This matter had its inception in the Municipal Court of the city of Columbus. The defendants seek a reversal of the judgment of the Municipal Court for $500 based upon a verdict of the jury. The pleadings are rather lengthy and we shall note only so much as is required to understand the issues.
The plaintiff alleges that on the 3rd day of February 1939 the defendants and The Norma Realty Company entered into a contract in writing whereby, through the plaintiff as broker representing both principals, they agreed to certain exchanges of property, one property, that of the defendants being located in Plain City, Madison county; the Columbus property owned by The Norma Realty Company being located on Washington avenue and Grove street.
The petition alleges that each of the principals promised to pay the plaintiff his commission on the accepted price of the properties, and further, that if either failed to fulfill within a reasonable time his part of the contract, nevertheless such party would pay the plaintiff his regular commission on the property to be exchanged, which commission is alleged in the case of the defendants to be $500. The petition alleges that The Norma Realty Company has at all times been ready, willing and able to fulfill its part of the contract, but that the defendants have wholly failed to fulfill their part of the contract, and that they have rendered the performance impossible by the sale of the Plain City real estate to another, all this to the damage of the plaintiff in the sum of $500. It is alleged that the plaintiff was duly licensed as a real estate broker at all times mentioned in the petition.
The defendants answered, admitting that they entered into a written contract on February 3, 1939, as alleged in the petition, but they deny all other allegations. As a further defense they say that when they signed such contract, the same was collateral to and wholly dependent upon another contract signed by the defendant, Loretta Karnes, on the same date, through the plaintiff as her agent. The defendants set out at length the terms of the second contract, and allege that they delivered both contracts to the plaintiff, as their
agent, with the direction and understanding that he would not deliver the first contract without the second; that the two contracts were interdependent and that neither should be effective unless both were consummated.
For a second defense the defendants plead the terms of the second contract and alleged that under the circumstances detailed in the second defense the plaintiff would collect a commission from the defendant Loretta Karnes on the second transaction, and that the plaintiff would waive the commission based upon the contract described in the petition; that the plaintiff did not carry out the terms of the second contract, and that as a consequence none of the defendants consummated any of the respective deals referred to in the pleadings.
As a third defense defendants allege that the contract sued upon was prepared by the plaintiff and not by an attorney. The defendants allege such preparation of the contract amounted to practice of law, and that for such reason the plaintiff is not entitled to collect under any of the terms thereof.
As a fourth defense defendants asserted that there is a limit of the amount of recovery to not more than $500.
As a reply the plaintiff denies that the contract alleged in the petition was collateral to or dependent upon any other contract; denies that he made any guarantee in reference to the second contract; and denies that he made any agreement to waive any commission under the terms as alleged in the answer. The plaintiff makes certain other specific denials which are not necessary to detail, and also pleads a general denial.
The verdict was for the plaintiff for $500.
During the trial the defendants interposed a number
of motions for a directed verdict and also after the verdict interposed a motion for judgment non obstante veredicto. The court overruled these motions and overruled the motion for a new trial. Notice of appeal was filed.
The defendants have filed an assignment of errors which may be briefly summarized as error of the court in refusing to give the defendants' special charge; error in the general charge; error in overruling defendants' motions and rejecting certain evidence; and that the verdict was contrary to law and against the manifest weight of the evidence. A bill of exceptions was filed showing that testimony was offered by the plaintiff and defendants each to sustain the allegations of their several positions. We have read this bill of exceptions and arrive at the conclusion that the court would not be justified in setting aside the judgment of the court below touching any of the plaintiff's motions filed either before the verdict or thereafter, as the same may relate to the evidence.
The court has found it rather difficult to follow the claims of counsel, especially that of the defendants, but has arrived at the conclusion that there was a separate and distinct contract for commission which will be noted later, and that the contract plead was not dependent upon or related to any other contract between the parties, but that the matters now under review relate solely to the first contract and the right of the plaintiff to recover thereunder.
Plaintiff's exhibit "A" is the contract dated February 3, 1939, between The Norma Realty Company and Loretta Karnes as the owners of the two tracts involved in a proposed exchange, and with the plaintiff touching his commission. The Norma Realty Company, being the owner of certain properties, agrees to exchange the same for a mortgage of $10,000 on a hotel
property located in Plain City, with conditions to equalize the value of the several properties due to existing mortgage liens. The Norma Realty Company agrees with the plaintiff that it will pay the regular commission with the understanding that in the event of exchange of properties, commissions may be received from both principals. Loretta Karnes likewise agrees to pay to the plaintiff his commissions. She being a defendant, we will set out this contract at length:
"I accept the above proposition this 3rd day of ______________ _________ 1939, and agree to pay your firm your regular commission of ___________________ on the accepted price of my property, and understand that in case of exchange of properties, commissions may be received from both principals. If I fail to fulfill within a reasonable time my part of this contract, I will pay your regular commission on my property."
