Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C h i e f J u s ti c e J u s t ic e s
Maura D. Corrigan Michael F. Cavanagh
Opinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED JUNE 18, 2003
G.C. TIMMIS & COMPANY,
Plaintiff-Appellant,
v No. 120035
GUARDIAN ALARM COMPANY,
Defendant-Appellee.
BEFORE THE ENTIRE BENCH
MARKMAN, J.
This case concerns whether plaintiff acted as a real
estate broker under § 2501(d) of the real estate brokers act
(REBA), MCL 339.2501 et seq. The trial court denied
defendant’s motion for summary disposition after finding that
a question of fact remained concerning whether plaintiff
participated in negotiations regarding the sale of a business.
The Court of Appeals reversed the order of the trial court and
held that REBA required plaintiff to be a licensed real estate
broker because it had acted as a “finder.” We reverse the
judgment of the Court of Appeals and remand this case to the
trial court for a determination whether defendant’s
transaction here constituted a “real estate” transaction for
purposes of REBA .1
I. BACKGROUND
Plaintiff is a registered investment advisor, but it is
not a licensed real estate broker. Plaintiff introduced
itself to defendant, a security-systems company, in order to
discuss how it might assist defendant in acquiring other
security-systems companies. According to plaintiff, the
parties entered into an oral contract, which specified that
plaintiff would receive a “success fee” for any company
plaintiff contacted on defendant’s behalf that defendant
subsequently purchased.2 Plaintiff eventually introduced
defendant to a company, MetroCell, a subsidiary of Rao
Corporation. Subsequently, defendant purchased the alarm
contracts of MetroCell and its customers, and plaintiff sought
1
We deny plaintiff’s motion to file a postargument
supplemental brief regarding plaintiff’s failure to submit at
the time of oral argument a signed affidavit on defendant’s
motion for summary disposition in the trial court. However,
we do not find this issue dispositive of this case in any way.
2
Defendant disputes the existence of such an oral
contract.
2
the “success fee.” However, defendant refused to pay,
claiming that REBA precluded plaintiff from bringing suit
because plaintiff had acted as an unlicensed real estate
broker. The trial court denied defendant’s motion for summary
disposition, concluding that there was a genuine issue of
material fact regarding whether plaintiff had acted as a “real
estate broker.” The Court of Appeals, in a two-to-one
decision, reversed. 247 Mich App 247; 635 NW2d 370 (2001).
This Court granted plaintiff’s application for leave to
appeal.3
II. STANDARD OF REVIEW
Statutory interpretation is an issue of law that is
reviewed de novo. People v Morey, 461 Mich 325, 329; 603 NW2d
250 (1999).
III. ANALYSIS
This Court must determine whether plaintiff’s conduct
fell within the scope of Michigan’s real estate brokers
licensing act. To determine whether plaintiff acted as a
“real estate broker,” this Court must first determine: (a)
whether the Legislature intended the definition of “real
estate broker” to encompass the brokerage of non-“real estate”
transactions; and, if so, (b) whether plaintiff conducted
itself as a “real estate broker,” as defined in § 2501(d) of
3
466 Mich 889 (2002).
3
the Occupational Code. MCL 339.101 et seq.
A. REBA LIMITED TO REAL ESTATE TRANSACTIONS
MCL 339.2501(d) provides:
“Real estate broker” means an individual . . .
[or entity] who with the 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
analysis, 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.]
When construing a statute, the Court’s primary obligation
is to ascertain the legislative intent that may be reasonably
inferred from the words expressed in the statute. Chandler v
Co of Muskegon, 467 Mich 315, 319; 652 NW2d 224 (2002). If
the language of the statute is unambiguous, the Legislature is
presumed to have intended the meaning expressed. Tryc v
Michigan Veterans’ Facility, 451 Mich 129, 135; 545 NW2d 642
(1996).
Real estate brokering is not the only profession
regulated by the Legislature under the Occupational Code. MCL
4
339.101 et seq. Rather, the Code regulates a number of other
professions, including public accounting, barbering, hearing
aid dealing, and residential building. See MCL 339.720 et
seq.; MCL 339.1101 et seq.; MCL 339.1301 et seq.; MCL 339.2401
et seq. A common theme prevails throughout each of these
articles—namely, that each article deals with a single or
discrete group of identified professions. For example,
article 11 deals only with barbering and does not contain
language that would suggest that it applies to any other
professions, such as dog grooming.
