FLICKINGER v. SWEDLOW ENGINEERING CO

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District Court of Appeal, Second District, Division 2, California.

R. H. FLICKINGER, Plaintiff and Respondent, v. SWEDLOW ENGINEERING CO., Inc., a corporation, and Fireman's Fund Indemnity Co., a corporation, Defendants and Appellants.

Civ. 20806.

Decided: May 25, 1955

Laurence J. Rittenband and Anderson, McPharlin & Conners, by Kenneth E. Lewis, Los Angeles, for appellants. C. J. Walker, Los Angeles, for respondent.

Defendants appeal from a judgment in favor of plaintiff after trial without a jury in an action arising out of work done on construction of a portion of a public highway for the State of California.

Facts: Plaintiff, a subcontractor, filed the present action against defendant Swedlow Engineering Company, Inc., the general contractor, and defendant Fireman's Fund Indemnity Company, the general contractor's surety.

It was alleged in plaintiff's second amended complaint that on the 29th day of January, 1948, plaintiff, R. H. Flickinger, a duly licensed engineer, entered into a written contract with defendant Swedlow Engineering Company for the performance of a certain portion of contract work upon the public highway for the State of California.

Thereafter by oral assignments the benefits of the written contract were assigned to a partnership composed of Flickinger and Welker. Mr. Welker was a duly licensed engineer. On April 20, 1948, a new oral contract was entered into whereby certain of the work previously contemplated under the original contract was undertaken by Swedlow Engineering Company rather than by plaintiff or the partnership composed of Flickinger and Welker.

No engineering License in the name of the partnership of Flickinger and Welker was obtained at any time during the performance of any of the work. Such a license, however, was obtained more than six months after the work was completed and three days before the complaint in the present action was filed.

The trial court found:

A.

‘That each all of the allegations contained in Paragraph VI of the Second Amended Complaint are true except that said oral assignment was made in the month of March, 1948, on or about the 15th day of said month, and that in consideration of said assignment, said partnership agreed with plaintiff to assume the obligations of said agreement and to furnish such partnership funds and equipment as might thereafter be necessary in the performance of the work as agreed to be done by plaintiff for said Swedlow Engineering Co., Inc., under said agreement of January 29, 1948.

‘The Court further finds that during all of the time mentioned in plaintiff's Second Amended Complaint, plaintiff was and now is a duly licensed contractor under the laws of the State of California; that Ralph Welker, at all times since November 24, 1947, has been and now is a duly licensed contractor under the laws of the State of California, and that at all times since May 9, 1949, the said partnership of Flickinger & Welker has been and now is a duly licensed contractor under the laws of the State of California.’

B.

‘That each and all of the allegations contained in Paragraph VIII of the Second Amended Complaint are true except that the plaintiff and said partnership duly performed all of said conditions and performed all of the work for said defendant, Swedlow Engineering Co., Inc., under said written agreement and oral agreement.’

This is the sole question necessary for us to determine:

Did the trial court err in permitting plaintiff to maintain the present action since it is conceded that the partnership of Flickinger and Welker, which performed with plaintiff all the work for which recovery was sought, had not obtained a contractor's license pursuant to the provisions of sections 7025, 7026, 7028 and 7029 of the Business and Professions Code?

Yes. The Business and Professions Code reads in part as follows:

‘§ 7025. Person. ‘Person’ as used in this chapter includes an individual, a firm, copartnership, corporation, association or other organization, or any combination of any thereof.'

‘§ 7026. Contractor defined. The term contractor for the purposes of this chapter is synonymous with the term ‘builder’ and, within the meaning of this chapter, a contractor is any person, who undertakes to or offers to undertake to or purports to have the capacity to undertake to or submits a bid to, or does himself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding or other structures or works in connection therewith. The term contractor includes subcontractor and specialty contractor.'

‘§ 7028. Engaging in business without license. It is unlawful for any person to engage in the business or act in the capacity of a contractor within this State without having a license therefor, unless such person is particularly exempted from the provisions of this chapter.’

‘§ 7029. Acting in joint venture or combination without additional license therefor. It is unlawful for any two or more licensees, each of whom has been issued a license to engage separately in the business or to act separately in the capacity of a contractor within this State, to jointly submit a bid or otherwise act in the capacity of a contractor within this State without first having secured an additional license for acting in the capacity of such a joint venture or combination in accordance with the provisions of this chapter as provided for an individual, copartnership or corporation.’

‘§ 7031. Allegation and proof of license in action on contract. No person engaged in the business or acting in the capacity of a contractor, may bring or maintain any action in any court of this State for the collection of compensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract.’

In passing upon the foregoing sections, the courts have held that a partnership which furnishes labor and material as a contractor is required to have a license as a ‘person’ under the provisions of section 7025 of the Business and Professions Code. Likewise it is settled that such a partnership cannot recover for services rendered where it fails to allege and prove that it was a duly licensed contractor at all times during the time of the performance of the acts or contract for which recovery is sought, pursuant to the provisions of the Business and Professions Code set forth, supra. (Kirman v. Borzage, 65 Cal.App.2d 156, 158 [1], 150 P.2d 3 (hearing denied by the Supreme Court); Loving & Evans v. Blick, 33 Cal.2d 603, 607 [1], 204 P.2d 23; Albaugh v. Moss Construction Co., 125 Cal.App.2d 126, 131 [6], 269 P.2d 936.)

