Springer v. Rosauer

• Decision Date: 18 March 1982
• Docket Number: No. 4095-III-0,4095-III-0
• Citation: 31 Wn.App. 418,641 P.2d 1216
• Parties: Ronald E. SPRINGER and Jaine Springer, husband and wife, Appellants, v. J. M. ROSAUER and Jessie Rosauer, husband and wife; and Rosauer's Supermarkets, Inc., Respondents.
• Court: Washington Court of Appeals

Page 418

31 Wn.App. 418

641 P.2d 1216

Ronald E. SPRINGER and Jaine Springer, husband and wife, Appellants, v. J. M. ROSAUER and Jessie Rosauer, husband and wife; and Rosauer's Supermarkets, Inc., Respondents.

No. 4095-III-0.

Court of Appeals of Washington, Division 3, Panel One.

March 18, 1982.

Michael L. Loft, Layman, Mullin & Etter, Spokane, for appellants.

Edward Parry, Parry & Esposito, Spokane, for respondents.

GREEN, Judge.

Plaintiffs, Ronald Springer and his wife, brought this action against defendants, J. M. Rosauer, his wife, and Rosauer's Supermarkets, Inc., to recover (1) compensation for finding a purchaser for the stock of Rosauer's Supermarkets, and (2) damages for outrageous conduct. Defendants moved for judgment on the pleadings and dismissal for failure to state a claim upon which relief could be granted. CR 12(b)(6). The trial court dismissed the complaint and the Springers appeal.

The primary issue presented is whether Mr. Springer's failure to allege he was licensed under the real estate brokers' statute, RCW 18.85, operates to bar his cause of action for compensation. If this statute is a bar to recovery, is Mr. Springer, nevertheless, entitled to receive compensation upon equitable grounds? The remaining issue concerns his right, if any, to damages for the tort of outrage.

A motion to dismiss pursuant to CR 12(b)(6) questions only the legal sufficiency of the allegations in the pleadings. Contreras v. Crown Zellerbach Corp., 88 Wash.2d 735, 742, 565 P.2d 1173 (1977). Therefore, the allegations of the complaint must be accepted and a dismissal is appropriate only if it appears beyond a reasonable doubt there is no set of facts, consistent with the complaint, which would entitle plaintiffs to relief. Corrigal v. Ball & Dodd Funeral Home, Inc., 89 Wash.2d 959, 961, 577 P.2d 580 (1978); Brown v. MacPherson's, Inc., 86 Wash.2d 293, 297, 545 P.2d 13 (1975); Christensen v. Swedish Hospital, 59 Wash.2d 545, 548-49, 368 P.2d 897 (1962). The complaint alleged:

V.

J. M. Rosauer requested plaintiff, Ronald E. Springer to perform distinct services for his benefit as principal and controlling stockholder of Rosauers Supermarkets, Inc., on behalf of said company as follows:

1. To become president and chief executive officer of defendant Rosauers Supermarkets, Inc., for which Springer would be paid a salary of $60,000 per year, with no provisions for retirement, profit sharing, pension or tenure.

2. To use plaintiff's contacts in the investment community to find a purchaser for the stock of said Rosauers Supermarkets, Inc., and for plaintiff to agree with said prospective purchasers that he would remain as part of management after the sale of stock.

VI.

It was implied by defendants and understood by the parties that the plaintiff would be compensated for finding a purchaser by payment of a reasonable fee or by plaintiff being given a share of ownership in defendant corporation equivalent to the value of a reasonable fee.

The complaint also alleged that, in addition to performing his duties as president, he found purchasers for all of the stock of the corporation and on July 13, 1976, presented Mr. Rosauer with a bona fide, firm offer of purchase from financially strong persons who were ready, willing and able to purchase the stock for a specified price. It is also alleged the prospective purchasers were willing to engage in further negotiations which might improve the offer. After this offer was presented, Mr. Rosauer, without warning or discussion, notified Mr. Springer he was terminated as president of Rosauer's Supermarkets, Inc.; he would not accept the offer or negotiate with the purchasers; and the company and stock were not for sale.

Initially, Mr. Springer contends the court erred in ruling that his action was barred by the real estate brokers' statute, RCW 18.85 et seq., because he failed to allege he was a duly licensed real estate broker.

RCW 18.85.100 provides:

No suit or action shall be brought for the collection of compensation as a real estate broker ... without alleging and proving that the plaintiff was a duly licensed real estate broker, ... prior to the time of offering to perform any such act or service or procuring any promise or contract for the payment of compensation for any such contemplated act or service.

