Court Opinion

ID: 9586473
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:11:43.787596+00
Date Added: 2024-06-11T17:31:46.984902
License: Public Domain

Hale, J.
(dissenting) — The court has, I think, expanded *841the operation of a minor regulatory measure to a point where it inevitably fosters an unjust enrichment and impairs the obligation of valid contracts. U.S. Const. art. 1, § 10. RCW 18.27.020 affords the public only modest protection; it should not be construed as though it were a major police measure. The broad and overencompassing effect given the statute, in my opinion, is not necessary to its vindication. Aside from making it a misdemeanor to bid or work as a contractor without having a certificate of registration (RCW 18.27.020), the statute requires only a $2,000 bond for general contractors and a $1,000 bond for specialty contractors. RCW 18.27.040. Applicants for a certificate of registration are not required to pass any examination or demonstrate skill, proficiency or training in the building arts. The enactment is as mild an exercise of the police power as one can imagine; I would not, as I think the court has done, give it earthshaking dimensions.
We have already given broad enough application to this legislation in Stewart v. Hammond, 78 Wn.2d 216, 471 P.2d 90 (1970), denying recovery there to a contractor for labor performed and material supplied. There, although the contractor had been partially paid for his work, we refused him recovery of the balance due upon the categorical provisions of RCW 18.27.080, which declares that an unregistered contractor cannot “maintain any action in any court of this state for the collection of compensation for the performance of any work.” In denying recovery of compensation for work done and labor furnished, we gave the statute literal application despite the fact that it resulted in what equity would hold to be an unjust enrichment.
Nowhere in the rationale of that case, however, can the idea be found that this court would have gone so far as to grant the owner a recovery back of the money he had already delivered to the contractor in partial payment of the contract. Stewart v. Hammond, supra, did not go beyond affording an owner the statutory remedy precisely as prescribed, i.e., to deny a contractor access to the courts for *842direct recovery of compensation in an action brought on a building contract.
The court now gives the statute even broader application than it did in Stewart v. Hammond, supra, for plaintiff is not seeking to enforce the terms of a construction contract but to recover upon a check. The statute does not make building contracts illegal, unlawful or immoral; it merely makes them unilaterally unenforceable. This is not an action on a construction contract, but one upon a check legally delivered and accepted in payment of a lawful debt. Having performed a legal and lawful contract and been paid for it by check, the plaintiff, as the court points out, is maintaining his action “ ‘on either the instrument or the obligation,’ ” according to his right of election under the Uniform Commercial Code. RCW 62A.3-802(1) (b).
By extending the statute to bar action on the check, the court has made the contractor’s registration statute work an impairment of a valid contract. It treats a contract to construct a building — to perform work and to supply materials — as though it were an 'agreement to perform an illegal, unlawful or immoral act. In applying the statute as a bar to recovery on a check delivered and accepted in payment of work performed and materials furnished, in the absence of any other defense such as breach of contract or faulty workmanship and materials, the court adopts an interpretation which deprives a contractor of his pay and at the same time permits another to keep his materials and the results of his labor without paying for them. Since this is not an action upon a construction contract but one to recover upon a check delivered to a contractor in part payment for work performed and materials delivered, if the statute not only bars action on the contract but renders illegal all consideration delivered or transferred in the course of or after performance, it follows that the contracting owner not only may refuse payment to an unregistered contractor for the unpaid balance but may recover back all advancements paid or consideration delivered to him during the course of construction. I doubt that any court will go so far.
*843As thus applied by the court, the statute not only vitiates general equitable principles against unjust enrichment, but unconstitutionally, in my opinion, impairs the obligation of contract. Plaintiff, in electing to sue upon a note, or more accurately a bank check given in payment for his work, does not escape the consequences of the penal section (RCW 18.27.020), nor gain any of the privileges and rights vouchsafed him had he registered. Not only could he have been prosecuted for the misdemeanor of bidding and performing without having first acquired a certificate of registration, but he lost his rights to file and enforce mechanic’s liens for nonpayment and recovery of reasonable attorney’s fees. Thus, the construction given it is not essential to the statute’s continuing viability.
We must infer that the check was given in payment of an honest debt. Having received the benefits of plaintiff’s work and labor, defendants sought to pay this honest debt by voluntarily delivering their check in payment of it. In ordering a stoppage of payment solely because of the plaintiff’s failure to have obtained a contractor’s certificate of registration, defendants have repudiated an honest debt— a debt actually acknowledged to be honest by the act of payment. Construing the statute so as to support this repudiation has, I think, stretched the contractor’s registration statute to untenable lengths and to a point where it operates actually to impair the obligation of a valid and subsisting agreement to pay money.
This is not the case of a contract to accomplish an illegal purpose, or a legal purpose by unlawful means, or of a contract rendered illegal by subsequent legislation, or by change in decisional law. Douglass v. County of Pike, 101 U.S. 677, 25 L. Ed. 968 (1879). The purpose of the contract to build or alter a structure was not only lawful but socially beneficial. Despite the contractor’s continuing liability for prosecution for a misdemeanor for failing to register as a contractor, the debt remained an honest one for an honest job of work, honestly paid for by check. This cause of action did not even arise until the check had been dishonored.
*844That Mr. Vedder had not obtained a contractor’s certificate under RCW 18.27.020 did not ipso facto preclude the Spellmans from incurring an honest debt for an honest job of work. Impairment of an obligation means refusal to pay an honest debt. Faitoute Iron & Steel Co. v. Asbury Park, 316 U.S. 502, 511, 86 L. Ed. 1629, 62 S. Ct. 1129 (1942). Although the constitutional provision against impairment of obligation of contract is directed primarily against the legislative enactments of the states (Barrows v. Jackson, 346 U.S. 249, 97 L. Ed. 1586, 73 S. Ct. 1031 (1953); McCoy v. Union Elevated R.R., 247 U.S. 354, 62 L. Ed. 1156, 38 S. Ct. 504 (1918)), the judicial actions of the state courts in construing a statute so as to produce an impairment will be regarded as state action impairing the obligation of contract in the particular instance under examination. Columbia Ry., Gas & Elec. Co. v. South Carolina, 261 U.S. 236, 67 L. Ed. 629, 43 S. Ct. 306 (1923); J. W. Perry Co. v. Norfolk, 220 U.S. 472, 55 L. Ed. 548, 31 S. Ct. 465 (1911).
Accordingly, I would reverse.
Hamilton, C. J., and McGovern, J., concur in the result of the dissent.