Hoblitzel v. Jenkins

• Decision Date: 01 July 1924
• Citation: 263 S.W. 764,204 Ky. 122
• Parties: HOBLITZEL ET AL. v. JENKINS ET AL.
• Court: Kentucky Court of Appeals

263 S.W. 764

204 Ky. 122

HOBLITZEL ET AL. v. JENKINS ET AL.

Court of Appeals of Kentucky.

July 1, 1924

Appeal from Circuit Court, Jefferson County, Chancery Branch, Second Division.

Action by Bruce Hoblitzel and another against I. Sidney Jenkins and others, as members of state real estate commission. From the judgment, plaintiffs appeal and defendants file cross-appeal Affirmed.

Hugo Taustine, of Louisville, for appellants.

W. A Perry, of Louisville, for appellees.

TURNER C.

This is a proceeding under the Declaratory Judgments Act (Laws 1922 c. 83), and involves the validity of an act of the General Assembly of 1924, wherein there is created a state real estate commission, and wherein there is defined a real estate broker and a real estate salesman, and giving to such commission certain regulatory powers as to such brokers and salesmen in cities of the first and second classes.

The plaintiffs are a real estate broker and a real estate salesman, while the defendants are the members of the commission appointed by the Governor under authority of the act.

The chancellor below upheld the great body of the act, but declared unconstitutional and void a part of section 9 limiting the remedy of an applicant for license whose application had been denied, and that of a licensee whose license had been revoked, to an application to the Court of Appeals for a review of the questions of law involved in the decision of the commission.

The plaintiffs appeal, and the defendants are prosecuting a cross-appeal from so much of the judgment as declares any part of section 9 invalid.

The chancellor below in his opinion clearly and accurately analyzes the several contentions of the parties growing out of the provisions of the act, and his conclusions are so logical and so fully in accord with the views entertained by this court we have concluded to adopt as the opinion of this court his admirable analysis of the act and conclusions of law.

The opinion is as follows:

"The act is a long one, but, for the purposes of this case, it may be summarized as follows:

In cities of the first and second classes no person, partnership, association, or corporation shall act as broker or salesman of real property without a license.

Section 1. A 'broker' is one who, for compensation, sells or buys, or offers to do either, or negotiates sales or purchases, or leases, etc., 'as a whole or partial vocation,' while a 'salesman is one who does any of these things under an employment by a "broker." ' A single act of any of these kinds constitutes the actor a 'broker' or 'salesman,' as the case may be.

Section 2 excepts such acts performed by the owner or lessee of the property, as well as by executors, administrators, trustees, and receivers.

Section 3 creates the commission, and section 4 provides licenses to be granted 'only to persons who bear a good reputation for honesty, truthfulness, and fair dealing, and are competent to transact the business of a real estate broker or real estate salesman in such a manner as to safeguard the interests of the public.'

Section 5 requires written applications for licenses supported by recommendations from owners of real property in the county of applicant's residence, certifying 'that the applicant bears a good reputation for honesty, truthfulness, fair dealing, and competency.' Applicant to furnish sworn statements of his present and former places of residence and business, during the past five years, 'accounting for such entire period and the length of such residence, together with the name of at least one real estate owner in each of said counties where he may have resided or have been engaged in business.' Applicant for salesman's license must also report the length of time, 'if any,' during which he has engaged in 'the real estate business,' together with name and address both of last employer and new employer, etc. Every application to be accompanied by bond, with two good sureties, in the sum of $1,000, running to the commonwealth; and the commission may require 'such other proof as may be deemed desirable with due regard to the paramount interests of the public as to the honesty, truthfulness, integrity, and competency of the applicant.'

Section 6 requires, before refusing a license, the commission shall set the application down for hearing.

Section 7 requires licenses and pocket cards to be issued; fees, $10 for a broker, $2 for a salesman; to be renewed annually; revocation of broker's license automatically revokes licenses of all of his salesmen; change of business location without notice to commission revokes license; salesman's license to be returned by broker (employer) to commission upon termination of employment, etc.

