KOPF v. MILAM

Reset A A Font size: Print

District Court of Appeal, First District, Division 1, California.

Raymond LeRoy KOPF, an Individual doing business under the fictitious name and style of Wm. E. Doud & Co., Cross-Complainant and Appellant, v. H. O. MILAM and Martha Locke Milam, Cross-Defendants and Respondents.

Civ. 21090.

Decided: August 13, 1963

Howard B. Crittenden, Jr., San Francisco, for appellant. Elliot W. Seymour, San Francisco, for respondent.

This action was brought by one Thomas E. Flanagan against Raymond LeRoy Kopf, an individual doing business under the fictitious name of Wm. E. Doud & Co., H. O. Milam and Martha Locke Milam to recover a specified percentage of a real estate commission allegedly due Flanagan as a salesman employed by Kopf, a real estate broker, for having procured a purchaser for certain real property of the Milams listed for sale with Kopf as such broker. In such action, Kopf filed a cross-complaint against the Milams to recover the entire commission in question. After a nonjury trial, the court below rendered judgment denying all relief to Flanagan on his complaint and in addition denying all relief to Kopf on the latter's cross-complaint. Flanagan has not appealed and is not now before us. Kopf has appealed only from that portion of the judgment denying him recovery on his cross-complaint. His appeal is taken on a clerk's transcript together with specified exhibits.

We summarize the pertinent facts found by the trial court: H. O. Milam and Martha Locke Milam, husband and wife, owned certain real property located in Larkspur, Marin County, improved with an eight-unit apartment house. At all times mentioned in the pleadings, Kopf and one Arthur Hoffman, both individually licensed real estate brokers, were partners doing a general real estate brokerage business under the fictitious name and style of Wm. E. Doud & Co. At no time did the above partners publish and file a certificate of transacting business under said fictitious name of Wm. E. Doud & Co. Nor were said Kopf and Hoffman licensed as partners so engaged in said real estate business under and pursuant to the California Real Estate Law.

At all times mentioned in the findings, plaintiff Flanagan was a real estate broker. On October 23, 1959, Flanagan and Kopf entered into a written contract of employment wherein Flanagan was employed by Kopf as a real estate salesman in the real estate office of Wm. E. Doud & Co. in San Anselmo, California. At all times thereafter Flanagan was a licensed real estate salesman and agent acting for Wm. E. Doud & Co., a partnership. However, Flanagan was not aware of any partnership existing between Kopf and Hoffman. The abovementioned contract provided, among other things, that ‘no commission shall be considered earned and payable to salesmen until the transaction has been consummated and the commission collected by the office,’ and by paragraph 10 of said contract of employment, it was provided that ‘[t]he office reserves the right to determine whether or not any suit shall be filed or defended or settled out of the Court.’

On February 4, 1960, Mr. and Mrs. Milam entered into a multiple listing agreement with Wm. E. Doud & Co., San Anselmo office, for the sale of their apartment house.1 This listing was secured by Hoffman. The listing agreement was on the ‘Standard Exclusive Multiple Listing Form’ of the Marin County Real Estate Board, Inc. and was signed by Mr. and Mrs. Milam as owners and by Arthur Hoffman for Wm. E. Doud & Co. as agent. By this agreement the Milams employed Wm. E. Doud & Co. as their sole and exclusive agent to sell their Larkspur property on the terms and conditions therein set forth or for such price and terms acceptable to them.2 The real property was listed on the multiple listing service and ‘published pursuant to the rules and regulations existing among real estate brokers as members of the Marin County Real Estate Board and in accordance with the provisions of the aforementioned multiple listing agreement.’

On March 13, 1960, plaintiff Flanagan ‘as agent for and acting in his capacity as salesman for Wm. E. Doud & Co.’ executed a deposit receipt agreement with Henry and Inna Karliner as buyers of the real property owner by the Milams.3 This agreement was prepared by Arthus Hoffman. It was executed by the Milams, as sellers, on March 14, 1960.

By the terms of the depoit receipt the Karliners offered and agreed to purchase the described property on the terms and conditions therein stated, and the Milams agreed to sell the described property ‘on the terms and conditions herein stated and agrees to pay the above named agent as commission the sum of Five Thousand Two Hundred & Twenty Dollars, or one-half the amount paid by Buyer in case same is retained by Seller as consideration for the execution hereof, provided such one-half shall not exceed the full amount of the commission,’ the Milams, as sellers, having the option to retain any amounts paid by the buyer in the event buyer failed to complete the purchase as provided in the deposit receipt agreement.

