G C Timmis & Co. v. Guardian Alarm Co.

Young, J.

(dissenting).

The majority ignores the clear language of the reba, MCL 339.2501 et seq., favoring instead an interpretation whose result the majority deems more palatable. The majority also ignores the historical evolution of the statute, which is not dispositive but is entirely consistent with the unambiguous language of the statute. I believe that the statute encompasses the brokerage of business opportunities that do not involve real estate transactions. Accordingly, I would affirm the decision of the Court of Appeals. Because the majority concludes otherwise, I respectfully dissent.

Plaintiff maintains that transaction it allegedly contracted to perform, which did not involve real estate, is not covered by the reba and thus plaintiff was not required to be licensed under that act as a precondition of bringing suit for breach of the alleged agreement. The majority contends that the issue in this case is whether the Legislature “intended” the definition of real estate broker to encompass the brokerage *435of non-real estate transactions. Ante at 419. However, rather than seeking to divine a free floating legislative intent, I believe that the Court’s task in this case is to determine whether the words actually used by the Legislature encompass the brokerage of business opportunities that do not involve real estate.

Our obligation of giving effect to the intent of the Legislature begins by examining the language of a statute. The words of a statute provide the most reliable evidence of legislative intent. Coleman v Gurwin, 443 Mich 59, 65; 503 NW2d 435 (1993). If the language of the statute is clear, the Legislature must have intended the meaning expressed, and the statute is enforced as written. Turner v Auto Club Ins Ass’n, 448 Mich 22, 27; 528 NW2d 681 (1995). It is only in the face of an ambiguity that a court may properly look outside the words utilized in the statute to ascertain legislative intent. Sun Valley Foods Co v Ward, 460 Mich 230, 236; 596 NW2d 119 (1999). Finally, in construing a statute, we must give the words used by the Legislature their common, ordinary meaning. MCL 8.3a.1

Over the past several years, a majority of this Court has consistently adhered to the philosophy that the plain language of a statute should be applied without regard to the “legislative wisdom” of the outcome. This philosophy is grounded in the belief that separation of powers principles preclude the judiciary from engaging in judicial legislation or otherwise “saving” *436the citizenry from the actions of its duly elected legislators. See People v Borchard-Ruhland, 460 Mich 278; 597 NW2d 1 (1999); People v Lukity, 460 Mich 484; 596 NW2d 607 (1999); Perez v Keeler Brass Co, 461 Mich 602; 608 NW2d 45 (2000); People v Hermiz, 462 Mich 71; 611 NW2d 783 (2000); Robinson v Detroit, 462 Mich 439; 613 NW2d 307 (2000); Mudel v Great Atlantic & Pacific Tea Co, 462 Mich 691; 614 NW2d 607 (2000); Nawrocki v Macomb Co Rd Comm, 463 Mich 143; 615 NW2d 702 (2000); People v Glass, 464 Mich 266; 627 NW2d 261 (2001); Michigan United Conservation Clubs v Secretary of State, 464 Mich 359; 630 NW2d 297 (2001); Pohutski v City of Allen Park, 465 Mich 675; 641 NW2d 219 (2002); Robertson v DaimlerChrysler Corp, 465 Mich 732; 641 NW2d 567 (2002); People v Cornell, 466 Mich 335; 646 NW2d 127 (2002); Sington v Chrysler Corp, 467 Mich 144; 648 NW2d 624 (2002); Mack v Detroit, 467 Mich 186; 649 NW2d 47 (2002); Weakland v Toledo Engineering Co, Inc, 467 Mich 344; 656 NW2d 175 (2003); In re Certified Question (Kenneth Henes Special Projects Procurement v Continental Biomass Industries, Inc), 468 Mich 109; 659 NW2d 597 (2003). I do not believe that the majority’s opinion can be easily squared with the principles of statutory construction outlined in the previously cited cases.