The doctrine of noscitur a sociis, i.e., that “a word or
phrase is given meaning by its context or setting,” affords us
assistance in interpreting § 2501(d). See Koontz v Ameritech
Services Inc, 466 Mich 304, 318; 645 NW2d 34 (2002). Thus, we
utilize this doctrine, and apply this theme of a “single or
discrete group of identified professions” in the Occupational
Code to REBA . Because there is no reason to believe that in
drafting REBA , the Legislature chose not to employ this “single
or discrete group of identified professions” theme, we find
this to be the first indication that REBA applies only to the
brokering of real estate.
However, our inquiry does not stop there. Next, we apply
noscitur a sociis to the individual phrases of § 2501(d), as
well as to the other provisions of REBA because the emphasized
5
language does not stand alone, and thus it cannot be read in
a vacuum. Instead, “[i]t exists and must be read in context
with the entire act, and the words and phrases used there must
be assigned such meanings as are in harmony with the whole of
the statute . . . .” Arrowhead Dev Co v Livingston Co Rd
Comm, 413 Mich 505, 516; 322 NW2d 702 (1982). “[W]ords in a
statute should not be construed in the void, but should be
read together to harmonize the meaning, giving effect to the
act as a whole.” Gen Motors Corp v Erves (On Rehearing), 399
Mich 241, 255; 249 NW2d 41 (1976)(opinion by COLEMAN , J.).
Although a phrase or a statement may mean one thing when read
in isolation, it may mean something substantially different
when read in context. McCarthy v Bronson, 500 US 136, 139;
111 S Ct 1737; 114 L Ed 2d 194 (1991); Hagen v Dep’t of Ed,
431 Mich 118, 130-131; 427 NW2d 879 (1988). “In seeking
meaning, words and clauses will not be divorced from those
which precede and those which follow.” People v Vasquez, 465
Mich 83, 89; 631 NW2d 711 (2001), quoting Sanchick v State Bd
of Optometry, 342 Mich 555, 559; 70 NW2d 757 (1955). “It is
a familiar principle of statutory construction that words
grouped in a list should be given related meaning.” Third
Nat’l Bank in Nashville v Impac Ltd, Inc, 432 US 312, 322; 97
S Ct 2307; 53 L Ed 2d 368 (1977); see also Beecham v United
States, 511 US 368, 371; 114 S Ct 1669; 128 L Ed 2d 383
6
(1994).
The emphasized language of REBA ’s definition of “real
estate broker,” part IIIA above, includes the phrase, one “who
. . . negotiates the purchase or sale . . . of a business,
business opportunity, or the goodwill of an existing business
for others . . . .” MCL 339.2501(d). In interpreting this
language, we examine its context and must give it a meaning
that is not only logically related to the type of broker
specifically defined in § 2501(d), but also a meaning
logically related to the other five phrases used in § 2501(d)
to define a “real estate broker,” and the other provisions of
REBA . Vasquez, supra at 89.
Section 2501(d) defines not merely a broker, but
specifically a “real estate” broker, and thus provides the
first indication that the Legislature intended that REBA apply
only to persons brokering real estate. Further, immediately
following REBA ’s definition of “real estate” broker, the
Legislature defines “real estate” salesperson, in terms that
expressly cross-reference the definition of “real estate”
broker, i.e., a “real estate salesperson” is one who is
employed by a “real estate broker.” The Legislature also
defines five other terms in § 2501,4 all of which are defined
4
“Property management,” “property management account,”
“property management employment contract,” “employment,” and
(continued...)
7
by express reference to “real estate” or “real property.” The
Legislature then employs six definitional phrases in § 2501(d)
to give meaning to the term “real estate broker,” and each of
those phrases, with the exception of the one at issue, either
expressly uses or references the term “real estate.”5 The
Legislature proceeds to employ these same definitional phrases
in giving meaning to “real estate salesperson.”