The deposit receipt provided that the total purchase price of the property was $87,000 to be paid as follows:

‘Subject to Buyers assuming an existing loan of approximately Fifty Eight ($58,000) Thousand Dollars secured by first D/T and bearing 6% (six) per cent interest and subject to seller accepting a second deed of trust in the $15,000 amount of Fifteen Thousand Dollars bearing 7% (seven per cent) payable in monthly instalments of $175. or more til paid and a cash down payment including above deposit of $14,000 (Fourteen Thousand Dollars) upon acceptance of this offer but not later than $87,000 March 21st—1960.’

The Karliners did not deposit the above sum of $14,000 in escrow until April 6, 1960, but the court found that this was ‘of no legal significance, and is not determinative of the Court's decision.’

The existing loan on the real property was held by the Bank of California. It was evidenced by a promissory note executed by the Milams in the sum of $58,000 with interest at six percent, payable in monthly installments of $580 or more. Such note was secured by a deed of trust on the property. On March 14, 1960 (the date of Milams' acceptance of the offer of sale) there was due on the note $54,674.06 with interest from March 3, 1960. The note contained a so-called ‘pay on sale’ clause.4

The trial court specifically found that the condition in the deposit receipt set forth above with respect to the assumption of the existing loan by the buyers ‘was made for the sellers' benefit.’ It further specifically found that ‘HENRY KARLINER and INNA KARLINER never undertook to assume the said existing loan made by THE BANK OF CALIFORNIA and at no time were said buyers ready, able or willing to assume the said loan or to meet the conditions contained in said deposit receipt; and the said deposit receipt agreement was never consummated.’

The Milams, as sellers, did not exercise their option to retain the monies deposited by the Karliners, as buyers, pursuant to the deposit receipt. At all times the Milams were prepared to convey title to the real property to the Karliners ‘upon performance by them of the conditions required of them by the deposit receipt.’

Flanagan and Kopf stipulated at the trial that before the commencement of the instant action Flanagan made demand upon Wm. E. Doud & Co. and Kopf to pay Flanagan his commission or take legal action to protect Flanagan's interest in the commission; and that Kopf neither paid the commission nor took any steps to recover it prior to the instant action.

The trial court found that, although it was true that Flanagan had procured the Karliners as purchasers, it was not true that such purchasers were at all times ready, able and willing to buy the property upon the terms and conditions set forth in the deposit receipt agreement; and that it was not true, as alleged in the cross-complaint, that the Milams ‘are conclusively presumed * * * to have accepted said KARLINER as a purchaser who was ready, willing and able to purchase upon the said terms and conditions in said writing.’

The court concluded that Flanagan was entitled to recover nothing by virtue of his complaint, and that Kopf was entitled to recover nothing by virtue of his cross-complaint and rendered judgment accordingly.5

We are presented with two principal questions: First: Was the broker entitled to a commission where the purchasers (Karliners) failed to perform a condition precedent in the contract? Second: May such broker actually engaged in doing business as a partner being and maintain the instant action without alleging and proving that such partnership was duly licensed? In a sense, the questions project independent considerations and a negative answer to either would uphold the trial court. We conclude that both questions should be answered in the negative and that the judgment should be affirmed.

Appellant contends that on the facts as admitted and as found by the trial court he was entitled to judgment for the full amount of the commission. As pointed out above, his appeal is presented on the clerk's transcript and certain exhibits. On such an appeal the findings are presumptively correct and we must assume that there was substantial evidence adduced at the trial to support them. (Berg v. Investors Real Estate Loan Co. (1962) 207 Cal.App.2d 808, 813, 24 Cal.Rptr. 701; Crowell v. Braly (1959) 169 Cal.App.2d 352, 354, 337 P.2d 211; Seay v. Allen (1955) 134 Cal.App.2d 440, 444, 286 P.2d 392; White v. Jones (1955) 136 Cal.App.2d 567, 569, 288 P.2d 913.) As the court said in the last case: ‘In disposing of appellant's contention this appeal is therefore to be treated as one on the judgment roll. On such an appeal the question of sufficiency of the evidence to support the findings is not open. [Citation.]

‘The judgment here can only be attacked for errors which affirmatively appear upon the facr of the judgment roll. Appellant cannot broaden the scope of this court's inquiry by incorporating in the clerk's transcript the documentary evidence received in the court below. [Citations.]

‘On an appeal based on a record such as that here, we must presume that in the oral proceedings there was substantial evidence to support the findings. * * *’ (136 Cal.App.2d at p. 569, 288 P.2d at p. 914.)

