A. D. MAMMEL,FROM A DISTRICT COURT APPELLANT, v. OF FRANK W. COLE, APPELLEE

COURT OF APPEALS
FIFTH DISTRICT OF TEXAS
AT DALLAS
 
NO. 05-88-00071-CV
 
A. D. MAMMEL,FROM A DISTRICT COURT
 
        APPELLANT,
 
v. OF
 
FRANK W. COLE,
 
        APPELLEE.DALLAS COUNTY, TEXAS
 
 
 
BEFORE JUSTICES HOWELL, WHITTINGTON AND LAGARDE
OPINION BY JUSTICE LAGARDE
JUNE 9, 1989
        A. D. Mammel appeals from the trial court's judgment in favor of Frank W. Cole in an action allegedly for breach of an oral agreement. Following a jury trial, the trial court awarded damages and attorney fees based on the jury's answers to five questions. In six points of error, Mammel claims that the trial court erred in: (1) and (2) awarding compensation for real estate brokerage services rendered by Cole because there was no pleading or proof that he was a licensed real estate broker, and because the oral agreement failed to satisfy the statute of frauds; (3) applying the doctrines of part performance and estoppel and failing to apply the general statute of frauds; (4) and (6) submitting jury questions one and five because there was insufficient evidence to support the questions; and (5) admitting testimony of an oral agreement. We agree with points one and three and hold that Cole failed to plead or prove that he was a licensed real estate broker and that estoppel does not apply in this case; consequently, we reverse and render judgment for Mammel.
        In 1973, Mammel purchased an interest in the minerals produced and sold from certain real properties referred to as the "Vinson Lease and Dutton Lease." Cole assisted Mammel in this transaction by locating the property, preparing reports on the property, and assisting in the negotiation and procurement of the property. As a result of Cole's services, Mammel allegedly made an oral promise to compensate Cole by providing him with a 1/16 working interest in the property. From 1973 until 1982, Cole was paid according to the terms of the alleged oral agreement. After May of 1982, Mammel stopped all payments to Cole from the interest in the Vinson lease and, several months later, stopped all payments from the interest in the Dutton lease.
        With the foregoing facts in mind, we address points of error one and three. Mammel claims that Cole cannot recover any compensation for real estate brokerage fees because Cole failed to plead or prove that he was a licensed real estate broker. We must first determine whether Cole acted as a real estate broker and, next, whether Cole was required to prove licensure in order to prevail below.
COLE ACTED AS A REAL ESTATE BROKER
        As a preliminary matter, we note that transactions in mineral interests, prior to 1975, were covered by the Texas Real Estate License Act (RELA). See duPont v. Hedley, 570 S.W.2d 384, 386 (Tex. 1978). In the absence of some applicable exemption, FN:1 a real estate license is required in order for a person to recover compensation for the performance of any of the services listed in section 4(1) of the RELA. See id.; TEX. REV. CIV. STAT. ANN. art. 6573a, § 4 (Vernon 1969). FN:2 At the time the initial transaction took place in this case, section 4(1) provided that:
        (1) The term "Real Estate Broker" shall mean and include any person who, for another or others and for compensation or with the intention or in the expectation or upon the promise of receiving or collecting compensation:
 
                (a) Sells, exchanges, purchases, rents or leases                 real estate;
 
                (b) Offers to sell, exchange, purchase, rent or                 lease real estate;
 
                (c) Negotiates, or offers or attempts or agrees to                 negotiate the sale, exchange, purchase, rental or                 leasing of real estate;
 
                (d) Lists or offers or attempts or agrees to list                 real estate for sale, rental, lease, exchange or                 trade;
 
                (e) Appraises or offers or attempts or agrees to                 appraise real estate;
 
                (f) Auctions, or offers or attempts or agrees to                 auction real estate;
 
                (g) Buys or sells or offers to buy or sell, or                 otherwise deals in options on real estate;
 
                (h) Collects or offers or attempts or agrees to                 collect rentals for the use of real estate;
 
                (i) Advertises or holds himself out as being                 engaged in the business of buying, selling,                 exchanging, renting or leasing real estate;
 
                (j) Procures or assists in the procuring of                 prospects, calculated to result in the sale,                 exchange, leasing or rental of real estate;
 
