Opinion
For Opinion on Hearing, see 106 Cal.Rptr. 761, 507 P.2d 65.
Opinions on pages 817 to 856 omitted.
Rehearing granted in case that appeared on pages 817 to 849.
Hearing granted in case that appeared on pages 850 to 856. The subsequent opinion not certified for publication.
[99 Cal.Rptr. 293]John E. Thorne, representing Thorne, Stanton, Cloptin, Herz, Stanek & Steinberg, San Jose, for plaintiff and respondent.
David W. Lennihan, representing Brobeck, Phleger & Harrison, San Francisco, for defendants and appellants.
SIMS, Associate Justice.
Defendants, the general partners in Triad, a limited partnership, and Triad itself, have appealed from a judgment which awarded the respondent Tyrone, who was made a party plaintiff by amendment of the complaint at the commencement of the trial, the sum of $200,000 with interest from April 9, 1965 as an agreed fee for finding a lender which committed itself to lend Triad the moneys it sought to finance construction of an office building.
The defendants contend that the evidence does not support the finding that there was an agreement to pay a fee in the amount of $200,000 or roughly equivalent to 3 percent of the amount of the loan commitment, nor the finding that there was an agreement to pay any fee to Tyrone, individually, doing business as Financial Services, Ltd., nor the finding that the defendants, individually, as distinguished from Triad, the limited partnership, had any dealings with Financial Services, Ltd. They also assert that neither Financial Services, Ltd., the partnership, with which Triad Allegedly did deal, nor Tyrone, doing business under that name, can recover in this action because the business was not licensed under the laws of this state as a real estate broker, and because the business did not comply with the fictitious name statute.
It is concluded that the evidence was sufficient to sustain the court's finding that there was an agreement to pay a fee of $200,000; that the court erred in determining that the agreement was with Tyrone, individually, as distinguished from with Financial Services, Ltd., a partnership; that the court erred, but not prejudicially, in finding that two of the general partners in Triad contracted individually for the fee; that on the record neither Tyrone nor Financial Services, Ltd. can recover because of a failure to comply with the provisions of section 10136 of the Business and Profession Code; and that the court on the record properly overruled defendants' plea predicated on lack of compliance with the fictitious name statute. For reasons set forth below the judgment is reversed and remanded for further proceedings.
In 1963 defendant Hare, Brewer & Kelley, Inc., a corporation involved in the real property development business, was engaged in developing a shopping center-office tower combination development. The construction of the office building, which involved the financial commitment which gave rise to this controversy, was undertaken by the defendant Triad, a limited partnership. William K. Kelley, Ryland Kelley, Alma Developments, a limited partnership, Hare, Brewer & Kelley, Inc., a corporation, and Portola Development Company, a corporation, as general partners, and ten limited partners made up the partnership when the loan commitment was secured. All of the general partners were [99 Cal.Rptr. 294] made defendants in this suit. General partners William K. Kelley and Ryland Kelley represented Triad in all matters involved in this action.
Although the caption of the complaint designates 'William E. Kelley, individually and as a partner in Triad, a limited partnership', the answer and subsequent documents including the judgment refer to 'William K. Kelley' etc.
William Hammond, one of the original plaintiffs in this action was engaged in the business of securing F.H.A., G.I. and conventional home loans for savings and loan and insurance companies. Prior to the events giving rise to this controversy he had formed a partnership with the plaintiff William Sockle and had built some houses and some apartments in Las Vegas. At some time in the spring or early summer of 1963, Sockle made arrangements with Financial Services, Ltd. whereby Sockle became the latter's western states' representative. Hammond, through Sockle, became associated with Financial Services, Ltd. and subsequently carried its card.
The original complaint named 'Financial Services, Ltd., a corporation' as the third plaintiff. In their answer the defendants alleged as a second affirmative defense that Financial Services, Ltd., as a foreign corporation transacting intrastate business in California, had not qualified to do business and lacked capacity to sue under the provisions of section 6801 of the Corporations Code. At the outset of the trial, on the motion of the attorney for three named plaintiffs and his representation that Financial Services, Ltd. was not a corporation, the court ruled, over the defendants' objection, that the complaint could be amended on its face to show that Norman Tyrone and Financial Services, Ltd. are one and the same. The plaintiff and respondent, Tyrone, testified that Financial Services, Ltd. was a partnership consisting of himself, who signed as president, his wife, his brother and Richard N. Robinson, who signed for the enterprise as vice-president. According to its letterhead, Financial Services, Ltd. was engaged in business as 'Financial Consultants-Mortgage Bankers-Appraiser-Real Estate Brokers' with offices in Atlanta, New York and Miami, and representatives throughout the world. By August 1964, when the loan commitment was negotiated by Triad, it had established a fourth office in Santa Monica, California.
Corporation Code section 6801 provides: 'A foreign corporation subject to the provisions of Chapter 3 of this part which transacts intrastate business in this State without complying therewith shall not maintain any action or proceeding upon any intrastate business so transacted in any court of this State, commenced prior to compliance with Chapter 3 until it has complied with the provisions thereof, and has paid to the Secretary of State a penalty of two hundred fifty dollars ($250) in addition to the fees due for filing the copy and statement required by Sections 6400 and 6403. and has filed with the clerk of the court in which the action is pending. receipts showing the payment of said fees and penalty and all franchise taxes and any other taxes on business or property in this State that should have been paid for the period during which it transacted intrastate business.'
In May 1963, apparently as a result of nationwide publicity about the shopping center project, there was a telephone conversation between Tyrone and W. K. Kelley, which was followed up by a letter subscribed 'Financial Services, Ltd., Norman Tyrone President' offering to help in securing financing for the shopping center. A copy of this letter was sent to Sockle.
In the late summer of 1963, Hammond, as correspondent of a large mortgage banking company, came to the real estate office of Hare, Brewer & Kelley, to discuss G.I. and F.H.A. home loans. He was advised that the firm had their own correspondent. Ryland Kelley told him about their office complex and their desire to finance it and a shopping center with a construction loan of $14,000,000. Hammond told Kelley, with Sockle and Financial Services, Ltd. in mind, that he had contacts who were interested in loans of the magnitude required. According to Ryland Kelley, he committed Triad to pay a fee of from 5 to 10 percent [99 Cal.Rptr. 295] of one percent of the amount of the loan. Hammond denied that there was any discussion of a fee for securing a loan. The trial court apparently accepted Hammond's version.
Thereafter Hammond furnished a three page application form bearing the legend at the end, 'Financial Services, Ltd. Mortgage Bankers.' This form and 11 additional pages were filled out and signed by Ryland Kelley on behalf of 'Kelley et al.' as the prospective mortgagor. The data sheets for both the office tower, and the shopping center each included under 'Other Costs,' 'Misc. Fees & Commissions $200,000.00.' Although the application is undated, it includes and architect's statement of the areas contained in the tower, dated October 31, 1963, and a general statement of the nature of the two developments, dated November 4, 1963.
Hammond sent the application to Sockle who forwarded it on to Financial Services, Ltd in Atlanta. Tyrone testified that on the receipt of the application, about the middle of November 1963, he telephoned W. K. Kelley to verify that the Kelleys were seeking the loan and had executed the application form. It was in this conversation, which is reviewed below, that Kelley allegedly agreed to a fee of $200,000, being a rounded off 3 percent of $7,000,000.
The court found that following the conversation with Kelley, '. . . Tyrone, phoned a lender, The Sixty Trust, in Rhode Island and found that their representative, Mr. John Cervieri was in San Francisco on business . . .. Tyrone, then phoned from Atlanta, Georgia, to Mr. Cervieri in San Francisco and asked him to call upon the Defendants at Defendant's office in Palo Alto, as The Sixty Trust was a lender of money. This representative of The Sixty Trust called upon the Defendants, but after talking with them for some time concerning the possible basis for The Sixty Trust to finance Defendant's building, the Defendants advised the representative that the costs would be too high and they would not pursue the matter further.'
After the meeting between the representative of The Sixty Trust and the defendants (the Kelleys), Tyrone visited their office in Palo Alto, and suggested that they revise their request by treating the financing for the office building and that for the shopping center separately. Although there is some confusion as to whether this meeting occurred before or after the meeting with Cervieri the evidence sustains the court's finding that it was later.
