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SCHULTZ v. PALMER WELLOCT TOOL CORP.

February 13, 1953

SCHULTZ
v.
PALMER WELLOCT TOOL CORP. et al.



The opinion of the court was delivered by: MARSH

Plaintiff brought this action to recover a commission under an execlusive agency contract with the defendant corporation. The individual defendants are the sole stockholders. At the close of the plaintiff's case, the defendants moved for a directed verdict, setting forth three reasons, as follows:

'(F)irst, that the plaintiff has shown that the commission in this case sought to be recovered, involved inter alia the sale of real estate, and it is admitted that the plaintiff is not and was not a licensed real estate broker under the laws of Pennsylvania.'

 'Second, the letter of authority to the plaintiff expressly provided that there should be no liability unless and until a sale was consummated, and plaintiff has shown that no sale ever was consummated.'

 Third, 'plaintiff's theory being that he can recover if he can show that he produced a customer ready, able and willing to buy on terms satisfactory to the seller, the evidence proves that the proposed purchaser, plaintiff's customer, * * * was never ready and willing to buy.'

 The motion was granted principally for the first reason presented. *fn1" The plaintiff now moves to set aside the directed verdict and for a new trial.

 The plaintiff testified that he knew he was selling the real estate of the defendant company as part of its business. The agency contract, which was dictated by the plaintiff and executed by the corporation, provided that he was to sell 'everything in connection with and pertaining to this business.' The asking price was fixed at $ 355,000 with 'leeway down to $ 315,000.00.' The contract concluded with the following:

 'It is understood and agreed that we are not subject to any charge whatsoever except your regular fee upon your consummation of the sale.'

 The commission was to be 6%. A sale was not consummated.

 It is admitted that plaintiff did not have a Pennnsylvania real estate broker's License Act, 1929, May 1, P.L. 1216, as amended, 63 Pa.Purdon's Stat.Ann. § 431 et seq. Section 6 (63 Pa.Purdon's Stat.Ann. § 436), makes it unlawful to act in the capacity of a real estate broker without first obtaining a license. Section 16 (63 Pa.Purdon's Stat.Ann. § 446), provides as follows:

 'No action or suit shall be instituted, nor recovery therein be had, in any court of this Commonwealth by any person, copartnership, association, or corporation for compensation for any act done or service rendered, the doing or rendering of which is prohibited under the provisions of this act to others than licensed real estate brokers, unless such person, copartnership, association or corporation was duly licensed hereunder as real estate broker at the time of the doing of such act or the rendering of such service.'

 Plaintiff contends that the real estate to be sold consisted of the land and since it was valued at only $ 9,000 it was incidental to the sale of the business for $ 355,000 and the aforementioned act does not prevent him from recovering the commission which he allegedly earned. However, in our view, the real estate to be sold along with the business includes not only the land but the building and equipment, and as such, was a very substantial part of the corporation's assets. It is established that machinery and equipment essential to the manufacturing process are considered as real estate and title to same would pass by the corporation's deed of conveyance. *fn3"

 The remedial clauses of the statute involved have been liberally construed by the courts to effect the intent and purposes of the Legislature and accordingly it has been held that one who negotiates in Pennsylvania a sale of real estate without a license even though it is an isolated transaction cannot recover a commission; Verona v. Schenley Farms Co., 1933, 312 Pa. 57, 167 A. 317; Alford v. Raschiatore, 1949, 163 Pa.Super. 635, 63 A.2d 366. At the trial it seemed clear that on the authority of Burns v. Gartzman, 1940, 139 Pa.Super. 453, 11 A.2d 708, one who, without a license, undertook to negotiate the sale of a 'bakery business' which included real estate among the assets could not recover a commission. Plaintiff argues that his contention, i.e., that the real estate was only incidental to the sale, was not raised in that case; but it is plain that the denial of the commission turned on the fact that the real estate was a part of the transaction; otherwise, there was no basis for application of the Act.

 The rule we derived from the Burns decision is fortified by Alford v. Raschiatore, supra, similar to the case at hand on its essential facts, in which it is apparently taken for granted that a commission cannot be recovered by one who negotiated the sale of a 'restaurant business' which included real estate; and by Schoenfeld v. Meckes, 1950, 166 Pa.Super. 101, 70 A.2d 377, where a commission was recovered for the sale of a 'hardware business' separately sold from the real estate in ...


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