The general rule governing the recovery of a broker's commission is articulated by Justice McComb in Meyer v. Selggio (1947) 80 Cal.App.2d 161, 164, 181 P.2d 690, 692: ‘A broker's commission is earned when the vendee and vendor have executed a binding, written agreement between them upon the terms provided in the contract of employment of the broker, and the vendee is ready, willing, and able to perform the contract on the terms prescribed. [Citation.]

‘* * * The readiness, willingness, and ability of the vendee [is] conclusively presumed in a suit by a broker to recover his commission upon proof that the vendor has entered into a valid contract of purchase and sale with the vendee. [Citation.]

‘* * * The right of the broker to his commission is not affected by failure of either party to carry out the agreement. [Citations.]’ (See also McNamara v. Steckman (1927) 202 Cal. 569, 572, 262 P. 297; Collins v. Vickter Manor, Inc. (1957) 47 Cal.2d 875, 880, 306 P.2d 783; Malmstedt v. Stillwell (1930) 110 Cal.App. 393, 398, 294 P. 41; Deeble v. Stearns (1947) 82 Cal.App.2d 296, 299, 186 P.2d 173; Ralston v. Demirjian (1948) 86 Cal.App.2d 124, 126, 194 P.2d 41; Austin v. Richards (1956) 146 Cal.App.2d 436, 439, 304 P.2d 132; Wesley N. Taylor Co. v. Russell (1961) 194 Cal.App.2d 816, 826, 15 Cal.Rptr. 357, 364.)

To the foregoing general rule, however, there is a well settled exception: namely, ‘that acceptance of a conditional deal procured and presented by the broker does not ripen into a right to a commission unless that condition, precedent or subsequent, is performed. See Colton v. O'Brien, 217 Cal. 551, 553, 20 P.2d 43; McAdoo v. Moore, 70 Cal.App. 408, 410–411, 233 P. 391; Leipsic v. Taggart, 101 Cal.App. 726, 728, 282 P. 400; Lawrence Block Co. v. Palston, supra, 123 Cal.App.2d 300, 309, 266 P.2d 856; McFarland v. Heady, 123 Cal.App.2d Supp. 973, 976, 267 P.2d 460; Cochran v. Ellsworth, 126 Cal.App.2d 429, 439, 272 P.2d 904. * * *’ (Wesley N. Taylor Co. v. Russell, supra, 194 Cal.App.2d 816, 828, 15 Cal.Rptr. 357, 364.6 See also: Edwards v. Billow (1948) 31 Cal.2d 350, 361, 188 P.2d 748; Wiseman v. Ross (1962) 202 Cal.App.2d 138, 142, 20 Cal.Rptr. 565; Phillips v. Barton (1962) 207 Cal.App.2d 488, 494, 24 Cal.Rptr. 527; Green v. Linn(1962) 210 A.C.A. 834, 838, 26 Cal.Rptr. 889.)

In Colton v. O'Brien (1933) 217 Cal. 551, 20 P.2d 43, the broker employed by defendant to exchange her property negotiated an agreement of exchange subject to the condition imposed by the other parties thereto that a loan of a specified amount could be placed on defendant's property. In reversing a judgment in favor of the broker, the court said: ‘The procurement of the loan was a condition precedent to the exchange. As the exchange was never made, appellant's acceptance of the conditional offer was never fulfilled, and plaintiff was not, therefore, entitled to his commission.’ (217 Cal. p. 553, 20 P.2d p. 44.)

In McAdoo v. Moore (1924) 70 Cal.App. 408, 233 P. 391, plaintiff's assignors were food brokers who negotiated a sale of merchandise ‘[s]ubject to approval of sample now in transit.’ Reversing a judgment for payment of the broker's commission, the court said: ‘While it is true, generally speaking, that a broker earns his commission when he produces a purchaser ready, able, and willing to purchase according to the terms upon which he was employed to sell, a different legal situation arises where a broker is employed to negotiate a sale, as in the instant case, and negotiates a contract of conditional sale. He then is bound to show that the condition has occurred which converts the conditional sale into an actual sale—a binding contract between the parties. * * *’ (70 Cal.App. p. 410, 233 P. p. 392.)

