Matchett v. Gould

• Decision Date: 28 March 1955
• Court: California Court of Appeals Court of Appeals
• Parties: V. O. MATCHETT, Plaintiff and Appellant, v. Jerry GOULD and Henry Matthews, doing business as firm style and fictitious name of G & M Brick Co., Jerry Gould and Henry Matthews, individually, G & M Brick Co. and association composed of Jerry Gould and Henry Matthews, Defendants and Respondents. Civ. 20491.

Page 524

281 P.2d 524

131 Cal.App.2d 821

V. O. MATCHETT, Plaintiff and Appellant, v. Jerry GOULD and Henry Matthews, doing business as firm style and fictitious name of G & M Brick Co., Jerry Gould and Henry Matthews, individually, G & M Brick Co. and association composed of Jerry Gould and Henry Matthews, Defendants and Respondents.

Civ. 20491.

District Court of Appeal, Second District, Division 3, California.

March 28, 1955.

Hearing Denied May 25, 1955.

Benjamin P. Riskin, Los Angeles, for appellant.

Louis Ballenger, Glendale, for respondents.

ASHBURN, Justice pro tem.

This question is determinative of the instant appeal: Did the trial judge correctly rule that plaintiff's failure to procure a contractor's license pursuant to Business & Professions Code, §§ 7026, 7028, 7029, precludes his recovery for work and materials furnished to another contractor under an agreement with that other contractor, who was also unlicensed?

Plaintiff sues as assignee of Frank B. Gotham who conducted business under the name Crane Service Co. (herein referred to as Crane). Defendants Jerry Gould and Henry Matthews operate under the name G & M Brick Co. (later designated herein as G & M). Crane was in 'the equipment and demolition equipment rental business' and G & M in the 'business of buying and selling salvage brick.' The Glendale Unified School District was the owner of two brick buildings which it desired to raze. Bids for demolition and removal of same were invited. The representatives of Crane and G & M conferred together and arrived at an oral agreement that Crane should make a bid of $3,349.99, said sum to be a payment to the School District for all salvage; this amount apparently represented the excess of the estimated value of all salvageable material over the cost of recovering the same and disposing of materials which could not be salvaged. Under their agreement G & M were to furnish the $3,349.99 for payment to the District. The bid was made and accepted, whereupon Crane entered into a written contract with the District and also paid for and posted a Public Works Bond and a Faithful Performance Bond. G & M supplied the $3,349.99 as agreed. Crane thus became the contractor so far as the School District was concerned. But Crane and G & M rearranged the deal between themselves. All salvageable bricks and other materials were to belong to G & M. They hired Crane Service Co. cranes 'by the hour to take down the brick and load them out on the G & M trucks for transportation to G & M yard.' These were 'manned and maintained' cranes, for whose services Crane was to be paid by G & M the reasonable value. G & M were to supply their own labor to strip the building of other salvageable materials and haul them away; G & M to own all salvage and 'receive the revenue therefrom in its entirety.' It was also agreed that Crane would remove and dispose of all concrete and rough grade the site, for which G & M were to pay Crane $5,500. The job was completed. Each of the parties 'worked on their respective portions of the job independently, and * * * they did not share control.' The reasonable value of the hire of the crane was $817.65 of which Crane received $200 from G & M. Crane also furnished additional labor and services, 'which included dumping fees and cost of replacing personal property removed in the amount of $680.67.' Neither Crane nor G & M had a contractor's license to do the work. Defendant G & M refused to pay the balance of $617.65 for crane hire, or any part of the $680.67 or the $5,500, relying upon the fact that Crane had no contractor's license. This position was upheld by the trial court, judgment went for defendants, and hence this appeal.

Plaintiff sued upon the contract, seeking recovery according to its terms. The trial judge found all the facts in his favor as alleged, but denied any recovery. Respondents' brief says: 'There is no question that the building in question was demolished and the salvage was carried away * * *'; it also appears that it was sold by G & M. Defendants' counsel argues that § 7031, Bus. § Prof.Code forbids recovery. This poses a serious question for plaintiff does not proceed in quantum meruit nor directly invoke the doctrine of unjust enrichment. His right to recover depends, we think, upon whether defendant was within the class of persons for whose protection the statute was enacted. §§ 7026, 7028, 7029 and 7031 are set out in the footnote. ¹

Appellant's counsel relies largely upon cases involving the rights of a partner or joint venturer to enforce a disgorgement of a share of profit or other property derived from activities conducted without a requisite license and withheld by another partner or venturer. Referring to such a situation the opinion in Norwood v. Judd, 93 Cal.App.2d 276, 286, 209 P.2d 24, 30, says: 'It must be remembered that these licensing statutes are passed primarily for the protection and safety of the public. They are not passed for the benefit of a greedy partner who seeks to keep for himself all of the fruits of the partnership enterprise to the exclusion of another partner entitled to share therein. Where the illegal transaction has been terminated, public policy is not protected or served by denying one partner relief against the other.'

