Court Opinion

ID: 9741788
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:02:16.255826+00
Date Added: 2024-06-11T11:58:13.735318
License: Public Domain

O’Connor, J.
(dissenting). This case presents the issue whether the defendants, not licensed as real estate brokers, may recover commissions for brokering two transactions. One of the transactions is the sale of an automobile dealership in Cambridge (Agreement I), and the other is the sale of an automobile dealership in Boston (Agreement II). The parties to Agreement I are the plaintiffs Gene’s Foreign Car Service, Inc., Eugene F. Looney, John A. Ryan, and James B. Ryan, as sellers, and Nai Nan Ko, as buyer. Agreement I provides for the sale of certain tangible and intangible personal property. It also provides that, at the closing, the individual plaintiffs and the buyer will execute and deliver a lease and option to purchase agreement in specified form covering the real estate on which the dealership is located. The individual plaintiffs are the sole owners of that real estate. Paragraph 7 (c) of Agreement I expressly conditions the buyer’s obligation to consummate the transaction on the individual plaintiffs’ compliance with their promise to deliver the lease and option agreement.
The parties to Agreement II are the plaintiff, Turnpike Motors, Inc., as seller, and HLT, Inc., as buyer. Both parties’ obligations are expressly conditioned on the seller and the buyer’s nominee, on or before the closing date, having executed an irrevocable purchase and sale agreement for the real estate on which the dealership is located. A second condition precedent to the buyer’s obligation is the delivery of the individual plaintiffs to the buyer’s nominee of an option entitling the nominee to purchase an apartment building which is adjacent to the locus of the dealership and is owned solely by the individual plaintiffs. It is perfectly clear from the agreements that each transaction is indivisible, that is, there was no deal without the transfer of real estate.
*298General Laws c. 112, §§ 87PP and 87RR (1986 ed.), prohibit an unlicensed person from recovering a commission — any commission — for brokering a transaction involving an exchange of real estate. The court has an obligation to apply those provisions to the facts of this case despite any lack of enthusiasm the court may have for the result produced thereby. Section 87PP defines the term “real estate broker” as “any person who for another person and for a fee . . . assists or directs in the procuring of prospects or the negotiation or completion of any agreement or transaction which results or is intended to result in the sale, exchange, purchase, leasing or renting of any real estate . . . .” It is beyond reasonable dispute that the defendants acted as real estate brokers, as defined by § 87PP, in reference to the Cambridge and Boston dealership transactions. Both transactions for which the defendants found prospects for a fee were “intended to result in the sale, exchange, purchase, leasing or renting” of real estate. Section 87RR provides in relevant part that “no person shall engage in the business of or act as a broker or salesman . . . unless he is licensed.” The defendants very clearly violated that provision. Section 87RR further provides that “no person shall recover in any suit or action in the courts of the commonwealth for compensation for services as a broker . . . unless he was a duly licensed broker at the time such services were performed.” There is no way, then, that a fair application of the law to the facts of this case can result in the defendants’ recovering a commission, whether calculated on the combined value of the real estate and personal property involved in the transactions or on the value of the personal property alone. Regardless of how it is calculated, such a commission is for services as a broker, that is, for services in connection with the procuring of prospects to engage in transactions resulting or intended to result in the sale, exchange, or leasing of real estate.
The court sweeps all of this aside by declaring, ante at 295, that, “[i]n selling the personal property of the dealerships, the broker was not acting as a real estate broker.” The court’s assertion is plainly wrong. In selling the personal property of the dealerships, the defendants were indeed acting as real estate *299brokers. The reality of the situation is that the sale, exchange, or leasing of real estate was absolutely essential to any contemplated sale of either dealership’s personal property. As to each dealership, there is but one integrated and indivisible transaction, and that transaction results, or is intended to result, in the sale, exchange, or leasing of real estate. The provision in § 87RR that an unlicensed person cannot recover for services in bringing about such a transaction should put an end to the fee dispute. Surely, the Legislature could have enacted a statute providing that, in circumstances like the circumstances of this case, a broker shall be entitled only to a reduced commission, one reflecting only the value of the personal property. But the Legislature, for whatever reason, did not choose that course, and the court’s duty is to respect that choice.
