Barry Laboratories, Inc. v. Wisconsin State Bd. of Pharmacy

• Decision Date: 17 February 1965
• Citation: 26 Wis.2d 505,132 N.W.2d 833
• Parties: BARRY LABORATORIES, INC., Respondent, v. The WISCONSIN STATE BOARD OF PHARMACY, Appellant.
• Court: Wisconsin Supreme Court

Page 833

132 N.W.2d 833

26 Wis.2d 505

BARRY LABORATORIES, INC., Respondent, v. The WISCONSIN STATE BOARD OF PHARMACY, Appellant.

Supreme Court of Wisconsin.

Feb. 17, 1965.

Bronson C. La Follette, Atty. Gen., Robert J. Vergeront, Asst. Atty. Gen., Madison, for appellant.

Quarles, Herriott & Clemons, Milwaukee, Maxwell H. Herriott and James Urdan Milwaukee, of counsel, for respondent.

HEFFERNAN, Justice.

1. The issues. Barry contends that the announcement by the board with respect to the licensing requirement is a rule as defined in sec. 227.01(3), Stats., and therefore reviewable in an action for declaratory judgment by virtue of sec. 227.05. The board contends that the statement of the board is not a rule. The circuit court agreed with the board and decided that no cause of action had been stated under sec. 227.05. The board concedes that the complaint would state a cause of action under sec. 269.56, governing declaratory judgment generally, if the action had been brought against the individual members of the board. It argues, however, that an action against the board is an action against the state, without its consent. The circuit court held, however, that the action, under sec. 269.56, may be brought against the board.

The order of the circuit court overruled the demurrer, and provided that the action should be considered as one under sec. 269.56, Stats., and not under sec. 227.05. The board phrased its notice of appeal so as to seek review of the order insofar as it overruled the demurrer and determined that the action was maintainable under sec. 269.56. Barry has attempted to appeal from the determination in the order that the action should not be deemed an action under sec. 227.05. The order is appealable only because it overrules a demurrer. The defendant board, which demurred may appeal from it, but plaintiff may not. ¹ Upon the board's appeal, however, Barry could ask us to review the ruling that no cause of action was stated under sec. 227.05, since reversal of that ruling would support the order overruling the demurrer. ² Under the circumstances we will treat Barry's appeal as a request for such review.

2. Pertinent provisions of ch. 151, Stats. Ch. 151, Stats., is entitled 'Pharmacy.' Sec. 151.01 provides for the state board of pharmacy, and sec. 151.01(4) provides that the board shall cause prosecution of violations of the chapter. Ch. 424, Laws of 1947, created sec. 151.07, entitled 'Dangerous Drugs,' generally forbidding the delivery of a dangerous drug except by a practitioner or upon prescription of a practitioner. This and other prohibitions contained in sec. 151.07 do not apply, however, to the wholesale delivery of dangerous drugs to persons enumerated in sec. 151.07(8). These persons are pharmacists, practitioners, hospitals, and certain others. 'Dangerous Drug' is defined, in part, as 'any drug or drug-containing preparation, the original container of which bears the statement 'Caution--federal law prohibits dispensing without prescription.'' Certain compounds included in the definition are enumerated. ³

Although sales at wholesale to the enumerated persons are not forbidden, sec. 151.04(5), Stats., has, since 1955, provided that no person shall engage in the sale or distribution at wholesale to any of the classes of persons enumerated in sec. 151.07(8) without first obtaining a license from the state board. ⁴

The letters sent by the state board announced the board's position that sec. 151.04(5), Stats., prohibits the shipment of prescription-legend drugs into Wisconsin to the persons enumerated without a license from the state board. Presumably the board will consider its duty is to seek prosecution of those who make such sales without a license, where jurisdiction can be obtained for such purpose.

3. May this action properly be brought under sec. 269.56, Stats., against the state board of pharmacy? It is alleged that the board is threatening prosecution of Barry or its agents for failure to obtain a license; that sec. 151.04(5), if properly interpreted, does not require Barry to be licensed in order to carry on its present business; and that if so applied, it would conflict with the constitution of the United States. Barry seeks a declaration that it has the right to continue its present business without being licensed. The attorney general concedes, on behalf of the board, that a similar action against the individual members of the board, alleging that they are proposing to act in excess of their authority as officers of the state, could be maintained under sec. 269.56.