                (k) Procures or assists in the procuring of                 properties calculated to result in the sale,                 exchange, leasing or rental of any business                 enterprise, or sells, exchanges, purchases, rents                 or leases any business enterprise;
 
                (l) Subdivides real estate into two or more parts                 or tracts which are to be sold, leased, exchanged                 or rented to others, or for the purpose of erecting                 buildings for residential or business purposes to                 be sold, leased, exchanged or rented.
TEX. REV. CIV. STAT. ANN. art. 6573a, § 4(1) (Vernon 1969) (emphasis added). In relation to the case sub judice, the emphasized portions of section 4 are applicable.
        First, Cole is a broker because he falls within the definition of one who "[n]egotiates, or offers or attempts or agrees to negotiate the sale, exchange, purchase, rental or leasing of real estate." TEX. REV. CIV. STAT. ANN. art. 6573a, § 4(1)(c) (Vernon 1969). During the direct examination of Cole, he responded in pertinent part:
        Q.    After you made the presentation of this substance to Mr. Mammel, what was his response, if anything?
 
        A.    At some period, probably within a short period of time, he told me to go ahead and pursue the purchase of the property, that he would fund it.
 
        Q.    What did you then do to pursue the purchase of the property?
 
        A.    I concluded agreements with the owner of the property as to the purchase price.
 
        Q.    After you contacted the owners and negotiated the purchase price, what did you do then?
 
        A.    I contacted an attorney in Sherman and had him prepare a title opinion on the property showing the actual ownership of the property.
We conclude that the above testimony is an admission by Cole that he negotiated the purchase price for the mineral interest.
        Secondly, Cole falls within the definition of one who "[a]ppraises or offers or attempts or agrees to appraise real estate." TEX. REV. CIV. STAT. ANN. art. 6573a, § 4 (1)(e) (Vernon 1969). Additionally, on direct, Cole testified:
        Q.    (By Mr. Schutza) Did you do any engineering evaluations of production for Mr. Mammel?
 
        A.    Yes, sir.
 
        Q.    Can you tell me what was involved in the evaluations you performed?
 
        A.    The first full scale evaluation I did for Mr. Mammel was a report I prepared on two wells in the Sherman field called the Vinson Lease and the Dutton Lease.
 
* * *
        Q.    What was his reaction when you recommended that he purchase producing wells?
 
        A.    After a number of meetings where we discussed the pros and cons of various ways of entering into the oil and gas business, the risk associated with the various ways, Mr. Mammel told me that he would like for me to help him acquire some producing properties, and following that, I did locate two wells in the Sherman field through a business associate of mine who found the wells initially. We made a study of those wells on a preliminary basis indicating that they should be a good long-term safe investment. I discussed the matter in some detail with Mr. Mammel.
 
* * *
        Q.    (By Mr. Schutza) So to clarify where we are, then his reaction to your recommendation was to request you to find something for him to purchase?
 
        A.    Yes, sir.
 
        Q.    What specifically did you do then after he made that request?
 
        A.    I reviewed a number of potential acquisition prospects that I had been reviewing already and in the past. In our business there are always various prospects that we as engineers and evaluators look at from time to time.
 
        Q.    Did you make any kind of a presentation to him?
 
        A.    At some point in time prior to preparing the full report on the properties, I presented to Mr. Mammel the substance of the report, not in its final printed form.
 
        Q.    Was that an oral presentation?
 
        A.    Yes, sir.
 
        Q.    Would you tell us briefly what was the substance of that report at that time?
 
        A.    The substance of my presentation to Mr. Mammel at that time was that I told him that I had reviewed these two wells, the Vinson well and Dutton well, and felt that they would be a good investment for him for the following reasons, and I showed him copies of the information that I had obtained.
 
