Frazer v. Shelton

• Decision Date: 18 February 1926
• Docket Number: No. 17211.,17211.
• Citation: 150 N.E. 696,320 Ill. 253
• Parties: FRAZER et al. v. SHELTON.
• Court: Illinois Supreme Court

320 Ill. 253

150 N.E. 696

FRAZER et al.

v.SHELTON.

No. 17211.

Supreme Court of Illinois.

Feb. 18, 1926.

Bill by George E. Frazer and others against A. M. Shelton, as Director of the Department of Registration and Education. From a judgment of dismissal, plaintiffs appeal.

Reversed and remanded, with directions.Appeal from Circuit Court, Sangamon County; Elbert S. Smith, judge.

Defrees, Buckingham & Eaton and Dodd, Matheny & Edmunds, all of Chicago (George T. Buckingham, Walter F. Dodd, and Don Kenneth Jones, all of Chicago, of counsel), for appellants.

Oscar E. Carlstrom, Atty. Gen. (B. L. Catron, of Springfield, of counsel), for appellee.

STONE, J.

Appellants filed a bill against appellee, as director of the department of registration and education of the state of Illinois, seeking to enjoin the enforcement of a certain act relating to the business of accounting, on the ground that the act is unconstitutional, unreasonable, and constitutes an arbitrary and improper exercise of the police power of the state. Appellee demurred to the bill, and the demurrer was sustained. Appellants having elected to abide the bill, the same was dismissed for want of equity. The cause is brought here for review, and various grounds of attack on the constitutionality of the act are assigned and argued.

The statutes attacked are, first, an act entitled ‘An act in relation to the practice of public accountancy and to repeal a certain act therein named,’ passed by the Legislature in 1925 (Laws of 1925, p. 505), and a companion act amending section 60 of an act commonly known as the Civil Administrative Code (Laws of 1925, p. 577). The attack on the latter act is based on the invalidity of the Accountancy Act, against which the arguments of counsel are leveled.

The first section of the Accountancy Act provides that, after the 1st day of October, 1925, it shall be unlawful for any person to practice, or attempt to practice, as a public accountant or certified public accountant without a certificate of registration as such issued by the department of registration and education pursuant to the amendment of section 60 of the Civil Administrative Code, hereinbefore referred to. ‘Public accountancy’ is defined by section 2 of the act as ‘accounting or auditing service as distinguished from bookkeeping, on a fee basis, per diem or otherwise, for more than one employer.’ It is provided by section 3 of the act that any citizen of the United States, or one who has declared his intention of becoming such and who resides in or has a place for the transaction of business as a public accountant in the state, if he be over the age of 21 years, of good moral character, has an education equivalent to a 4-year course in high school, and has received from the department of registration and education, under the provisions of the act, a certificate of his qualifications to practice as a public accountant, shall be styled and known as a public accountant, ‘and no other person shall assume such title or use any abbreviation thereof or other words or letters signifying that the person using the same is a public accountant except as permitted by this act.’ It is also provided in that section that [320 Ill. 256]5 years' experience of the applicant as a public accountant in business for himself or in the employ of a public accountant shall be accepted as equivalent to a high school education. Section 4 provides that any person having the qualifications referred to in section 3, and who shall have received from the department of registration and education, under the provisions of the act, a certificate of his qualifications to practice as a certified public accountant, shall be styled and known as a certified public accountant, and ‘no other person shall assume such title or use the abbreviation ‘C. P. A.’ or any other words or letters signifying that the person using the same is a certified public accountant, except as permitted by this act.' It is made clear by these provisions that one who has received from the department of registration and education a certificate qualifying him to practice as a public accountant is not entitled, under the act to hold himself out as a certified public accountant or use the letters ‘C. P. A.’ or any words or letters of such significance and that one who has not received a certificate provided for in these or subsequent sections is not permitted to practice accountancy for more one employer. Section 5 provides that the department of registration and education shall make the necessary rules and regulations regarding examinations and the time thereof. Section 6 specifies the subjects on which examinations shall be held. It then provides:

‘Each candidate who passes said examination shall thereupon receive a certificate of his qualifications to practice as a public accountant from the department, which certificate shall state that said candidate has successfully passed the examination in order to be qualified and known as a ‘public accountant’ and shall authorize the said successful candidate to so style himself and to be known as such.'

Section 7 fixes the fees for such examination. By section 8 it is provided that those who shall have received a certificate as a certified public accountant from the University of Illinois under the Accountancy Act of 1903 may practice under this law without further examination. By section 9, any person holding a valid and unrevoked certificate as a certified public accountant issued by any other state or territory, or by the District of Columbia, who desires to practice as a certified public accountant in this state, may present his application for a certificate as a certified public accountant in this state, together with the required fee and such information as the department may consider necessary, and the department if it be satisfied that the requirements for a certificate in such other state of territory or in the District of Columbia are equivalent to those in this state, and that the applicant has the qualifications required of an applicant in this state, may issue a certificate as a certified public accountant to such applicant without examination, provided such other state or territory or the District of Columbia extends a similar privilege to certified public accountants of this state. Section 10 provides for the revocation of certificates issued under this act or any prior act. It is provided by section 11 that nothing in the act shall prohibit a certified public accountant holding an unrevoked certificate issued in compliance with the law of another state from practicing in this state and styling himself a certified public accountant, provided he register annually with the department and pay the annual license fee provided in the act. All who are permitted by the department to practice as certified public accountants or as public accountants are required by section 12 of the act to pay an annual license fee of $5. By this section it is made unlawful for any public accountant under this act to practice as such after 10 days from the date on which such license fee is due. Certified public accountants do not appear to be made subject to this penalty. Section 13 is as follows:

‘The department of registration and education shall waive the examination and issue a certificate to any person who is a citizen of the United States or has duly declared his intention of becominga citizen, who resides in the state of Illinois and who applies therefor on or before October 1, 1925, permitting such person to practice as a public accountant, Provided that such person, on July 1, 1925, shall be practicing as a public accountant on his own account, or shall have had five years experience in the employ of either a certified public accountant or a public accountant.’

By section 14 it is provided that nothing in the act shall be construed to prevent the employment by a certified public accountant or public accountant, or a firm of such, of unlicensed employees provided such employees work under adequate control and supervision of a certified public accountant or licensed public accountant and provided that such employees do not certify to the accuracy of any audit or statement made by them or their employer. Section 15 provides the penalties for a violation of the act and section 16 provides that certified public accountants or public accountants of other states may practice in this state in pursuance of any engagement originating from without this state, provided such accountants register with the department and pay the annual license fee. Section 17 repeals the act of 1903 relating to certified public accountants.

By the amendment of section 60 of the act known as the Civil Administrative Code it is provided that the department of registration and education shall designate a board of three persons for the purpose of assisting in the carrying out of the act in relation to accountancy. It is provided that this board shall consist of one public accountant, one certified public accountant, and one lawyer, each of whom has been actively engaged in the practice of public accountancy or of law for at least 5 years next preceding his appointment. It is by that act made their duty to conduct necessary investigations and examinations and report to the department.

Appellants contend that the Accountancy Act is unconstitutional, for the reason that it violates section 22 of article 4 of the Constitution, prohibiting special privileges, and the Fourteenth Amendment to the Constitution of the United States, in that it denies equal protection of the laws. It is also contended that the act is an unreasonable exercise of the police power.

[1] In support of the first contention it is pointed out that the act confers a special privilege on a limited class of persons, namely, those persons who, on the 1st of October, 1925, were holding certincates as certified public accountants, and those who, under...