A. THE CLEAR LANGUAGE OF THE STATUTE IS NOT LIMITED TO REAL ESTATE TRANSACTIONS

The statute at issue is contained in the Occupational Code. MCL 339.2501(d) defines “real estate broker” as follows:

*437“Real estate broker” means an individual, sole proprietorship, partnership, association, corporation, common law trust, or a combination of those entities who with intent to collect or receive a fee, compensation, or valuable consideration, sells or offers for sale, buys or offers to buy, provides or offers to provide market analyses, lists or offers or attempts to list, or negotiates the purchase or sale or exchange or mortgage of real estate, or negotiates for the construction of a building on real estate; who leases or offers or rents or offers for rent real estate or the improvements on the real estate for others, as a whole or partial vocation; who engages in property management as a whole or partial vocation; who sells or offers for sale, buys or offers to buy, leases or offers to lease, or negotiates the purchase or sale or exchange of a business, business opportunity, or the goodwill of an existing business for others-, or who, as owner or otherwise, engages in the sale of real estate as a principal vocation. [Emphasis added.]

The plain language of the statute defines a real estate broker as, among other things, one who “negotiates the purchase ... of a business, business opportunity, or the goodwill of an existing business for others . . . .” There is no textual indication in the statute that brokering a “business,” “business opportunity,” or the “goodwill of an existing business” is limited to only those transactions involving real estate. To the contrary, the clear language of “business, business opportunity, or the goodwill of an existing business” encompasses the brokerage of transactions without regard to real estate. The majority does not discuss the plain meaning of the statutory language; rather, the majority’s analysis sidesteps the plain meaning of the words and proceeds directly to the use of a canon of statutoiy construction and other contextual tools to explain why the plain language could not possibly mean what it so obviously says.

*438In fact, by its very definition, the term “goodwill” refutes any notion that real estate is the factor common to all the actions assigned to real estate brokers by the Legislature. Goodwill is an intangible asset defined as “[t]he favor which the management of a business wins from the public” and “[t]he fixed and favorable consideration of customers arising from established and well-conducted business.” Black’s Law Dictionary (5th ed).2 Thus, contrary to the majority’s assertions, goodwill has nothing to do with real estate; rather, it attaches only to an ongoing business concern.3 The irreducible problem faced by the major*439ity is that it cannot fit this round peg into its square hole. That is, the majority cannot declare the term “goodwill” to mean “real estate” without completely emasculating the definition of “goodwill.” The majority makes a conscientious effort to ignore the fact that the word “goodwill” is a legal term of art that is distinct from real estate or any other physical asset.

B. MISUSE OF STATUTORY CONSTRUCTION CANONS

Of importance, I believe that the majority misuses canons of statutory construction to actually deprive the words of the statute their customary meaning.4 This is contrary to the well-understood principle that statutory construction aids should not be utilized to create an ambiguity where one does not otherwise exist. See In re Certified Question (Henes v Continental Biomass), supra. Under the doctrine of noscitur a sociis, “the meaning of questionable words and phrases in a statute may be ascertained by reference to the meaning of words or phrases associated with it.” Black’s Law Dictionary (5th ed) (emphasis added). United States Supreme Court Justice Antonin Scalia discussed the meaning of this rule by illustration: “If you tell me, T took the boat out on the bay,’ I understand ‘bay’ to mean one thing; if you tell me, T *440put the saddle on the bay,’ I understand it to mean something else.” Scalia, A Matter of Interpretation, (Princeton, New Jersey: Princeton University Press, 1997), p 26. Using Justice Scalia’s example as a guide, it is clear that the common meaning of the terms “business, business opportunity, or the goodwill of an existing business” are not contextually altered by the rest of the language in the reba.

I offer the following as an example to illustrate the majority’s abuse and misapplication of this canon of statutory construction. Suppose that a hypothetical statute were to preclude ownership of the following animals without a license:

Duck, Goose, Bittern, Swan, Heron

Presume that the word “bittern” had no commonly understood meaning that could be discerned by resort to a dictionary. In order to determine the meaning of the word, the doctrine of noscitur a sociis could be utilized to reasonably come to the conclusion that a bittern is a type of waterfowl. That is, where the meaning of the word is not apparent, the meaning could be ascertained by reference to the meaning of words associated with it.