In McFarland v. Heady (1954) 123 Cal.App.2d Supp. 973, 267 P.2d 460, the plaintiff broker acting pursuant to an exclusive listing agreement negotiated an agreement of exchange covering defendant's motel subject to the condition that the other party to the exchange obtain a new lease from the owner of the land on which the motel was located. The court reversed a judgment in favor of the broker with directions for the entry of judgment denying recovery, saying: ‘The situation is simply one in which the principals agreed to effect an exchange of properties, only if a lease, with certain terms, should be granted by the owner of the land on which the motel was located; the procurement of the lease proved impossible and, as the condition was not complied with, no effective contract for the exchange of the property ever came into being. The plaintiff undoubtedly devoted substantial time and money in his attempt to complete the transaction, and he did all that he could to close the deal successfully. But, as the contract for the exchange was conditional and the condition did not occur, the broker is not entitled to any pay.’ (123 Cal.App.2d Supp. p. 976, 267 P.2d p. 462.)

In Wesley N. Taylor Co. v. Russell, supra, 194 Cal.App.2d 816, 15 Cal.Rptr. 357, the plaintiff broker acting pursuant to a nonexclusive listing produced a purchaser for defendant's property. The deposit receipt agreement thereafter executed between buyer and sellers provided among other things that the contract was contingent upon the buyer being able to obtain a loan of a specified amount and description. The court, after setting forth the governing principles as we have quoted them herein, held that the foregoing condition having been inserted in the contract at the instance of and for the benefit of the buyer, had been waived by the buyer. As a result the ‘condition * * * was fulfilled through the waiver’ (194 Cal.App.2d p. 828, 15 Cal.Rptr. p. 364) and the broker was entitled to recover his commission.

In Phillips v. Barton, supra, 207 Cal.App.2d 488, 24 Cal.Rptr. 527, the deposit receipt which the broker caused to be executed provided that the buyer's offer to purchase was ‘[s]ubject to the approval of the lease by the buyers.’ Such deposit receipt also contained an agreement on the part of the seller to pay the broker a commission in a stipulated amount. The trial court found that there had been a total failure of consideration because the buyers had in good faith rejected the proposed lease. Justice Ashburn, who was also the author of the opinion in Wesley N. Taylor Co., after alluding to his statement of the rule in the latter case, observed that ‘the broker must recover upon and according to the terms of his written contract. When that reflects a conditional deal between the buyer and seller, no right to compensation accrues to him unless or until the condition has been performed.’ (207 Cal.App.2d at p. 494, 24 Cal.Rptr. at p. 531.) It was held in Phillips that, as determined by the trial court, the broker was not entitled to a commission and could not recover in quantum meruit for his services.

In Wiseman v. Ross, supra, 202 Cal.App.2d 138, 20 Cal.Rptr. 565, the plaintiff broker with whom defendants listed their property procured purchasers therefor who entered into a deposit receipt agreement with defendants. One of the conditions contained therein was that the owners would sell at the price specified providing they would be able to ‘cash out’ with a minimum of $25,000 after loans and commissions were paid. In such deposit receipt, the defendant owners expressly agreed to pay the broker a commission of $5,000 and attorney fees in case of suit. The evidence clearly established the buyers were not ready, able or willing to provide money or securities which would enable the owners to ‘cash out’ at the above minimum and at the same time meet the specified purchase price. We reversed a judgment for the plaintiff broker holding that the rule set forth in Malmstedt v. Stillwell, supra, 110 Cal.App. 393, 294 P. 41, was not applicable since ‘at the time of the execution of the written agreement, it was understood by the parties that the buyers' acceptance of the sellers' offer was subject to the buyers being able to finance their purchase along the lines required by the agreement.’ (202 Cal.App.2d p. 142, 20 Cal.Rptr. p. 567.)

We think that the instant case falls clearly within the foregoing exception to the general rule. The deposit receipt agreement here before us discloses a ‘conditional deal’ procured and presented by the broker. The sale here involved is specifically made ‘[s]ubject to the Buyers assuming an existing loan’ of approximately $58,000. This is the language of a condition. (Lawrence Block Co. v. Palston (1954) 123 Cal.App.2d 300, 310, 266 P.2d 856.)

The trial court found that this condition was made for respondents' benefit. Its importance to respondents is apparent. Because of the provision in the promissory note already referred to, any sale of the property would have given the Bank the right to declare the entire principal sum due and payable. By making appropriate arrangements to assume the loan, the Karliners would prevent the operation of the above clause and thus permit respondents to go forward with the sale without having their loan called. In addition, assumption of the loan by the Karliners would give the respondents the advantage of having such buyers personally responsible for the obligation and personally liable, in the event of default, for any deficiency to the extent permitted by law. Appellant conjures up a fatal inconsistency from this state of affairs, because, as he argues, the court found that they were at all times prepared to convey that which they did not have, their loan being ‘non-assumable.’ We do not share appellant's views. The court found that the Milams were so prepared to convey title to the Karliners ‘upon performance by them [the Karliners] of the conditions required of them * * *.’