On December 10, 1963 vice-president Robinson wrote Ryland Kelley suggesting two methods of accomplishing the financing plan for the proposed shopping center and office building. At that time the Kelleys considered the proposals as unsatisfactory.
Both Tyrone and the Kelleys continued to endeavor to find a lender to lend funds for the construction of the office building. In July or August 1964 the Kelleys reopened negotiations with The Sixty Trust. These negotiations resulted in a final commitment April 9, 1965 for a loan in a maximum sum of $7,000,000. On August 7, 1964, W. K. Kelley wrote Hammond that they were getting together with the representative of The Sixty Trust and should be negotiating a fee. On the same day Tyrone, in writing Hammond about another matter which had been referred to financial Services, Ltd., stated 'Bill [presumably Sockle] undoubtedly has posted you on Bill Kelley's deal which we hope we are going to wrap up in very short order.' On August 12, Cervieri, the representative of The Sixty Trust, advised Tyrone that a loan had been approved for the building. On August 17 Tyrone wrote to W. K. Kelley for Financial Services, Ltd. that he had assured Cervieri, 'I will meet with you immediately upon my return and conclude the fee arrangement.' On August 21, 1964 the general counsel for The Sixty Trust wrote the Kelleys regarding the documents necessary for the commitment and pointed out. '. . . our first call on [99 Cal.Rptr. 296] this project came from Norman Tyrone of Financial Services, Ltd., although he has not been active since the call. We assume that you will make appropriate arrangements with his office and with your own broker.' A copy of this letter was sent to Tyrone, as president of Financial Services, Ltd. on October 14, 1964. The final commitment agreement required Triad to pay 'all expenses of the transaction . . . including, without limitation . . . commissions and compensation, if any due any broker, finder or similar agent. . . .'
Hammond came in and was told that Triad was prepared to pay a fee of $10,000. Hammond said he could not discuss it, that he would have to consult with Tyrone. Thereafter the three met. W. K. Kelley repeated his offer and Tyrone and Hammond insisted upon 2 percent of the loan commitment. Kelley said, 'Let the attorneys handle it.' This action ensued.
I
The trial court found: 'Following the receipt of this request [the loan application form and exhibits], Plaintiff [Tyrone] phoned Defendants and spoke with William Kelley to arrange the fee that would be received by Plaintiff if he were successful in fulfilling Defendants' request. Defendants at that time agreed to pay to Plaintiff a fee of $200,000.00 which it was agreed was approximately 3% of the financing being sought by Defendants.'
Tyrone testified that in the telephone call he advised Kelley, and Kelley recognized, that the office building loan was a difficult loan to place, because the debt service and expenses were not covered by existing leases, that they discussed the question of the fee and Kelley said, "Well, you get me any kind of a commitment that I can live with because I have got to do something and do it very fast"; that he, Tyrone, said, "Well, anything that we would do we would expect a fee of ordinarily five per cent, but from all that I learn of your company you are a highly ethical company, and we would do it for three per cent,"; that the 3 percent figure was very specifically mentioned. Tyrone further testified that in his conversation with Kelley he adverted to the $200,000 allocated for miscellaneous fees and commissions in the cost statement for the tower, and told Kelley 'I presume, Mr. Kelley, that in this financing here you are taking the part of the financing as one of it--in one of these deals as the financing that would go to banks and lenders? . . . 'Three per cent is roughly rounded to $200,000 of $7,000,000,' . . . 'Therefore, our fee of $200,000 is already reflected in the cost,''; and that he then wrote down the figure '3%' which appears inserted in front of the $200,000 figure on the ninth page of the application. W. K. Kelley denied that he ever had any conversation with Tyrone concerning fees, until a dispute developed as outlined above. When asked if Kelley did agree in the phone call that he would pay 3 percent if Tyrone found a lender, Tyrone replied, 'Mr. Kelley, of course, was very evasive in the point specifically, but he said that whatever is fair. And I said, 'Well, three percent is [99 Cal.Rptr. 297] what we want if we do the deal.' And he said, 'We'll work out a commitment." At a subsequent meeting Kelley stated, according to Tyrone, that if we found him a satisfactory commitment, that fees would not be a problem, that he, Kelley, had to have a commitment.
There was conflicting evidence over the significance of this item. It was first noted by the trial judge before Tyrone testified. He elicited the following answer from Ryland Kelley: 'The miscellaneous fees and commission involves primarily the leasing services, the costs of commission to lease the premises paid to real estate brokers who bring in the tenants, and those fees including things such as permits involved with the City and just a miscellaneous category of--I don't know whether, for example, a soils test would be in that or not.' The plaintiff, however, took the position that leasing commissions should be properly changed to expense against rental income, and offered evidence to that effect. On cross-examination Ryland Kelley acknowledged that the miscellaneous fees and commissions may have contained the projected cost figures for possible fees for finders or brokers. No one explained why when at the time the borrowers were seeking a $14,000,000 loan, the $200,000 figure for the office building was singled out to the exclusion of the $200,000 figure for the shopping center. It was only after the Kelleys talked to Cervieri that separate financing was discussed.
Defendants contend that Tyrone's testimony that Kelley was very evasive, and said 'whatever was fair' was a rejection of the 3 percent figure and a counteroffer to pay whatever was fair. This contention fails to consider the whole of the testimony of Tyrone. It permits the finding that the statement of the requisite fee, by the offeror, together with directions to proceed by the offeree made a binding contract.
No purpose would be served by reviewing the various circumstances which each side relies upon to establish its contention. Even if this court were impressed with the inconsistencies in some of the evidence (see fn. 3 above), it cannot substitute its judgment of the weight of the evidence for that of the trial court.
II
Throughout the findings the court refers to Norman Tyrone as the contracting party. Defendants contend that the uncontradicted evidence reflects that all negotiations by Tyrone were in his capacity as president of Financial Services, Ltd., and that Financial Services, Ltd. was a partnership.
The unverified complaint, filed in the action on October 5, 1965, was brought in the name of William Hammond, William Sockle and Financial Services, Ltd., a corporation. Over the signatures of respondent's present attorney, the aforementioned plaintiffs alleged agreement, performance on their part and failure to perform on the part of the defendants. There are no allegations concerning to capacity in which any of the plaintiffs acted. In an unverified answer filed July 13, 1966, the defendants, as a second affirmative defense, alleged on information and belief, 'That plaintiff Financial Services, Ltd. is a foreign corporation transacting intrastate business in California and has not qualified to do such business and that this action is barred by the provisions of the Corporations Code of California § 6801.' (See fn. 2 above.)
In connection with his opening statement at the trial on February 25, 1969, the attorney for the plaintiffs stated that he had learned that Financial Services, Ltd. was not a corporation at the time in question, that Norman Tyrone was simply doing business under that name, and that he had announced to the defendants at the taking of a deposition on June 24, 1966 that Norman Tyrone was a plaintiff. He moved that the title of the complaint be amended to show Norman Tyrone as a plaintiff.
At the conclusion of the opening statement of the attorney for the defendants the court ascertained that the defendants conceded that some one of the plaintiffs was entitled to a reasonable, but not a 3 percent, fee; and that the plaintiffs had arranged among themselves, and were not concerned with respect to which plaintiff recovered the judgment. The court pointed out, 'With regard to the amendment of the Complaint, the pleading is very simple in the sense that there is no allegation as to capacity of any party in the Complaint as far as the plaintiffs, and, therefore, I see no prejudice to amend the Complaint except possibly with regard to special defense.' The defendants agreed that the amendment would affect only the special defense, but did not withdraw the objection interposed when the plaintiff's attorney first suggested to amendment. The court indicated that the defendants would not be prejudiced by losing that special defense, and ruled as follows: 'At this time the [99 Cal.Rptr. 298] Complaint may be amended on its face to show, assuming the evidence supports it, that Mr. Norman Tyrone and Financial Services are one and the same, an individual d. b. a.'
Tyrone testified that Financial Services, Ltd. or himself would retain 25 percent of the fee to cover expenses and office overhead; and that the balance of the fee would be divided one-half, or 37 1/2 percent, to Financial Services, Ltd. or himself as compensation; and one-half, or 37 1/2 percent, to Sockle for himself and Hammond as their compensation.