Moreover, there are other textual indicators that REBA
applies only to “real estate.” First, the courses an
applicant must complete in order to receive a license under
this act, a license as a “real estate” broker, all not
surprisingly concern real estate.6 Second, amid this focus on
real estate, there is nothing within REBA that suggests any
legislative intent that it apply to non-“real estate”
4
(...continued)
“independent contractor relationship.” MCL 339.2501(a)
(c),(f), and (g).
5
Section 2501(d) defines a “real estate broker” as one
who, for a fee, “sells . . . or buys . . . real estate”;
“rents . . . real estate”; “leases . . . real estate”; or “who
otherwise engages in the sale of real estate.” A 1994
amendment of REBA expanded the definition of “real estate
broker” to include one who “engages in property management,”
defined in MCL 339.2501(a) as “the leasing or renting . . . of
real property . . . .”
6
MCL 339.2504(3). For example, these courses include:
(1) real estate licensing law and related regulatory laws; (2)
real property law; (3) conveyances, including contracts, deeds
and leases; (4) appraisal of real property; and (5) real
estate securities and syndications.
8
transactions.7 Thus, application of the “single or discrete
group of identified professions” theme, along with an
examination of the text of § 2501(d), as well as the text of
REBA ’s surrounding provisions, together suggest that REBA ’s
licensing requirement only applies to “the purchase or sale
. . . of a business, business opportunity, or the goodwill of
an existing business”8 when that purchase or sale involves a
7
For example, MCL 339.2502 creates the board of real
estate brokers; MCL 339.2504 mandates continuing education
requirements of real estate brokers; MCL 339.2505 provides the
licensing requirements of real estate brokers; MCL 339.2506
states the method by which a real estate salesperson’s license
is issued; MCL 339.2507 mandates that a real estate
salesperson’s license be returned by the real estate broker
department upon termination of employment; MCL 339.2508
defines the scope of a real estate broker’s license; MCL
339.2509 provides for the issuance of associate real estate
broker’s licenses; MCL 339.2510 sets forth the commissions to
which a real estate salesperson is lawfully entitled; MCL
339.2512b provides that referral of prospective tenants does
not constitute participation in a real estate transaction; and
MCL 339.2514 states that nonresidents can become real estate
brokers.
8
Purchase of “the premises in which [the] business is
conducted” is one way to acquire “goodwill.” Black’s Law
Dictionary (6th ed)(emphasis added). In our judgment, because
goodwill can be acquired merely through a business’s premises,
i.e., real estate, and because the surrounding text and
provisions of REBA relate only to real estate, we find that the
“goodwill” language of § 2501(d) applies only to situations in
which the purchase or sale of an existing business’s goodwill
is made in conjunction with the purchase or sale of the
premises in which that goodwill was acquired. We believe that
such language was inserted in § 2501(d) to prohibit an
unlicensed broker from contending: (1) that it can be
compensated for that portion of a real estate transaction that
involves non-“real estate,” including the purchase or sale of
the existing business’s goodwill, or (2) that it can be
(continued...)
9
real estate transaction.
The purpose of REBA , which is to protect the integrity of
real estate transactions by ensuring that they are brokered by
persons expert in that realm, requires the interpretation that
REBA applies only to real estate transactions. The conclusion
that the emphasized language of § 2501(d) applies only to real
estate transactions affords reasonable meaning to this
language within the context of the provisions that surround
it, while maintaining the focus of REBA on transactions
involving the purchase or sale of business real estate.
Alarm contracts are not real estate and, thus, at least
on the basis of the present record, REBA is not applicable to
this transaction, which apparently involved only the purchase
of such contracts. However, because our interpretation of §
2501(d) has not been previously set forth, and because this
case was resolved on summary disposition where the record may
not have been fully developed in light of this interpretation,
8
(...continued)
compensated for the entire transaction because the purchase or
sale of the business’s real estate was incidental to the
purchase or sale of the existing business’s goodwill.
Moreover, the meaning we accord “goodwill” as it is used in
REBA is not, as the dissent asserts, “patently false and taken
out of context,” post at 7 n 3, because, as set forth in its
dictionary definition, goodwill can be acquired, among other
ways, through the “premises in which the business is
conducted.”
10
we remand this matter to the trial court for a determination
of whether a real estate transaction was involved here.
