Peck v. Ives

• Decision Date: 21 July 1972
• Docket Number: No. 9384,9384
• Citation: 84 N.M. 62,499 P.2d 684,1972 NMSC 53
• Parties: James L. PECK, d/b/a James L. Peck Construction Company, Plaintiff- Appellant, v. Burl IVES, Defendant-Appellee.
• Court: New Mexico Supreme Court

Page 684

499 P.2d 684

84 N.M. 62

James L. PECK, d/b/a James L. Peck Construction Company Plaintiff- Appellant, v. Burl IVES, Defendant-Appellee.

No. 9384.

Supreme Court of New Mexico.

July 21, 1972.

[84 NM 62] McDermott, Connelly & Stevens, Santa Fe, for plaintiff-appellant.

Bigbee, Byrd, Carpenter & Crout, Paul D. Gerber, Santa Fe, for defendant-appellee.

OPINION

STEPHENSON, Justice.

This is an appeal from a summary judgment in an action to foreclose a mechanic's lien. Appellant-contractor ('appellant') and appellee-owner ('appellee') orally agreed for appellant to construct a house for appellee. After the work was completed appellant, alleging that $19,683.65 was left unpaid under the agreement, filed suit seeking foreclosure on a mechanic's lien in that amount against the property. After appellee had answered and counterclaimed (alleging various deficiencies in the structure) and depositions had been taken, appellee filed a motion for summary judgment alleging that under the provisions of the New Mexico Construction Industries Licensing Act appellant was not duly licensed and was barred from bringing the action. The district court granted the motion and dismissed appellant's complaint with prejudice. We reverse.

The oral agreement between the parties can best be described as being 'loose.' Basically, the parties agreed that appellant would build a residence which would cost the appellee the appellant's cost plus eighteen percent. No contract was ever formalized. No final set of plans was ever agreed upon. There was a set of blue-prints which formed the basis of the design of the structure, but these were not closely adhered to. Instead, appellee, wishing to 'play it by ear,' made periodic alterations to the plans. Neither was there ever any firm price agreed upon. Appellant billed, and was paid, on a monthly basis. Appellant contends that under the agreement appellant would have been justified in ceasing work if appellee failed to make any monthly payment on time.

The parties made the oral agreement on October 9, 1969. At that time no price was agreed upon, but a cost of $40,000.00 to $45,000.00 was discussed. On November 1, 1969, appellant prepared a cost estimate of approximately $60,000.00. Appellee rejected this estimate. The ultimate cost of the house was $90,526.42. The most ever billed by appellant during any one month was $18,671.77.

The relevance of these negotiations and their accompanying figures becomes apparent in light appellant's contractor's license, under which appellant was licensed to perform an aggregate dollar-amount of contracts, at any one time, up to $50,000.00. The basis of the summary judgment was that because the ultimate cost of the residence exceeded $50,000.00, appellant was not licensed to enter into a contract to build it and was thus barred from bringing suit.

The New Mexico Construction Industries Licensing Act ('the Act') §§ 67--35--1 through 67--35--63, N.M.S.A.1953 (Pocket Supp.1971) provides a comprehensive method for the licensing and control of contractors in order to protect the public from either irresponsible or incompetent contractors.

Several sections of the Act are of special significance to the facts of this case. For example, the Act provides that no person shall engage in the business of a contractor unless the Construction Industries Commission ('the Commission') has issued him a license which covers the type of work to be undertaken. § 67--35--15, subd. A.

The Act also provides:

'No license shall be issued by the commission to any person unless the commission is satisfied that he is or has in his employ a qualifying party, qualified for the classification for which application is made, and who has satisfied the requirements of subsection B of this section.' § 67--35--17, subd. A.

And the first requirement set out under subsection B of § 67--35--17 is the one involved in this cause: 'An applicant for a license shall: (1) demonstrate financial responsibility as provided in the Construction Industries Licensing Act * * *.' The financial responsibility provisions of the Licensing Act are contained principally in two sections. Section 67--35--56 directs the Commission to promulgate regulations setting forth standards for determination of financial responsibility and provides that 'No applicant for a contractor's license or for the renewal thereof shall be issued a license until the commission determines that he is financially responsible to perform a specified aggregate dollar-amount of contracts at any one time.' § 67--35--56, subd. C. Section 67--35--57 provides an alternative method of establishing financial responsibility through the furnishing of a bond or cash collateral.

The Act contains several sanctions for the violation of its provisions. Under one sanction the Commission may either revoke or suspend a license for various causes set out in § 67--35--26. Under another, it may enforce the provisions of the Act in district court, 'by injunction, mandamus or any proper legal proceeding.' § 67--35--60. Section 67--35--59 provides that a person who violates any of the provisions of the Act is guilty of a petty misdemeanor. Finally, the most drastic sanction, and the one at issue in this appeal is provided for by § 67--35--33. It provides:

'A. No contractor shall act as agent or bring or maintain any action in any court of the state for the collection of compensation for the performance of any act for which a license is required by the Construction Industries Licensing Act (67--35--1 to 67--35--63) without alleging and proving that such contractor was a duly licensed contractor at the time the alleged cause of action arose.

'B. Any contractor operating without a license as required by the Construction Industries Licensing Act shall have no right to file or claim any mechanic's lien as now provided by law.'

The bar-to-suit provision of this statute formed the basis of the summary judgment in this action.

Appellant's attack upon the summary judgment is many-faceted. He first contends that he was always duly licensed because under the provisions of § 67--35--56 his aggregate dollar-amount of contracts at any one time never exceeded his limit of $50,000.00, since he billed his work on a monthly basis and the most any one of these bills amounted to was approximately $19,000.00.

Secondly, appellant contends that the bar-to-suit was meant to apply only to those contractors who have no license whatsoever, and that even if he did exceed his limitation he should be subject to one of the other three sanctions since he was licensed for an aggregate amount of $50,000.00. Appellant's third point is similar to his second, in that he maintains that simply because a contractor exceeds his financial limitation this does not take him out of the 'duly licensed' category or constitute 'operating without a license.'

In his fourth point appellant urges that this court adopt the doctrine of 'substantial compliance' as applied to the Licensing Act.

In his fifth point appellant contends that even if he violated the Act the contract was not void. In his last point he argues that certain provisions of the Licensing Act are unconstitutional because they act to deprive the appellant of his property without due process of law.

Appellant's first point places special emphasis on the phrase 'at any one time' as it exists in § 67--35--56. He argues that when this statute is applied to the circumstances of this agreement, the aggregate dollar amount 'at any one time' was that which was billed during any one month, and that since this amount never exceeded $50,000.00 he was always duly licensed. The agreement, maintains appellant, was--in practice at least--a series of unilateral contracts on a month-to-month basis.

Appellee, on the other hand, argues that appellant was not working on a monthly basis; he was hired to build an entire house and was simply paid on a monthly basis. Furthermore, contends appellee, the Licensing Act--as verified by the Commission's regulations--is concerned with total cost of any one construction project and not with the amount of...