Also it is settled that the foregoing requirement is not satisfied by the issuance of a license to one of the partners. (Kirman v. Borzage, supra, 65 Cal.App.2d 158[2], 150 P.2d 3.)

An assignee of an unlicensed contractor who has performed work may not recover upon the contractor's claim for the reason that the contractor did not have a valid license. (Shields v. Shoaff, 116 Cal.App.2d 306, 308 [1, 2], 253 P.2d 1002.)

Applying the foregoing rules to the conceded facts in the present case it is evident that plaintiff should not have been permitted to recover in the instant action. The partnership which the court found performed a portion of the work was not licensed at any time during the performance of the work and not until more than six months after the work had been performed. Hence under the clear provisions of section 7031 of the Business and Professions Code such partnership could not maintain this action, and under the authorities above cited plaintiff as assignee of the partnership was not in any better position to maintain the action than the partnership itself.

Plaintiff relies upon the decision of the Supreme Court in Gatti v. Highland Park Builders, Inc., 27 Cal.2d 687, 166 P.2d 265. However, such decision is not applicable to the facts of the present case and is distinguishable from such case as is pointed out by Mr. Justice Spence in Loving & Evans v. Blick, supra, 33 Cal.2d 607, 204 P.2d 25, where, speaking for the court, he says:

‘There can be no question but that this case presents a clear violation of the statutes regulating the contracting business. Thus, while respondent Loving at all times possessed an individual contractor's license, his respondent partner Evans did not, and the partnership, as such, failed to procure such a license. As appellant maintains, it has been repeatedly declared in this state that ‘a contract made contrary to the terms of a law designed for the protection of the public and prescribing a penalty for the violation thereof is illegal and void, and no action may be brought to enforce such contract’ (citing cases); and that ‘whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case.’ (Citing cases.)

‘To overcome the force of these settled principles, respondents unavailingly seek to align their status under the licensing regulations with that prevailing as a distinguishable consideration in Gatti v. Highland Park Builders, Inc., supra, 27 Cal.2d 687, 166 P.2d 265. There a judgment in favor of plaintiff contractors was affirmed although no license in the name of the partnership under which they had been operating had been issued to the two plaintiff contractors as such. But in the Gatti case these factors were material to its disposition: (1) At the time the contract was performed, both plaintiffs possessed contractor's licenses in their own names as individuals; and (2) during the performance of the contract, a joint contractor's license was issued to plaintiffs and a third party not concerned in the action so that ‘thereby any matters which might form the basis of legitimate inquiry by the licensing board as a condition precedent to the issuance of an additional partnership or joint venture license to plaintiffs, though involving a third party, where necessarily considered, and favorable action was taken thereon.’ 27 Cal.2d page 689, 166 P.2d page 266. Accordingly, it was concluded, 27 Cal.2d at page 690, 166 P.2d at page 266, that plaintiff contractors had ‘substantially complied with the statutory requirements,’ for otherwise their legitimate claim would be defeated on ‘technical ground, resting on an unnecessarily strict construction of the statutory provision for the additional joint contractor's license and denying any effect to the combination license in fact issued to plaintiffs and a third person as above recited, [and] the legislative scheme in relation to the licensing of contractors, intended ‘for the safety and protection of the public,’ would become an unwarranted shield for the avoidance of a just obligation.' As was further said in the Gatti case, 27 Cal.2d at page 690, 166 P.2d at page 267, ‘similar considerations' with respect to a contractor's claim prevailed in Citizens State Bank of Long Beach v. Gentry, 20 Cal.App.2d 415, 67 P.2d 364, and ‘justified the denial of [a] motion for a nonsuit, predicated on rigid application of the licensing requirement,’ where the ‘contractor's license expired while the work was in progress but was renewed in the name of a corporation, organized by and bearing the contractor's name, and in which he was the dominant and controlling factor; and where the work was completed under the auspices of the corporation.’ But no comparable situation is presented here, for under the undisputed facts the contracting partnership of Loving and Evans did not hold a license ‘until after the termination of [the] job’ in question and though from ‘all times from the initial negotiations * * * throughout the progress of the work and until the completion thereof,’ respondent Loving ‘held a contractor's license,’ his partner, respondent Evans, during all of said times ‘did not have such a contractor's license.’ Thus, it is apparent that the licensing regulations enacted ‘for the safety and protection of the public,’ by prohibiting inexperienced persons from engaging in contracting work, were at no time here material permitted to function in determining the qualifications of respondent Evans therefor. Such disregard of the public policy underlying the state's licensing requirements cannot be correlated with the rationale governing the Gatti and Gentry cases, and it renders the entire transaction between respondents and appellant ‘illegal and void,’ for completion of the contract ‘necessarily would involve the performance of illegal acts.’ (Wise v. Radis, supra, 74 Cal.App. 765, 776, 242 P. 90, 94.)'