In support of its holding, the court states that any illegality on the part of the defendants was minor, and that a holding barring recovery would result in a substantial windfall to the plaintiffs. The court characterizes these factors as relevant to any consideration of the consequences that should attach to nonlicensure, ante at 295, citing Town Planning & Eng’g Assocs. v. Amesbury Specialty Co., 369 Mass. 737, 745 (1976). Those factors are not relevant to the present case because it is not for the court to say what the consequences of nonlicensure should be. The Legislature has spoken to that. Surely, the court is not free to ignore statutorily provided consequences of statutory violations. Town Planning & Eng’g Assocs. v. Amesbury Specialty Co., supra, does not say otherwise. In that case, the court held that the fact that the person in charge of the plaintiff corporation was not a “professional engineer . . . holding a certificate of registration,” as required by G. L. c. 112, § 81R (/), did not prevent the corporation from recovering for engineering services it had performed. The court reasoned as follows: “If there was a violation here, it was punishable as a misdemeanor under the statute. Violation of the statute, aimed in part at least at enhancing public safety, should not be condoned. But we have to ask whether a consequence, beyond the one prescribed by statute, should attach . . . .”Id. at 745 (emphasis added) (footnote omitted). In afoot-*300note, id. at 745 n.7, the court observed that, in the relevant statute in that case, G. L. c. 112, § 81T, “[t]here is no provision, as in the case of an unlicensed real estate broker (G. L. c. 112, § 87RR), for loss of compensation by one who unlawfully engages in engineering practice.”
The court does not stop with the conclusion that the defendants are entitled to go to trial on the question of their right to a commission based on the price of the personal property. Rather, the court concludes that the defendants are entitled to go to trial also on the question whether the plaintiffs are estop-ped from relying on the statute to bar recovery of a commission based on the price not only of the personal property to be sold but of the real estate to be sold or leased as well. In my view, the application of estoppel principles is entirely inappropriate.
The defendants say that the plaintiffs misled them by representing that no real estate broker’s license would be necessary because the deals would be structured as sales of corporate stock, and thus real estate would not be involved. As the court recognizes, ante at 296, reasonable reliance is essential to estoppel. O’Blenes v. Zoning Bd. of Appeals of Lynn, 397 Mass. 555, 558 (1986). It seems clear.that the defendants, as a matter of law, could not reasonably have relied on the plaintiffs’ alleged representations that the defendants would not require real estate brokers’ licenses because of the form of the contemplated transactions. With respect to the Cambridge dealership, the corporate dealer does not own the real estate to be sold. The real estate belongs to the individual plaintiffs, and therefore no transfer of corporate stock would shift control of the real estate to the buyer. The transaction, therefore, clearly depends on a sale or lease of real estate, and the defendants could not reasonably have relied on advice that no broker’s license would be required. Similarly, Agreement II, relative to the Boston dealership, was contingent on the delivery by the individual plaintiffs to the buyer of an option to purchase real estate belonging only to those plaintiffs. A sale of corporate stock would not have shifted control of that real estate to the buyer.
*301Even apart from the fact that both transactions involved the sale, exchange, or leasing of real estate owned by the individual plaintiffs, there is further reason why, despite any contrary representations by the plaintiffs, the defendants reasonably should have known that a real estate broker’s license would have been necessary even if the dealership sales were structured as transfers of corporate stock. In Morad, v. Haddad, 329 Mass. 730, 735 (1953), a licensed real estate broker claimed a commission for the sale of a business when the seller elected to effect the transaction as a sale of corporate stock rather than corporate property. This court held that “[t]he transfer of stock by Haddad effected the sale of the corporate property for which Morad had been employed to find a customer. . . . The sale of all of the stock of the corporation was in legal effect a sale of all its assets, and the mere fact that the parties found it more convenient to transfer all of the stock rather than to make a conveyance of its assets does not change the substance of the transactionT Id. (emphasis added). See Patsades v. Atsales, 353 Mass. 772 (1968). Despite the plaintiffs’ alleged representations about structuring the deals as corporate stock transactions, the defendants could not reasonably have assumed that this court would have declined to follow the lead of the Morad case, and, despite the public interest in protecting buyers as well as sellers, would have ignored the substance of the transaction as well as the legislative intent to prohibit the recovery by unlicensed persons of commissions on transactions resulting, or intended to result, in the sale, exchange, or leasing of real estate.
My conclusion that the defendants’ position would not have been advanced by the dealership sales being structured as sales of corporate stock does not conflict, it seems to me, with the exception to § 87RR found in § 87QQ. Section 87QQ provides that § 87RR shall not apply to “a person buying, selling or otherwise dealing in any stock, bond or other security. . . .” For the purposes of the real estate broker’s licensing statute, a sale of all the stock in a corporation with real estate holdings must be treated not as a stock deal but rather as a sale of all the corporation’s assets, as in Morad, supra. Section 87QQ *302must be construed as referring only to transactions involving less than all the stock in a company. Any other constmction would defeat the clear purpose of the licensing statute.
I make one last observation with respect to estoppel. It is, of course, true that a defendant may be found to have waived or be estopped to rely on a statute of limitations defense. A party for whose benefit a statute has been enacted, such as a defendant in a civil case, may relinquish that benefit. It cannot rightly be said, however, that G. L. c. 112, §§ 87PP and RR, were enacted for the sole benefit of sellers of real estate. The court should not permit the public interest sought to be advanced by §§ 87PP and RR to be relinquished or thwarted by representations made by sellers to unlicensed brokers of real estate.
I would remand this case to the Superior Court for the entry of a declaration that the defendant brokers are not entitled to commissions.