No. 80-372
I N THE SUPREME COURT O THE STATE O M N A A
F F OTN
1981
J A C K TAURMAN and LON WOCASEK,
d/b/a T & W CONSTRUCTION,
P l a i n t i f f s and A p p e l l a n t s ,
TOWN O CASCADE,
F
Defendant , Respondent & Cross-Appellant.,
Appeal from: D i s t r i c t Court o f t h e Eighth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f C a s c a d e , The H o n o r a b l e
H. W i l l i a m Coder, J u d g e p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t :
D z i v i , C o n k l i n & Nybo, G r e a t F a l l s
R i c h a r d D z i v i and Susan Rebeck a r g u e d , Great F a l l s ,
Montana
For Respondents:
Cure & Borer, G r e a t F a l l s , Montana
Maxon X. D a v i s a r g u e d , G r e a t F a l l s , Montana
Submitted: Aprib&3, 1981
jbjji 4
Decided :
F i l e d :JUN
Clerk
Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d t h e Opinion of
the Court.
This is an a p p e a l from the District Court of the
E i g h t h J u d i c i a l D i s t r i c t o f t h e S t a t e o f Montana, i n and f o r
t h e County of C a s c a d e .
Appellant, T & W Construction, s u e d on c o n t r a c t f o r
the performance of street construction in the Town of
Cascade. Respondent, t h e Town o f Cascade, counterclaimed
a l l e g i n g t h a t a p p e l l a n t b r e a c h e d t h e c o n t r a c t and f a i l e d t o
fully perform the contract and raised as a defense the
i l l e g a l i t y of the contract. R e s p o n d e n t moved for summary
judgment, and t h e m o t i o n was g r a n t e d . The D i s t r i c t C o u r t
a l s o dismissed respondent's counterclaim. Appellant appeals
from t h e summary judgment order. R e s p o n d e n t a p p e a l s from
t h e d i s m i s s a l of t h e c o u n t e r c l a i m .
J a c k Taurman and Lon Wocasek a r e a p a r t n e r s h i p d o i n g
business i n Cascade County a s T & W Construction. On o r
about July 24, 1979, following competitive bidding,
r e s p o n d e n t Town o f C a s c a d e awarded a c o n t r a c t t o a p p e l l a n t T
& W Construction for street construction and improvement
work. A p p e l l a n t began work on t h e s t r e e t p r o j e c t on A u g u s t
7 , 1979. On A u g u s t 1 5 , 1 9 7 9 , an a g e n t o f r e s p o n d e n t a d v i s e d
a p p e l l a n t t o c e a s e and d e s i s t from a n y f u r t h e r work on t h e
construction project because of respondent's uncertainty
about obtaining funding f o r t h e p r o j e c t . Appellant stopped
work.
On S e p t e m b e r 2 5 , 1 9 7 9 , a p p e l l a n t , a t t h e d i r e c t i o n o f
respondent, resumed work on t h e s t r e e t p r o j e c t . Appellant
was u n a b l e t o c o m p l e t e t h e c o n s t r u c t i o n c o n t r a c t d u r i n g t h e
1979 construction season because of the forty-day work
stoppage ordered by respondent. Appellant alleged it had
completed the grading and graveling portion of the contract.
This portion of the work had a reasonable value of $25,857.
Respondent refused to pay appellant for the work performed.
On January 30, 1980, appellant filed its complaint in
the District Court seeking to recover from respondent the
value of the work performed under the contract and related
damages.
On May 8, 1980, appellant applied for and on May 20,
1980, obtained a valid and retroactive 1979 Montana Public
Contractor's License, No. 1717B.
On May 9, 1980, respondent moved the District Court
for summary judgment. On August 20, 1980, the District
Court entered summary judgment against appellant.
Specifically, in its Conclusion of Law No. 3, the District
Court found:
"In light of plaintiffs' failure to possess a
public contractor's license in 1979, their
alleged contract with the Town of Cascade for
the performance of that public construction
work was illegal pursuant to Section
15-50-201, MCA."
We address the following issue in this appeal:
Can a contractor collect payment for work performed
under a contract with a municipality, if the contractor does
not obtain a public contractor's license until after the
work has been performed?
Section 15-50-101(l)(a), MCA, states:
"A 'public contractor' within the meaning of
this chapter shall include any person who
submits a proposal to or enters into a
contract for performing all public
c o n s t r u c t i o n work i n t h e s t a t e w i t h t h e
f e d e r a l g o v e r n m e n t , s t a t e o f Montana, o r w i t h
any b o a r d , c o m m i s s i o n , o r d e p a r t m e n t t h e r e o f
o r w i t h any b o a r d o f c o u n t y c o m m i s s i o n e r s o r
w i t h any c i t y o r town c o u n c i l o r w i t h any
a g e n c y o f a n y t h e r e o f o r w i t h any o t h e r
p u b l i c b o a r d , body, c o m m i s s i o n , o r a g e n c y
a u t h o r i z e d t o l e t o r award c o n t r a c t s f o r a n y
p u b l i c work when t h e c o n t r a c t c o s t , v a l u e , o r
p r i c e t h e r e o f e x c e e d s t h e sum o f $ 1 , 0 0 0 . "
S e c t i o n 15-50-201, MCA, p r o v i d e s :
" I t s h a l l be u n l a w f u l f o r a n y p e r s o n o r a n y
combination of persons t o engage i n t h e
b u s i n e s s or a c t i n t h e c a p a c i t y of p u b l i c
contractor a s herein defined within the s t a t e
o f Montana w i t h o u t h a v i n g a l i c e n s e t h e r e f o r
a s herein provided."
The District Court erred in concluding that the
c o n t r a c t e n t e r e d i n t o b e t w e e n t h e p a r t i e s was i l l e g a l a n d ,
therefore, void. Appellant admits t h a t it d i d n o t have a
public contractor's l i c e n s e a s r e q u i r e d by s t a t u t e when it
accepted the bid proposal. It admits that it may have
violated the law and may be assessed a misdemeanor fine.
Nowhere i n t h e s t a t u t e s i s i t d e c l a r e d t h a t a c o n t r a c t made
w i t h o u t a l i c e n s e is u n e n f o r c e a b l e o r v o i d . Nowhere i n t h e
s t a t u t e d o e s i t e x p r e s s l y p r o h i b i t t h e making o f a c o n t r a c t
o r recovery o u t s i d e of t h e c o n t r a c t . S e e McManus v . Fulton
( 1 9 2 9 ) , 85 Mont. 170, 278 P. 126. It is n o t t h e c o n t r a c t
which t h e s t a t u t e made i l l e g a l . I t is " u n l a w f u l " t o " a c t i n
t h e c a p a c i t y of a p u b l i c c o n t r a c t o r . " The c o n t r a c t itself
was l e g a l a n d , therefore, enforceable. See V i t e k , I n c . v.
A l v a r a d o I c e P a l a c e ( 1 9 7 4 ) , 34 Cal.App.3d 5 8 6 , 110 C a l . R p t r .
The l i c e n s i n g l a w s h o u l d n o t be u s e d a s a s h i e l d f o r
t h e avoidance of a just o b l i g a t i o n o r t o p r o h i b i t a. c l a i m
for just compensation.
We reverse the District Court's summary judgment and
dismissal of respondent's counterclaim and order that
further proceedings be conducted consistent with this
opinion.
W e concur:
Chief Justice