B. “REAL ESTATE BROKER ”
If, on remand, the trial court determines that
defendant’s purchase of MetroCell’s contracts involved a real
estate transaction, the trial court must then address a
further issue: whether plaintiff is prohibited by MCL
339.2512a from seeking compensation for its services because
plaintiff was not a licensed “real estate broker.” MCL
339.2501(d).
As previously stated, § 2501(d) defines a “real estate
broker” as an individual or entity that “sells . . . buys
. . . or negotiates the purchase or sale . . . of a business,
business opportunity, or the goodwill of an existing business
for others. . . .” MCL 339.2512a provides:
A person engaged in the business of, or acting
in the capacity of, a person required to be
licensed under this article, shall not maintain an
action in a court of this state for the collection
of compensation for the performance of an act or
contract for which a license is required by this
article without alleging and proving that the
person was licensed under this article at the time
of the performance of the act or contract.
The Court of Appeals held that “plaintiff’s activities
constituted ‘negotiations [for] the purchase or sale or
exchange of a business’ as contemplated by the act and that,
therefore, [plaintiff] was required to procure a real estate
11
brokers license in order to collect fees for its service.”
247 Mich App 252-253. In reaching this conclusion, the
appellate court relied on Cardillo v Canusa Extrusion
Engineering Inc, 145 Mich App 361; 377 NW2d 412 (1985),
observing:
Here, plaintiff found business assets for
defendant to purchase, conduct which falls squarely
within the definition of activities performed by a
“real estate broker” under the act. . . . [I]t is
clear that plaintiff’s conduct in attempting to
locate business assets for purchase by defendant
constitutes action of a “real estate broker” as
defined by the statute. [247 Mich App 256-257.]
In Cardillo, the plaintiffs alleged that the defendant
orally agreed to pay a fee for successfully finding a buyer
for the defendant’s engineering firm. The defendant moved for
summary disposition, contending that REBA precluded the
plaintiffs from bringing an action seeking compensation
because the plaintiffs were unlicensed as real estate brokers.
Cardillo, supra at 364-365. Although the plaintiffs claimed
not to be brokers, the Court of Appeals opined:
In interpreting this statute, the trial court
concluded that a mere finder or middleman is not
included in the definition of a broker. We do not
agree. . . . Sometimes, performing one of the usual
functions, such as finding a purchaser, will be
enough to subject a person to the broker licensing
requirement.
* * *
Under this analysis [after reviewing REBA ], we
would hold that in finding a purchaser for
defendants’ assets under a commission agreement,
plaintiffs were subjected to [REBA ]. [Id. at 368,
12
371 (emphasis added).]
Thus, under Cardillo, one must be a licensed real estate
broker when one merely performs one of the “usual functions”
of a real estate broker, including among other things
“finding” a purchaser for real estate.
However, in our judgment, REBA does not require one to be
a licensed real estate broker when one merely performs a
“usual function” of a real estate broker, such as “finding” a
purchaser. Rather, REBA expressly requires that one be a
licensed real estate broker only if, for a fee, one “sells or
buys” real estate or “negotiates” a real estate transaction
for another. MCL 339.2501(d). Accordingly, to the extent
that Cardillo holds otherwise, we believe that it reads too
much into § 2501(d), and, thus, we reject its interpretation
of this provision.
In rejecting Cardillo’s interpretation of § 2501(d), we
instead believe that Turner Holdings, Inc v Howard Miller
Clock Co, 657 F Supp 1370 (WD Mich, 1987), correctly
interpreted this provision. In that case, the court held that
one need not possess a real estate broker’s license for merely
“identifying and advising” a client about a purchase of a
business.9 Likewise, unless plaintiff’s actions here are
9
In the present case, the Court of Appeals refused to
follow Turner Holdings because “decisions of a federal
(continued...)
13
covered by § 2501(d)—that is, unless plaintiff’s activities
can reasonably be characterized as “sell[ing], . . . buy[ing],
. . . or negotiat[ing]” the purchase or sale of real estate
for another for a fee, it is not required to possess a real
estate license.