In a pivotal finding, here unassailable, the trial court found that the Karliners ‘never undertook to assume the said existing loan * * * and at no time were said buyers ready, able or willing to assume the said loan or to meet the conditions contained in said deposit receipt; and that said deposit receipt was never consummated.’ The contract in the instant case shows a conditional deal between the buyers and the sellers. Since the condition was never performed, we conclude that no right of compensation accrued to appellant.

In view of this conclusion, we deem it unnecessary to consider what rights, if any, appellant might have had to a commission based on a portion of any deposit retained by respondents upon the buyers' default. Under the terms of the deposit receipt, the retention of any amounts paid on account was optional with respondents, as the court found. Respondents did not exercise such option. Indeed appellant makes no claim against respondents on the basis that the deposit was forfeited and retained and that he is entitled to one-half thereof not exceeding the full amount of his specified commission.

We take up the second question presented by the appeal. As we have noted, both appellant and Hoffman were licensed individually as real estate brokers. The record shows that appellant in January 1959 and more than a year prior to securing the listing from the Milams had filed a certificate with the County Clerk of Marin County stating in substance that he was engaged in the real estate business in Mill Valley, California, under the fictitious name of Wm. E. Doud & Co. However, the court found that at all times mentioned in the pleadings appellant and Hoffman were partners engaged in the real estate business in Marin County under the fictitious name of Wm. E. Doud & Co. but that they had neither filed a certificate to that effect nor were they at any time licensed as partners in the real estate business.

Appellant argues that these last findings, which in reality establish his incapacity to recover as an individual, were outside the issues raised by the pleadings and delineated in the pretrial statements of the parties.7 In his cross-complaint, appellant alleged that he was at all times therein mentioned a duly licensed real estate broker and had duly complied with the law relating to the conduct of his business under the fictitious name of Wm. E. Doud & Co. Respondents denied such allegations on information and belief thereby raising no issue, as appellant properly points out. (Atwater v. Argonne Van & Storage Co. (1946) 74 Cal.App.2d 410, 412–413, 168 P.2d 776; Vickery v. Valdez (1931) 113 Cal.App. 135, 140–141, 298 P. 151; 2 Witkin, Cal.Procedure, p. 1516.) However the instant record discloses that at the beginning of the trial counsel for all parties entered into a number of stipulations included among which was a stipulation to the effect that respondents would have the right to disprove that appellant was the sole owner of Wm. E. Doud & Co. and to show that such real estate firm was comprised of other persons in addition to appellant. Under such circumstances we cannot conclude that the findings which appellant would exclude from our review were outside the issues. We therefore proceed to determine their effect upon appellant's right to recover even as a member of the real estate partnership.8

The California Real Estate Law (Bus. & Prof.Code, § 10000 et seq.)9 provides that it is unlawful for any person to engage in the business of or act as a real estate broker without first obtaining a real estate license (§ 10130); that among other things a real estate broker ‘is a person who, for a compensation or in expectation of a compensation, sells or offers for sale, buys or offers to buy, lists or solicits for prospective purchasers, or negotiates the purchase or sale or exchange of real estate, * * *’ (§ 10131); that among other things ‘person’ includes a copartnership (§ 10006); and that ‘[n]o person engaged in the business or acting in the capacity of a real estate broker or a real estate salesman within this State shall bring or maintain any action in the courts of this State for the collection of compensation for the performance of any of the acts mentioned in this article without alleging and proving that he was a duly licensed real estate broker or real estate salesman at the time the alleged cause of action arose.’ (§ 10136.)

At the outset therefore it appears that appellant and Hoffman were acting in the particular transaction at hand ‘without first obtaining a real estate license’ (see § 10130) for their partnership of Wm. E. Doud & Co. and that they are thus unable to bring or maintain the instant cross-complaint. (§ 10136; see Abrams v. Guston (1952) 110 Cal.App.2d 556, 557, 243 P.2d 109.) To state it another way, it was not alleged or proved in the instant case that appellant and Hoffman were licensed as partners doing business under the fictitious name of Wm. E. Doud & Co.

