Sunflower Lumber Co. v. Turner Supply Co.

• Decision Date: 21 January 1909
• Citation: 48 So. 510,158 Ala. 191
• Parties: SUNFLOWER LUMBER CO. v. TURNER SUPPLY CO.
• Court: Alabama Supreme Court

48 So. 510

158 Ala. 191

SUNFLOWER LUMBER CO. v. TURNER SUPPLY CO.

Supreme Court of Alabama

January 21, 1909

Appeal from Law and Equity Court, Mobile County; Saffold Berney Judge.

Action by the Turner Supply Company against the Sunflower Lumber Company, a partnership. From a judgment for plaintiff defendant appeals. Affirmed.

The action was on a promissory note made on the 23d day of November, 1907, and payable 60 days after date. The special plea filed is as follows: "That the plaintiff during the years 1907-08 was and is a corporation organized under the general laws of the state of Alabama, and during none of said time has it had a license from the state of Alabama to do business in the state, and the contract sued on in said court is a contract made and to be performed entirely within the state of Alabama. During all of the time mentioned above the plaintiff has been doing business in this state. Said business is, and during all of said time has been, that of a sawmill and railway supply business, and the contract sued on was made in the course of such business." The demurrer interposed to the plea is as follows: "The plea shows that the plaintiff is a corporation organized under the laws of the state of Alabama, and shows that the alleged failure of the plaintiff to pay the license tax required by the laws of Alabama did not make void the sale to the defendant of the goods described in the plea as sold by the plaintiff to defendant during the time it is alleged plaintiff had not paid the license tax required by the laws of the state to be paid by it for doing business as a corporation for the period covered by the sale of some of said business." This demurrer was sustained.

R. H. &amp R. M. Smith, for appellant.

Charles L. Bromberg, for appellee.

ANDERSON J.

In determining whether an agreement is prohibited by statute the intention of the Legislature must be ascertained and must govern. "When conditions prescribed for the conduct of a business, trade, or profession are not complied with agreements in the course of such business, trade, or profession are (1) void, if the condition is for the benefit of the public, as for the maintenance of public order or safety, or the protection of persons dealing with those upon whom it is imposed; (2) valid, if no specific penalty is attached to the specific transaction, and the condition is imposed simply for administrative purposes, such as the protection or convenient collection of the revenue." Clark on Contracts, 385. The rule as to the rights of unlicensed or unauthorized persons to recover on contracts, stated in 25 Cyc. p. 633, is as follows: "The rule is that, when a statute imposes a penalty for engaging in a given business or calling without a license, a contract made by one who has no license is not invalid, the penalty attaching to the person and not affecting the contract; but the rule is otherwise where the statute expressly prohibits such business or calling without a license, or expressly vitiates all contracts made by an unlicensed person while engaged therein." It was said by Baron Parke in the case of Smith v. Mawhood, 14 Mees. & W. 452 (English), in discussing the right to enforce a contract of sale made by one who had not taken out a license: "I think the object of the legislation was not to prohibit a contract of sale by dealers who have not taken out a license pursuant to the act of Parliament. If it was, they certainly could not recover, although the prohibition were merely for revenue. But its object was not to vitiate the contract itself, but only to impose a penalty on the party offending, for the purposes of revenue." The Massachusetts court, in the case of Larned v. Andrews, 106 Mass. 435, 8 Am. Rep. 346, in considering a sale made by one who had no revenue license, where it was made a violation of the law to carry on business without same, said: "It is to be observed that the act does not expressly declare that sales by a wholesale dealer who neglects to pay the tax shall be illegal. The tax is not laid upon each sale, but upon the business or calling. The illegality does not attach to the sale, but consists in not paying the tax imposed upon the business." The court enforced the contract and quoted from the English case, supra. The New Jersey court, in the case of Ruckman v. Bergholz, 37 N. J. Law, 440, in discussing the right to enforce a contract of sale made by a party who had no license as required by law, which provided a penalty, said: "The question in such case is whether the statute was intended as a protection, or merely as a fiscal expedient; whether the Legislature intended to prohibit the act unless done by a qualified person, or merely that every person who did it should pay a license fee. If the latter, the act is not illegal." In the case of Aiken v. Blaisdell, 41 Vt. 655, the court upheld the contract, notstanding the seller had no license and that the law fixed a penalty for doing business without same, basing its conclusion upon the fact that the revenue law was not intended to make any kind of business illegal or to prohibit it. "The purpose was not to diminish, restrain, control, or regulate the business. The transaction of all kinds of business was just as legal after the passage of the law as before. The law is strictly a revenue law, the sole object being to get money into the treasury, and that is accomplished by requiring all persons that engage in certain kinds of business to contribute a certain amount towards paying the liabilities...