Latipac, Incorporated (hereinafter defendant) petitions for a writ of prohibition to restrain the respondent superior court from taking any further proceedings in an action on contract brought by the real party in interest, J. W. Lee & Co. (hereinafter plaintiff).
In this case defendant seeks to avoid its contractual obligation to plaintiff by reason of plaintiff’s failure strictly to comply with the statutory provisions which govern the licensing of contractors. The statute in question, section 7031 of the Business and Professions Code, denies to unlicensed contractors the use of the courts for the recovery of sums owed to them for contracting services.1 In view of the severity of *280this sanction and of the forfeitures which it necessarily entails, our decisions record our reluctance to construe the statute more broadly than requisite to the achievement of its manifest purpose. We have not insisted on literal compliance in the situation in which the party seeking to escape his obligation has received the full protection which the statute contemplates. Examination of the facts of the present case discloses that it falls within the ambit of the doctrine of “substantial compliance” as that doctrine has been elaborated by our courts in applying section 7031.
Defendant Latipac, Incorporated, seeks to restrain the respondent court from hearing an action brought by plaintiff, J. W. Lee & Co., to recover for labor and materials furnished defendant pursuant to written contract. We must, therefore, resolve the issue of whether section 7031 bars plaintiff’s recovery.
On March 22, 1962, plaintiff contracted to grade and fill certain land owned by defendant in Marin County. Plaintiff alleges that of the total contract price of $740,000, well over one-half ($432,370.07) remains unpaid. It seeks to recover this sum on its own behalf and, since it alleges that its claim against defendant is the only substantial asset of the corporation, on behalf of its creditors as well.
The records of the registrar of corporations reveal that plaintiff possessed a valid contractor’s license at the time the parties executed the contract. Because of plaintiff’s failure to submit a renewal application and the $30 renewal fee, that license expired on June 30, 1963. At the time of such expiration, plaintiff had been performing under the contract for 15 months. It continued to perform and completed the job on April 28, 1964. Plaintiff actually renewed its license on June 26, 1964. Since plaintiff continued to perform under the contract after the expiration of its license, defendant urges that section 7031 bars plaintiff from recovering any part of the contract price.
Nothing in the record suggests that plaintiff’s failure to make timely application for renewal of its license evidenced any apprehension on its part that such renewal would be denied. On the contrary, when plaintiff did submit its application and renewal fee, the registrar issued the renewal, routinely without further examination. Moreover, plaintiff *281explains that it assigned the responsibility for renewing the license to its office manager, and that the manager suffered an emotional breakdown and subsequent commitment to a mental institution. As a result the license was not promptly renewed.
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.” (Gatti v. Highland Park Builders, Inc. (1946) 27 Cal.2d 687, 690 [166 P.2d 265].) If the facts clearly indicate that the contractor has “substantially” complied with the statute and that such compliance has afforded to the obligor the protection contemplated by the statute, we have rejected the obligor’s attempt to escape liability. (Gatti v. Highland Park Builders, Inc. supra; Weiman v. Superior Court (1959) 51 Cal.2d 710 [336 P.2d 489]; Citizens State Bank v. Gentry (1937) 20 Cal.App.2d 415 [67 P.2d 364]; Oddo v. Hedde (1950) 101 Cal.App.2d 375 [225 P.2d 929].) As Justice Traynor has stated, the test must be whether the contractor ⅛ “substantial compliance with the licensing requirements satisfies the policy of the statute.” (Lewis & Queen v. N. M. Ball Sons (1957) 48 Cal.2d 141, 149 [308 P.2d 713].) For nearly three decades we have developed and applied to cases arising under section 7031 the doctrine of “substantial compliance”; during that entire period the Legislature has indicated no hint of disapproval of this construction.
Defendant, indeed, does not attack the doctrine but contends only that the cases which have relied upon it differ in certain particulars from the case before us and that, therefore, we may not properly apply the doctrine here. Although nothing in the prior cases suggests that the doctrine fits only the identical factual patterns there adjudicated, we need not now undertake to define the outer limits of its proper application, Examination of the record reveals that the instant case presents each of the elements upon which the courts have in the past relied for the application of the doctrine of substantial compliance. Since all these elements here concur, we need not determine whether any of them, singly or in more limited combination, would constitute “substantial compliance. ’ ’
We proceed to an examination of these elements: (1) the fact that plaintiff held a valid license at the time *282of contracting, (2) that plaintiff readily secured a renewal of that license and (3) that the responsibility and competence of plaintiff ⅛ managing officer were officially confirmed throughout the period of performance of the contract.
