Dunhill of Fargo, Inc. v. Lahman Manufacturing, Co.

FOSHEIM, Justice. Dunhill of Fargo, Inc., appellant, is an employment agency located in North Dakota. Dunhill sued Lahman Manufacturing Company, Inc., appellee, of Hecla, South Dakota for breach of contract. Dunhill alleged that by the terms of the contract it was to find Lahman a plant manager, who would work for Lahman at least 31 days, in return for a $4,200 fee to be paid by Lah-man. Dunhill claims it fulfilled its end of the bargain but Lahman refused to pay the fee. Lahman moved for summary judgment based on Dunhill’s failure to procure, pursuant to SDCL ch. 60-6A, a private employment agency license from the South Dakota Department of Labor. Lahman argued that this failure relieved it of liability for the fee. The trial court’s memorandum decision was incorporated by reference into its summary judgment in favor of Lahman. The trial court decided that by the terms of SDCL 60-6A-31 Dunhill was required to procure a South Dakota private employment agency license and that Schmidt v. Earl, 83 S.D. 245, 158 N.W.2d 184 (1968), prevents Dunhill from collecting its fee because of the failure to procure the license. We affirm. In Schmidt we held that an out-of-state real estate broker, licensed out-of-state but not in South Dakota, could not collect a brokerage commission for the attempted sale of a farm in South Dakota since the broker had failed to obtain a broker’s license in compliance with what is now SDCL ch. 36-21, the Real Estate Brokers and Salesmen Act. In Schmidt we had before us the question of whether a foreign [825] broker, admittedly engaged in the brokerage business as a full or part-time vocation and thus required to procure a broker’s license, was nonetheless exempted from our licensing requirement because the broker had engaged in an isolated real estate transaction in this State. When Schmidt was decided the terms real estate broker and real estate salesman were defined in SDC 1960 Supp. 51.07A06 to include the following exemption. A single act performed, or isolated transactions for a commission or valuable consideration in the buying or selling real estate of or for another, or offering for another to buy or sell, or exchange real estate, shall not constitute the person, firm, partnership, copartnership, association or corporation, performing, offering, or attempting to perform any of the acts enumerated herein, a real estate broker or a real estate salesman within the meaning of the chapter. We rejected the broker’s single transaction defense in Schmidt, saying that the exemption added nothing to the statutory definition of a broker. We held that if a person was a full or part-time broker the fact that he engaged in an isolated real estate transaction in South Dakota did not bring him within the statutory exemption. Dunhill argues that it was excused from the licensing requirement because its dealing with Lahman was an isolated transaction in South Dakota. Dunhill’s argument fails for two reasons. First, while the Real Estate Brokers and Salesmen Act contained an exemption for single transactions at the time Schmidt was decided, SDCL ch. 60-6A contains no such exemption. Second, even if SDCL ch. 60-6A did contain the exemption, the plain reading of Schmidt would prevent Dunhill from falling within the exemption as it appears undisputed that Dun-hill is engaged in the full-time business of an employment agency. Dunhill also argues that SDCL 60-6A is inapplicable to this case because that statute does not apply to employment agencies who obtain their commissions and fees from employers as opposed to employees. We find no merit in this argument. See, e.g., SDCL 60-6A-11. The general principles supporting our af-firmance were cogently stated in Conrad Seipp Brewing Co. v. Green, 23 S.D. 619, 122 N.W. 662, 664 (1909) (citations omitted). ‘Where a statute expressly provides that a violation thereof shall be a misdemean- or, a contract made in direct violation of the same is illegal, and there can be no recovery thereon, although such statute does not in express terms prohibit the contract or pronounce it void.’ See: Johnson v. Berry, 20 S.D. 133, 104 N.W. 1114 (1905); 51 Am.Jur.2d Licenses and Permits § 66 (1970). SDCL ch. 60-6A expressly provides that violation of its provisions is a misdemeanor. SDCL 60-6A-14. SDCL 60-6A-3 states: “No person, firm, or corporation in this state shall open, operate, or maintain a private employment agency for hire or for help without first obtaining a license for the same from the department of labor[.]” We interpret this statute to apply to foreign and domestic employment agencies. Since Dunhill failed to procure a license pursuant to SDCL ch. 60-6A the contract is illegal and cannot be enforced. DUNN, MORGAN and HENDERSON, JJ., concur. WOLLMAN, C. J., dissents. Footnotes [1] SDCL ch. 60-6A was repealed by SL 1981, ch. 367, §§ 1 to 4.