Unger v. Travel Arrangements, Inc.

• Decision Date: 25 January 1966
• Citation: 266 N.Y.S.2d 715,25 A.D.2d 40
• Parties: Irving UNGER, Plaintiff-Respondent, v. TRAVEL ARRANGEMENTS, INC., Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 715

266 N.Y.S.2d 715

25 A.D.2d 40

Irving UNGER, Plaintiff-Respondent, v. TRAVEL ARRANGEMENTS, INC., Defendant-Appellant.

Supreme Court, Appellate Division, First Department.

Jan. 25, 1966.

Martin Finkelhor, New York City, of counsel (Francis Finkelhor, New York City, attorney), for defendant-appellant.

Herbert Rand, New York City, of counsel (Preiss & Rand, New York City, attorneys), for plaintiff-respondent.

Before BREITEL, J. P., and VALENTE, McNALLY, STEUER and WITMER, JJ.

WITMER, Justice.

We are asked on this appeal to determine whether the courts below were correct in granting plaintiff's motion for summary judgment against the defendant, Travel Arrangements, Inc. It appears that in August 1964 plaintiff asked the defendant to secure steamship passage for himself and family from New York to the British West Indies; that defendant arranged for such passage on the S.S. Riviera and sent plaintiff a bill therefor in the sum of $704.55, which plaintiff promptly paid; and that before the scheduled date for sailing, defendant's principal became insolvent and the cruise was cancelled. Plaintiff then demanded of defendant that his money be refunded; the demand was refused; and this lawsuit was instituted.

In his complaint plaintiff alleged four bases for recovery, in four causes of action, (1) that defendant was not duly licensed as a travel agent under Article 10 of the General Business Law, sections 150-154; (2) that there was a failure of consideration; (3) impossibility of performance, and (4) money had and received. After defendant entered a general denial, plaintiff moved for summary judgment (supported by an affidavit setting forth most of the above facts) against the defendant on the ground that it was not licensed under the General Business Law, Article 10. Defendant cross-moved for summary judgment, supported by an affidavit and exhibits setting forth that it was a duly certificated agent of a steamship company and expressly excluded by the terms of section 150 of the General Business Law from the requirement that it be licensed; that it acted as agent for the Carribean Cruise Lines, Inc., the operator of the S.S. Riviera; that it remitted to its principal the payment made to it by plaintiff, less defendant's commission amounting to $69; and asserted that defendant as such agent has no obligation to the plaintiff. The plaintiff served a reply affidavit on the motion, and set forth facts which, it contends, show that the defendant was acting as principal; and that if it was acting as agent, it did not reveal to the plaintiff the name of its principal, and hence, the plaintiff asserts, defendant is liable to the plaintiff as if it were the principal.

Summary judgment was granted to the plaintiff against the defendant on this motion and cross-motion. Defendant moved to reargue, which motion was granted; and on the reargument defendant pointed out that in his complaint the plaintiff had not demanded judgment against the defendant on the ground that the defendant had failed to disclose its principal; and the affidavits in support of the reargument set forth the alleged facts that plaintiff, when he contacted defendant for such passage, knew that defendant was only a travel agency, knew that the Carribean Cruise Lines, Inc. was operator of the S.S. Riviera, and that plaintiff told defendant's employee, who was acquainted with him, that the plaintiff had just come from the office of the Carribean Cruise Lines, Inc. and wanted defendant to arrange passage for him on the S. S. Yarmouth Castle; but before such could be arranged, the Yarmouth Castle cruise was cancelled, and plaintiff asked defendant to book passage for him on the S. S. Riviera, which was done. In plaintiff's affidavit in opposition to defendant's motion for reargument, he fails to meet directly the above assertions by the defendant. Instead, he equivocates by saying that whether or not he knew that the Carribean Cruise Lines, Inc. was owner or operator of the S. S. Riviera 'is irrelevant as a matter of law under the admitted facts in this case.' He proceeds to charge that the defendant is misinforming the court as to who is the owner of the S. S. Riviera; and says that the defendant did not tell him that the Carribean Cruise Lines, Inc. was the owner or operator thereof.

Admittedly, if the defendant paid the money over to its principal as it asserts, the plaintiff has a valid claim for restitution against the principal under the theories of his second, third and fourth causes of action. But it appears that the principal is insolvent, and hence plaintiff seeks recovery from the defendant agent.

With respect to the first cause of action, based upon defendant's failure to have a license, we shall assume for the moment, as alleged by the plaintiff that defendant's principal was not a steamship company and that defendant acted in violation of section 150 of the General Business Law when it arranged passage for the plaintiff. The defendant contends that the cause of action is insufficient in law.

The statute (General Business Law, § 150) provides that 'No person, firm, or corporation, other than * * * the agents of * * * steamship companies duly appointed in writing, shall hereafter engage within this state in the sale of steamship tickets * * * without having first procured a license to carry on such business.' Section 153 of that law provides that one who violated it shall be guilty of a misdemeanor.