1. Plaintiff held a valid license at the time of contracting.
Plaintiff possessed a valid license at the time its existence was crucial to the decisions of the other contracting party and to the prospective subcontractors and other creditors who might extend credit in reliance upon the validity of that contract. The key moment of time when the existence of the license becomes determinative is the time when the other party to the agreement must decide whether the contractor possesses the requisite responsibility and competence and whether he should, in the first instance, enter into the relationship. The license, as an official confirmation of the contractor’s responsibility and experience, then plays its important role. Then, too, it serves as a basic determinant in the decision of prospective subcontractors and other creditors as to whether to extend credit to the contractor on the strength of the contract. At the date of the execution of the instant contract plaintiff held an unquestionably valid contractor ⅛ license. Indeed, plaintiff had possessed such a license ever since 1957; plaintiff held that license for 17 months after the date of the execution of the contract.
In determining whether or not a contractor has “substantially complied” with the statute and whether such substantial compliance has afforded the other party the effective protection of the statute, the courts have accorded great weight to the significant moment of the entrance of the parties into the relationship. The contractor who holds a valid license at the time of contracting executes a contract valid at its inception both as between the parties and as to third parties who might rely upon it.
In Gatti v. Highland Park Builders, Inc., supra, 27 Cal.2d 687, plaintiff Gatti held a valid contractor’s license at the time he entered into a contract with the defendant. Later, the parties agreed that Gatti should complete his performance in partnership with his foreman. Like Gatti, the foreman had possessed a valid license at the time of the execution of the contract. Defendant sought to escape liability on the contract by reason of the plaintiffs’ failure to secure the partnership license required by section 7029. In holding that the plaintiffs had “substantially” complied with the statute and that the defendant could not find shelter behind section 7031, this *283court placed stress upon tlie fact that Gatti and his foreman were licensed at the time of contracting. It found the case distinguishable from prior cases ‘1 in that at the time the contract between Gatti and defendant was made, both plaintiffs possessed contractor’s licenses in their own names as individuals.”2 (P. 689.)
Similarly, in Citizens State Bank v. Gentry, supra, 20 Cal.App.2d 415, 419-420, apparently the first of the substantial compliance cases, the court noted: “In none of the cases cited by appellant did the party suing have a license at the time of entering into the contract and then make an application for a renewal in any manner, such as was done here.”
As a corollary, the absence of a license at the time of con-trading has figured prominently in decisions in which our courts have denied recovery for want of substantial compliance. In Steinwinter v. Maxwell (1960) 183 Cal.App.2d 34 [6 Cal.Rptr. 496], the court thus explained its inability to find substantial compliance: “These cases [Gatti and Gentry] do acknowledge that under certain circumstances substantial compliance with the statute is sufficient. However, it should be pointed out that in each of these cases the contractor did have a valid license at the time the contract was executed and therefore at its inception the contract was valid. The effect of the ruling in these cases is that the subsequent changes in the license status of the contractor did not invalidate a contract that was valid at its inception.” (Pp. 37-38.)
2. Plaintiff readily secured a renewal of its license.
Just as plaintiff’s possession of a valid contractor’s license at the time of contracting attests to its competence and responsibility at the inception of the contract, so the renewal of its license after completion of performance lends confirmation to plaintiff’s continuing competence and responsibility during the period of performance. Nothing in the record suggests that plaintiff’s fitness to enjoy a license was subject *284to variation in the interval between the expiration and renewal of its license.
We have referred to the case of Gatti v. Highland Park Builders, Inc., supra, 27 Cal.2d 687, and to the significance which this court there attached to the fact that the contractor was licensed at the time of contracting. The other consideration which led this court to find ‘ ‘ substantial compliance ’ ’ in Gatti was the fact that, although plaintiffs failed to secure the required partnership license at the time they began to perform on a partnership basis, they did secure such a license three months later. The court concluded that the issuance of this license gave further proof of the fulfillment of the policy of the statute because the fitness of the plaintiffs to enjoy a partnershiplicense was “necessarily considered, and favorable action was taken thereon” when they did eventually secure a partnership license. (P. 689.) (See also Weiman v. Superior Court, supra, 51 Cal.2d 710.) Similarly, in the present case, plaintiff’s competence and responsibility were necessarily considered and confirmed when the renewal license issued.
