E. A. Strout Company v. Howell

• Decision Date: 21 January 1913
• Citation: 85 A. 666,27 Del. 31
• Court: United States State Supreme Court of Delaware
• Parties: E. A. STROUT COMPANY, plaintiff below, plaintiff in error, v. ALFRED P. HOWELL and MARY J. HOWELL, defendants below, defendants in error

85 A. 666

27 Del. 31

E. A. STROUT COMPANY, plaintiff below, plaintiff in error, v. ALFRED P. HOWELL and MARY J. HOWELL, defendants below, defendants in error

Supreme Court of Delaware

January 21, 1913

Supreme Court, January Term, 1913.

WRIT OF ERROR (No. 2, June Term, 1912) to the Superior Court, in and for New Castle County.

Action by the E. A. Strout Company against Alfred P. Howell and another. (No. 40, March Term, 1910). Motion to strike out plaintiff's general demurrer to defendant's fifth plea. Demurrer stricken out. Judgment for defendants, and plaintiff brings error. Affirmed. (See also, 2 Boyce 489, 82 A. 238; 3 Boyce 252, 82 A. 1081.)

Judgment affirmed.

Alexander B. Cooper and Richard S. Rodney for plaintiff in error.

Levin Irving Handy for defendants in error.

CURTIS Chancellor, and CONRAD and WOOLLEY, J. J., sitting.

OPINION

CURTIS, Chancellor,

The writ of error in this case is to the final judgment sustaining the demurrer to the replication to the fifth plea. The action was in assumpsit to recover payment for commissions for selling land for the defendant. By the fifth plea the defendants set up the defense that the plaintiff did not have a license from the State of Delaware to engage in the business of conducting a real estate agency. To this plea the plaintiff replied that it was incorporated under the laws of Maine, had complied with the laws of Delaware respecting foreign corporations doing business in Delaware, and that one Zepp, a real estate agent, duly licensed under the laws of Delaware, did, as the agent or representative of the plaintiff, make the sale, for the making of which the commission was demanded and sued for. A demurrer of the defendant to this replication was sustained by the court below, on the authority of the case of Reeder v Jones, 6 Penne. 66, 65 A. 571, a case like this one, except that the real estate agent was an individual and not a corporation.

In the court below both court and counsel treated and considered the question raised as though there were in the pleadings an allegation that the defendant company was itself engaged in, prosecuted, followed, or carried on the trade, business, pursuit, or occupation of a real estate agency, and, therefore, that in making the sale referred to in the declaration it violated the following section of a statute of the State of Delaware, entitled "An act to raise revenue and provide for the current expenses of the state government":

"Section 1. That no * * * company or corporation, without having first obtained a proper license therefor, as hereinafter provided, shall within the limits of this State, be engaged in, prosecute, follow, or carry on any trade, business, pursuit, or occupation in this section hereinafter next mentioned; that is to say, * * * real estate agency, * * *." See Chapter 117, Vol. 13, Laws of Delaware, p. 105, passed March 22, 1867, and published as amended in Revised Code of 1893, p. 56.

In this court, also, it was argued by counsel on both sides as though it was averred clearly that the plaintiff was conducting a real estate agency in Delaware by branch office, or agency located here, and without a license. Applying critical tests to the pleadings, perhaps this averment is not clearly made, but the case will be decided as though it was so made.

The plaintiff relied largely on the decision of this court in the case of Model Heating Co. v. Magarity, 25 Del. 459, 2 Boyce 459, 81 A. 394. There it was held that a corporation incorporated under the laws of a state other than Delaware, doing business here by branch office, or agent located here, could recover here for goods sold and delivered to a resident here, notwithstanding the constitutional and statutory provision that no such corporation could so do business here until it had complied with certain requirements, which the vendor in that case had not done. In the case now before the court, the plaintiff, in its replication to the fifth plea, avers compliance with these regulations. But it is quite clear that this compliance does not of itself authorize the defendant company to carry on a particular kind of business, regardless of laws of this state requiring that a license be had before that particular kind of business can be carried on. When a foreign corporation comes into this state by branch office, or agents, or representatives, located here to do a particular kind of business here, it must comply with the statutory regulations prescribed for those who transact that kind of business. If it engages in any of the kinds of business mentioned in the above statute, it must have a license therefor, and it is not sufficient for it to have complied with other legislative provisions applicable to all foreign corporations irrespective of the nature of the business which they transact. Therefore, the plaintiff in making the sale for the defendant violated the statute above referred to, notwithstanding it had complied with the Constitution and provisions of other statutes relating to foreign corporations generally, because it had not received a license to carry on the business of a real estate agency.

Does this failure to have such license prevent the plaintiff from recovery in this case? In this case the act was one for raising revenue as its primary object and it is so stated in its title. By the statute no person, without having first obtained a license therefor, shall carry on any of the several kinds of business therein designated, including a real estate agency, and a penalty was provided "for every such offense." Unenforceability of contracts was not made a further penalty and contracts made by those without licenses were not made unlawful.

In the case of Model Heating Co. v. Megarity supra, the act there under consideration made it unlawful for a foreign corporation to do business in Delaware by branch office, etc., until it had complied with certain regulations, and any corporation doing business without having first complied was made subject to a penalty for each and every offense. There the question was whether a contract made by a foreign corporation doing business in Delaware by branch office without having complied with the requirements relating to such corporations, was enforceable in this state. It was held that the court should consider the purposes and object of the act, and not impose the penalty of unenforceability of its contracts as an additional penalty, not imposed by the act,...