Appellant contends that where, as here, all members of a real estate partnership are individually licensed as brokers they may bring and maintain an action for a commission earned while acting as partners despite the fact that the partnership as such has not been separately licensed. To support this proposition appellant relies on Heinfelt v. Arth (1933) 135 Cal.App. 445, 27 P.2d 420 and Allen v. Gindling (1955) 136 Cal.App.2d 21, 288 P.2d 130.

In Heinfelt, the complaint alleged that the plaintiffs were partners doing business under the fictitious name of National Realty Company, that they duly recorded and published the required certificate of such fictitious name, and that each of the plaintiffs was licensed as a real estate broker. The trial court found that the National Realty Company as a copartnership was not alleged and proved to have been licensed as a real estate broker. Heinfelt arose under the California Real Estate Act (see Stats.1919, ch. 605, p. 1252 et seq.). The trial court there denied recovery on the sole ground that the partnership as distinguished from the individuals constituting the same was not separately licensed.10 Reversing such judgment, the court in Heinfelt stated that section 1 of the act (see footnote 10, ante) contained ‘an element of uncertainty and indefiniteness' since a partnership was not a separate entity and could not act as a broker except through its members; that in any action the real plaintiffs were not the partnership but the members thereof irrespective of the name under which they operated (citing, as appellant herein does, Ginsberg Tile Co. v. Faraone (1929) 99 Cal.App. 381, 278 P. 866); that consequently the essential thing would be the existence of a license covering each partner; that while the act ‘seems to provide’ (emphasis added) that a license may be issued to a partnership, it ‘contains neither a provision that this is the only way a partnership can be licensed nor any provision forbidding individuals who are fully licensed from acting in partnership with each other’ (135 Cal.App. p. 448, 27 P.2d p. 421); and that ‘[i]n the absence of a positive provision to the contrary * * * fully licensed individuals may work in partnership with each other without obtaining another license in the firm name * * *.’ (135 Cal.App. p. 450, 27 P.2d p. 422.) The court concluded: ‘In our opinion, a partnership is licensed as a real estate broker within the meaning of this act when each member of the partnership is licensed, whether through a general license or in the other way apparently authorized by the act although vaguely provided for, that is, through one in the name of the partnership, applying to the persons named therein, and to be supplemented by other licenses for those members not named therein. This action is by all of the individuals composing the copartnership and, each being licensed, the action can be maintained without alleging or proving a separate license in the name of the partnership.’ (135 Cal.App. at p. 450, 27 P.2d at p. 422.)

In the Allen case, the plaintiff J. Monroe Allen engaged in the real estate business under the name of Merle Allen Company, that being the name under which his father had operated it. Plaintiff was duly licensed individually, was the sole owner of the above real estate firm and had complied with the fictitious name statute. The court cited Heinfelt holding that its reasoning had a fortiori application.

We have not been referred to, nor has our research disclosed, any other cases dealing with the particular problem now engaging our attention.

However, pertinent to such problem are several regulations of the real estate commissioner adopted after the decision in Heinfelt and not discussed by the court in Allen.11

The following regulations of the commissioner applicable to partnerships doing business under a fictitious name are found in article 5 of title 10, California Administrative Code:

Section 2731: ‘No fictitious name shall be used by a broker in the conduct of any business for which a license is required under the Real Estate Law, unless a license bearing such fictitious name has been issued to said broker.’ (Emphasis added.)12

Section 2732: ‘No name will be placed on a license except the true name of the licensee or a name which has been registered as a fictitious name in accordance with Section 10159.5 or 10282.5.’ (Emphasis added.)13

In article 6 of title 10, dealing with partnership and corporate licenses, section 2740 provides in relevant part14 as follows: ‘Partnerships * * * may transact a brokerage business under the Real Estate Law if licensed through * * * members of the partnership who qualify as brokers provided the * * * partnership applies for and secures licenses for each such active * * * member. The license issued for a * * * partnership entitles qualified * * * member to transact business only for and on behalf of the * * * partnership. A separate license must be secured to enable the individual to transact business as an individual or for another firm.'15 (Emphasis added.)

We think that the above statutes and regulations make it clear that a partnership must be licensed in order to engage in the real estate business. Certainly the basic licensing requirements (§§ 10130, 10006) are couched in language embracive of a partnership. Section 10159 also speaks of a partnership being licensed through its members. If any ‘element of uncertainty and indefiniteness' existed in these provisions, as the court in Heinfelt appeared to think, we are satisfied that it has now been dissipated by the complete statutory and regulatory scheme which we have pointed out. The regulation of the commissioner (10 Cal.Admin.Code, § 2740) provides that partnerships may transact a brokerage business ‘if licensed through * * * members of the partnership * * * provided the * * * partnership applies for and secures licenses for each such active * * * member.’ (Emphasis added.) In our view, this plainly means that the partnership must be licensed separately from its members and that its members must hold licenses as members of such particular partnership, separate from and independent of whatever other brokers' licenses they may have.16 Indeed the rest of section 2740 makes it quite plain that the members of a particular partnership having been properly licensed as such members can act only for such partnership, and cannot merely by virtue of holding such partnership license transact business for themselves individually or for other firms. Conversely, brokers individually licensed cannot merely by virtue of such individual license act for a partnership or thereby confer a licensed status upon the partnership.