This court has indicated that belated compliance with the statute does not in itself constitute substantial compliance if . the initial acquisition of the required license postdates the completion of performance under the contract. (Loving & Evans v. Blick, supra, 33 Cal.2d 603.) That case does not, however, foreclose us from according significance to a contractor’s successful, although belated, renewal of a license which it held at the inception of the contract. In the absence of any indication that plaintiff’s fitness to enjoy a license fluctuated between the expiration and renewal of its license, we may properly accord weight to that renewal in determining whether the policy of the statute has been: satisfied.
More closely relevant to the present case than the decision in Loving is Bierman v. Hagstrom Construction Co., supra, 176 Cal.App.2d 771. There, as in the present case, the contractor possessed a valid license at the time of contracting and later secured a renewal some weeks after the license had expired. The court nevertheless denied him recovery, distinguishing the “substantial compliance” cases on the ground that “in those cases someone had a license at all times during the performance.” (P. 777, italics added.) We have already indicated our doubt concerning the accuracy of this reading of the prior decisions. Nevertheless, without approving the apparent holding of the Bierman court that possession of a license by “someone” is the sole determinative condition for *285a finding of “substantial compliance,” we proceed to note that such condition was met in this case.
3. The responsibility and competence of plaintiff’s managing officer were officially confirmed throughout the period of performance of the contract.
The pattern of the statute evinces a legislative determination that the fitness of a corporation to enjoy a contractor’s license lies in the competence and experience of the individual who qualifies on its behalf. A corporate applicant qualifies for a license by demonstrating that one of its members, the “responsible managing officer,” possesses the requisite knowledge and experience. (Bus. & Prof. Code, § 7068, subd. (c).)3 Section 7068.1 requires that the individual who qualifies on behalf of the corporation “shall be responsible for exercising such direct supervision and control of his employer’s or principal’s construction operations as is necessary to secure full compliance with the provisions of this chapter and the rules and regulations of the board relating to such construction operations. . . . ”4 (See Fechi v. Trojan Construction Co. (1960) 185 Cal.App.2d 121 [8 Cal.Rptr. 138].)
Plaintiff's “responsible managing officer’’ is Mr. J. W. Lee. It is by virtue of Mr. Lee’s qualifications that plaintiff secured and holds its contractor’s license. Mr. Lee and his associates conduct their affairs through a number of related corporations. The qualifications of Mr. Lee form the basis for the licenses of a number of these corporations. One of them, San Leandro Rock Co., possessed a valid contractor’s license throughout the period that plaintiff was performing its contract with defendant. The existence of this license necessarily evidences an official determination of the experience and competence of Mr. Lee, the same experience and competence which would have been in issue in a consideration of plaintiff’s application for renewal of its license. This official *286confirmation of Mr. Lee ⅛ qualifications throughout the period of performance should exorcise any remaining doubt that the policy of the statute has been satisfied in this case.
Defendant urges that this court may not consider the existence of the license of one entity as tending to confirm the qualifications of another, even in a situation in which the same facts determine the fitness of both to enjoy licensed status. The decided cases do not support defendant’s contention. In Gatti v. Highland Park Builders, Inc., supra, 27 Cal.2d 687, the belatedly-acquired partnership license to which this court accorded such great significance was not in fact that of the plaintiff partnership. It was, rather, the license of another partnership which, in addition to the plaintiffs, embraced a third party and which had no relation to the contract which formed the basis of the action. Nevertheless, this court gave, weight to the acquisition of that license on the ground that “any matters which might form the basis of legitimate inquiry by the licensing board” in determining the fitness of plaintiffs to enjoy a license were “necessarily considered” and resolved in connection with the issuance of the license to the other partnership. (P. 689.)
Similarly, in Citizens State Bank v. Gentry, supra, 20 Cal.App.2d 415, the court, in sustaining recovery by an individual contractor despite the expiration of his license, laid stress on the fact that, from the expiration of Ms license until the completion of performance, a corporation controlled by him possessed an outstanding, valid license which presumably rested on his qualifications.5
The case of Steinwinter v. Maxwell, supra, 183 Cal.App.2d 34, which defendant cites to us does not support its contention. In that case the court denied recovery to a partnership with only one licensed partner despite the fact that the qualifications of both partners had necessarily been established in connection with the issuance of a license to a corporation con*287trolled by them. This ruling did not rest upon a conclusion by the court that the existence of the corporation’s license failed to confirm the qualifications of the unlicensed partner. Rather the court noted that, even if that partner’s qualifications were accepted, indeed even if he had held a valid individual contractor’s license, the partners would still necessarily have been required to secure a partnership license as required by section 7029. The court stated: “The contractors-. . . contend that where both members of the partnership have been approved by the licensing board, as they were in this instance, for the issuance of the corporation license, the purpose sought to be accomplished by the statute, i.e., the assurance of reliable, honest and competent contractors is satisfied. However, this argument ignores the provisions of section 7029 . . . which specifically requires that, even if both partners have individual licenses, they still must obtain an additional license if they combine to jointly act in the capacity of a contractor.” (P. 38; italics added.)
