Lakeview Investments, Inc. v. Alamogordo Lake Village, Inc.

• Decision Date: 05 April 1974
• Docket Number: No. 9793,9793
• Citation: 520 P.2d 1096,1974 NMSC 27,86 N.M. 151
• Parties: LAKEVIEW INVESTMENTS, INC., Plaintiff-Appellant, v. ALAMOGORDO LAKE VILLAGE, INC., Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 1096

520 P.2d 1096

86 N.M. 151

LAKEVIEW INVESTMENTS, INC., Plaintiff-Appellant, v. ALAMOGORDO LAKE VILLAGE, INC., Defendant-Appellee.

No. 9793.

Supreme Court of New Mexico.

April 5, 1974.

Keleher & McLeod, Ranne B. Miller, Albuquerque, for plaintiff-appellant.

Branch, Dickson, Dubois & Wilson, Frank P. Dickson, Jr., Albuquerque, for defendant-appellee.

OPINION

MONTOYA, Justice.

This appeal is brought from the granting of a motion to dismiss for failure to state a cause of action by plaintiff-appellant Lakeview Investments, Inc. (appellant). The facts are as follows. Appellant and defendant-appellee Alamogordo Lake Village, Inc. (appellee) entered into a written agreement dated April 4, 1972. Essentially, the agreement provided that appellant would serve appellee as exclusive sales representative of subdivided land owned by appellee in DeBaca County, New Mexico. According to the agreement, appellee was to place the land in a marketable condition and appellee agreed to pay appellant's monthly operating expenses in an amount not to exceed $10,000 per month. On June 21, 1972, appellant became licensed for the first time as a real estate broker under the laws of the State of New Mexico. After receiving payments through the month of August 1972, appellant complained that appellee repudiated and otherwise breached the agreement subsequent to June 21, 1972, and specifically on or about September 1, 1972, by refusing to pay the monthly operating expenses for the month of September 1972, and all subsequent months. Further, that the appellee failed to pay commissions on sales of property which were made after June 21, 1972.

After appellee filed a motion to dismiss on the ground that the complaint failed to state a claim upon which relief may be granted and filed a motion for summary judgment, the court granted appellee's motion to dismiss. In its order the court concluded that the appellant's complaint failed to state a cause of action 'by virtue of the fact that the plaintiff (appellant) was not a licensed real estate broker at the time the contract * * * was entered into on April 4, 1972 * * *' as required by § 67--24--33, N.M.S.A., 1953 Comp. It is this conclusion that is the subject of this appeal.

The narrow issue involved in this appeal is when, within the factual situation presented and pursuant to § 67--24--33, supra, does a cause of action arise. Section 67--24--33, supra, provides:

'No action for the collection of commission or compensation earned by any person as a real estate broker or salesman required to be licensed under the provisions of this act (67--24--19 to 67--24--35) shall be maintained in the courts of the state unless such person was a duly licensed broker or salesman at the time the alleged cause of action arose. In any event suit against a member of the public as distinguished from any person licensed under this act shall be maintained only in the name of the broker.' (Emphasis added.)

Simply stated, the trial court held that appellant's cause of action arose at the time the parties entered into their contract. We disagree with that conclusion for the reasons hereafter given.