Although, in our judgment, Cardillo’s interpretation of
REBA is incorrect, we agree with Judge WHITE in her dissent in
the instant case,10 and would also remand to the trial court
for consideration of whether plaintiff, in fact, “negotiated”
a real estate transaction with MetroCell (or its parent Rao
Corporation). There is a genuine issue of material fact
9
(...continued)
district court interpreting Michigan law are not binding
precedent on Michigan courts . . . [and] [w]e further decline
to extend the reasoning of Turner Holdings to the present
case, and reaffirm the Cardillo Court’s interpretation and
application of the statute as correct.” 247 Mich App 258. Of
course, we agree that federal decisions interpreting Michigan
law are not binding on Michigan courts, but we do find Turner
Holdings nonetheless to be persuasive.
10
In her dissent, Judge WHITE stated:
Taken in the light most favorable to
plaintiff, there is a genuine issue whether
plaintiff seeks compensation for the performance of
an act . . . for which a license is required by the
statute. Plaintiff does not claim compensation for
offering to buy MetroCell or for any negotiating
respecting the sale. Rather, plaintiff seeks
compensation for providing information concerning
the nature of the industry, the approach defendant
should take to strengthen its position in the
industry, and the type of business it should
attempt to acquire, and for targeting MetroCell as
such a business. [247 Mich App 261.]
14
relating to whether plaintiff participated in real estate
negotiations. For example, defendant offered the following
evidence of plaintiff’s participation in real estate
negotiations: (a) that plaintiff’s lawyer sent defendant a
letter, acknowledging that it “represented [defendant] in
negotiations with Rao Corporation for the purchase of
MetroCell Security over a period of several weeks”; (b) that
plaintiff’s business brochure stated that plaintiff often
engaged in transactions requiring it to perform “acquisition
negotiations”; and (c) that plaintiff had meetings with Rao
Corporation to engage in business “discussions” of some
uncertain character. However, plaintiff presented the
following evidence in response: (a) that plaintiff only
introduced itself to defendant as an investment banker; (b)
that the alleged oral contract between plaintiff and defendant
never mentioned negotiations; (c) that the purpose of
plaintiff’s initial meeting with Rao Corporation was merely to
determine whether MetroCell was for sale; and (d) that the
only evidence regarding negotiations are those that occurred
between defendant and MetroCell, not between plaintiff and
MetroCell. Therefore, if, on remand, the trial court
determines that a real estate transaction occurred here, the
trial court must then determine also whether plaintiff
“negotiated” such transaction.
15
IV. RESPONSE TO THE DISSENT
The dissent criticizes the majority’s interpretation of
§ 2501(d) by asserting that we “ignore[] the clear language
of the REBA ” and “sidestep[] the plain meaning of the words
. . . .” Post at 1, 6. We respectfully, but strongly,
disagree. Although we may reach a different conclusion than
the dissent, we do not “ignore” the language of the statute.11
Rather, our conclusion that the real estate brokers act is
limited to transactions involving real estate is predicated on
the following analysis: (1) that § 2501(d) defines a specific
type of broker, a “real estate” broker; (2) that the
Legislature defines other occupations in this provision, all
of which expressly cross-reference “real estate” broker; (3)
that the Legislature defines five other terms in § 2501, all
of which are defined by express reference to “real estate” and
“real property”; (4) that five of the six definitional phrases
used by the Legislature in § 2501(d) either expressly use or
reference the term “real estate”; (5) that the Legislature
then proceeds to employ these same definitional phrases in
giving meaning to “real estate salesperson”; (6) that all the
11
Nor have we rejected the dissent’s interpretation of
the statute in order to avoid the “enforcement of a policy
[that we] reject as unsound.” Post at 11. Rather, the
majority has taken no position on the “soundness” of a broader
or narrower REBA and, instead, has rejected the dissent’s
interpretation entirely on its own merits.
16
courses that a person is required by the statute to complete
to become a “real estate broker” concern real estate; and (7)
that other sections of REBA only discuss “real estate” and
“real estate brokers.” Thus, it is only on the basis of its
language that we reach our conclusions concerning the meaning
of REBA .12
12
Moreover, we disagree with the dissent that the
interpretative doctrine of noscitur a sociis cannot “properly”
be applied in the instant context because the language being
defined in § 2501(d) has only a single “customary meaning.”
Post at 10-11. We disagree, and we believe that the dissent’s
“pig” hypothetical example makes our point. Concerning this
hypothetical example, noscitur a sociis can not only be
“accurately” applied, but must necessarily be applied.