        Q.    What type of information had you obtained?
 
        A.    I had obtained the well records, the logs of the wells, producing history of the wells, the geology of the entire area with the wells located on the geology. I had made some projects of future producing rates, an estimate of the remaining recoverable oil reserves from the two wells. I had reviewed from the available public records the producing history of the offset wells, and I showed him how much the offset wells had produced in prior years, summed all of this up into a recommendation that it would be a good purchase.
As Cole's answers reveal, he appraised the property for Mammel.
        Not only did Cole engage in negotiating the sale of the property and in appraising the property, he also engaged in procuring the property. Cole fits the definition of one who "[p]rocures or assists in the procuring of prospects, calculated to result in the sale, exchange, leasing or rental of real estate." TEX. REV. CIV. STAT. ANN. art. 6573a, § 4(1)(j) (Vernon 1969). Once again, on direct, Cole admits:
        On this specific Vinson & Dutton Lease, after I had completed my evaluation, I told Mr. Mammel that I would conclude the transaction for him, prepare the complete report, do all the things necessary to bring the purchase to fruition, for a one-eighth working interest in the property, of which I told him immediately that Paul Adams would share in half of that one-eighth and I would retain a sixteenth and Paul Adams would retain a sixteenth.
Based on his own admission, Cole assisted in procuring the property. FN:3
        In summary, Cole admitted, through uncontradicted statements elicited by his own attorney, that he negotiated the sale of the property, appraised the property, and assisted in procuring the property. Any one of these three actions is enough to place Cole within the definition of a real estate broker. However, Cole goes even further and actually admits that he acted as a broker. On redirect of Cole, the following exchange occurred:
        Q.        And you also had testimony about the fact that one time one of your companies assisted some production -- the Bond, Patton and Sawyer Leases?
 
        A.        Yes, sir.
 
        Q.        How many were involved in that? The purchaser and seller?
 
        A.        Yes, sir.
 
        Q.        Was a broker involved?
 
        A.        No broker involved.
 
        Q.        How did that differ from the transaction in this lawsuit?
 
        A.        There was a broker involved in this transaction; namely, me.
Thus, based on the facts above, we conclude that Cole acted as a real estate broker in this particular transaction.
        Cole asserts that he was not compensated as a broker but only compensated for "educational, advisory, and informational services" as awarded in the jury verdict. In actuality, jury question number one simply states, "Do you find from a preponderance of the evidence that A. D. MAMMEL agreed to compensate FRANK W. COLE for services rendered by paying him a 1/16th working interest and corresponding revenue interests in the properties known as the Vinson and Dutton Leases?" By the express wording of the question, the jury only found that there was an agreement to compensate Cole for "services." Indeed, there is no evidence that Mammel agreed to compensate Cole for "educational, advisory, and informational services." In fact, during cross- examination, Cole testified:
        Q.        You also testified, I believe, that after you prepared the work, that's when you had this discussion with him about how you were going to be paid?
 
        A.        That's correct.
 
        Q.        So you weren't expecting to be paid for doing this report?
 
        A.        I had not prepared the report at that particular time; I had prepared the study.
 
        Q.        You would not have expected compensation for any type of oral --
 
        A.        I had expected we would close the deal, yes, sir, and I was expecting compensation.
 
        Q.        But you were not expecting compensation for just preparing a report, were you, sir, because you stated you didn't even have an agreement with him until after you had done the work for the report.
 
        A.        The preparation for the report was a part of the entire process of putting the project together, and I was not paid but for a portion of the project, that's correct.
 
        Q.        And given your scenario of the facts, Mr. Mammel, once you had made that oral presentation to him, could have said "I don't want to buy these things" and you would not have been entitled to any money, would you, sir?
 
        A.        That's correct.
Furthermore, Cole also stated on direct:
        On this specific Vinson & Dutton Lease, after I had completed my evaluation, I told Mr. Mammel that I would conclude the transaction for him, prepare the complete report, do all the things necessary to bring the purchase to fruition, for a one-eighth working interest in the property, . . .
There was no evidence of an agreement to compensate Cole for "educational, advisory, and informational services." The agreement was to compensate Cole once he brought "the purchase to fruition." If the sale, for any reason, had not taken place, Cole would not have been compensated. Furthermore, Cole's subjective characterization of the agreement is irrelevant. If, objectively, the agreement calls for unexempted conduct included within the definition of a real estate broker as set out in section 4, the RELA governs. See Sherman v. Bruton, 497 S.W.2d 316, 322 (Tex. Civ. App.--Dallas 1973, no writ).
        Cole also claims that he should be exempted from the RELA because he met the exemption established by section 6(1) in existence at the time of the transaction. See TEX. REV. CIV. STAT. ANN. art. 6573a, § 6(1) (Vernon 1969). FN:4 We disagree. Section 6(1) stated:
        The provisions of this Act shall not apply to the advertising, negotiation or consummation of any purchase, sale, rental or exchange of, or the borrowing or lending of money on, real estate by any person, firm or corporation when such person, firm or corporation does not engage in the activities of a Real Estate Broker as an occupation, business or profession on a full or part-time basis.
Id. By his own admissions, Cole does not come within this exemption. He testified:
        Q    Mr. Cole, you've told the Jury at length about your experience in the oil and gas industry prior to the time that you met Dean Mammel. Had you entered into business transactions with other people wherein which you brought them production to buy?
 