Fraenkel v. Bank of America, 40 Cal.2d 845, 848, 256 P.2d 569, 571, states the purpose of the legislation more broadly: 'That law was enacted for the safety and protection of the public against imposition by persons inexperienced in contracting work, and for the prevention of fraudulent acts by contractors resulting in loss to subcontractors, materialmen, employees, and owners of structures. Loving & Evans v. Blick, 33 Cal.2d 603, 609, 204 P.2d 23; Franklin v. Nat. C. Goldstone Agency, 33 Cal.2d 628, 632, 204 P.2d 37.' Moreover, "The invasions it makes on constitutional rights are not to be carried farther than is necessary to protect the public from the evils intended to be removed, unless the language compels such meaning and such effect is reasonably calculated to secure the legitimate objects for which the power is exercised." Joseph v. Drew, 36 Cal.2d 575, 581, 225 P.2d 504, 508. Indeed, the statute is to be strictly construed. Oddo v. Hedde, 101 Cal.App.2d 375, 383, 225 P.2d 929.

Cases which uphold the right of one partner to recover his share of moneys earned in a venture conducted without the required license are: Denning v. Taber, 70 Cal.App.2d 253, 257, 160 P.2d 900; Norwood v. Judd, 93 Cal.App.2d 276, 286, 209 P.2d 24; Galich v. Brkich, 103 Cal.App.2d 187, 191, 229 P.2d 89; Wold v. Luigi Consentino & Sons, 109 Cal.App.2d 854, 857-885, 241 P.2d 1032; Wilson v. Stearns, 123 Cal.App.2d 472, 481, 267 P.2d 59. In each of them, except the Wold case, a hearing was denied by the Supreme Court; no application was made in Wold. The Denning and Norwood cases proceed upon the basis that the illegality has spent its force when the point of dissolution and accounting is reached and that enforcement of a promise, express or implied, to divide the partnership assets does not require the court to lend its aid to enforcing the illegal feature of the partnership. The Galich decision marks a departure from the concept that there must be an express or implied promise to divide. That was an action for dissolution of a partnership or joint venture. In rejecting the claim that the relation between the parties was completely illegal because of absence of a license, the court, 103 Cal.App.2d at page 191, 229 P.2d at page 91, quoted from the Norwood case and added: 'The contract in question was not per se contrary to any statute; public welfare and safety were not threatened, and public policy would not be protected or served by denying one partner relief against the other. Appellants' endeavor to distinguish the Norwood case from that here involved is not persuasive, for, while the facts are not identical, the principle announced is clearly applicable to the instant controversy.'

Wold v. Luigi Consentino & Sons, supra, 109 Cal.App.2d 854, 241 P.2d 1032, dealt with a joint venture whose weakness lay in the fact that, although each individual was licensed, there was no license to act jointly as required by § 7029, Bus. & Prof.Code. 109 Cal.App.2d at page 857, 241 P.2d at page 1035: 'Remembering that each of the joint venturers was duly licensed as a contractor and that only the license to act jointly was lacking, that the contract which the joint venturers were to perform was completed and paid for by the owners, that the defendant partnership received into its possession, and still retains, the profits of the venture, and that this is an action, not against the owners for whose protection in the main part the statute requiring the license was enacted, and that because the joint venturers were licensed so as to bring to the performance of the contract the skill, knowledge and responsibility which in main part the licensing statute was enacted to assure to those with whom they dealt, we think that the decision must be controlled by application of the rule laid down in Galich v. Brkich, 103 Cal.App.2d 187, 229 P.2d 89, which was decided after the trial court's decision in this case.'

Respondent argues that these cases are not controlling because no joint venture was alleged or proved at bar. Certainly there was no such allegation or finding; at least not in specific terms. And there is no fund to be divided. But defendants received and disposed of all salvage and kept all profits derived therefrom. They have also had materials and labor worth $6,683.57 furnished by plaintiff for their benefit and for which they refuse to pay. We apprehend that the presence of a partnership or joint venture in the cases above reviewed is not the determinative feature; it merely affords the basis for application of the equitable concept that one person in possession of property belonging to himself and another cannot deny the claim of that...