein, and hence that the contract was unenforcible and void. Copy of the said ordinances was set out and the salient features thereof are as follows:
"Sec. 1. For the purpose of raising a revenue for said city there is hereby levied a license tax on each and every business hereinafter mentioned, within the corporate limits of Oklahoma City, Oklahoma * * * Real Estate agent, firm or broker * * * $ 15.00 per year * * *."
¶2 It is then provided, section 5, "that it shall be unlawful for any person, firm, or corporation by principal or agent to carry on, conduct, or maintain or follow any occupation or business," etc., "without having complied with all the provisions of this ordinance." It is then provided, section 6, that any person found guilty of violating any of the provisions shall on conviction be fined $ 25.00, etc. This defense was, on motion, stricken from the answer, and that it was available and a complete defense to plaintiff's cause of action is the only contention made by the defendant in this court.
¶3 It would be a hopeless task to endeavor to reconcile the opinions of the different appellate courts on this question, and we shall not undertake to do so. In our judgment the ordinance herein was merely a revenue measure and the penalties set forth therein are the only ones contemplated by it. It does not pretend to deny a recovery upon contracts made in violation of it, nor is the business in itself of such a character that it may be concluded that the ordinance was passed for the purpose of suppressing or rendering it less obnoxious. We will notice a few of the cases in which the doctrine we deem correct is discussed.
¶4 One of the best considered is that of Vermont Loan & Trust Co. v. Hoffman et al., 5 Idaho 376, 49 P. 314, 37 L.R.A. 509. Action was brought therein to recover on certain promissory notes which had been given to the appellant. The same defense was made therein as in the case at bar, and the court in the consideration thereof said:
"The first question that arises is this: Was the transaction void, or is the plaintiff precluded from recovering on said contract by reason of its failure to procure a license to do the business of loaning money? Sec. 1636, Rev. Stat., provides: 'A license must be procured immediately before the commencement of any business or occupation liable to a license tax from the tax collector of the county where the applicant desires to transact the same, which license authorizes the party obtaining the same in his town, city or particular locality in the county to transact the business described in such license * * *' Sec. 1644, Rev. Stat., requires 'persons, associations, or corporations engaged in the occupation of banking, loaning money at interest,' etc., to pay a license tax, the amount of such tax varying according to the classification enumerated in said section. Section 6983, Rev. Stat., is in the following language, to wit: 'Every person who commences or carries on any business, trade, or profession or calling for the transaction or carrying on of which a license is required by any law of this territory (state) without taking out or procuring the license prescribed by such law, is guilty of a misdemeanor.' The appellants contend that under the statutes, supra, the consideration for the notes and mortgage in question was illegal; that the respondent was prohibited from doing such business; that the contract of the parties was made in violation of law, and therefore void; that owing to the illegality of the consideration of said contract, the same having been made in violation of law, the court could grant no relief to the respondent. Counsel for appellants has spent much time in research, and has cited many authorities in support of his position. The general rule, as urged by appellants, that a contract founded on an act forbidden by a statute under a penalty is void, although it be not expressly declared to be so, is correct and well established by authority. But in applying the rule many courts have excepted from its operation one class of cases, viz., when the statutory prohibition is found in a statute enacted for the purpose of raising revenue or the regulation of traffic or business, when, unless it is manifestly the intention of the statute to make the contract void, the court will treat the contract as valid. Mr. Sutherland, in his admirable work on Statutory Construction, at sec. 336, in treating the question under consideration, very aptly says: 'When a statute is for revenue purposes, or is a regulation of a traffic or business, and not to prohibit it altogether, whether a contract which violates the statute shall be treated as wholly void will depend on the intention expressed in the particular statute. Unless the contrary intention is manifest the contract will be valid.' And in support of the rule Mr. Sutherland, in a footnote, cites many authorities among the following which support the text, as we have seen by a careful examination of the cases."
¶5 The court then cites a large number of authorities supporting the doctrine therein set out. It is to be noticed that the violation of the law in that case, as in the one at bar, was denounced as criminal and made a misdemeanor.
¶6 The Supreme Court of Maryland in the case of Coates v. Locust Point Co., 102 Md. 291, 5 Am. & Eng. Ann. Cases 895, 62 A. 625, held that in that state the case of Banks v. McCosker, 82 Md. 518, 34 A. 539, was conclusive on the case then before it, and said:
"In that case this court held that the failure of a hawker and peddler to take out the license required by the code did not affect the contract between the unlicensed peddler and the purchaser of goods from him. The statute furnished more reason for such a contention as that made by the appellee than the one applicable to real estate brokers does. Sec. 24 (formerly 27) of art. 56 provides that 'no hawker or peddler shall buy for sale out of the state, or buy to trade, barter, or sell, or offer to trade, barter, or sell within the state, any goods, wares, or merchandise until he shall have first taken out a license for that purpose.' The penalty prescribed by that statute for its violation is the imposition of a fine, and this court said: 'When the law declares the consequence of its violation, the contract can in no sense be regarded as illegal, unless the law itself, either by its manifest intent or in express terms, so declares it. The provisions of the code referred to neither directly nor indirectly refer to any consequences save the payment of a fine for a violation of the law, and the failure to pay such fine, so that it can only be regarded as a revenue measure, and does not affect the contract between an unlicensed peddler and the purchaser of goods from him.' The statute now under consideration is to be found in art. 4 of the Local Code, applicable to Baltimore City. Sec. 695 provides that 'any person, copartnership or firm applying for the same, and paying the sum of money herein provided, may obtain a license for carrying on the business of real estate broker in the city of Baltimore,' etc. Sec. 696 makes it a misdemeanor and imposes a fine for carrying on such business without first obtaining a license, but does not declare invalid a contract
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