Plaintiff's exhibit "B" is a copy of a letter from The Norma Realty Company to Loretta Karnes under the date of April 25, 1939, which calls attention to the fact that on February 14, 1939, Mrs. Karnes signed an acceptance of a proposal by the realty company to purchase from the company the Columbus property located at the corner of Washington avenue and Grove street. The letter stated that the realty company had been ready to proceed with this contract, and that the letter is formal notice that the realty company is tendering a deed for the premises, and that any delay in performance will result in damages to the realty company.
Plaintiff's exhibit "C" becomes of prime importance under the issues made in this case. It is a license to engage in real estate business for the year 1939, dated February 28, 1939. It states that George W. Pierce, the plaintiff, has been duly licensed as provided
by law by the state Board of Real Estate Examiners "from this date till December 31, 1939."
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This matter had its inception in the Municipal Court of the city of Columbus. The defendants seek a reversal of the judgment of the Municipal Court for $500 based upon a verdict of the jury. The pleadings are rather lengthy and we shall note only so much as is required to understand the issues.
The plaintiff alleges that on the 3rd day of February 1939 the defendants and The Norma Realty Company entered into a contract in writing whereby, through the plaintiff as broker representing both principals, they agreed to certain exchanges of property, one property, that of the defendants being located in Plain City, Madison county; the Columbus property owned by The Norma Realty Company being located on Washington avenue and Grove street.
The petition alleges that each of the principals promised to pay the plaintiff his commission on the accepted price of the properties, and further, that if either failed to fulfill within a reasonable time his part of the contract, nevertheless such party would pay the plaintiff his regular commission on the property to be exchanged, which commission is alleged in the case of the defendants to be $500. The petition alleges that The Norma Realty Company has at all times been ready, willing and able to fulfill its part of the contract, but that the defendants have wholly failed to fulfill their part of the contract, and that they have rendered the performance impossible by the sale of the Plain City real estate to another, all this to the damage of the plaintiff in the sum of $500. It is alleged that the plaintiff was duly licensed as a real estate broker at all times mentioned in the petition.
The defendants answered, admitting that they entered into a written contract on February 3, 1939, as alleged in the petition, but they deny all other allegations. As a further defense they say that when they signed such contract, the same was collateral to and wholly dependent upon another contract signed by the defendant, Loretta Karnes, on the same date, through the plaintiff as her agent. The defendants set out at length the terms of the second contract, and allege that they delivered both contracts to the plaintiff, as their
agent, with the direction and understanding that he would not deliver the first contract without the second; that the two contracts were interdependent and that neither should be effective unless both were consummated.
For a second defense the defendants plead the terms of the second contract and alleged that under the circumstances detailed in the second defense the plaintiff would collect a commission from the defendant Loretta Karnes on the second transaction, and that the plaintiff would waive the commission based upon the contract described in the petition; that the plaintiff did not carry out the terms of the second contract, and that as a consequence none of the defendants consummated any of the respective deals referred to in the pleadings.
As a third defense defendants allege that the contract sued upon was prepared by the plaintiff and not by an attorney. The defendants allege such preparation of the contract amounted to practice of law, and that for such reason the plaintiff is not entitled to collect under any of the terms thereof.
As a fourth defense defendants asserted that there is a limit of the amount of recovery to not more than $500.
As a reply the plaintiff denies that the contract alleged in the petition was collateral to or dependent upon any other contract; denies that he made any guarantee in reference to the second contract; and denies that he made any agreement to waive any commission under the terms as alleged in the answer. The plaintiff makes certain other specific denials which are not necessary to detail, and also pleads a general denial.
The verdict was for the plaintiff for $500.
During the trial the defendants interposed a number
of motions for a directed verdict and also after the verdict interposed a motion for judgment non obstante veredicto. The court overruled these motions and overruled the motion for a new trial. Notice of appeal was filed.
The defendants have filed an assignment of errors which may be briefly summarized as error of the court in refusing to give the defendants' special charge; error in the general charge; error in overruling defendants' motions and rejecting certain evidence; and that the verdict was contrary to law and against the manifest weight of the evidence. A bill of exceptions was filed showing that testimony was offered by the plaintiff and defendants each to sustain the allegations of their several positions. We have read this bill of exceptions and arrive at the conclusion that the court would not be justified in setting aside the judgment of the court below touching any of the plaintiff's motions filed either before the verdict or thereafter, as the same may relate to the evidence.