A violation of some statutes requiring a license to do business renders the contract made thereunder unenforceable, if not void. (Carmine v. Murphy, 285 N.Y. 413, 35 N.E.2d 19; [Alcoholic Beverage Control Act, Cons.Law, Ch. 3-B]; American Store Equipment & Constr. Corp. v. Jack Dempsey's Punch Bowl, Inc., 283 N.Y. 601, 28 N.E.2d 23 [Education Law, § 1476(1)]; Adler v. Zimmerman, 233 N.Y. 431, 135 N.E. 840 [Natl. Prohibition Act]; Atkin v. Hill, Darlington & Grimm, 15 A.D.2d 362, 224 N.Y.S.2d 553, affd. 12 N.Y.2d 940, 238 N.Y.S.2d 516, 188 N.E.2d 790 [Insurance Law, § 51(1)]; O'Mara v. Dentinger, 271 App.Div. 22, 29, 62 N.Y.S.2d 282, 289, et seq. [U.S.Rationing Act]); but a contract made in violation of certain other statutes which require a license or certificate to do business will not for that reason be rendered unenforceable. (Rosasco Creameries, Inc. v. Cohen, 276 N.Y. 274, 11 N.E.2d 908, 118 A.L.R. 641 [Agriculture and Markets Law, § 257]; Sajor v. Ampol, Inc., 275 N.Y. 125, 130-131, 9 N.E.2d 803, 806 [General Business Law, Art. 23-A]; Fosdick v. Investors Syndicate, 266 N.Y. 130, 194 N.E. 58 [Banking Law]; Mahar v. Harrington Park Villa Sites, 204 N.Y. 231, 97 N.E. 587 [General Corporation Law]; Gold Medal Farms v. Rutland Co. Creamery, 9 A.D.2d 473, 195 N.Y.S.2d 179.) In Atkin v. Hill, Darlington & Grimm, supra, 15 A.D.2d p. 367, 224 N.Y.S.2d 553, Presiding Justice Botein said 'Legislative intent remains the touchstone' for determining the effect of violation of a particular statute (and see 6 Williston on Contracts, rev. ed., § 1764).

It is the general rule that one who is required to have a license to practice a profession or occupation and who has no license, will not be permitted to recover for the services which he has rendered in the practice of such profession or occupation (Roman v. Lobe, 243 N.Y. 51, 152 N.E. 461, 50 A.L.R. 1329; Baird v. Krancer, 138 Misc. 360, 246 N.Y.S. 85; 6 Williston on Contracts, rev. ed. § 1765); and thus it is clear that had the plaintiff not already paid the defendant an amount which includes his commission, the defendant could not have recovered the commission from the plaintiff in an action. That does not mean, however, that by virtue of the statute the plaintiff can recover his payment from the defendant. (See Schank v. Schuchman, 212 N.Y. 352, 106 N.E. 127.) In the Schank case the court said at p. 359, 106 N.E., at p. 129, 'The law may at times refuse to aid a wrongdoer in getting that which good conscience permits him to receive; it will not for that reason aid another in taking away from him that which good conscience entitles him to retain.' In other words, such statutes may serve as a shield but rarely may they serve as a sword. If the defendant, acting in good faith, paid the money over to its principal and thus no longer has it within its control, the violation of the statute would not have been a factor in the plaintiff's loss, and the plaintiff could not recover it by virtue of the statutory violation. (See Klinkenstein v. Third Avenue Ry. Co., 246 N.Y. 327, 158 N.E. 886, 54 A.L.R. 369; New York Contracts Law, § 2306, including note 49; and see Fosdick v. Investors' Syndicate, 266 N.Y. 130, 135, 194 N.E. 58.) Upon the facts of this case, therefore, the first cause of action is insufficient in law.

Recovery of the money paid by the plaintiff to the defendant rests, however, upon grounds unrelated to the statutory violation, which will, under certain circumstances, support recovery under the second, third and fourth causes of action.

In Schank v. Schuchman, supra, 212 N.Y., at page 358, 106 N.E., at page 128, Cardozo, J. said, 'The action for money had and received is based, however, upon equitable principles. The plaintiffs must show that it is against good conscience for the defendant to keep the money.' (See also Rothrock Syosset, Inc. v. Kreutzer, 2 A.D.2d 777, 154 N.Y.S.2d 816; County of Oneida v. First Citizens Bank and Trust Co., 264 App.Div. 212, 35 N.Y.S.2d 782.) In the Oneida case the court said 264 App.Div., at page 214, 35 N.Y.S.2d, at page 784, 'An action for money had and received * * * is in its [true] nature a substitute for a suit in equity and it is to be ruled by broad considerations of equity and justice.'

In conformity with these principles the Restatement of the Law of Restitution states in section 17, 'A person who has paid money to another in the performance of an agreement with a third person is entitled to restitution from the other if,...