Yount v. Denning

• Decision Date: 06 January 1894
• Parties: MARY A. YOUNT, as Administratrix of the estate of George W. Yount, deceased, v. WALTER DENNING et al
• Court: Kansas Supreme Court

35 P. 207

52 Kan. 629

MARY A. YOUNT, as Administratrix of the estate of George W. Yount, deceased, v. WALTER DENNING et al

Supreme Court of Kansas

January 6, 1894

Error from Cowley District Court.

THE opinion states the nature of the action and the material facts. Judgment for plaintiffs, Denning and another. The defendant, Yount, brings the case to this court.

Judgment reversed.

Pollock & Love, for plaintiff in error:

The sale for which a commission is claimed, and for which judgment was rendered in this case, if made by plaintiffs below, was made in violation of law, and plaintiffs should not have been permitted to recover. At the time the sale of this property was made, on the 3d day of February, 1890 plaintiffs were engaged in the real-estate business in the city of Winfield, Cowley county, Kansas, a city of the second class. The sale of this property, if made by plaintiffs, was made in the city of Winfield. It is admitted by counsel for plaintiffs that ordinance No. 325 of the city of Winfield entitled "An ordinance in relation to license tax on certain callings, business and occupations in the city of Winfield," etc., was in full force and effect at the time this sale was made. That § 43 of said ordinance 325 of the city of Winfield, prescribing a punishment for the violation of the ordinance, is valid and binding, cannot be controverted, neither can the fact that the plaintiffs might have been prosecuted criminally for the doing of the very act for which they claim compensation in this action. See Campbell v. City of Anthony, 40 Kan. 652; City of Wyandotte v. Corrigan, 35 id. 21. See, also, Milne v. Davidson, 5 Martin, N. S. (La.) 586; Dill. Mun. Corp. (4th ed.), § 308; Johnson v. Simonton, 43 Cal. 242; Stephenson v. Ewing, 9 S.W. 230; Cooley, Tax'n (2d ed.), 572; Bowman v Phillips, 41 Kan. 364.

"It is familiar law, both in England and America, that a contract prohibited either expressly or impliedly by statute is illegal, and cannot be enforced." Perkins v. Watson, 2 Baxt. 187; Insurance Co. v. Insurance Co., 11 Humph. 11; Hale v. Henderson, 4 id. 200; 2 Benj. Sales (4th Am. ed.), §§ 818, 825; 1 Add. Cont., § 294; Holt v. Green, 73 Pa. 198; Dillon v. Allen, 46 Iowa 299; McConnell v. Kitchens, 20 S.C. 430; Woods v. Armstrong, 54 Ala. 150; Johnson v. Hulings, 103 Pa. 498.

McDermott & Johnson, for defendants in error:

There seem to be two kinds of license taxes recognized by the law writers and courts, one for regulation wholly or partly, and one for revenue only. The first is denominated by Cooley, in his work on Taxation, a license, and "is a right granted by some competent authority to do an act which, without such authority, would be illegal." And the second, a tax, which is a rate or sum of money assessed upon the persons following certain lines of business. Cooley, Tax'n, p. 386.

Benjamin, in his work on Sales, (in §§ 530 to 538, inclusive,) reviews a long line of English cases, and sums up the matter in this way:

"Where a contract is prohibited by statute, it is immaterial to inquire whether the statute was passed for revenue purposes only, or for any other object; but when the question is, whether a contract has been prohibited by statute, it is material, in construing the statute, to ascertain whether the legislature had in view solely the security and collection of the revenue, or had in view, in whole or in part, the protection of the public from fraud in contracts, or the promotion of some object of public policy. In the former case, the inference is, that the statute was not intended to prohibit contracts; in the latter, that it was."

Counsel for plaintiff in error insist that the contract is illegal, because it is prohibited by the ordinance. We do not think this contention is tenable. The city of Winfield has no power, except what the legislature has conferred upon it. Section 48 of chapter 19 of the General Statutes gives cities of the second class exclusive authority to levy and collect license taxes, etc., and § 68 of the same chapter gives the power to prescribe punishment for the violation of its ordinances. The full extent of the power possessed by cities of the second class under these statutes (and they can have no other power) is to levy taxes and to prescribe punishment for failure to pay. This court has already decided that the levy and collecting of said taxes is purely for revenue, and the contracts made in such business without paying the tax are not illegal. Fretwell v. City of Troy, 18 Kan. 271; City of Newton v. Atchison, 31 id. 151.

Counsel seem to think that the case of Stephenson v. Ewing, 9 S.W. 230, is exactly in point. We are unable to see the similarity in that case and this. In that case, the statutes of the state, and not the ordinance of a city, were under discussion. This statute provided that the occupation of a real-estate broker "shall be deemed a privilege and be taxed, and not pursued or done without a license," and the court held that was "an express prohibition of all unlicensed persons to act as real-estate brokers." This distinguishes the case from the one at bar, and the distinction is so broad that no application of the case can be made. That law was made by the legislature, which had full power to enact it. The case at bar rests on an ordinance of a city which had no power, under the statute, to make the business or occupation unlawful.

ALLEN, J. All the Justices concurring.

OPINION

ALLEN, J.:

Walter Denning and Mahlon E. Johnson brought suit against George W. Yount before a justice of the peace, alleging that they were partners, and that the defendant was indebted to them in the sum of $ 265 for commission on a sale of a quarter section of land negotiated by them for the defendant. The defendant denied liability. The justice of the peace rendered judgment in favor of the defendant for costs. Plaintiffs appealed to the district court, where they obtained judgment for the full amount claimed, and the defendant brings the case here.

It appears from the undisputed facts in the case that the plaintiffs were real-estate agents, doing business in Winfield, a city of the second class; that at the time of the transaction for which they seek to recover there was in force in said city an ordinance containing the following provisions:

"SECTION 1. That no person, firm, company or corporation, shall conduct, carry on or operate in the city of Winfield, Cowley county, state of Kansas, any of the callings, businesses or occupations hereinafter specified, without first having obtained a license so to do, and having paid the license tax hereinafter prescribed for any such calling, business or occupation so intended to be pursued, carried on, or conducted by any such person, firm, company, or corporation."

"SEC. 17. Each person engaged in the business of real estate and loan agents, or brokers, shall pay a semi-annual license tax of $ 10."

Section 43 of the same ordinance prescribed a fine of not less than $ 10 nor more than $ 100 for a violation of any of the provisions of the ordinance. It is conceded that the plaintiffs had not paid the tax, and were consequently carrying on business in violation of the ordinance when they performed the services for which they seek to recover in this action. The general rule that no person can recover in a court of justice on a cause of action founded on a violation of law is not controverted; but the contention is, that the ordinance of the city was passed solely for the purpose of collecting revenue; that a city council has no power under the statutes of the state to prohibit persons from carrying on the business of real-estate agents; that the limit of its power is to levy the tax, and impose fines for its nonpayment. The power to impose burdens for the purpose of raising revenue is essential, not only to the existence of national and state governments, but to those of municipalities as well. To that power, when rightfully exercised, the citizen must yield. The modes of raising revenue vary according to the views of those imposing the tax and the changing circumstances affecting each case. The revenue of the United States government is raised almost wholly by indirect taxation, and violations of its revenue laws are generally punished by severe penalties, often by confiscations, and contracts founded on a violation thereof are generally held utterly void.

It is urged that there is a distinction between those kinds of business which, because of their character, are deemed subjects of regulation, and on which license taxes are imposed in connection with restrictions and regulations of the mode of conducting the same, and those businesses which are regarded...