The court has found it rather difficult to follow the claims of counsel, especially that of the defendants, but has arrived at the conclusion that there was a separate and distinct contract for commission which will be noted later, and that the contract plead was not dependent upon or related to any other contract between the parties, but that the matters now under review relate solely to the first contract and the right of the plaintiff to recover thereunder.
Plaintiff's exhibit "A" is the contract dated February 3, 1939, between The Norma Realty Company and Loretta Karnes as the owners of the two tracts involved in a proposed exchange, and with the plaintiff touching his commission. The Norma Realty Company, being the owner of certain properties, agrees to exchange the same for a mortgage of $10,000 on a hotel
property located in Plain City, with conditions to equalize the value of the several properties due to existing mortgage liens. The Norma Realty Company agrees with the plaintiff that it will pay the regular commission with the understanding that in the event of exchange of properties, commissions may be received from both principals. Loretta Karnes likewise agrees to pay to the plaintiff his commissions. She being a defendant, we will set out this contract at length:
"I accept the above proposition this 3rd day of ______________ _________ 1939, and agree to pay your firm your regular commission of ___________________ on the accepted price of my property, and understand that in case of exchange of properties, commissions may be received from both principals. If I fail to fulfill within a reasonable time my part of this contract, I will pay your regular commission on my property."
Plaintiff's exhibit "B" is a copy of a letter from The Norma Realty Company to Loretta Karnes under the date of April 25, 1939, which calls attention to the fact that on February 14, 1939, Mrs. Karnes signed an acceptance of a proposal by the realty company to purchase from the company the Columbus property located at the corner of Washington avenue and Grove street. The letter stated that the realty company had been ready to proceed with this contract, and that the letter is formal notice that the realty company is tendering a deed for the premises, and that any delay in performance will result in damages to the realty company.
Plaintiff's exhibit "C" becomes of prime importance under the issues made in this case. It is a license to engage in real estate business for the year 1939, dated February 28, 1939. It states that George W. Pierce, the plaintiff, has been duly licensed as provided
by law by the state Board of Real Estate Examiners "from this date till December 31, 1939."
It is the claim of the defendants that on the 3rd day of February 1939 at the time the contract was entered into whereby the defendants agreed to pay the commission to the plaintiff, he was not a licensed real estate dealer, and that therefore his contract is void and that he has no right to claim or to recover commissions.
In the trial of the case, and especially in the assignment of errors presented to this court, practically the whole defense revolves around the claim that the plaintiff at the time he made the contract was not a licensed real estate dealer.
This brings us to the examination of the law controlling real estate brokers which may be found in Chapter 27a, Sections 6373-25 to 6373-51, General Code. Section 6373-26, General Code, provides that:
"No person, firm or corporation shall act as a real estate broker or as a real estate salesman, or advertise or assume to act as such, without first being licensed so to do as provided in this act."
The several sections provide for the examination and qualification of the individual seeking the license, and Section 6373-38, General Code, provides that each license issued shall expire on the 31st day of December of the year in which it is issued; but each license shall be renewed upon application therefor if made within 90 days after the date of its expiration, without recommendation, examination or inquiry. Any licensee failing to make application for renewal of license within such period of 90 days shall be subject to all the requirements of this act applicable to persons who have never been licensed.
Section 6373-48, General Code, provides:
"No right of action shall accrue to any person, firm
or corporation for the collection of compensation for the performance of the acts mentioned in section one of this act without alleging and proving that such person, firm or corporation was duly licensed as a real estate broker or real estate salesman, as the case may be, at the time the cause ofaction arose." (Italics ours.)
The plaintiff testifies that he was licensed as a real estate dealer in the year 1938, but admits that there was no license issued to him for the year 1939 until February 28, 1939. It will be observed that the statute, Section 6373-38, General Code, states in part that "each license issued under this act shall expire on the 31st day of December of the year in which it is issued" and the claim of the defendants is that the plaintiff's 1938 license, by the provision of the statute, expired on the 31st day of December, 1938, and that the new license did not take effect until its issue upon February 28, 1939, and that consequently, on the 3rd day of February 1939, the date of the contract, the plaintiff was an unlicensed real estate dealer without any right of action for the collection of compensation for the performance of the acts mentioned in the statute.
The plaintiff urges that under the provision of Section 6373-38, General Code, providing that the license shall be renewed upon the application therefor if made within 90 days after the date of expiration, he was a licensee by virtue of the 1938 license for 90 days after the statutory period of expiration, which was the 31st day of December 1938, and that if his 1939 license was issued within the 90 days of grace that it would cover the period subsequent to December 31st until the date of the new license. The defendants take the view that the 90 days of grace after the date of the expiration of the license for 1938 relates only to the provision that if the application for renewal be made within
that period that the licensee may have his new license "without recommendation, examination or inquiry."