The evidence failed to show the existence of any entity such as Norman Tyrone, doing business as Financial Services, Ltd. Tyrone acknowledged in his testimony that Financial Services, Ltd. was a partnership, and the court found: 'Financial Services [sic] was a partnership of which Norman Tyrone was a partner.'
The evidence establishes that at all times Tyrone purported to act as agent, to wit, president, for Financial Services, Ltd. From the original offer of services May 10, 1963 through the letter of August 17, 1964 in which a meeting was planned to 'conclude the fee arrangement,' all correspondence is subscribed Financial Services, Ltd. followed by the signature of the president, or vice-president. The application from bore the partnership name, and as late as December 6, 1965, after this action had been filed, Tyrone as president represented that the $200,000 fee was an account receivable of Financial Services, Ltd. Correspondent from Hammond, and from The Sixty Trust was addressed to Tyrone in his representative capacity, or to Financial Services, Ltd. directly.
Respondent Tyrone does not seriously question the foregoing facts. He contends that since the defendants, through the Kelleys only dealt with a man named Norman Tyrone, he should be permitted to recover. This overlooks the fact that at all times Tyrone represented himself as acting for Financial Services, Ltd. 'Unless otherwise agreed, a person making or purporting to make a contract with another as agent for a disclosed principal does not become a party to the contract.' (Rest., Agency 2d (1958) § 320.) 'An agent who makes a contract on behalf of a principal cannot maintain an action thereon in his own name on behalf of the principal although authorized by the principal to bring suit, unless the agent is a promisee or transferee.' (Id., § 363.) The following comments to the last section are pertinent: 'a. The fact that an agent negotiates a contract for a principal does not enable him to maintain an action in his own name against the other party thereto for its breach; nor can the principal create a cause of action in favor of the agent merely by giving him authority to bring an action in his own name . . . . [p] b. An agent authorized to negotiate a contract does not thereby have authority to bring suit on account of the principal . . . [p] c. The right of the agent to maintain an action in his own name may be of more than procedural importance, since it may enable suit to be brought in a jurisdiction or court in which action could not be brought in the principal's name.' (Id., p. 140.)
'It is well established that an agent who is liable to his principal for the price of the thing sold may institute in his own name an action for the purchase price. [Citations.]' (Walter J. Warren Ins. Agency v. Surpur Timber Co. (1967) 250 Cal.App.2d 99, 104, 58 Cal.Rptr. 143, 146; and see Code Civ.Proc., § 369.) Moreover, the following rule is recognized, 'Unless otherwise agreed, an agent who has or who acquires an interest in a contract which he makes on behalf of his principal can, although not a promisee, maintain such action thereon as might a transferee having a similar interest.' (Rest., Agency 2d (1958) § 372, subdivision (1).) This rule applies in the following circumstances, 'One who has made a contract on behalf of another may become an assignee of the contract and bring suit against the other party to it, as any other transferee. The customs of business or the course of conduct between the principal and the agent may indicate that an agent who ordinarily has merely a security interest is a transferee of the principal's rights under the contract and as such is permitted to bring suit. It the agent has settled with his principal with the understanding that he is to collect the claim against the obligor by way of reimbursing himself for his advances and commissions, the agent is in the position of an assignee who is the beneficial owner of the chose in action. He [99 Cal.Rptr. 299] has an irrevocable power to sue in his principal's name . . .. And, under the statutes which permit the real party in interest to sue, he can maintain an action in his own name.' (Id., Comment a, p. 158.)
On the other hand it is stated, 'An agent does not have such an interest in a contract as to entitle him to maintain an action at law upon it in his own name merely because he is entitled to a portion of the proceeds as compensation for making it or because he is liable for its breach.' (Id., § 372, subdivision (2).) 'The fact that an agent who makes a contract for his principal will gain or suffer loss by the performance or nonperformance of the contract by the principal or by the other party thereto does not entitle him to maintain an action on his own behalf against the other party for its breach. An agent entitled to receive a commission from his principal upon the performance of a contract which he has made on his principal's account does not, from this fact alone, have any claim against the other party for breach of the contract, either in an action on the contract or otherwise. An agent who is not a promisee cannot maintain an action at law against a purchaser merely because he is entitled to have his compensation or advances paid out of the purchase price before payment to the principal. . . .' (Id., Comment d, p. 161.)
Tyrone's capacity as a partner in a partnership gave him no greater right to sue on his own behalf. A partner is merely an agent of the partnership. (See Corp.Code, § 15009.) 'The general rule at common law is that in actions on partnership contracts, since there are joint contracts, all persons who were partners at the time must join as plaintiffs by their individual names.' (2 Rowley on Partnership (2d ed. 1960) § 49.2, subd. A, pp. 267-268, fn. omitted.) 'At common law nonjoinder of all partners as plaintiffs, in action ex contractu, may be raised as a ground of nonsuit because of variance; or pleaded in abatement; or if apparent on the face of the record, taken advantage of by demurrer, motion in arrest or error. In tort the defect can be taken advantage of only by plea in abatement. Under the codes nonjoinder of a partner as plaintiffs should be raised by demurrer if apparent of record; or if not so apparent, by answer; else the objection is deemed waived. Ordinarily one partner cannot sue alone on a firm contract not executed in his own name.' (Id., at pp. 270-271, fns. omitted.)
At the time the complaint was filed, October 5, 1965, Financial Services, Ltd., as a partnership, could not sue in its own name. It was necessary to join all of the partners. (Ginsberg Tile Co. v. Faraone (1929) 99 Cal.App. 381, 387, 278 P. 866; and see 3 Witkin, Cal.Procedure (2d ed. 1971) Pleading, § 76, p. 1751.) In 1967 (Stats.1967, ch. 1324, § 1, p. 3150) section 388 of the Code of Civil Procedure was amended to provide in part as follows: '(a) Any partnership . . . may sue . . . in the name which it has assumed or by which it is known.' (See Witkin, op. cit., § 77, pp. 1752-1753.) Therefore, at the time of trial, February 25, 1969, the plaintiff could have moved to amend to show that Financial Services, Ltd. was a partnership rather than a corporation. The effect of lack of publication under the fictitious name statute is discussed below. No such amendment was proposed. Instead Tyrone, the president of the business entity, elected to amend to plead that he individually, doing business as Financial Services, Ltd., contracted with the defendants.
Even if the statute had not been amended, since the negotiations were admittedly conducted with an entity denominated as 'Financial Services, Ltd.,' the complaint could probably have been amended to show that the real parties plaintiff were the members of the partnership, naming them, doing business as Financial Services, Ltd. (See Ginsberg Tile Co. v. Faraone, supra, 99 Cal.App. 381, 387-389, 278 P. 866, and Ginsberg v. Faraone (1932) 126 Cal.App. 337, 339-341 and 343, 14 P.2d 777.)
It is no answer to say that nominal or dormant partners need not be joined. [99 Cal.Rptr. 300] (See 2 Rowley, op. cit., § 49.2, subds. B and C, pp. 271-272.) The fact remains that at no time did the action purport to be prosecuted by or for the benefit of the partnership, as distinguished from Tyrone personally.
In Williams v. Southern Pac. R. R. Co. (1985) 110 Cal. 457, 42 P. 974, the court stated: 'There is no doubt that at common law all members of a partnership, except dormant or merely nominal partners, must be joined as plaintiffs in an action of this character [to recover compensation for work done at the defendant's request], and that, before the Code, a motion for nonsuit made as in this instance would have been sustained.' (110 Cal. at p. 459, 42 P. at p. 974.) The court examined the code legislation as follows: '. . . our legislation provides that, of the parties to an action, those who are united in interest must be joined as plaintiffs or defendants (Code Civ.Proc., sec. 382); that the defendant may demur to a complaint for defect of parties plaintiff (section 430); that, if the defect does not appear on the face of the complaint, the objection may be taken by answer (section 433); and that, if objection on that ground be not taken by demurrer or answer, the defendant is deemed to have waived the same (section 434).' ( Id., pp. 459-460, 42 P., p. 974.) On the ground that the question of waiver had not been raised, it distinguished earlier cases which had held that proof of a partnership claim under allegations of an individual claim was a failure of proof. ( Id., p. 461, 42 P. 974. See Weinreich v. Johnston (1889) 78 Cal. 254, 257, 20 P. 556; and McCord v. Seale (1880) 56 Cal. 262, 264.) The court concluded, 'The object of the statute is to bring the parties to speedy issue and trial on the merits; and we are of opinion, following the incontestable trend of authority, that the absence as parties of some of the partners from a complaint by one or more of them on a partnership demand does not, speaking strictly, affect the merits, and in order to be considered, must be pleaded by the defendant. The motion for nonsuit was therefore properly denied.' (Id., pp. 461-462, 42 P. 975. See also Ah Tong v. Earle Fruit Co. (1896) 112 Cal. 679, 682, 45 P. 7.)