The foregoing quotation from the Supreme Court in Loving & Evans v. Blick, may be parphrased and applied to the facts of the instant case thus:

There can be no question but this case presents a clear violation of the statutes regulating the contracting business. Thus, while plaintiff R. H. Flickinger at all times possessed an individual contractor's license the partnership composed of Flinckinger and Welker did not, and the partnership as such failed to procure such a license until six months after the work had been completed. As defendant maintains it has been repeatedly declared in this state “a contract made contrary to the terms of a law designed for the protection of the public and prescribing a penalty for the violation thereof is illegal and void, and no action may be brought to enforce such contract” and that “whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case.'

To overcome the force of these settled principles plaintiff unavailingly seeks to align his status under the licensing regulations with that prevailing as a distinguishable consideration in Gatti v. Highland Park Builders, Inc., 27 Cal.2d 687, 166 P.2d 265, 266. There a judgment in favor of plaintiff contractors was affirmed although no license in the name of the partnership under which they had been operating had been issued to the two plaintiff contractors as such. But in the Gatti case these factors were material to its disposition: (1) At the time the contract was performed, both plaintiffs possessed contractor's licenses in their own names as individuals; and (2) during the performance of the contract, a joint contractor's license was issued to plaintiffs and a third party not concerned in the action so that ‘Thereby any matters which might form the basis of legitimate inquiry by the licensing board as a condition precedent to the issuance of an additional partnership or joint venture license to plaintiffs, though involving a third party, were necessarily considered, and favorable action was taken thereon.’ Accordingly, it was concluded at page 690 of 27 Cal.2d, at page 266 of 166 P.2d that plaintiff contractors had ‘Substantially complied with the statutory requirements', for otherwise their legitimate claim would be defeated on a ‘technical ground, resting on an unnecessarily strict construction of the statutory provision for the additional joint contractor's license and denying any effect to the combination license in fact issued to plaintiffs and a third person as above recited, [and] the legislative scheme in relation to the licensing of contractors, intended ‘for the safety and protection of the public,’ would become an unwarranted shield for the avoidance of a just obligation.' As was further said in the Gatti case, 27 Cal.2d at page 690, 166 P.2d at page 266, ‘similar considerations' with respect to a contractor's claim prevalied on Citizens State Bank of Long Beach v. Gentry, 20 Cal.App.2d 415, 67 P.2d 364, and ‘justified the denial of [a] motion for a nonsuit, predicated on a rigid application of the licensing requirement,’ where the ‘contractor's license expired while the work was in progress but was renewed in the name of a corporation, organized by and bearing the contractor's name, and in which he was the dominant and controlling factor; and where the work was completed under the auspices of the corporation.’

No comparable situation is presented here for under the undisputed facts the partnership of Flickinger and Welker did not hold a license ‘until after the termination of [the] job’ in question, and though from ‘all times from the initial negotiations * * * throughout the progress of the work and until the completion thereof’ plaintiff Flickinger ‘held a contractor's license, the partnership of Flickinger and Welker did not have such a contractor's license.’ Thus it is apparent that the licensing requirements enacted ‘for the safety and protection of the public’ by prohibiting inexperienced persons from engaging in contracting work, were at no time here material permitted to function in Gatti and Gentry cases and it renders the correlated with the rationale governing the the city's licensing requirements cannot be disregard of the public policy underlying nership of Flickinger and Welker. Such determining the qualifications of the partentire transaction between plaintiff and defendants ‘illegal and void’, for completion of the contract ‘necessarily would involve the performance of illegal acts.’ (Wise v. Radis, 74 Cal.App. 765, 776, 242 P. 90, 94.)

It is evident that the public policy involved herein has been determined by the Legislature in section 7031 of the Business and Professions Code. It needs no citation of authority to support the proposition that it is the province of the courts to enforce the law as determined by the Legislature and not to make it, or where, as here, the law is clear and unambiguous, to change it under the theory of interpreting it.

There is this additional distinction between the present case and the facts in Gatti v. Highland Park Builders, Inc., supra. In the Gatti case it was held that a manifest and equitable result would follow the enforcement of the statute to defeat the plaintiff's legitimate claim on a technical ground. In the case at bar we do not have such a situation. An examination of the record discloses that plaintiff and defendant Swedlow Engineering Company, Inc., in a prior action, #558300, in the Superior Court of Los Angeles County, litigated the facts now in issue and the judgment in such action has become final, but due to certain ‘technical’ rules of pleading and procedure the trial judge in the present case declined to consider that the previous action constituted a bar to plaintiff's claim in this case.

Thus, contrary to the situation in the Gatti case where the enforcement of a technical requirement would result, so the court held, in an injustice, we find that in the instant case the enforcement of such a requirement which has been prescribed by the legislature, brings about a just result.

In view of our conclusions it is unnecessary to discuss other questions presented.

The judgment is reversed.

McCOMB, Justice.

MOORE, P. J., and FOX, J., concur.