Upon the consideration of this matter we are of the view that under the statute the license of 1938 expired on the 31st of December 1938 and that the provision that an application for renewal could be made within 90 days without recommendation, examination or inquiry relates solely to the right of the licensee to secure a new license without presenting any of the preliminary matters that were required of one who had never before been licensed. It follows that on February 3rd, when the original contract was signed, and February 14th when the defendants signed an acceptance of the proposal made by The Norma Realty Company, the plaintiff was not a licensed real estate broker or salesman.
What right is withheld from one who is not licensed in reference to the collection of fees? Section 6373-48, General Code, provides that no right of action shall accrue for the collection of compensation for the performance of the acts without alleging and proving that such person was duly licensed "at the time the cause of action arose."
The plaintiff's petition asserts that the defendant breached the contract on the 28th day of June 1939 by then refusing to consummate the exchange of her property for that of the realty company as secured by the plaintiff.
The defendants before argument offered to the court a special charge asking that the same be submitted to the jury:
"If you find that he was not a duly licensed agent on the 3rd day of February, 1939, then your verdict should be for the defendants."
The court refused this charge. The court in the general charge charged Section 6373-48, General Code, that:
"No right of action shall accrue to any person, firm or corporation for the collection of compensation for the performance of the acts * * * without alleging and proving that such person, firm or corporation was duly licensed as a real estate broker or real estate salesman, as the case may be, at the time the cause of action arose. `At the time the cause of actionarose' does not mean the time of the signing of the paper of the parties thereto, but from the time of the alleged breach of the contract."
The court then charged in substance that the action was upon an agency contract instituted by the plaintiff to recover damagesfor breach of an alleged contract. "It therefore becomes important that you thoroughly understand the elements of the contract," and the court then charged as to contractual relations, and to the effect that "before the plaintiff is entitled to a verdict, he must show by a preponderance of the evidence the material facts that constitute a contract. The burden rests upon the plaintiff to show by a preponderance of the evidence that the contract was entered into; he must show that there was a breach of the contract as claimed by him in the petition, and he must show by a preponderance of the evidence damage or loss which he has sustained. If he has not sustained this burden then you should render a verdict for the defendants. If on the other hand plaintiff has shown you by a preponderance of the evidence that there was a breach of this contract by the defendants, and that he has been damaged, then he is entitled to recover."
It will be readily perceived that if the requested charge of the defendants is a correct statement of the law, then the refusal of the court to give it is fatal to the judgment of the court below. If on the other hand the court was correct in refusing to give the special
charge and if his general charge is a correct statement of the law, then so far as the charge of the court is concerned, no error has intervened.
It is difficult for us to definitely ascertain the legislative intent in denying the right of action without alleging and proving that the broker was duly licensed at the time the causeof action arose.
Section 6373-26, General Code, provides that no person shall act as a broker without first being licensed. And Section 6373-49, General Code, provides that whoever violates the provisions of that section shall upon conviction be fined not to exceed $500. Those two sections would indicate that the individual may not act as a broker without having a license under penalty of punishment, and the provisions for penalty tend to support the claims of the defendants that under the provisions of Section 6373-48, General Code, no right of action accrues to an individual for compensation for performing any of the acts unless he has been licensed. However, we must give attention to the further provision of Section 6373-48, General Code, that he has no right of action unless he was licensed "at the time the causeof action arose."
Considering the contract entered into by the parties we can not bring ourselves to the view that his cause of action which was the breach of the contract entered into on February 3rd arose on that date when the parties agreed to exchange their properties. This agreement was secured by the plaintiff. The defendants were liable to the plaintiff for his compensation in the event the parties consummated the deal. If through the fault of the defendants the deal was not consummated, then the defendants were liable. This did not occur until the 28th of June when the Plain City property was sold to others. This was four months after the plaintiff had secured a license to engage in the
real estate business. We can not take the narrow view that in an action of this kind based upon a breach of contract, that the cause of action arose upon the parties entering into a contract which gave neither of them a right of action until something further arose between the parties. The Legislature may have had good reason to so draft the law as to permit transactions to be conducted between parties which in themselves might never ripen into a right of action. The Legislature might well have said that they were to recover nothing if at the time of the contract the broker was not licensed. The Legislature avoided this and made the right to recover dependent upon the possession of a license upon the date when the cause of action arose.
We have examined the other assignments of error and find that none of them are fatal to the judgment if we are right in our conclusion that the plaintiff could recover if at the time of thebreach of the contract he was a licensed broker.
The judgment of the court below is affirmed and the cause remanded.
Judgment affirmed.
HORNBECK and BARNES, JJ., concur.
ON MOTION of Grace M. Pierce.