In Berlowitz v. Roach ⁵ action for declaratory judgment was brought against the state treasurer and other officers, naming each individually and as such officer. The court referred to sec. 269.56(2), Stats., and said:

'This clearly grants to any party the right to proceed under the uniform declaratory judgment statute to have a statute construed with reference to a claimed right so long as it cannot be said to be an action against the state. It is argued that while the state is not named as a party defendant it is the party in interest because the money realized from the collection of this tax is state property. We cannot agree with appellants' position that this is an action against the state. It is an action against the enforcing officer to prevent him from doing that which it is claimed he has no legal right to do, and if respondent is correct in his position that the statute gives him no legal right to collect this tax the enforcing officer is then acting as an individual in excess of his authority and with no protection under the law. * * * ' ⁶

It is claimed that naming the board in its official name as defendant makes the action one against the state, and therefore improper in the absence of statutory consent.

It is very difficult to see, however, how an action for a judgment declaring that proposed official action is grounded on an improper construction of a statute has any greater effect upon the interests of the state if brought against a board as defendant than if brought against the members of the board. The purpose in either case is to determine whether a course of official action is consistent with the laws or constitution. The principle that such an action against individuals who are officers is not an action against the state has been termed a fiction, created 'in order to find a way around sovereign immunity.' ⁷ As a matter of practice, a decision unfavorable to the position of the officers in an action against them individually, is ordinarily recognized as final by the successor officers. Although there is a question whether a judgment against individual officers is resjudicata against the state and other officers, Professor Davis has pointed out that the state may be bound by judgment in an action against its officers where such officers are defended by the government's counsel. ⁸ If the state is bound by the result in any event, the reason for the distinction between suing the officers and suing the agency vanishes.

The supreme court of New Jersey has decided that an action for a declaratory judgment would lie against a state board where the plaintiff challenged the constitutionality of a statute and sought to restrain threatened enforcement. ⁹ The court pointed out that a suit to restrain a state agency from executing an unconstitutional statute had been a common exercise of jurisdiction, and that acts done by the administrative agency in the enforcement of the law would have been reviewable on certiorari as in excess of power.

We agree with the learned circuit judge that the present action may properly be maintained against the board.

4. Is there a defect of parties? The board contends that Barry is attempting to secure an interpretation of sec. 151.04(5), Stats., for the benefit of others than itself and points out that sec. 269.56(11) requires that all shall be made parties who have or claim any interest which would be affected.

We have held that sec. 269.56(11), Stats., should not be construed as requiring that where a declaratory judgment as to the validity of a statute or ordinance is sought, every person whose interests are affected must be made a party. ¹⁰ Although Barry's prayer for relief suggests that it is seeking a ruling which will protect others as well as itself, it has not alleged that the action is brought on behalf of a numerous class. Barry does sufficiently show that its own interests are affected. Presumably any adjudication of the inapplicability or invalidity of the statute would be limited to Barry's method of doing business, as established by the evidence. We do not consider it necessary that other manufacturers be made parties in order to proceed with the action.

5. Is the board's statement, that out-of-state manufacturers must be licensed, a rule? Barry contends that the board's statement is a rule as defined in sec. 227.01(3), Stats. If that be true, it is subject to judicial review under sec. 227.05. Barry not only contends on review that the board's statement violates constitutional provisions and exceeds statutory authority of the board, but alleges failure to comply with statutory rule-making procedures. ¹¹

Sec. 227.01(3), Stats., provides:

"Rule' means a regulation, standard, statement of policy or general order (including the amendment or repeal of any of the foregoing), of general application and having the effect of law, issued by an agency to implement, interpret or make specific legislation enforced or administered by such agency or to govern the organization or procedure of such agency.'

The board's statement involved herein fits the foregoing definition only if it is a 'statement of policy * * * of general application and having the effect of law, issued * * * to * * * interpret * * *' sec. 151.04(5), Stats.

It seems to us that the statement involved herein can not be said to have the effect of law. If so, it does not...