Now suppose that the hypothetical example were altered slightly, and the statute listed these animals:

Duck, Goose, Pig, Swan, Heron

Unlike bittern, the word “pig” does have a fixed, commonly understood meaning, and it is not “waterfowl.”5 *441However, under the majority’s analysis, the doctrine of noscitur a sociis could properly be used to come to the conclusion that a pig is a waterfowl (despite the clear, unambiguous meaning of pig), because all the surrounding terms were waterfowls.6

Similarly, despite the clear and unambiguous meaning of “business, business opportunity, or the goodwill of an existing business,” the majority concludes that these words are limited to those involving “a real estate transaction.” Ante at 424. By misuse of the rules of construction, I believe the majority is amending the statute in order to avoid giving meaning to the words the Legislature has employed because to do so would result in the enforcement of a policy the majority rejects as unsound. The doctrinal difference separating me from the majority is that I am satisfied with applying the plain meaning of the statutory words, whereas the majority is uncomfortable with a construction that results in licensed real estate bro*442kers being the only persons in Michigan authorized to buy and sell businesses for others for a fee. This is an admittedly odd result, but one of the Legislature’s making. As my colleague Justice Taylor has observed elsewhere, I “take comfort in the fact that the Legislature is free to amend” this statute if it now considers that the statute no longer reflects a sound policy choice. People v Hermiz, supra at 80 n 13. I fully agree with the proposition that “the Legislature should not have to suffer judicial interference with the choice made in its legislative product.” Id. at 81. Thus, in my view, it remains the duty of the Legislature, not this Court, to change the state’s licensing policy.

C. THE HISTORICAL IMPORT OF THE STATUTORY PHRASE

In addition to ignoring the most obvious, common meaning of the disputed statutory provisions, which as the primary consideration, resolves the question before the Court, the majority ignores the historical evolution of the statute and the distinct meaning given to the “business chance broker” provisions. While this history is by no means dispositive, reba’s text being the most compelling basis for determining the intent of that statute, it does provide additional comfort that the construction I offer is sound.

In 1919, the Legislature enacted the brokers license act, 1919 PA 306, which was titled “An act to define, regulate, and license real estate brokers, real estate salesmen and business chance brokers and to provide a penalty for a violation of the provisions [of the act].”

*443Section 2 of the brokers license act defined “business chance broker,” and provided in pertinent part:

A business chance broker within the meaning of this act is any person, firm, partnership association, copartnership or corporation, who for a compensation or valuable consideration sells or offers for sale, buys or offers to buy, or negotiates the purchase or sale or exchange of a business, business opportunity, or the good will of an existing business for others as a whole or partial vocation. [1919 PA 306 (emphasis added).7]

In 1943, the “business chance broker” section was eliminated, and the provisions delineating the responsibilities of business chance brokers were transferred verbatim to the real estate broker licensing act. Thus, the statutory definition of real estate broker was expanded to include those activities previously assigned to business chance brokers. The formerly separate business chance broker provision incorporated into the real estate broker provision is highlighted below:

A real estate broker within the meaning of this act is any person, firm, partnership association, copartnership or corporation, who with intent to collect or receive a fee, compensation or valuable consideration, sells or offers for sale, buys or offers to buy, appraises or offers to appraise, lists or offers or attempts to list, or negotiates the purchase or sale or exchange or mortgage of real estate, or negotiates for the construction of buildings thereon, or who leases or offers to lease or rents or offers for rent any real estate or the improvements thereon for others, as a whole or partial *444vocation, or who sells or offers for sale, buys or offers to buy, leases or offers to lease, or negotiates the purchase or sale or exchange of a business, business opportunity, or the good will of an existing business for others, or who, as owner or otherwise, engages in the sale of real estate as a principal vocation. [1943 PA 57.]