The decision in Williams is predicated upon the theory of waiver (see Code Civ.Proc., §§ 430, subd. 4 and 434). It presupposes that the defendant had or should have had knowledge of the nonjoinder of the partners as parties plaintiff. Here the plaintiffs sued jointly, apparently as joint venturers, in the name of two individuals and a corporation. The outward manifestations of the negotiations conducted on behalf of Financial Services, Ltd. were consistent with its existence as a corporation. Defendants questioned the right of the corporation to sue. Then plaintiff asserted that Financial Services, Ltd. was merely a fictitious name under which Tyrone individually did business The defendants, as discussed below, objected to his right to sue under such circumstances. Then the plaintiff's evidence finally disclosed the existence of a partnership. Tyrone, as the principal agent of Financial Services, Ltd., after his equivocal and evasive positions with respect to the nature of that entity, cannot in equity and good conscience urge that the defendants waived the right to have the true nature of the entity with whom they dealt determined, and the right to urge such defenses as they might have against it.
The court found that there never was any agreement for a fee between the defendants and the plaintiff Hammond. This finding, although on conflicting evidence, is supported by Hammond's testimony. It further found that the division of the fee between the three plaintiffs was not before the court and beyond the purview of this action. Since Hammond and Sockle were parties to the action they are bound by that finding, and it may be assumed that the court found that they were not proper parties plaintiff because the negotiations were conducted by, and the contract for a fee, was entered into, by another (be it Tyrone, individually, or Financial Services, Ltd., a partnership). (See Freeman v. Jergins (1954) 125 Cal.App.2d 536, 557-559, 271 P.2d 210; and Sime v. Malouf (1949) 95 Cal.App.2d 82, 117, 212 P.2d 946, 213 P.2d 788.)
[99 Cal.Rptr. 301]The court erred in awarding judgment to Tyrone, individually. Whether that error was prejudicial is discussed below.
III
The trial court found that Tyrone (i. e., Financial Services, Ltd., see above) was requested by each of the five general partners 'individually and as a general partner in Triad, a limited partnership' (emphasis added) to locate for them someone who would finance the construction of their office building. The application from 'Kelley et al.' and signed by Ryland Kelley as 'Partner' does not otherwise refer to the entity which is seeking a lender or is to receive the loan. W. K. Kelley allegedly arranged for the fee. Ryland Kelley signed the application, and Hare, Brewer & Kelley, Inc. are named as developers of both projects. Whether the principal, Triad, be considered a partially disclosed, or an undisclosed principal, Financial Services, Ltd. was entitled to consider the Kelleys and their real estate firm, as agents, as parties to the contract, and as well Triad itself. (See Rest., Agency 2d (1958) §§ 321 and 322.)
The findings, however, are technically inaccurate in stating that the other two general partners individually requested the services which were rendered. This inaccuracy is of no moment. The contracting party was entitled on proof of agreement and breach by Triad to recover judgment against the partnership and those general partners who were joined as parties to the action and who appeared therein. (Code Civ.Proc., § 388. See also Fazzi v. Peters (1968) 68 Cal.2d 590, 596-597 and fn. 7, 68 Cal.Rptr. 170, 440 P.2d 242; Harbor City Canning Co. v. Dant (1927) 201 Cal. 79, 86-87, 255 P. 795; Rudolph v. Johnson (1932) 127 Cal.App. 451, 458, 16 P.2d 152; Corp. Code, §§ 15015, 15509; and 1 Rowley on partnership (2d ed. 1960) § 15(b), subd. G, pp. 418-419.)
Section 388 of the Code of Civil Procedure provided in part at the time of judgment, and now provides: '. . . (b) Any member of the partnership or other unincorporated association may be joined as a party in an action against the unincorporated association. If service of process is made on such member as an individual, whether or not he is also served as a person upon whom service is made on behalf of the unincorporated association, a judgment against him based on his personal liability may be obtained in the action, whether such liability be joint, joint and several, or several.'
No prejudicial error is found in the form in which the defendants are referred to in the findings and judgment.
IV
In their answer the defendants asserted that the plaintiffs, as originally named, were barred from suit by the provisions of sections 10130, 10131 and 10136 of the [99 Cal.Rptr. 302]Business and Professions Code, and applicable provisions of Title 10 of the California Administrative Code.
These sections provided and provide in pertinent part:
The court found: 'None of the Plaintiffs at any time involved in this case have been licensed as real estate brokers or salesmen in the State or California.' It also found: 'As a finder, Plaintiff, Tyrone, is neither required to be licensed nor to file a fictitious name certificate. At all times involved in this case, the Plaintiff, Norman Tyrone, was a non-resident of California and maintained his office and his business outside of the State of California. The loan application information was sent to him out of the State of California and his services were performed out of the State of California. Financial Services was a partnership of which Norman Tyrone was a partner. Financial Services is not a corporation. At all times mentioned, Plaintiff, Norman Tyrone, had his principal place of business in Atlanta, Georgia.' The court concluded: 'Plaintiff, Norman Tyrone, acted as a finder in performing services for the Defendants and not as a broker and was not required to be licensed.'
As has noted above, financial Services, Ltd., the partnership, was the contracting party. Nevertheless, the activities upon which defendants must rely to establish a violation of the local law are the same whether attributable to Tyrone individually or to his principal. Therefore, if the court's conclusion was correct as to Tyrone it was correct as to his principal, and conversely if the activities reflect the necessity of a license neither could recover the promised fee.
In Batson v. Strehlow (1968) 68 Cal.2d 662, 68 Cal.Rptr. 589, 441 P.2d 101, in determining whether a licensed broker was an agent with a fiduciary duty to disclose his interest to his principal or a mere 'finder' or 'middleman' without such a duty, the court observed, '. . . we do not adjudicate defendant's legal status by a mere labeling process. In scrutinizing the record, we assess his function in the transaction by the role he played as well as by his description in the cast; we consider what he did, as well as what he called.' (68 Cal.2d at p. 670, 68 Cal.Rptr. at p. 595, 441 P.2d at p. 107. See also Hasekian v. Krotz (1968) 268 Cal.App.2d 311, 320, 74 Cal.Rptr. 410.) In Shaffer v. Beinhorn (1923) 190 Cal. 569, 213 P. 960, the unlicensed plaintiffs alleged performance of an agreement 'that, if the plaintiffs, or either of them, would find any one interested in the purchase of [a ranch which was listed for sale with the defendant as real estate agent and broker], to whom the said defendant would be able to negotiate a sale thereof, or would introduce to said defendant anyone to whom the said defendant would be able to negotiate a sale thereof, he . . . would pay unto the plaintiffs . . . two-thirds of the gross commission . . . .' (190 Cal. at p. 571, 213 P. at p. 961.) The court examined the provisions of the existing regulatory act (Stats.1919, ch. 605, § 2, p. 1252) and concluded, 'In order to come [99 Cal.Rptr. 303]within the definition of real estate broker or real estate salesman a party must 'sell or offer to sell, buy or offer to buy, or negotiate the purchase or sale or exchange or real estate . . .' By the terms of their contract as pleaded the plaintiffs were only required 'to find' or 'to introduce' to defendant a person 'interested' in purchasing and who subsequently did purchase, in order to recover the sum agreed by defendant to be paid to them. By the terms of the contract, as set forth in the complaint, the 'negotiation' of the sale was to left entirely to defendant. Plaintiffs' only duty was to produce a prospective purchaser. This, the complaint alleges, they did. The complaint expressly negatives any further act or acts on the part of plaintiffs which might tend to bring them within the scope of the definition, denying specifically and in practically the identical words of the statute itself that they 'sold or offered to sell, bought or offered to buy, or negotiated the sale . . . of real estate . . .' The truth of this allegation is admitted by demurrer. The acts of plaintiffs, therefore, as alleged in the complaint fall short of those defined by the Real Estate Brokers' Act, as constituting either a real estate broker or real estate salesman.' (190 Cal. at pp. 573-574, 213 P. at p. 962.)