As we view the above law, one individual may hold more than one type of broker's license. He may be licensed as an individual, or as a member of one or more partnerships, or as an officer or employee of one or more corporations, all engaged in the real estate brokerage business. But his authority to act is separate in character deriving from each of his licenses and he is not invested with any power by one license to confer licensed status automatically on other brokerage firms in which he may be interested. Contrary to the court's views in Heinfelt v. Arth (see 135 Cal.App. 445, 448, 450, 27 P.2d 420; see footnote 15, ante), it is our opinion that the positive expression of the present laws and regulations impose a limitation on the license issued to a broker individually.

In addition, the foregoing regulations clearly provide that a partnership cannot do business under a fictitious name ‘unless a license bearing such fictitious name’ has been issued to it.17

We therefore hold that a real estate brokerage partnership must be separately licensed under and in the manner prescribed by the Real Estate Law and the regulations of the commissioner, and that such partnership does not become licensed within the meaning of these statutes and regulations when, and merely by virtue of the fact that, the individuals constituting its membership are individually licensed. Whatever persuasion the case of Heinfelt v. Arth may have once had, we are satisfied that its rationale can on longer be applied to the existing laws and regulations.

In the case at hand, the commission, if payable at all, was payable to Wm. E. Doud & Co., a partnership doing business under a fictitious name and composed of appellant and Hoffman. Such partnership had never filed or published a certificate of doing business under such fictitious name; had never become licensed as a real estate broker; and had never applied for and secured licenses for its members as such partners. It was neither alleged nor proved, as apparently it could not be, that such partnership, as distinguished from the individuals thereof, was ‘a duly licensed real estate broker * * * at the time the alleged cause of action arose’ (§ 10136).

The judgment is affirmed.

FOOTNOTES

1.  Nevertheless, as stated in the findings, it was admitted by Mr. Milam upon request for admissions by Kopf that the agreement was duly made, executed and delivered by Mr. Milam to Kopf and that Mr. Milam's signature was genuine. (In the answer to the request for admissions, Mrs. Milam denied that she signed, executed or delivered the document.)

2.  The listing agreement referred to in the findings by exhibit number provides in relevant part as follows: ‘For and in consideration of the services to be performed by Wm. E. Doud & Co., 71 Redhill Ave., S. A. hereinafter called agent, I (or we) hereby employ said agent as my (our) sole and exclusive agent to sell for me (us) the following described real property situated in the City of Larkspur, County of Marin, State of California, concerning which I have furnished said agent with the listing information set forth below: All that property commonly known as 30 Locust St., Larkspur, Calif. and I hereby grant said agent the exclusive right to sell the same for the price of $96,000 or such price and terms as shall be acceptable to me, and to accept a deposit thereon * * *. ‘This employment and authority shall continue irrevocably for the full period of not less than Four (4) Months from date hereof, and I agree to pay said agent or sub-agent six (6) per cent of the selling price as and for their compensation, in the event of a sale or an agreement to sell or exchange said real property by said agent or sub-agent or by anyone else including myself, while this contract is in force, * * * ‘In case a deposit is forfeited, one-half of same shall be retained by or paid to said agent or sub-agent, and one-half to me, provided however, that the agent's or sub-agent's portion of any forfeiture shall not exceed the amount of the full commission * * *.’

3.  After the statement of the terms and conditions of the offer, the name Wm. E. Doud & Co. is printed on a line designated ‘Real Estate Agent.’ Flanagan's signature appears immediately to the right on a line beginning with the word ‘By’ so that the document reads: ‘Wm. E. Doud & Co. (Real Estate Agent) by Thomas E. Flanagan.’ Immediately below appears the following: ‘The undersigned Buyer offers and agrees to purchase the above described property on the terms and conditions herein stated * * *’ under which are the signatures of Mr. and Mrs. Karliner on separate lines designated ‘Buyer.’