From these legislative actions, I conclude that the Legislature made a deliberate and conscious decision not to eliminate activities formerly performed by business chance brokers, but to reassign to real estate brokers those activities previously performed by business chance brokers. Therefore, an evaluation of those activities historically performed by business chance brokers is particularly instructive on understanding the definition of these activities reassigned to real estate brokers that are at issue in this case.

Before its statutory introduction in 1919, the term “business chance broker” did not exist in Michigan. The term and its function were entirely a creation of the Legislature.8 While there are but a few cases addressing the “business chance broker,” there is clear indication in our case law that the activities of a business chance broker were not limited to transactions involving real estate.

Hague v DeLong, 292 Mich 262; 290 NW 403 (1940), involved the stock sale of a company. There, this Court held that a brokerage firm was precluded from collecting a commission on the sale of all the capital stock of a company because plaintiff was not licensed *445as a business chance broker.9 The issue dividing the evenly split Court in Hague was whether the agreement was for the mere sale of stock or for the “sale of a business” within the meaning of the act. The prevailing side held that the agreement was for the sale of the business and that the sale of stock was merely incidental.10 The dissent concluded that the agreement was merely for the sale of stock. The dissent acknowledged, however, that if the purpose of the stock transaction were the sale of the business, plaintiff would be precluded from recovery because he was not licensed as required by the act.11

Thus, in Hague, decided three years before the statutory transfer of the functions of business chance brokers, the activities of a business chance broker were unanimously determined to encompass efforts that did not involve real estate transactions — in that case, the sale of stock. The majority here not only ignores the plain meaning of the words, but also the historical meaning given to the business chance broker provisions. To the contrary, I believe that the clear language of the statute, in addition to the historical meaning given to “business chance brokers,” mili*446tates against a conclusion that the Legislature in 1943 intended that the transferred business chance broker duties became limited to only those transactions involving real estate. Contrary to the majority’s apparent belief that a transaction not involving real estate would not fall within the ambit of reba, the statutory text and historical construction of this language indicate that stockbrokers and investment bankers were in fact business chance brokers under idential statutory language.

It is certainly within the Legislature’s constitutional prerogative and authority to decide what activities require licensure. I tend to agree that the choices made by the Legislature in enacting legislation regulating business chance brokers, and subsequently real estate brokers, may make little sense in today’s economy. However, I do not believe that this Court has the constitutional authority to “fix” the statute to better suit our modem economy according to our own policy assumptions. Rather, it is the responsibility of the Legislature to rescind or amend statutes that are no longer viable.

Under the clear language of the statute, supported by the historical interpretation and eventual transfer of the activities of the business chance broker into those assigned to real estate brokers, I believe that the statute encompasses the brokerage of business opportunities that do not involve real estate transactions. Therefore, the plaintiff was required to be a licensed real estate broker as a precondition to entering into the alleged contract and is now precluded by MCL 339.2512a from suing to enforce any such contract.

*447Accordingly, I respectfully dissent from the majority opinion and would affirm the decision of the Court of Appeals.

Weaver, J. I dissent from the majority for the reasons stated in parts a and c only of Justice Young’s dissent.

Indeed, the statutory construction rules, MCL 8.3 et seq., provide a compelling justification, if any were needed, for hewing closely to the common meaning of the words employed in a statute: The Legislature is drafting its statutes in reliance that courts will follow the statutory canons of construction the Legislature has adopted.

See also Random House Webster’s College Dictionary (2002), which defines goodwill as “an intangible, salable asset arising from the reputation of a business and its relations with its customers.”

The majority’s quotation of Black’s Law Dictionary, wherein the majority states that “[p]urchase of ‘the premises in which [the] business is conducted’ is one way to acquire ‘goodwill’ ” is patently false and taken out of context. Ante at 424 n 8.

Read in its entirety, the passage states:

The custom of patronage of any established trade or business; the benefit or advantage of having established a business and secured its patronage by the public. And as property incident to business sold, favor vendor has won from public, and probability that all customers will continue that patronage. It means every positive advantage that has been acquired by a proprietor in carrying on his business, whether connected with the premises in which the business is conducted, or with the name under which it is managed, or with any other matter carrying with it the benefit of the business. [Black’s Law Dictionary (6th ed) (emphasis added).]