It is a gross misdemeanor to act as a real estate broker without a license. RCW 18.85.340. Since this act is penal in nature and in derogation of the common law, it must be strictly construed. Grammer v. Skagit Valley Lbr. Co., 162 Wash. 677, 299 P. 376 (1931); Main v. Taggares, 8 Wash.App. 6, 504 P.2d 309, 74 A.L.R.3d 630 (1972). The purpose of the act is to protect the public from fraud and misrepresentation. Schmitt v. Coad, 24 Wash.App 661, 665, 604 P.2d 507 (1979), rev. denied 93 Wash.2d 1016 (1980).

The earlier version of RCW 18.85.010, in effect at the time of the alleged transaction, stated:

(1) "Real estate broker," or "broker," means a ... person, acting independently, who for ... compensation engages in the ... sale or negotiation therefor, of ... business opportunities or interest therein, belonging to others ...

(5) "Business opportunity" shall mean and include business, business opportunity and good will of an existing business or any one or combination thereof; ...

A person authorized to find a buyer for all of the stock of a corporation for compensation has been held to be a real estate business opportunity broker within the meaning of this statute. Schmitt v. Coad, supra at 665, 604 P.2d 507. It necessarily follows that Mr. Springer's failure to allege he was a licensed real estate broker is a bar to his claim for compensation under RCW 18.85.100.

Notwithstanding, Mr. Springer contends that, since he was involved in an isolated transaction, the real estate brokers' act does not apply. We disagree. In Marble v. Clein, 55 Wash.2d 315, 320, 347 P.2d 830 (1959), the court, albeit in dicta, distinguished the securities act, RCW 21.04, from the real estate brokers' statute, with respect to isolated transactions, stating:

(The real-estate brokers' licensing act) was held to disallow suits for collection of commissions where no license had been obtained even in the case of an occasional dealer.... It defines a real-estate broker as one who "engages in" real-estate dealings, as opposed to the phrase "engaging in the business" in the (security act). The former phrase is far more susceptible of application to a person who has engaged in a single transaction. Furthermore, RCW 18.85.100 specifically provides:

"No suit or action shall be brought for the collection of compensation as a real estate broker ... without alleging and proving that the plaintiff was a duly licensed real estate broker ... at the time the alleged cause of action arose."

A comparable provision is absent in (the security act).

We find no authority in the decisions interpreting the real-estate brokers' licensing act, since that act specifically applies to those engaged in isolated transactions.

(Italics ours.) The interpretation of the real estate brokers' act expressed in this decision was approved in Schmitt v. Coad, supra. See also Kilthau v. Covelli, 17 Wash.App. 460, 563 P.2d 1305, rev. denied, 89 Wash.2d 1010 (1977). Consequently, we conclude the real estate brokers' act does apply to isolated transactions.

Further, Mr. Springer contends his activity is exempt under the former RCW 18.85.110 (Laws of 1972, 1st ex. sess., ch. 139, § 10):

This chapter shall not apply to (1) any person who purchases property and/or a business opportunity for his own account, or who, as the owner or part owner of property, and/or a business opportunity, in any way disposes of the same; ...

He argues he is exempt under this section for two reasons. First, he was one of the persons in the group of prospective purchasers. This reason fails because the complaint does not allege he was a purchaser or member of the purchasing group.

Second, Mr. Springer contends that since he was an employee ¹ of Rosauer's, the owner of the property, at the time he was seeking a purchaser for the stock, he is within the exemption. As the trial judge noted, Mr. Springer alleged two distinct responsibilities for two distinct compensations: He was president and chief executive officer of Rosauer's Supermarkets, Inc., with an annual salary of $60,000; and he was requested to find a purchaser for the stock of Rosauer's Supermarkets, Inc., for alleged additional compensation. In Kilthau v. Covelli, supra, Covelli not only found wholesale buyers for Kilthau's corn, but also helped with the picking, hauling and delivery of the corn. This court allowed Covelli to recover the reasonable value of his services for hauling, picking and delivering, but denied recovery of a commission for finding a buyer because he was not licensed as required by statute, Kilthau v. Covelli, supra at 463, 563 P.2d 1305. The same is true here. Although Mr. Springer is entitled to his salary as president of Rosauer's, he is not entitled to a commission for finding potential purchasers of the stock because he was not licensed as required by statute.

Next, Mr. Springer contends even if recovery is barred by the real estate brokers' statute, he should be entitled to recover on equitable grounds, e.g., quantum meruit, quasi contract, and unjust enrichment. We disagree. A contract which is contrary to the terms and policy of a statute is illegal and unenforceable. Vedder v. Spellman, 78 Wash.2d 834, 480 P.2d 207 (1971); St. John Farms, Inc. v. D. J. Irvin Co., 25 Wash.App. 802, 609 P.2d 970, rev. denied, 94 Wash.2d 1002 (1980).

Finally, Mr. Springer's contention the complaint alleged sufficient facts to...