In 1917 when the Legislature first provided for the regulation, supervision, and licensing of teal estate brokers, agents, salesmen and solicitors, a teal estate broker was defined in part as one 'who for a compensation sells or offers for sale, buys or offers to buy or negotiates the purchase or sale or exchange of real estate, or who, for compensation negotiates loans on real estate, . . .' (Stats. 1917, ch. 758, § 2, p. 1579.) This language was continued in the new regulatory statute adopted in 1919 and construed in Shaffer v. Beinhorn, supra, in 1923 (Stats.1919, ch. 605, § 2, p. 1252).
In this case the court expressly found. 'All negotiations between the Defendants and The Sixty Trust for the loan commitment were carried on by the Defendants directly and Plaintiffs did not participate in any negotiations for the terms of or for said loan commitment.' The defendants objected to this finding on the grounds that it was only applicable to negotiations conducted after the defendants resumed discussions with the lender. At the request of the defendants the court did find as follows: 'After the meeting between the [99 Cal.Rptr. 304]representative of the Sixty Trust and the Defendants, Plaintiff Tyrone visited the Defendants in Palo Alto, California, and suggested Defendants revise their request by treating separately the financing for the shopping center and the financing for the office building'; and 'Following the meeting between Plaintiff Tyrone and the Defendants in Palo Alto, California, the Plaintiff and the Defendants each continued to endeavor to find a lender to lend funds for the project on which Defendants were embarked, namely construction of the office building.'
Defendants contend that the following services rendered by financial Services, Ltd. indicate that it was dealing as a real estate broker within the code provisions: 1. In May 1963 it requested W. K. Kelley to contact Financial Services, Ltd. for help in financing the proposed shopping center.
2. Through its subrepresentative Hammond it offered to assist in financing the development as it was proposed in the late summer or fall of 1963.
3. It furnished application forms, and through Hammond assisted in the submission of 'a package' so that Financial Services, Ltd. could study the matter over, make its own appraisals of the project to determine which lenders it would contact to consider taking the project; that it had to make a preliminary inquiry to different lenders and decide who would be interested in the project.
4. Soliciting lenders by sending The Sixty Trust a copy of the application and supporting documents; by requesting their representative, Mr. Cervieri, to go to Palo Alto and check out the development which was the subject of the proposed loan; and, as found by the court, by continuing to endeavor to find a lender to lend funds for the project after original negotiations between the Kelleys and The Sixty Trust proved fruitless.
5. By suggesting to the defendants, as found by the court, that their request be revised by separating the financing of the shopping center and that for the office building.
In Hasekian v. Krotz (1968) 268 Cal.App.2d 311, 74 Cal.Rptr. 410, the court stated, 'Hasekian's admitted activity in studying the maps and exhibits in the package to acquire familiarity with the location and terrain, and in submitting 'the package' to three or four other prospects all bespeak services of a character normally performed by a broker, but not by a finder.' (268 Cal.App.2d at p. 323, 74 Cal.Rptr. at p. 417. See also Rhode v. Bartholomew, 94 Cal.App.2d 272, 279, 210 P.2d 768; 33 Ops.Cal.Atty.Gen. 6., Opinion No. 58-225 (1959) at p. 13.)
The fact that the defendants did their own negotiating for the terms of the loan has been stressed by respondent and the trial court. The court found: 'All negotiations between the Defendants and The Sixty Trust for the loan commitment were carried on by the Defendants directly and Plaintiffs did not participate in any negotiations for the terms of or for said loan commitment.' In 1952, despite the amendments of 1929 (see fn. 9 above), a reviewing court stated: 'The cited case [Shaffer v. Beinhorn] was decided, as noted, some 29 years ago and in the intervening time successive Legislatures have met and have made no amendments to the pertinent language of the enactment which would change the scope of the Legislature's definition of who was a real estate broker as that definition was contained in the act current at the time the Supreme Court made its decision. Under such circumstances we think it clear that the Legislature has acquiesced in the interpretation of the statute as give and that no justification could be found for any different interpretation now. As pointedly observed by the trial judge in his memorandum opinion, no license is required for the simple act of introducing one person to another--yet.' (Crofoot v. Spivak (1952) 113 Cal.App.2d 146, 148, 248 P.2d 45, 46. See also Zappas v. King williams Press, Inc. (1970) 10 Cal.App.3d 768, 772-773, 89 Cal.Rptr. 307.)
Neither the 1929 amendments, nor the 1959 amendments (see fn. 9 above) yet require a license for the simple act of intro-ducing [99 Cal.Rptr. 305]one person to another. Nevertheless, if one undertakes to engage in the business of communicating with prospective borrowers, in order to present their needs to potential lenders with a view to earning a commission if a transaction results, he cannot escape finding himself categorized as one who 'solicits borrowers or lenders for . . . loans secured directly or collaterally by liens on real property . . .' (Bus. & Prof.Code, § 10131, subd. d; see fn. 8 above.) To hold otherwise would violate the legislative intent expressly set forth in 1959 amendments (see fn. 9 above).
The trial court erred insofar as it found and concluded that Tyrone's acts were not such as would constitute him or his principal a real estate broker as the term is defined in the statutes of this state.
Two questions remain. Were the activities which rendered Financial Services, Ltd. a real estate broker within the definition contained in the law of this state, inherent to the agreement upon which recovery is sought, and if so did the acts of Financial Services, Ltd. through its agents subject it to the control and jurisdiction of this state?
V.
In Freeman v. Jergins, supra, it was contended that the plaintiff's services in finding and arranging an introduction of a representative of an investment partnership (through whose efforts a sale of stock was ultimately effected) to the prospective sellers, could not support the seller's promise to pay reasonable compensation if such a sale was effected, because the promise was unlicensed in California, and engaged in activities in which a permit for engaging in the sale of securities was required. The court disposed of this contention as follows: 'The next phase of the question arises from the claim that plaintiff is claiming compensation for services for which he was required to be licensed, namely, offering the property of the defendants for sale and negotiating for a sale of it. Although this contention is advanced with much vigor, we are of the opinion that it is without merit. In the first place, plaintiff had done everything that he was required to do when he brought about the introduction of Lee. That constituted performance on his part, and it is that performance and nothing else for which he seeks compensation. If he did more than that it was not in performance of anything that he had undertaken to do or was required to do in order to earn his compensation. He is not suing for compensation earned as a result of his efforts in effecting a sale, but claims it solely on the basis of his introduction of Lee and the results of the efforts of Smith-Barney. Even if he had engaged in some activity that was not required of him, and which was wholly apart from the full performance of his agreement, this would not be a defense against liability of the defendants to him for the full performance of a valid agreement in a lawful manner.' (125 Cal.App.2d at p. 546, 271 P.2d at p. 217.)
So here the respondent claims that he (or his firm) had performed all that was undertaken when he picked up the telephone and told a representative of The Sixty Trust to call on the defendants' representatives. The fee was earned, contingent only upon the fact that a commitment be subsequently effected between the prospective borrower and potential lender. The earlier solicitation of Kelley in May 1963 may be disregarded as only relevant to the shopping center, and as in no way contributing to the arrangements effected through Hammond. Respondent, or his principal, cannot however avoid the fact that an application and data were requested for evaluation of the borrowers' financial position, and needs, and presumably for use in soliciting and obtaining an appropriate lender. Nor is it denied that Financial Services, Ltd., though its officers, furnished advice to the borrower in connection with separating its loan requests, or that Financial Services, Ltd. continued to solicit prospective lenders after The Sixty Trust proposal was first rejected. If a second, third or fourth prospective lender had ultimately given the commitment it would [99 Cal.Rptr. 306]clearly reflect that Financial Services, Ltd. was engaged in soliciting lenders for a real estate loan. The fact that the borrower ultimately returned to the first prospective lender does not detract from the necessary conclusion that the agreement contemplated that Financial Services, Ltd. would, and that it did, solicit lenders for a real estate loan. The contract, and the performance thereunder cannot be tailored to come within the limited agreement approved in Freeman v. Jergins, supra.