Section 8 provides for revocation of license by commission, after investigation either on its own motion or on complaint filed, on any of the following grounds: Fraud in obtaining license; 'substantial misrepresentation' (i. e., in conduct of business); false promises; 'continued and flagrant course of misrepresentation'; false promises through an agent; acting for more than one party without the knowledge of all for whom he acts; accepting recompense as salesman from any but his employer; representing another broker without knowledge and consent of his employer; failing to account for moneys of others within a reasonable time; paying any person for acts in violation of this law; 'being unworthy or incompetent to act as a real estate broker or salesman in such manner as to safeguard the interest of the public'; 'any other conduct, whether of the same or a different character from that hereinbefore specified, which constitutes improper, fraudulent, or dishonest dealing.'

Section 9 requires, before denying an application for license or revoking a license, commission to set the matter for hearing, giving ten days' notice to applicant or licensee; latter given right to be heard in person or by counsel, with right to subp na witnesses. 'In the absence of fraud' the finding of fact made by the commission shall be 'conclusive,' but Court of Appeals given power to review questions of law, upon application of aggrieved party, made within thirty days, 'by certiorari, mandamus, or by any other method permissible under the rules and practices of said court, or the laws of this state.'

Section 10. Provisions as to nonresidents.

Section 11. Publication of licenses granted or revoked.

Section 12. Penalties provided: Fine of not over $500 or imprisonment for not over six months, or both, etc.

Sections 13 and 14. Saving and repealing clauses.

Section 15. No interference intended with power of cities to tax or license real estate brokers.

Section 16. Effective date.

It is contended by plaintiffs that the act is an unconstitutional interference with the liberty of the citizen to pursue any lawful calling. On the other hand, the act is defended as a legitimate exercise of the police power.

(1) It may be safely said that, in the exercise of the police power, a business or occupation may be prohibited or regulated by government only when its unrestricted pursuit imperils, in some degree, the health or morals or safety or welfare of the public. If there is no such peril, the prohibition or regulation is unauthorized.

(2) The mere declaration by the Legislature that such a peril exists is not conclusive. The legislation must have a real relation to the public health, morals, safety, or welfare. Commonwealth v. Smith, 163 Ky. 227, 173 S.W. 340, L.R.A. 1915D, 172.

(3) The public peril which alone will justify such legislation must inhere in the nature of the occupation itself, and not merely in the frailties to be expected in some of the persons who may follow it. Tolliver v. Blizzard, 143 Ky. 773, 137 S.W. 509, 34 L.R.A. (N. S.) 890. In that case it was said: 'In proportion to the severity or extent of the police power must the strict observance of the constitutional limitations upon the police power be required. The test in every case is: Is the prohibition of a particular business or the sale of a particular article necessary to prevent the infliction of a public injury? It is not sufficient that the public sustains harm from a certain trade or employment as it is conducted by some engaged in it. Because many men engaged in the calling persist in so conducting the business that the public suffers and their acts cannot otherwise be effectually controlled is no justification for a law which prohibits an honest man from conducting the business in such a manner as not to inflict injury upon the public.'

That was, however, a case of absolute prohibition (of the sale of any 'soft drinks,' except five named kinds), and the court proceeded to say that 'all sorts of police regulations' might be adopted 'to suppress the evil' (of illegal sale of intoxicants), so long as 'honest men may be protected in their right to pursue an innocent calling.'

(4) Upon the other hand, the policy to be adopted is a matter for decision by the Legislature and not by the courts. If there is any foundation at all for the regulation adopted, if the nature of the calling is such that a reason can be given for apprehending a public peril from its unrestricted pursuit, then the action of the Legislature is conclusive.

(5) And there is, of course, a presumption in favor of the validity of legislation which is controlling in case of doubt.

(6) It is obvious that the sole purpose of the act under examination--certainly its chief purpose--is to insure the probity of all persons permitted to engage in the business of selling or leasing real estate for a compensation. It is true that the act refers more than once to the 'competency' of licensees, but no means is provided for determining...