4.  The note provided: ‘In case any change is made in the title to all or any part of the property described in the deed of trust securing this note, the whole of said principal sum shall forthwith become due and payable at the election of the holder of this note.’

5.  The court's specific findings that performance by the Karliners as buyers of the terms and conditions of said receipt ‘was a necessary prerequisite before any commission could be earned,’ and that Flanagan's right to recover ‘is dependent upon the defendant KOPF having earned a commission’ are actually conclusions of law and are properly so considered although placed among the ‘findings of fact.’ (Estate of Blake (1910) 157 Cal. 448, 456, 108 P. 287, overruled on other grounds in Estate of Stanford (1957) 49 Cal.2d 120, 129, 315 P.2d 681; Howard Townsite Owners, Inc. v. Progressive Oil Co. (1961) 188 Cal.App.2d 24, 26, 9 Cal.Rptr. 856.)

6.  Lawrence Block Co. v. Palston (1954) 123 Cal.App.2d 300, 266 P.2d 856 was subsequently disapproved on other grounds in Mattei v. Hopper (1958) 51 Cal.2d 119, 126, 330 P.2d 625.

7.  The pretrial conference order recites that the issues are set forth in the pretrial statements.

8.  Appellant's contention that Hoffman was actually employed as his office manager receiving a percentage override on the profits of the firm in Marin County involves matters outside this record and cannot be here considered.

9.  Hereafter unless otherwise indicated all code references will be to the Business and Professions Code.

10.  Section 1 of the 1917 Act (on which Bus. & Prof.Code § 10130 is based) provided as follows: ‘It shall be unlawful for any person, copartnership, or corporation to engage in the business or act in the capacity of a real estate broker or a real estate salesman within this state without first obtaining a license therefor.’ Section 20 of said act (on which Bus. & Prof.Code § 10136 is based) is practically identical with § 10136 except that it begins: ‘No person, copartnership or corporation engaged in the business * * *.’

11.  See generally title 10, Cal.Admin.Code, § 2700 et seq. enacted pursuant to Bus. & Prof.Code § 10080, originally published March 22, 1945.

12.  Section 2730 of article 5, title 10, Cal.Admin.Code provides in relevant part that ‘[a] fictitious name * * * is one which does not identify * * * the members of a partnership * * *.’

13.  Bus. & Prof.Code § 10159.5 provides: ‘Every person applying for a license under this chapter who desires to have such license issued under a fictitious name shall file with his application a certified copy of both the entry of the county clerk and the affidavit of publication made pursuant to the provisions of Chapter 2 (commencing with Section 2466) of Title 10 of Part 4 of Division 3 of the Civil Code.’

14.  For clarity we omit references to corporations.

15.  It is to be noted that Bus. & Prof.Code § 10159 provides in part that ‘each member of a copartnership through whom it is licensed to act as a real estate broker, is, while so employed under such license, a licensed real estate broker, but licensed only to act as such for and on behalf of * * * the copartnership, as * * * member, * * *.’ This is based on § 8 of the 1917 Act which provided: ‘No real estate license shall give authority to do any act mentioned in section two of this act to any person, copartnership or corporation other than those to whom said license is issued; * * * and provided, further, that when a license is granted to a copartnership the members of said copartnership shall each be required to obtain a separate license, except as provided in section ten hereof.’ In Heinfelt, the court, while recognizing the limitations in § 8, observed: ‘[I]t is significant that they contain no limitation upon a license that is issued to an individual.’ (135 Cal.App. at p. 448, 27 P.2d at p. 421.)

16.  See 30 Ops.Cal.Atty.Gen. 238 wherein it is concluded ‘that where a real estate broker's partnership is dissolved by death, or otherwise, a continuation of the business on a partnership basis by a former or new members is a new partnership and must obtain a new real estate broker's license by making application and qualifying for such license and pay the fees required.’ (P. 239.) This opinion points out that ‘[a] real estate broker's license issued to a partnership extends only to that partnership and is effective during the existence of such partnership.’ (P. 239.)

17.  We point out that 10 Cal.Admin.Code § 2731 providing that no fictitious name shall be used by a broker whether individual, partnership or corporate, was adopted by the commissioner (as § 2730.5) after the real estate transaction which is the subject of Allen v. Gindling, supra, 136 Cal.App.2d 21, 288 P.2d 130, and therefore had no application to that case, as the court there notes. (See footnote, 136 Cal.App.2d p. 27, 288 P.2d p. 134.)

SULLIVAN, Justice.

BRAY, P. J., and MOLINARI, J., concur.

Copied to clipboard