VI
The trial court in the findings which have been set forth above stressed the fact that the respondent (the representative of Financial Services, Ltd.) at all times involved was a nonresident of California and maintained his office and his business outside of this state. This fact would not necessarily relieve him from compliance with the local regulations if the transaction, although interstate in character, involved local activity. In Robertson v. People of State of California (1946) 328 U.S. 440, 66 S.Ct. 1160, 90 L.Ed. 1366 it was urged that because the business of insurance could not be regulated locally because it had been held that it was subject to the Sherman Anti-Trust Act as commerce between the states when it involved transactions across state lines. (United States v. South-Eastern Underwriters Assn. et al. (1944) 322 U.S. 533, 553, 64 S.Ct. 1162, 88 L.Ed. 1440. Cf. Paul v. Virginia (1869) 8 Wall. [75 U.S.] 168, 183, 19 L.Ed. 357.) The court held that a state could impose licensing requirements upon an insurer soliciting business through radio and mailed literature, and require its agents, acting within the state, to be licensed. (See 328 U.S. at pp. 447-449 and pp. 455-461, 66 S.Ct. 1160. See also California v. Zook (1949) 336 U.S. 725, 737, 69 S.Ct. 841, 93 L.Ed. 1005; and California v. Thompson (1941) 313 U.S. 109, 115, 61 S.Ct. 930, 85 L.Ed. 1219.) It was unnecessary to consider the subsequently enacted McCarran Act under which Congress expressly authorized such regulation (see id., 328 U.S. at pp. 461-462, 66 S.Ct. 1160; and note People v. United National Life Ins. Co. (1967) 66 Cal.2d 577, 583-595, 58 Cal.Rptr. 599, 427 P.2d 199 [app. dismissed 389 U.S. 330 88 S.Ct. 506, 19 L.Ed. 2d 562].) So here, although the business of soliciting borrowers and/or lenders for real estate loans on land situated in California may affect interstate commerce so as to subject it to Federal regulation (cf. Perez v. United States (1971) 402 U.S. 142, 91 S.Ct. 1357, 28 L.Ed.2d 686, 690), it does not solely thereby become exempt from local regulation.
A more serious question is presented by the issue as to whether the activities contemplated and performed under the contract upon which respondent relied brought the transaction within the orbit of the local regulatory statute. In two cases the courts of this state have upheld the payment of commission with respect to the sale of land situated outside the state. In Hayter v. Fulmor (1944) 66 Cal.App.2d 554, 152 P.2d 746, the plaintiff alleged that the defendant delivered to him a power of attorney to sell land in Alaska and promised to pay him a stated commission. The court found that the agreement was governed by the law of this state, and that plaintiff was exempt from licensing as the holder of a power of attorney. (See present § 10133, subd. (b).) In applying the law of this state the court stated, 'It is the general rule of contracts that the lex loci contractus, or law of the place where the agreement is made, determines the nature, validity and construction of the instrument, unless it appears therefrom that it is to be performed in another state. [Citations.]' (66 Cal.App.2d at p. 558, 152 P.2d at p. 748. See also Bitterman v. Schulman (1943) 265 A.D. 486, 39 N.Y.S.2d 495, and on further proceedings (1944) 267 A.D. 858, 46 N.Y.S.2d 250, aff'd. (1944) 293 N.Y. 678, 56 N.E.2d 294. Cf. Meltzer v. Crescent Leaseholds, Ltd. (S.D.N.Y.1970) 315 F.Supp. 142, 146-147.) Since the ultimate performance was to be the sale and conveyance of the Alaska land it is arguable that the agreement contemplated performance in Alaska.
This last thought was pursued in Cochran v. Ellsworth (1954) 126 Cal.App.2d 429, 272 P.2d 904 where the court affirmed [99 Cal.Rptr. 307]a judgment against a California licensed broker because the sale of Arizona land was never consummated as was required by his contract. In the course of the opinion, however, the court rejected a contention that the transaction was governed by, and illegal under, the law of Arizona, the situs of the land involved, and the place where the brokerage contract was executed. The court recognized the rule applied in the earlier case without citing it. In Cochran the opinion notes, 'Three possible rules have been suggested for ascertaining the law governing the validity of a contract: (1) the intention of the parties; (2) the place of performance; (3) the place of making the contract. These are discussed at length by Beale in 23 Harvard Law Review 260 ff., and he concludes (p. 272) that 'the principle which is both sound theoretically and most practical in operation is the principle that contracts are in every case governed as to their nature and validity by law of the place where they are made.'' (126 Cal.App.2d at p. 434, 272 P.2d at p. 907.) It then pointed out, 'Ordinarily the 'last act essential to the validity' of a brokerage contract is not the signing of authorization to act. The mere engagement of a broker to dispose of specified property does not create an enforceable contract, for the broker is not obligated to find a purchaser. An enforceable contract does not result until the broker finds one able and willing to buy the property at the authorized price. The validity of such a contract is to be determined by the law of the state where the contract was consummated, that is, the place where the purchaser was found. [Citation.] This is not inconsistent with the rule that the lex loci contractus determines the validity and legal effect of a contract; it is merely a method of ascertaining the loci contractus.' (Id., p. 435, 272 P.2d, p. 908.) The court after reviewing other authorities observed, 'Therefore courts will frown upon efforts to avoid payment of a just claim merely because an agreement was signed in a place requiring a license.' ( Id., p. 437, 272 P.2d p. 909.) It concluded, 'In the instant case we have a contract for personal services, most of which the parties well know had already been performed in California, and the balance of which they contemplated to be performed in California. In this situation the bare physical act of signing the written instrument was a fortuitous fleeting and relatively insignificant circumstance in the total contractual relationship between the parties. It should not be elevated to paramount importance, particularly when to do so will serve only the purpose of rendering invalid an otherwise legal agreement.' ( Id., pp. 437-438, 272 P.2d, p. 909. See also Johnson v. Delane (1955) 77 Idaho 172, 290 P.2d 213.)
The defendants contend that a strict rule as to the place of contracting should govern, and that the contract was formed, if respondent's testimony is taken at face value, when Kelley in California acceded to his demand for a $200,000 fee. (See Travelers Ins. Co. v. Workmen's Comp. App. Bd. (1967) 68 Cal.2d 7, 14-15, 64 Cal.Rptr. 440, 434 P.2d 992.) On the other hand, respondent contends, and the court in effect found, that any of the local incidents of the transaction was, as stated in Cochran, supra, '. . . a fortuitous, fleeting and relatively insignificant circumstance in the total contractual relationship between the parties.'
It is unnecessary to pursue the foregoing contentions because they are predicated upon choice of law involving land outside of the forum. Since here the land, and the borrowers to be protected lie within the forum further considerations affect the choice of law. Professor Ehrenzweig in an article entitled 'The Real Estate Broker and the Conflict of Laws, 59 Cal.L.Rev. (1959) 303' reviewed the existing authorities and concluded as follows: 'A simple pattern emerges, as should typically result from analyses of other conflicts problems on a specific factual basis: The forum will apply its own law if this is required by the policy which was the primary reason for the adoption of that law. In the case of real estate brokerage contracts, this will occur whenever an employment contract for the sale of local real estate is in issue, regardless of whether the broker is[99 Cal.Rptr. 308]local or foreign or whether the employment contract was executed (or was to be performed) within or without the forum state. Forum law will also be applied where the employment contract concerns the sale of foreign real estate if the court feels that the protective purpose of the foreign lex situs can substantially be achieved by compliance with the standards of the forum, again without regard to the broker's domicile or the place of contracting.' (59 Cal.L.Rev. at p. 309. See also cases collected Annotations (1945) 159 A.L.R. 266 and (1933) 86 A.L.R. 640.)
