Kopf v. Milam

• Decision Date: 12 December 1963
• Citation: 60 Cal.2d 600,35 Cal.Rptr. 614,387 P.2d 390
• Parties: , 387 P.2d 390 Raymond Leroy KOPF, Cross-Complainant and Appellant, v. H. O. MILAM et al., Cross-Defendants and Respondents. S. F. 21503.
• Court: California Supreme Court

Page 614

35 Cal.Rptr. 614

60 Cal.2d 600, 387 P.2d 390

Raymond Leroy KOPF, Cross-Complainant and Appellant, v. H. O. MILAM et al., Cross-Defendants and Respondents.

S. F. 21503.

Supreme Court of California, In Bank.

Dec. 12, 1963.

Rehearing Denied Jan. 7, 1964.

Howard B. Crittenden, Jr., San Francisco, for cross-complainant and appellant.

Elliot W. Seymour, San Francisco, for cross-defendants and respondents.

TRAYNOR, Justice.

In this action for a real estate commission, cross-complainant, hereinafter referred to as plaintiff, appeals from a judgment for cross-defendants, hereinafter referred to as defendants. The appeal on the clerk's transcript and certain exhibits is treated as an appeal on the judgment roll (White v. Jones, 136 Cal.App.2d 567, 569, 288 P.2d 913), and the sufficiency of the evidence to support the findings is therefore not open to question.

Plaintiff sought to recover his commission on the ground that he had secured a purchaser after defendants listed their property with him doing business as Wm. E. Doud & Co. The trial court found that Wm. E. Doud & Co. was a copartnership consisting of plaintiff and one Hoffman. Although both plaintiff and Hoffman were licensed real estate brokers, the trial court found that they had not secured a separate partnership license pursuant to the Real Estate Law. (Bus. & Prof.Code, §§ 10000-10221.) It also made findings against plaintiff on the merits.

SECTION 10130 OF THE BUSINESS AND PROFESSIONS CODE¹ prohibits any person from acting as a real estate broker without a license. Section 10136 ² provides that no person may bring or maintain an action for a broker's commission without establishing that he was licensed when the cause of action arose. Section 10006 ³ provides that 'person' includes a copartnership.

Defendants contend that since a copartnership is a person and since all persons must be licensed to act as brokers, the partnership must be licensed as such to permit the partners to act as brokers on its behalf. Plaintiff concedes that a partnership must be licensed, but contends that it may become licensed either by securing a partnership license or by securing licenses for all of its partners. We agree with plaintiff's contention.

When each member of a real estate brokerage partnership is a licensed broker no purpose would be served by requiring an additional license. Thus, whether an applicant for a real estate broker's license is an individual or a partnership, the issuance of a license depends on whether the applicant has the following three qualifications: good character and reputation in the community, ⁴ specified experience as a real estate salesman or education equivalent thereto, ⁵ and the basic skills necessary to the transaction of a brokerage business. ⁶ When each member of a partnership is licensed as a broker, nothing more is required to qualify the firm for a license. It was for this reason that in Heinfelt v. Arth, 135 Cal.App. 445, 27 P.2d 420, in construing the statute that formed the basis of the present code provisions, the court held that to require a partnership license in addition to individual licenses, when all the members of the partnership were licensed, 'would accomplish nothing useful in carrying out the purpose of the act, and would, in fact, call for merely a double license for persons whose qualifications have already been favorably passed upon.' (135 Cal.App. at p. 449, 27 P.2d at p. 422.) ⁷

The holding of the Heinfelt case does not render the provisions of the Real Estate Law governing partnership licenses superfluous. Those provisions were designed, not for firms in which all of the members are licensed brokers, but for firms in which some of the members will not act as brokers. Thus, the only regulation in the California Administrative Code that specifies a procedure for obtaining a partnership license explicitly applies only to partnerships in which not all of the members act as brokers. (Cal.Admin.Code, tit. 10, § 2743.) Furthermore, section 10158 of the Real Estate Law assumes that the partnership licensed is one in which some of the members will not act as brokers, ⁸ and this assumption also underlies the difference in the scope of sections 10152 and 10153. The former empowers the Real Estate Commissioner to require proof of the good character and reputation of every member of the partnership, where-as the latter provides for an examination to test the skill of only 'those (partners) through whom (the partnership) proposes to act' as a broker. Thus a partnership license is required so that the licensing authorities may inquire into the integrity of a firm, some of whose members are not engaged in brokerage activities.

Our conclusion that the Real Estate Law does not prohibit individually licensed borkers from acting in partnership without a separate license finds added support from a comparison of the licensing requirements of the Business and Professions Code governing real estate brokers with those governing contractors. The Legislature used phraseology in sections 10130 and 10136 virtually identical with that used in sections 7028 and 7031, which respectively forbid any unlicensed 'person' (which under section 7025 includes an individual, a firm, copartnership, corporation, association, or other organization, or any combination of any thereof) to engage in the business or to act in the capacity of a contractor, or to bring or maintain any action for compensation based on the transaction of such business. These provisions were apparently not designed to prevent individually licensed contractors from acting as a partnership, for the Legislature expressly provided in section 7029 that individually licensed contractors may not join forces without obtaining an additional joint license. If sections 7028 and 7031 are construed as prohibiting such action then section 7029 is redundant. Since it appears that the Legislature did not regard sections 7028 and 7031 as prohibiting individually licensed contractors from acting jointly and since those sections correspond so closely to sections 10130 and 10136, it is reasonable to conclude that the Legislature would have adopted a section comparable to section 7029 had it meant to prohibit individually licensed brokers from acting as a partnership. We hold that plaintiff may maintain this action, and we therefore reach the merits of his claim.

Defendants appointed plaintiff and his partner exclusive agents to sell certain real property owned by defendants. The partners found two purchasers, and a deposit receipt agreement embodying a contract of sale prepared by plaintiff's partner was signed by defendants and by the purchasers. This agreement provided: 'The total purchase price is Eighty Seven Thousand ($87.000) Dollars. The balance is to be paid within _ _ days from date of acceptance hereof by Seller as follows: Subject to Buyers assuming an existing loan of approximately Fifty Eight Thousand ($58.000) Dollars secured by first D/T and bearing 6% (six) per cent interest * * *.'

The principal of the existing loan was in fact approximately $54,000 and was evidenced by a note held by the Bank of California, which provided, 'In case any change is made in the title to all or any part of the property described in the deed of trust securing this note, the whole of said principal shall forthwith become due and payable at the election of the holder of this note.' The purchasers made a cash down payment into escrow, but for reasons not specified in the record, the transaction proceeded no further. Defendants elected not to keep any of the purchasers' money, and plaintiff received no commission.

The trial court found that the clause 'subject to Buyers assuming an existing loan,' was a condition made for the defendants' benefit; that the purchasers never undertook to assume the loan and were never ready, willing, and able to assume it or to perform the other...