Thus, when an ongoing business and its physical assets are purchased, goodwill comes with it. However, purchase of the premises alone does not convey goodwill. Similarly, the purchase of only the ongoing business without its physical assets will convey goodwill.

The majority is compelled to ignore the fact that goodwill is never associated with anything other than the value of the continued patronage of an ongoing business concern in order to advance its argument that the reba concerns only real estate transactions. See Pontiac Trust Co v Newell, 266 Mich 490, 501; 254 NW 178 (1934) (“[G]oodwill cannot exist without a going concern . . . .”).

In addition to misconstruing canons of statutory construction, the majority also invents new ones. After noting that each article in the Occupational Code “deals with a single or discrete group of identified professions,” the majority proceeds to utilize and quote the “ ‘single or discrete group of identified professions’ theme” as a divining rod for legislative intent. Ante at 420 and 423. This method appears to be an application of a variant of the principle of in pari materia, not noscitur a sociis, which is properly used only where an ambiguity exists. Tyler v Livonia Pub Schools, 459 Mich 382, 390-392; 590 NW2d 560 (1999). It appears obvious that the majority is willing to ignore distinctions between interpretive canons in order to arrive at its preferred construction of reba.

We agree with the majority that “pig” does have many meanings beyond swine. Ante at 430-431 n 12. However, none of the alternatives cited in the majority opinion, such as an “oblong mass of metal,” would suggest themselves to a native speaker of English as the common, most likely meaning of the term as used in our hypothetical statute.

The majority uses noscitur a sociis to suggest, not that the correct definition of “pig” is a swine, but that the level of abstraction should move from “waterfowl and swine” to animals or mammals. The majority must do so because it desires to give no meaning (at least not the meaning every other person familiar with these terms would give them) to the reba terms that originally constituted the business chance broker statute. Surely, the majority’s approach is unlimited by any common sense. Thus, using the minority’s method, we could abstract the meaning to the point that we could characterize the terms in our hypothetical statute as meaning “English words” or “nouns.” The majority must make such an abstraction because giving the equivalents of “pig” in reba their obvious meaning results in a construction the majority does not like. The majority fails to explain why it is appropriate, given goodwill’s definite meaning as a term of art (which is completely divorced from the term “real estate”), to “abstract” the term in the manner it does. The action taken by the majority is actually a redefinition, not an abstraction. Moreover, it is also unclear what principle, if any, the majority employs to discern the appropriate level of “abstraction” to be used in any given application of its new rule of construction. This is no longer a principle of statutory construction. It is a rule of deconstruction.

In 1937, a provision was added to § 3 of the act, stating that “[t]he commission of a single act prohibited under the Michigan statutes defining, regulating and licensing real estate brokers and salesmen shall constitute a violation thereof.” 1937 PA 188. Under that amendment, even isolated transactions were governed by the act.

See Miller v Stevens, 224 Mich 626, 630-631; 195 NW 481 (1923). “[C]ounsel cite us to no authority, and we have not discovered any, where the subject of ‘business chance broker’ is mentioned or discussed, outside the act referred to, which apparently coined the term and defines it for the purposes of the act.”

Plaintiff arranged the sale of all the capital stock of the American Broach and Machine Company to the Sundstrand Machine Tool Company. The sale of the stock “would result in a transfer of the business, at least pro tanto.” Id. at 296.

In support of the conclusion that the Sundstrand Company purchased the business and not merely the stock, the opinion indicates that, in addition to the stock, Sundstrand subsequently purchased “valuable patents and patents pending, the services of Mr. Lapointe, a lease, and an option to purchase the real estate and buildings.” Id. at 277. These items were apparently not part of the commission agreement between plaintiff and defendant.

The dissent also acknowledged that, because there was no sale of an interest in real estate, the commission agreement was not required to be in writing for the purpose of the statute of frauds. Id. at 302.