The principle that the forum will select the law necessary to carry out the public policy of domestic law was recognized and applied in Travelers Ins. Co. v. Workmen's Comp. App. Bd., supra, 68 Cal. 2d 7, 14-15, 64 Cal.Rptr. 440, 434 P.2d 992.) There the court stated, 'California has rejected the traditional mechanical solutions to choice-of-law problems and adopted foreign law only when it is appropriate in light of the significant interests in the particular case. The significance of extra-state elements varies directly with the nature of the forum's interest in a given case. Thus, California maintains a stronger interest in applying its own law to an issue involving the right of an injured Californian to benefits under California's compulsory workmen's compensation act than to an issue involving torts or contracts in which the parties' rights and liabilities are not governed by a protective legislative scheme that imposes obligations on the basis of a statutorily defined status . . . Even if the employee may be able to obtain benefits under another state's compensation laws, California retains its interest in insuring the maximum application of this protection afforded by the California Legislature. [Citations.]' (68 Cal.2d at pp. 11-12 and 13, fns. omitted, 64 Cal.Rptr. at pp. 442-443, 434 P.2d at pp. 994-995.) The interest in maintaining the protection which the Legislature has provided in the laws regulating real estate transactions and those engaged in that business dictates that California law be applied. (See Riley v. Chambers (1919) 181 Cal. 589, 592-594, 185 P. 855; and People ex rel. Savage v. L. A. Trust Deed etc. Exchange (1961) 190 Cal. App.2d 66, 75-77, 12 Cal.Rptr. 144.)
In Cochran v. Ellsworth, supra, the court noted, 'In many jurisdictions it has been held that an isolated transaction does not preclude recovery of a commission by a nonresident unlicensed real estate broker where he is not shown to be otherwise carrying on the business of a real estate broker in the state. (Ressler v. Marks, 308 Pa. 205, 162 A. 666, 86 A.L.R. 638; Boggan v. Clark, 141 Miss. 849 [105 So. 760]; Land Co. of Florida v. Fetty, 5 Cir., 15 F.2d 942; Vossler v. Earle, 273 Ill. 367, 112 N.E. 687.)' (126 Cal.App.2d at p. 434, 272 P.2d at p. 907. See in addition to the cases cited, Roberts v. Ross (C.A.3d 1965) 344 F.2d 747; and Circelli v. Braunstein (D.Del.1958) 165 F.Supp. 168, 172-174.) In this state, as noted in Cochran to be the law in Arizona, until 1961 there was an express provision of law which rendered the performance of one act, a violation of law if the actor was unlicensed. (See former §§ 10134 and 10134.1.) At the time of the repeal of those sections, the definitions were amended to include anyone who 'does or negotiates to do one or more of the following acts for another or others . . .' (Stats.1961, ch. 886, §§ 4, 12, 13 and 14, pp. 2325 and 2327.) The law expressly provides for the licensing of nonresidents. (See §§ 10131.5 and 10151.5.)
It is concluded that the respondents' firm by soliciting the defendants as borrowers, and by undertaking to, and actually soliciting others as lenders for a loan to be made on the security of land situated within this state, subjected itself to regulation and licensing by this state. (See Reed v. Kelly (C.A. 7, 1949) 177 F.2d 473, 475; Goldsmith v. Walker Manufacturing Co. (E.D.Wis.1969) 295 F.Supp. 1037, 1040; Dolan v. Ramacciotti (Mo.1971) 462 S.W.2d 812, 815; Miller Nationwide R. E. Corp. v. Sikestan Motel Corp. (Mo.1967) 418 S.W.2d 173, 177-178; Schmidt v. Earl (1968) 83 S.D. 245, 158 N.W.2d 184; and Tanenbaum v. Sylvan Builders, Inc. (1958) 50 N.J.Super. 342, 354-355, 142 A.2d 247, [99 Cal.Rptr. 309]253-254. Note also, Meltzer v. Crescent Leaseholds, Ltd. (S.D.N.Y.), supra, 315 F.Supp. 142 at p. 147 re law of situs of land.)
VII
At the commencement of the fourth day of trial the defendants moved to amend their answer to allege noncompliance with section 2466 of the Civil Code regulating the use of fictitious names. On plaintiff's representation that the statute applied only to California residents the motion was taken under submission. Thereafter, defendants introduced into evidence a 'Certificate of Fact of Non-Finding' which indicated that there was no indexed record of the name of Financial Services, Ltd., or Financial Services, Limited, in the office of the county clerk of Los Angeles County. The respondent acknowledged that he could not recall ever signing a certificate with respect to doing business under the fictitious name. A second certificate indicated that no corporation of the name in question had ever qualified in California.
Civil Code section 2466 provides in pertinent part: 'Except as otherwise provided in the next section every person transacting business in this State under a fictitious name . . . must file with the clerk of the county in which his or its principal place of business is situated, a certificate subscribed and acknowledged in the manner provided in Section 2468 of the Civil Code, . . .'
Apparently there was no ruling on defendants' motion. Evidence was introduced to show Tyrone's activities on behalf of Financial Services, Ltd. in this state. At the conclusion of the presentation of plaintiff's case, the defendants moved for a nonsuit upon the ground that it was established that there was no compliance with the requirements of section 2466 of the Civil Code. The court denied the motion. At the end of the trial the court made the following finding: 'The Defendants are not prejudiced by the Plaintiffs' amendment to the complaint naming Plaintiff, Tyrone, as an individual, for it made no difference to them whether they were dealing with a partnership, an individual, or a corporation. As a finder, Plaintiff, Tyrone, is neither required to be licensed nor to file a fictitious name certificate. At all times involved in this case, the Plaintiff, Norman Tyrone, was a non-resident of California and maintained his office and his business outside of the State of California. The loan application information was sent to him out of the State of California and his services were performed out of the State of California. Financial Services was a partnership of which Norman Tyrone was a partner. Financial Services is not a corporation. At all times mentioned, Plaintiff, Norman Tyrone had his principal place of business in Atlanta, Georgia.' The court concluded: 'Plaintiff was not required to file a certificate of doing business under a fictitious name.'
In denying the motion the court observed: '. . . I'd like your comments on this. If, as Mr. Lennihan contends and as I am inclined to believe there was a period when some business was being transacted in this state, but the business of Mr. Tyrone is no longer being transacted in the state, is it necessary to abate the trial and require him to file a certificate that he is transacting business in the state if he, in fact, is not transacting in the state at the present time? I don't believe that the appellate courts would require us to do a useless act since it is not jurisdictional in any event. So I am going to deny your motion at this time, and the record will reflect my remarks.'
The defendants had requested the following finding: 'Financial Services Ltd. is and at all times mentioned herein has been a partnership, of which plaintiff Norman Tyrone is a partner.
[99 Cal.Rptr. 310]Record produced by the defendants reflect that on May 14, 1964 a Santa Monica savings and loan association leased a suite to 'Financial Services, Ltd. and/or Financial Services International' for a three-year term commencing June 1, 1964 at a rental of $223.20 per month; that on February 11, 1965 the lease was amended with a party designated as Elliott Roosevelt International Bank and Trust Ltd.; and that a note dated January 23, 1967 was given the lessor by Financial Services, Ltd. The original lease and the note were signed by Tyrone as president of Financial Services, Ltd. Correspondence in this case to and from Tyrone as president of Financial Services, Ltd. during the month of August 1964 bore the Santa Monica address for the addressee, and as the point to reply to the sender.
In J & J Builders Supply v. Caffin (1967) 248 Cal.App.2d 292, 56 Cal.Rptr. 365 the court said, 'Section 2466 of the Civil Code is designed to make available to the public, and especially to creditors, the identities of persons who are doing business under fictitious names for the purpose of benefiting creditors; . . .' (248 Cal.App.2d at p. 295, 56 Cal.Rptr. at p. 369.) The requirement and the prohibition do not apply to a transaction conducted by an individual in his own name, even though he may do some other business under a fictitious name. (See Dennis v. Over-holtzer (1960) 178 Cal.App.2d 766, 774, 3 Cal.Rptr. 193 [overruled other grounds (1963) 60 Cal.2d 206, 221]; Devencenzi v. Donkonics (1959) 170 Cal.App.2d 513, 518, 339 P.2d 232; and Jeffery v. Volberg (1958) 159 Cal.App.2d 815, 819-820, 324 P.2d 964.) Here, however, as has been demonstrated, the services were contracted to be rendered and were rendered by a partnership doing business under a fictitious name.
