Superior American Homesv.Fry

Michigan Court of AppealsNov 8, 1983
130 Mich. App. 379 (Mich. Ct. App. 1983)
130 Mich. App. 379343 N.W.2d 561

Docket No. 65233.

Decided November 8, 1983.

Roy T. Traynor and Joel L. Massie for plaintiff.

Doyle, Ladd, Philipps Justin, P.C. (by Thomas A. Ladd), for defendant.

Before: CYNAR, P.J., and J.H. GILLIS and WAHLS, JJ.

Defendant appeals as of right from a jury verdict awarding plaintiffs $21,000.

Plaintiffs originally brought this action to recover the contract price of a premanufactured home built by plaintiff Superior American Homes and sold through Superior's agent, Sanford Peterson, doing business as plaintiff Sanford's Real Estate Agency. Defendant counterclaimed, alleging, inter alia, defective construction, misrepresentation, fraud and breach of warranty. Plaintiffs do not appeal the jury award of $6,320 to defendant on this counterclaim.

On appeal, defendant argues that the trial court erred by failing to direct a verdict in defendant's favor after the jury found that the selling agent of the home in question was Sanford's Real Estate Agency, New Homes Division, a partnership, and not Sanford Peterson, an individual doing business as Sanford's Real Estate Agency. The trial court ruled that the licensing of one partner in his individual capacity was "substantial compliance" with the requirements of the residential builders act then in effect, MCL 338.1501 et seq.; MSA 18.86(101) et seq.

The residential builders act required that any individual, firm or partnership which engaged in the construction of residential structures must be licensed, MCL 338.1501, 338.1502; MSA 18.86(101), 18.86(102), with one penalty being that a person engaged in the business of a residential builder without a license may not "bring or maintain any action in any court of this state for the collection of compensation for the performance of any act or contract for which a license is required". MCL 338.1516; MSA 18.86(116).

In the instant case, plaintiff Superior American Homes was not licensed in this state. Sanford's Real Estate Agency, New Homes Division, the agent of Superior American, was not licensed as a partnership, although Sanford Peterson, individually, was licensed. Contrary to the trial court's ruling, there was no substantial compliance on the part of the plaintiffs with the act. See Bernard F Hoste, Inc v Kortz, 117 Mich. App. 448; 324 N.W.2d 46 (1982). The jury award to plaintiffs of $21,000 is, therefore, reversed.

Our disposition of defendant's first issue makes it unnecessary to address defendant's second issue on appeal.


I must respectfully dissent from the majority in this case. The residential builders act was enacted to protect homeowners from incompetent, inexperienced, and fly-by-night contractors. Alexander v Neal, 364 Mich. 485, 487; 110 N.W.2d 797 (1961). See also Kirkendall v Heckinger, 105 Mich. App. 621; 307 N.W.2d 699 (1981), lv den 413 Mich. 859 (1982). It was not enacted to afford a substantial windfall to a buyer who seeks avoidance to pay an unwary builder by claiming the benefit, but unexpectedly using the residential builders act as a shield, declaring in effect "I gotcha". The wisdom of the legislature cannot be questioned. The residential builders act has and continues to protect the public against the unscrupulous builder or contractor. However a buyer should not be a beneficiary of a windfall under a guise not intended by the legislation. In my opinion Bernard F Hoste, Inc v Kortz, 117 Mich. App. 448; 324 N.W.2d 46 (1982), was erroneously decided.

In Michigan Roofing Sheet Metal, Inc v Dufty Road Properties, 90 Mich. App. 732; 282 N.W.2d 809 (1979), vacated on other grounds, 409 Mich. 887 (1980), this Court adopted the test of substantial compliance and stated:

"In so holding, we adopt the California test of substantial compliance.

"Although plaintiff thus failed literally to conform to the commands of section 7031 of the Business and Professions Code, the courts of this state have not insisted upon such strict observance if it would transform the statute into an `unwarranted shield for the avoidance of a just obligation.'" Michigan Roofing, supra, pp 735-736, quoting Latipac, Inc v Superior Court of Marin County, 64 Cal.2d 278, 281; 49 Cal.Rptr. 676; 411 P.2d 564 (1966).

In my opinion, under the facts herein, there was substantial compliance. I would affirm.