To the extent that the court accepted the contention that the existence of the corporation’s license confirmed the qualifications of the unlicensed partner, the Steinwinter decision supports our conclusion in this case. To the extent, however, that Steinwinter turns on the construction of section 7029, it raises questions not here relevant.6
Under all the circumstances of this case, we cannot doubt that it is one in which the policy of the licensing statute has been effectively realized, and that defendant has received in full measure the protection intended by the Legislature. Fidelity to precedent and considerations of equity each preclude us from requiring the wholly gratuitous enrichment of defendant at the expense of plaintiff and its creditors. We are not disposed to decree vast forfeitures in the aid of no ascertainable public policy.
*288The alternative writ of prohibition is discharged and the writ prayed for is denied.
Peters, J., Peek, J., and Burke, J., concurred.At all times material, section 7031 provided: “No person engaged in the business or acting in the capacity oí a contractor, may bring or maintain any action in any court oí this state for the collection of com*280pensation for the performance of any act or contract for which a license is required by this chapter without alleging and proving that he was a duly licensed contractor at all times during the performance of such act or contract. ...”
Defendant urges that the court found “substantial compliance’’ in Gatti because the plaintiffs continued to possess valid individual contractor’s licenses throughout the period of performance. Language in certain other cases lends support to this reading. (Loving & Evans v. Blick (1949) 33 Cal.2d 603, 608 [204 P.2d 23]; Bierman v. Hagstrom Construction Co. (1959) 176 Cal.App.2d 771, 777 [1 Cal.Rptr. 826, 82 A.L.R.2d 1424].) It is significant, however, that the majority in Gatti did not even state that the partners did in fact possess valid licenses throughout the period of performance. Moreover, in its summary of the factors which led to its decision, the Gatti court mentioned only the possession of valid licenses “when the contract was made.’’ (P. 691; italics added.)
This individual must display “such degree of knowledge and experience in the classification applied for, and such general knowledge of the building, safety, health and lien laws of the State and of the administrative principles of the contracting business as the board deems necessary for the safety and protection of the public. ’ ’ (Bus. & Prof. Code, § 7008.)
Section 7071 imposes the additional requirement that the directors of the corporation meet certain standards of good character. The record contains no suggestion that the character of plaintiff’s directors oscillated in the period between the expiration and renewal of its license.
The fact that the statutory responsibility of the “responsible managing officer” extends only to the “construction operations” of the contractor should allay any suspicion that plaintiff acted improperly in delegr.ting to its office manager the responsibility for renewing its license.
Defendant seeks to distinguish these cases on the ground that the entity which held the license was legally liable on the contract which formed the basis of the action. This contention cannot stand. In the first place, it is far from clear that the license holders were in fact liable on the contracts. In Gatti, nothing whatever indicates that the other partnership was liable on the plaintiffs’ contract. In Gentry, the court states only that performance proceeded “under the auspices” of the corporation.
No court has taken the view of these cases which defendant urges. This court has summarized its understanding in the following language: ‘ ‘ In both the Gatti and Gentry cases, any matter that might have formed the subject of inquiry by the licensing board in determining whether to issue an additional license was necessarily considered in connection with the licenses actually issued.” (Lewis & Queen v. N. M. Ball Sons, supra, 48 Cal.2d 141, 149.)
It might appear anomalous that a court which would accept the contention that the existence of the corporation license established the qualifications of the unlicensed partner was nevertheless unwilling to conclude that confirmation of the qualifications of both partners would establish the qualications of the partnership. The position of the court becomes understandable, however, in light of the fact that section 7029 explicitly requires an additional license, even where all of the partners are licensed. Because of the obscurity of the policy which underlies the requirement of section 7029, the courts have found it difficult to determine that this policy has been satisfied in a given case. The question is now of limited importance since the statute was amended in 1961 to provide that the sanction of section 7031 shall not be imposed for lack of a partnership license when all the partners are individually licensed (Stats. 1961, ch. 1325, § 1.)