'The language of section 2466 . . . clearly implies that it was intended to apply only to partnerships having 'a local habitation' or 'a principal place of business' situated in this state.' (Moon v. Martin (1921) 185 Cal. 361, 365, 197 P. 77, 79. See also Smith v. Pittler (1928) 95 Cal.App. 101, 105, 272 P. 789; and Haun v. Rosenmayer (1920) 46 Cal.App. 353, 356-357, 189 P. 117.) The facts here do not come within the exception in the foregoing cases. The record shows that the partnership through its president, a general partner, rented and incurred an obligation for the rental of office space within this state, and that in 1964 it was conducting business from that office concerning the very claim at issue in this case. For the same reason the partnership cannot raise any constitutional objection to the plea. (Cf. Moon v. Martin, supra, 185 Cal. 361, 365-366, 197 P. 77.)
The objection to the maintenance of an action because of failure to comply with the fictitious name statute may be waived. (See Rivers v. Beadle (1960) 183 Cal.App.2d 691, 701-702, 7 Cal.Rptr. 170; Jeffery v. Volberg (1958) 159 Cal.App.2d 815, 820, 324 P.2d 964; and Kadota Fig Assn. v. Case Swayne Co. (1946) 73 Cal.App.2d 796, 805, 167 P.2d 518.) 'The discretion of the trial judge in denying a motion to amend an answer for the purpose of raising a plea of abatement under section 2466 of the Civil Code will not be disturbed on appeal. [Citation.]' (Stewart v. San Fernando Ref. Co. (1937) 22 Cal.App.2d 661, 663-664, 71 P.2d 1118, 1119. See also Paff v. Ottinger (1916) 32 Cal.App. 439, 442, 163 P. 230.) Here, for reasons set forth above, there was no waiver and the action of the trial [99 Cal.Rptr. 311]court cannot be defended on these principles.
-26] Nevertheless, the record fails to show conclusively that this condition existed on October 5, 1965 when the action was filed, or on May 4, 1969 when the issue was raised at the trial. 'An objection to the maintenance of an action on the ground that plaintiff has not complied with the provisions of sections 2466 and 2468 of the Civil Code by filing and publishing the certificate required thereby, is a mere matter of abatement pending the trial, which has the result of suspending the trial until the statute is complied with. It is not jurisdictional. [Citations.]' (Kadota Fig Assn. v. Case-Swayne Co., supra, 73 Cal.App.2d 796, 804, 167 P.2d 518, 523. See also Rivers v. Beadle, supra, 183 Cal.App.2d 691, 701, 7 Cal.Rptr. 170.) In the case last quoted, the court added, 'The statute in question does not prohibit the instituting or commencement of an action for failure to file the certificate. It merely forbids the maintenance of the action 'until the certificate has been filed and the publication has been made.' Before an action is finally dismissed on that ground, prior to the trial the plaintiff should be given an opportunity to comply with the statute if it so desires.' (73 Cal.App.2d at p. 805, 167 P.2d at p. 523.) The trial court therefore properly concluded, in the absence of any showing that the partnership was doing business in this state at the time the objection was raised, that it would be a futile act to abate the action to require performance of that which could not be performed. No prejudicial error is found in the court's suling on that special defense.
VIII
From what has been set forth above it would appear that recovery is barred under the provisions of section 10136 of the Business and Professions Code, and that the judgment should be reversed with directions to render judgment for defendants. Two factors weigh against this conduction. Although the code provides for the licensing of nonresidents (see §§ 10131.5 and 1015.5), section 10137 permits a licensed real estate broker to pay a commission to a broker of another state. The Kelleys admit that a commission, in a reasonable sum, is due to someone. In view of the manner in which the case was conducted the interests of Sockle and Hammond may not have been adequately represented or presented. It is also possible that the Kelleys and their real estate office were action as brokers--to secure a lender--for Triad, that as such they engaged Financial Services, Ltd. as a broker of another state (no finding was made as to whether it was licensed as a broker in Georgia or elsewhere), and that its acts, through Tyrone, in California, were only incidental to those of a local broker. It is, therefore, concluded as set forth below.
The judgment is reversed and the case is remanded for further proceedings in accordance with the views herein expressed on the record before the court or such additional evidence as the court in its discretion may permit the parties to introduce.
MOLINARI, P. J., and ELKINGTON, J., concur.
Similar provisions existed prior to the 1967 amendments. (Cf. Stats.1907, ch. 371, § 2, p. 704, with Stats.1967, ch. 1324, § 1, p. 3150.)
Section 10130. 'It is unlawful for any person to engage in the business, act in the capacity of, advertise or assume to act as a real estate broker or a real estate salesman within this State without first obtaining a real estate license . . ..'
Section 10131. 'A real estate broker within the meaning of this part is a person who, for a compensation or in expectation of a compensation, does or negotiates to do one or more of the following acts for another or others: . . .
'(d) Solicits borrowers or lenders for or negotiates loans or collects payments or performs services for borrowers or lenders or note owners in connection with loans secured directly or collaterally by liens on real property . . ..'
Section 10136. 'No 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.'
In 1929 the scope of regulated activities was further defined when the statute was amended so as to include one 'who, for 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, or who, for compensation, negotiates loans on real estate, . . .' (Stats.1929, ch. 130, § 2, p. 223, emphasis added.) This definition was carried forward into section 10131 of the Business and Professions Code as enacted in 1943 (Stats.1943, ch. 127, § 1, pp. 835-836).
In 1955 the words 'or in expectation of compensation' were added in two places after 'compensation' (Stats.1955, ch. 1678, § 1, p. 3013). In 1959 the definition was broadened and denoted one '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 or real estate, or who, for a compensation or in expectation of a compensation, solicits borrowers or lenders for or negotiates loans on real estate . . ..' (Stats.1959, ch. 2117, § 4, p. 4039. See also Stats.1959, ch. 2116, § 3, p. 4933, and Stats. 1st Ex.Sess.1960, ch. 45, § 1, p. 388 which add the activity of assisting others in obtaining an interest in government land, apparently inadvertently omitted in chapter 2117.) Chapter 2117 expressly recites that the amendments it contains are designed to curd evilpractices in connection with securing an 'advance fee' for listing property for sale or for aid and assistance in securing loans on property. Section 14 recites in part: 'That said promoters have sought to shield their activities under the guise of operating as mere finders or locators of buyers, or as being engaged exclusively in the advertising or publishing business, and to claim that they are not operating as real estate or business opportunity brokers or salesmen. . .. [p] Recently persons engaged in the advance fee promotion business have switched to the lending field from the selling field, and have applied the same modus operandi to inducing persons to sign advance fee contracts on the representation that the advance fee operator will aid and assist them to secure loans on their personal or real property, or both. These are often called 'advance fee lenders' as distinguished from their prototype, the 'advance fee seller.' Each is equally in need or regulation and licensing.' (Stats. 1959, pp. 4942-4943.)
In 1961 section 10131 was recast and the material reviewed above was placed in subsections (a) and (d) which read as follows: '(a) Sells or offers to sell, buys or offers to buy, solicits prospective sellers or purchasers of, solicits or obtains listings of, or negotiates the purchase, sale or exchange of real property . . .
'(d) [See fn. 8 above].'
(Stats.1961, ch. 886, § 4, p. 2325. Subsequent amendments Stats.1965, ch 172, § 5, p. 1134 are not material to this action.)
Certain exceptions are contained in sections 10133, 10133.1 and 10133.15 of the Business and Professions Code, but they do not appear to embrace the unlicensed actors in this case, except Hamilton, insofar as he acted as an employee or loan correspondent of a bank, savings and loan association or insurance company. (See § 10133.1, subd. (a) and § 10133.15.)
Civil Code section 2468 provided in pertinent part: 'No person doing business under a fictitious name, or his assignee or assignees, . . . shall maintain any action upon or on account of any contract or contracts made, or transactions had, under such fictitious name, . . . in any court of this State until the certificate has been filed and the publication has been made as herein required.'
Note: Effective July 1, 1971 the provisions of the Civil Code were repealed and the matters embraced in the former Civil Code sections ate treated in sections 17900-17930 of the Business and Professions Code (Stats.1970, ch. 618, §§ 4 and 5).
'Financial Services Ltd. was doing business in California as well as elsewhere by soliciting both borrowers and lenders for loans during 1963, 1964 and 1965.
'Financial Services Ltd. maintained offices in California commencing in the Spring of 1964 and continuing until the Winter of 1965.
'No certificate as provided in Civil Code § 2468 has been filed or published as therein provided, and the provisions of Chapter 11 of the Civil Code have in no respects been complied with by Financial Services Ltd., or any of plaintiffs . . ..'