        A    Yes, sir.
 
        Q    You'd done that before in the past in Texas and in Oklahoma?
 
        Q    Yes, sir.
 
* * *
        Q    Mr. Mammel knew, did he not, sir, in your initial discussion that that's what you did for a living, is that you went out and found properties for people to buy?
 
        A    That is one of the things I did for a living, yes, sir.
 
        Q    You related that information to him?
 
        A    Yes, sir.
Cole admits that he engaged in the activities of a real estate broker on at least a part-time basis. The exemption does not apply in this instance. Thus, as a matter of law, we hold, for the reasons above, that the agreement between Cole and Mammel was for compensation for services as a real estate broker.
COLE REQUIRED TO PLEAD AND PROVE LICENSURE
        Now that we have determined that the agreement between Cole and Mammel was an agreement to compensate Cole for performing the services of a real estate broker, we must next determine if Cole was required to plead and prove licensure in order to prevail at trial.
        At the time of the transaction in this case, section 19 of the Real Estate License Act provided that:
        No person or company may bring or maintain any action for the collection of compensation for the performance in this state of any of the acts set out in subdivision (1) of Section 4 hereof without alleging and proving that the person or company performing the brokerage services was a duly licensed real estate broker or salesman at the time the alleged services were commenced; or was a duly licensed attorney-at-law, as exempt from the provisions of this act by Section 6.
TEX. REV. CIV. STAT. ANN. art. 6573a, § 19 (Vernon 1969). FN:5 A person or entity seeking to recover compensation FN:6 for any of the services listed in section 4(1) of the Act must strictly comply with section 19 in order to use the courts of this state. See Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 289 (Tex. 1978). The burden of pleading and proving licensure is placed upon the party seeking to use the courts to collect compensation. Id. Mammel did not have to assert failure to plead licensure as an affirmative defense. See id. Indeed, Cole's failure to plead and prove licensure could have been raised by Mammel for the first time on appeal. FN:7 See Conrad v. Artha Garza Co., 615 S.W.2d 238, 241 (Tex. Civ. App.--Dallas 1981, no writ). Cole did not plead licensure. Further, he produced absolutely no evidence to suggest that he was licensed as a real estate broker. Thus, Cole cannot recover for the services he rendered to Mammel. We sustain Mammel's first point of error.        
        In point of error number three, Mammel asserts that, although the jury found that Mammel should be estopped from denying the agreement, estoppel cannot apply in this case. We agree. The rule requiring real estate brokers to be licensed is strictly interpreted, and estoppel will not lie. See Schmidt v. Matise, 747 S.W.2d 883, 887 (Tex. App.--Dallas 1988, writ denied); see also Terry v. Allied BancShares, Inc., 760 S.W.2d 45, 47 (Tex. App.--Fort Worth 1988, no writ). It is well settled that estoppel cannot be invoked to nullify a mandatory statutory restriction, especially when it inures to the benefit of the general public as opposed to a private individual. See Missouri Pac. R.R. Co. v. American Statesman, 552 S.W.2d 99, 105-06 (Tex. 1977); Schmidt, 747 S.W.2d at 887; see also Terry, 760 S.W.2d at 47. The Real Estate License Act is a mandatory restriction that inures to the benefit of the general public; thus, estoppel cannot be invoked. See Schmidt, 747 S.W.2d at 885-87. Moreover, estoppel is a defensive theory and operates to prevent the loss of existing rights. Missouri Pac., 552 S.W.2d at 105; see Schmidt, 747 S.W.2d at 887. The statute in this case forbids enforcement of any contract from the moment of inception; thus, no rights ever existed in this case to which estoppel could apply. See Schmidt, 747 S.W.2d at 887. In conclusion, an agreement that is void as prohibited by law cannot be rendered valid by invoking the doctrine of estoppel. Id. We sustain Mammel's third point of error. As a result of our disposition of points of error one and three, we need not address Mammel's remaining points. See TEX. R. APP. P. 90.
        We REVERSE the judgment of the trial court and RENDER judgment that Cole take nothing in this case.
 
