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DANIEL J. KREIDER v. WALTER H. KLEINFELTER AND JENNIE KLEINFELTER. DANIEL J. KREIDER V. WALTER H. KLEINFELTER AND JENNIE KLEINFELTER (06/03/83)

SUPERIOR COURT OF PENNSYLVANIA


filed: June 3, 1983.

DANIEL J. KREIDER, APPELLANT
v.
WALTER H. KLEINFELTER AND JENNIE KLEINFELTER. DANIEL J. KREIDER V. WALTER H. KLEINFELTER AND JENNIE KLEINFELTER, APPELLANTS

No. 2016 Philadelphia 1980, Appeal from the Order of the Court of Common Pleas of Lebanon County, Civil Division, at No. 351 of 1980, No. 2109 Philadelphia 1980, Appeal from the Order of the Court of Common Pleas of Lebanon County, Civil Division, at No. 351 of 1980.

COUNSEL

Thomas P. Harlan, Lebanon, for appellant (at No. 2016) and for appellee (at No. 2109).

Loren H. Schrum, Lebanon, for appellants (at No. 2109) and for appellees (at No. 2016).

Price, Wieand and Hoffman, JJ. Price, J., did not participate in the consideration or decision in this case.

Author: Hoffman

[ 314 Pa. Super. Page 572]

Appellant contends that the lower court erred in granting appellees' motion for judgment on the pleadings based on

[ 314 Pa. Super. Page 573]

    res judicata. We agree that the requirements for res judicata have not been met and, accordingly, reverse and remand for proceedings consistent with this opinion.

In the summer of 1976, appellees allegedly entered into an oral contract with Allen L. Brown, appellant's employee, whereby Brown would receive a commission if he secured a purchaser for appellees' real estate and business. On August 31, 1977, after producing a buyer and unsuccessfully attempting to collect his fee, Brown filed suit against appellees. In response to appellees preliminary objections, the lower court dismissed Brown's complaint because he was not a licensed real estate broker. Thereafter, Brown filed a motion to amend his complaint, seeking to join appellant, a licensed broker, as a voluntary plaintiff. Appellees' preliminary objections challenging the timeliness of the attempted amendment were sustained. On appeal to this Court, we affirmed. Brown v. Kleinfelter, 267 Pa. Superior Ct. 144, 406 A.2d 560 (1979).

Appellant filed suit, seeking Brown's commission, on February 8, 1980. Appellees counter-claimed for costs and fees and motioned for judgment on the pleadings alleging that the action (1) was barred by the statute of limitations; (2) violated professional ethical standards; and (3) was brought in bad faith because of appellant's knowledge of the earlier suit. The court granted the motion finding appellant's suit barred by res judicata, and dismissed appellee's counter-claim for costs and fees.*fn1 This appeal followed.

Appellant contends that judgment on the pleadings*fn2 was inappropriate because the requirements of res judicata were not met.*fn3 We agree. Res judicata involves the effect

[ 314 Pa. Super. Page 574]

    of one judgment on a subsequent proceeding. Notoro v. Hyer Estate, 239 Pa. Superior Ct. 10, 361 A.2d 766 (1976). For a later action to be wholly barred, there must be a concurrence of four elements:

(1) an identity of the thing sued upon;

(2) an identity of the cause of action;

(3) an identity of the persons and parties to the action; and

(4) an identity of the quality or capacity of the parties suing or sued.

Dunham v. Temple University of the Commonwealth System of Higher Education, 288 Pa. Superior Ct. 522, 527, 534, 432 A.2d 993, 999 (1981); see Schubach v. Silver, 461 Pa. 366, 336 A.2d 328 (1975); Del Boring Tire Services, Inc. v. Barr Machines, Inc., 285 Pa. Superior Ct. 66, 426 A.2d 1143 (1981).

Even if we assume a concurrence of the first three identities, we cannot agree that as between appellant and Brown there is "an identity of the quality or capacity of the parties suing . . . ." Dunham v. Temple University of the Commonwealth System of Higher Education, supra, 288 Pa. Superior Ct. at 534, 432 A.2d at 999. Section 16 of the Real Estate Brokers License Act provides:

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,

[ 314 Pa. Super. Page 575]

    unless such person, copartnership, association or corporation was duly licensed.

Act of May 1, 1929, P.L. 1216, § 16, 63 P.S. § 446, repealed as of February 19, 1980, P.L. 15, No. 9, § 901. Courts have interpreted this section "as precluding any recovery of a commission, fee, or other consideration, by anyone who without a license acts as a broker in a transaction involving real estate." Burke v. Israel, 264 Pa. Superior Ct. 286, 290, 399 A.2d 779, 781 (1979). See Verona v. Schenley Farms Co., 312 Pa. 57, 167 A. 317 (1933); Harrison v. Soffer, 221 Pa. Superior Ct. 275, 289 A.2d 752 (1972). If a licensed real estate salesperson,*fn4 employed by a licensed real estate broker, negotiates a real estate transaction, only the broker has the capacity to sue for an unpaid commission.*fn5 If a licensed salesperson or any unlicensed person sues for a commission owed, the underlying agreement or contract may not be enforced in his favor. See Burke v. Israel, supra (obtaining a license is a condition precedent to the enforcement of an agreement); Kusche v. Vulcanized Rubber and Plastics Co., Inc., 416 Pa. 364, 206 A.2d 40 (1965); Burns v. Gartzman, 139 Pa. Superior Ct. 453, 11 A.2d 708 (1939).

Although only a licensed broker may sue on a contract, either a licensed broker or a licensed salesperson may engage in the business of transacting real estate. 63 P.S.

[ 314 Pa. Super. Page 576]

§ 436(a).*fn6 Therefore, a determination that an agreement is unenforceable because of the absence of a broker's license, applies to the ability of the party to sue and not to the invalidity or validity of the underlying agreement.

Although Brown had no standing to sue for the commission, his inability does not affect appellant's statutory capacity to sue or the validity or enforceability of the underlying agreement. Therefore, the actual determination that must be made, in light of appellant's and Brown's differing capacities to sue, is whether Brown was a licensed salesperson at the time the alleged agreement was made. If Brown was licensed,*fn7 then the merits of the action, the existence and enforceability of the alleged contract, must be reached because of his capacity to enter into a real estate contract. If, on the other hand, Brown was not a licensed salesperson, the alleged contract would be wholly void and unenforceable as to any party, pursuant to a statutory inability to enter into the agreement.*fn8 63 P.S. § 436(a). See n. 6.

[ 314 Pa. Super. Page 577]

Based on the foregoing analysis, we find that the lower court erred in granting judgment on the pleadings. The identity of a capacity to sue, required for res judicata, has not been met. Accordingly, we reverse the order of the lower court and remand for proceedings consistent with this opinion.

Reversed and remanded.

JURISDICTION IS RELINQUISHED.


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