Contrary to the dissent’s assertion, the term “pig” does not
have a single, invariable meaning. Rather, it has several
separate and distinct meanings, including: (1) a swine; (2) a
person who is gluttonous, greedy, or slovenly; or (3) an
oblong mass of metal that has been run into a mold of sand
while still molten. Random House Webster’s College Dictionary
(2d ed). Further, “pig” may also be defined as: (4) a segment
of a citrus fruit or an apple; (5) a device that fits within
an oil or gas pipeline to clean or inspect its insides; or (6)
an earthenware pitcher, jar or other vessel. New Shorter
Oxford English Dictionary (4th ed). That the first of these
definitions would suggest itself to a “native speaker of
English as the common, most likely meaning of the term,” post
at 10, n 5, is surely a correct, but an irrelevant,
observation on the part of the dissent. We do not accord
words “default” definitions on the basis of their order of
appearance in the dictionary. Rather, because the term “pig”
has several different meanings, we initially apply noscitur a
sociis (whether or not in an explicit fashion) to accord it
one of these meanings–that which is contextually related to
the language that surrounds “pig.” Such a meaning, we assume,
is that which is most likely intended by the lawmaker. In the
dissent’s hypothetical example, after examining the
immediately surrounding terms, all of which have in common
that they relate to animals, we accord “pig” its only meaning
possessed in common with these other terms, i.e., “a swine.”
(continued...)
17
Next, the dissent contends that the majority’s
interpretation that REBA applies only to transactions involving
real estate is in error because it “ignores the historical
evolution of the statute,” which evidences the legislative
intent that REBA “encompasses the brokerage of business
opportunities that do not involve real estate transactions.”
Post at 8, 13. However, because the meaning of § 2501(d) can
be reasonably ascertained, in our judgment, by examining its
language, including the context of this language, and
therefore is not ambiguous, there is no need to resort to the
legislative history of the act to assist in our
interpretation. Nonetheless, to the extent that this history
is examined, we believe that it is consistent with our
interpretation of REBA .
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
12
(...continued)
Moreover, our analysis would not necessarily stop there.
Instead, depending on the matter in controversy, noscitur a
sociis might have to be further applied to determine an even
narrower common characteristic between “a swine” and the other
listed terms, for example, that each of these terms can be
characterized as an animal that is a mammal. Similarly, we
believe that the instant phrase is susceptible to different
meanings, at least until noscitur a sociis refocuses our
interpretative gaze from the phrase itself to the words and
phrases that surround it.
18
business chance brokers and to provide a penalty for a
violation of the provisions hereof.” Section 2 of that act
defined “business chance broker” as “any person, firm,
partnership association, copartnership or corporation, who for
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.” On the basis of this definition, this
Court found in Hague v Delong, 292 Mich 262; 290 NW 403
(1940), that a person must be a licensed real estate broker
even though a transaction does not involve real estate.
Subsequently, in 1943, the Legislature eliminated this
separate provision concerning “business chance brokers” and
expanded the definition of “real estate broker” to include the
activities previously assigned to a business chance broker.
While we agree with the dissent concerning the facts of
this history, we do not agree about its significance. While
the dissent views the 1943 amendments as evidencing the
Legislature’s intent that the broad definition of “business
chance broker,” as defined in Hague, be fully retained as part
of REBA ’s modified definition of “real estate broker,” we view
this differently. Rather, the Legislature can just as easily
be viewed as having transferred a phrase, originally defining
19
a broad term (“business chance brokers”) occurring within a
broad act (encompassing both “real estate” and “business
chance” brokers), and reincorporated this phrase within the
definition of a more narrow term (“real estate broker”)
occurring within a more narrow act (encompassing only “real
estate” brokers). Not only does the term itself that is being
defined (here, “real estate broker,” rather than “business
chance broker”) afford some textual clue about its own
definition, see discussion at 8, but the different statutory
contexts within which the term is located (here, a statute
confined to real estate brokers, rather than one encompassing
both real estate and business chance brokers) affords some
textual clue about its meaning. We do not believe that a
given grouping of words—in this case “business, business
opportunity or good will of an existing business”—has an
invariable meaning regardless of what it purports to be
defining, regardless of the words and phrases that surround
it, regardless of the organization of the statute in which it
is contained, and regardless of the overall purposes of this
statute.
