Thus, Magasiny stands for no more than that where the facts do not clearly show that a license was required, a summary judgment cannot be entered on the issue of illegality.
Another federal decision, in this circuit, considered both Weinrott and Magasiny. In Costello v. Schmidlin, 404 F.2d 87 (C.A.3, 1968, Maplewood entered into a contract with Schmidlin, as architect, for a municipal swimming pool. Schmidlin entered into a contract with Costello, a professional engineer licensed in New York, Maryland, Illinois and New Mexico, but not New Jersey, for consulting engineering services to be rendered to and paid by Schmidlin. In the face of a defense of illegality, the court ruled for Costello, pointing out that in Weinrott, the unlicensed plaintiff purported to be the principal professional engineer, while Costello was serving as a consulting professional engineer to a New Jersey architect who was the principal contracting with the lay client.
The Court of Appeals in Costello does evaluate Magasiny as a departure from Weinrott. This is evident from the fact that Magasiny could not depart from Weinrott because Weinrott was not a point of departure. Weinrott applied Kenney, a decision of the former Court of Errors and Appeals, the highest court. The Appellate Division is bound to follow that court's decisions and cannot depart from them; only the Supreme Court of New Jersey can do so, and it has not. See, also, Gionti, supra, also decided by the highest court, which is in line with Kenney and Weinrott, but not referred to in Weinrott, Magasiny or Costello. Perhaps the digest system is at fault, but the case is there and not departed from by the highest court of the State.
In the present case, unlike Magasiny, there is no issue of fact about whether the services called for a license; the contract is expressly for architect's services, using the standard AIA printed form. The statute on architects includes a "single act or transaction", N.J.S.A. 45:3-10, the engineering statute does not. The engineering statute allows a corporation to practice professional engineering so long as the persons in responsible charge of the engineering are licensed in New Jersey, N.J.S.A. 45:8-27 (par. 4), but the architect statute carries no such permission.
In the present case, unlike Costello, plaintiff foreign corporation was the principal professional architect, dealing directly with the lay client, and not a consultant to a New Jersey licensed professional.
The enactment of the Professional Service Corporation Act, N.J.S.A. 14A:17-1, et seq., in no way alters this result. The corporate plaintiff is not incorporated under that law, but under some Maryland law whose force does not extend beyond its borders. In this respect the illegality is multiplied. Not only is the contracting party not authorized to practice in New Jersey, but it purported to practice here in the corporate form without complying with the only statute under which it is allowed.
The legislative purpose to protect those with whom professionals deal, and not to allow the professional responsibility to be degraded by allowing use of the corporate form, would be frustrated by any other result.
The Professional Service Corporation Act requires that all shareholders of the professional corporation be individually licensed for their profession in this State. N.J.S.A. 14A:17-5, 10 and 12. Thus, if a single shareholder of such a corporation were not licensed here, the corporation could not be formed and could not exist (the only exception is for the estate of a deceased shareholder, N.J.S.A. 14A:17-10 and 13).
The fact that an individual architect licensed by New Jersey sealed and certified the plans and specifications does not alter the result. He is not the contracting party, and he is not the plaintiff, nor could he be. The only contracting party is a Maryland corporation which cannot sue on an illegal contract, whether alleged as express or implied (common counts), or whether for the agreed sum or for damages quantum meruit. Both the express contract and the underlying relationship were illegal under applicable local law.
A further argument is made that the corporate plaintiff cannot prevail here for failure to obtain authority to do business in New Jersey as a foreign corporation before instituting suit, N.J.S.A. 14A:13-11(1). And, see, Lilly (Eli) & Co. v. Sav-On-Drugs, Inc., 366 U.S. 276, 81 S. Ct. 1316, 6 L. Ed. 2d 288 (1961), reh. den. 366 U.S. 978, 81 S. Ct. 1913, 6 L. Ed. 2d 1268, affirming 57 N.J.Super. 291, 154 A.2d 650 (Ch. 1959) and 31 N.J. 591, 158 A.2d 528 (1960); also 348 Bloomfield etc. v. Montclair, etc., 90 F. Supp. 1020 (D.N.J. 1950).
The point need not be decided. The Maryland corporation cannot secure authority to practice architecture in New Jersey, despite the assertion of counsel that it is in process of doing so, because N.J.S.A. 14A:13-3(1) limits such authority to business "which may be done lawfully in this State by a domestic corporation". Domestic business corporations cannot practice architecture in New Jersey; only domestic professional corporations may do so, N.J.S.A. 14A:17-1, et seq. and that act does not allow a grant of authority to foreign professional corporations. Even if it did, plaintiff would not qualify because its powers under its Maryland charter include both professional and business activities. Under the statute here, the professional activity must be the sole and specific purpose of the corporation, N.J.S.A. 14A:17-3(2).
The motion is accordingly granted. Judgment will be entered against plaintiff. This result also applies to all other claims by all other parties. All these claims arise out of and are directly connected with the illegal contract, and all are equally tainted. Thus, all parties will be left where the court finds them, without remedy.
This result is what the law intends. New Jersey landowners or developers or builders, as well as unlicensed professionals and foreign corporations, are both to take the consequences of entering into an illegal contract, and derivative claims can rise no higher than their source.
There is no genuine issue on any material fact, and the judgment specified is required to be entered as a matter of law.
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