The issue presented by this case is one of first impression in New Mexico. As such, it is necessary to turn to other jurisdictions for authority to turn to other jurisdictions of this problem. In Schreibman v. L. I. Combs & Sons, Inc., 337 F.2d 410 (7th Cir. 1964), cert. denied 380 U.S. 911, 85 S.Ct. 896, 13 L.Ed.2d 797, the United States Court of Appeals had to decide whether a real estate broker licensed in New York was precluded from recovering a commission in Indiana for services rendered in Indiana under a listing contract there, because he had no reciprocal Indiana license when the listing contract was made but had obtained an Indiana license by the time the contract of sale of the property was entered into. The trial court, without a jury, found for the defendant at the close of plaintiff's case, concluded that plaintiff had acted as a real estate broker without an Indiana license and was guilty of violating the criminal provision, § 63--2407 of the Indiana Real Estate Licensing Act, IC 1971, 25--34--1--8 (similar to § 67--24--19, N.M.S.A., 1953 Comp. amended 1973 Pocket Supp.), which violation precluded recovery of his commission under § 63--2408 of that Act, IC 1971, 25--34--1--9 (similar to § 67--24--33, supra). In reversing the trial court, the Court of Appeals held that the fact that the plaintiff was not licensed when the listing contract was entered into does not preclude recovery under the applicable Indiana statutes. The court stated (337 F.2d at 412--413):

'The purpose of the Indiana Real Estate Licensing Act is to protect its citizens from possible loss at the hands of incompetent or unscrupulous persons acting as brokers. A licensing commission is established to administer tests to determine whether applicants are qualified to act as brokers and to issue licenses to those found to be qualified. Provision is also made for issuance of licenses without examination to licensed non-resident brokers at the discretion of the commission. Section 63--2408 here in question provides that one who seeks to recover a commission must allege and prove that he was a licensed broker 'at the time the cause of action arose.' In order to effectuate the purpose of the Act it has been provided that only licensed persons may perform any acts as real estate brokers and criminal penalties are imposed, under § 63--2407, upon those who violate this provision.

'The district court's conclusion that acts in violation of § 63--2407 preclude recovery of any commission in connection with the illegal acts renders the phrase 'at the time the cause of action arose' in § 63--2408 meaningless, for under this interpretation if a broker has engaged in any of the acts enumerated in the statute prior to obtaining a license, the entire transaction is tainted with illegality and he will not be permitted to recover, no matter when his cause of action arose. This demonstrated by the fact that the district court decided the case below without making any finding as to when plaintiff's cause of action arose. * *

'We have found no precedent in Indiana or in any other jurisdiction for such an interpretation of the word 'arose,' nor has any been cited to us in the briefs, with the exception of the Hunter case (Hunter v. Cunning, 176 Or. 250, 154 P.2d 562 (1944), rehearing denied, 176 Or. 250, 157 P.2d 510 (1945)), and Irons Investment Co. v. Richardson, 184 Wash. 118, 50 P.2d 42 (1935), in both of which the interpretation followed by the district court, in the case before us, was dictum, since in Hunter and in Richardson the court found that the broker was not licensed until after the date on which the last act necessary to the arising or accrual of his cause of action had taken place.

"Arose,' in its usual and ordinary meaning, denotes past completed action, while the usual and ordinary means of expressing past continuing action would be 'was arising.' In framing § 63--2408 the Indiana legislature chose the word 'arose,' and in the absence of some established technical meaning of the term in Indiana law, it should be read by the courts in its ordinary sense, unless the clear intent of the statute requires otherwise.

'* * *.

'Our view of § 63--2408 is expressed, with respect to a similar Ohio statute, in Pierce v. Isabel, 70 Ohio App. 385, 40 N.E.2d 481, 46 N.E.2d 292 (1941) where the issue was whether the plaintiff broker was precluded from recovering a commission because his broker's license had lapsed and had not been renewed when the listing contract was entered into, although he secured a license before the parties agreed to a sale. The Ohio court held that since the cause of action did not arise until the making of the agreement to sell, which occurred after the plaintiff received his license, the plaintiff could recover.

'* * *.

'Our interpretation of § 63--2408 is consistent with the purpose of the Indiana act, to protect the public against incompetent and otherwise unqualified brokers. The means selected by the legislature to protect the public in this regard is to penalize persons who act as brokers without having been certified as qualified. The district court's interpretation renders it possible for one who has employed a competent broker and benefited from his services to repudiate the listing contract and deprive the broker of his commission if the latter performed any act, pursuant to the...