Moreover, we believe that it is necessary to ask why the
Legislature in 1943 would have undertaken this apparently
substantial rewrite of REBA –modifying its title, and amending
the statute in accordance with this title modification by
20
eliminating coverage for “business chance brokers,” and
limiting the statute’s coverage to “real estate brokers”–if it
had intended that there be no change whatsoever in the scope
of the act’s coverage. By itself, the decision to alter the
statute suggests some intent to effect a substantive change in
the statute. Further, consider that this alteration of the
statute occurred against the backdrop of a decision of this
Court finding that the 1919 act was clear and encompassed
transactions involving the sale of all businesses, real estate
or otherwise.
For these reasons, we cannot join the dissent in
concluding that the Legislature intended that “real estate
broker” within REBA be understood to mean “broker,” or “a
broker of all things, real estate or otherwise.”
V. CONCLUSION
REBA applies only to real estate transactions. Further,
under § 2501(d), one must only be a licensed real estate
broker when, for a fee, one “sells or buys” real estate or
“negotiates” a real estate transaction for another.
For these reasons, we reverse the judgment of the Court
of Appeals and remand this case to the trial court for a
determination of whether a real estate transaction occurred
here. If no such transaction occurred, the trial court must
merely determine whether an oral contract existed between
21
plaintiff and defendant and compensate plaintiff accordingly.
However, if the trial court determines that a real estate
transaction occurred, then, consistently with the language of
§ 2501(d) and this opinion, the trial court must also
determine whether plaintiff’s actions constituted those of a
“real estate broker” and proceed accordingly.
Stephen J. Markman
Maura D. Corrigan
Michael F. Cavanagh
Marilyn Kelly
Clifford W. Taylor
22
S T A T E O F M I C H I G A N
SUPREME COURT
G.C. TIMMIS & COMPANY,
Plaintiff-Appellant,
v No. 120035
GUARDIAN ALARM COMPANY,
Defendant-Appellee.
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 of non-real estate transactions. Ante at 3.
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.
2
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” the 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);
1
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.
3
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:
"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
4
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 statutory construction and other
contextual tools to explain why the plain language could not
possibly mean what it so obviously says.
In 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
5
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 majority is
2
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.”
3
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
9 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
(continued...)
6
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
3
(...continued)
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 . . . .”).
4
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 5-6 and 9. 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 .
7
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, 'I took the boat out on the
bay,' I understand 'bay' to mean one thing; if you tell me, 'I
put the saddle on the bay,' I understand it to mean something
else." 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
8
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 However,
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
5
We agree with the majority that “pig” does have many
meanings beyond swine. Ante at 18 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.
6
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 majority’s method, we
could abstract the meaning to the point that we could
characterize the terms in our hypothetical statute as meaning
(continued...)
9
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 10. 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 brokers 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,
6
(...continued)
“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.
10
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]."
Section 2 of the brokers license act defined “business
11
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
7
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.
12
offers to lease or rents or offers for rent any
real estate or the improvements thereon for others,
as a whole or partial vocation, 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
8
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.”
13
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 as 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
9
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.
10
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.
14
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,” militates 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. Thus, contrary
to the majority’s assertion that stockbrokers were not
“intended to fall within REBA ,” ante at 11, the statutory text
and historical construction of this language indicate that
stockbrokers were in fact subject, as business chance brokers,
under identical statutory language.
It is certainly within the Legislature’s constitutional
prerogative and authority to decide what activities require
11
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.
15
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 modern 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.
Accordingly, I respectfully dissent from the majority
opinion and would affirm the decision of the Court of Appeals.
Robert P. Young, Jr.
16
S T A T E O F M I C H I G A N
SUPREME COURT
G. C. TIMMIS & COMPANY,
Plaintiff-Appellant,
v No. 120035
GUARDIAN ALARM COMPANY,
Defendant-Appellee.
WEAVER, J. (dissenting).
I dissent from the majority for the reasons stated in
parts A and C only of Justice Young’s dissent.
Elizabeth A. Weaver
Family Independence Agency v. Kucharski
Court: Michigan Supreme Court
Date filed: 2003-06-18
Citations: 663 N.W.2d 918, 468 Mich. 1239
Copy CitationsCombined Opinion