 
 
 
                                                  
                                                  SUE LAGARDE
                                                  JUSTICE
 
DO NOT PUBLISH
TEX. R. APP. P. 90
88-00071.F
 
FN:1 Prior to 1975, the RELA contained four general exemptions from the licensing requirement, none of which classified transactions in oil, gas or other mineral or mining interests as an exempted category of real estate transactions. TEX. REV. CIV. STAT. ANN. art. 6573a, § 6 (Vernon 1969). An amendment to Article 6573a, enacted in 1975, included section 3(h), which specifically exempts "transactions involving the sale, lease or transfer of any mineral or mining interest in real property." duPont v. Hedley, 570 S.W.2d at 386; TEX. REV. CIV. STAT. ANN. art. 6573a, § 3(h) (Vernon Supp. 1989).
FN:2 In the interest of clarity, all citations to section 4 of the RELA will be to the 1969 bound volume of Vernon's Revised Civil Statutes. From a purely technical standpoint, however, we note that citation should be made to Texas General Laws because of subsequent revisions and amendments to the RELA. The technically correct citation is: Real Estate License Act, ch. 383, § 1, 1955 Tex. Gen. Laws 986, 988, revised by Real Estate Brokers and Salesmen--Licensing and Regulation, ch. 216, § 1, 1975 Tex. Gen. Laws 533, 534.
FN:3 Moreover, Cole, in his second amended original petition, states that, "Plaintiff [Cole] agreed to render his services in procuring for defendant the assignment of an interest in and to oil, gas and. . . ." Even in the fact statement contained in Cole's brief, he admits that he agreed to render services in procuring the assignment of the mineral interest for Mammel.
FN:4 As a result of a subsequent revision to the RELA, the technically correct citation should be to the Texas General Laws as follows: Real Estate License Act, ch. 383, § 1, 1955 Tex. Gen. Laws 986, 989, substitution by Real Estate Brokers and Salesmen--Licensing and Regulation, ch. 216, § 1, 1975 Tex. Gen. Laws 533, 537.
FN:5 The technically correct cite is: Real Estate Brokers and Salesmen--Examination and Licensing, ch. 325, § 3, 1963 Tex. Gen. Laws 850, 853, revised by Real Estate Brokers and Salesmen--Licensing and Regulation, ch. 216, § 1, 1975 Tex. Gen. Laws 533, 549.
FN:6 Cole urges that this suit is for breach of contract and not a suit for compensation for real estate brokerage services. In this regard, it is well settled that, "The term 'compensation as used in § 19 is defined in § 4(5) to include any fee, commission, salary, money or valuable consideration, as well as the promise thereof and whether contingent or otherwise.' This action is one for lost profits which are nothing more or less than anticipated 'compensation' for the rendition of the services of a real estate broker or salesman." Raybourn v. Lewis, 567 S.W.2d 908, 911 (Tex. Civ. App.--San Antonio 1978, writ ref'd n.r.e.), quoting Coastal Plains Dev. Corp. v. Micrea, Inc., 572 S.W.2d 285, 289 (Tex. 1978).
FN:7 Mammel first brought up Cole's failure to plead licensure by filing special exceptions to Cole's second amended original petition. Although we find nothing in the record to show that Mammel brought his special exceptions to the trial court's attention, Mammel did certify that a copy of the special exceptions were hand delivered to Cole's attorney. Mammel also raised the issue in his motion for directed verdict and motion for judgment non obstante veredicto, both of which were denied by the trial court.
File Date[01-02-89]
File Name[880071F]