Holloway v. Brown

• Decision Date: 09 April 1980
• Docket Number: No. 79-383,79-383
• Parties: , 16 O.O.3d 47, 15 A.L.R.4th 1153 HOLLOWAY, D.B.A. Holloway Productions, et al., Appellants, v. BROWN, Attorney General, et al., Appellees.
• Court: Ohio Supreme Court

Page 65

62 Ohio St.2d 65

403 N.E.2d 191, 16 O.O.3d 47, 15 A.L.R.4th 1153

HOLLOWAY, D.B.A. Holloway Productions, et al., Appellants, v. BROWN, Attorney General, et al., Appellees.

No. 79-383.

Supreme Court of Ohio.

April 9, 1980.

Syllabus by the Court

1. An ordinance regulating charitable solicitations is constitutional when the ordinance is narrowly drawn, does not vest municipal officials with the undefined power to determine what people will hear, is a reasonable means of achieving legitimate social interests, and is drafted clearly enough that men of ordinary intelligence can discern its meaning.

2. An ordinance which allows charities to use non-affiliated solicitors only when the cost of that use is reasonable does not violate the charity's right of free speech when percentage limitations are specified in the ordinance which constitute a prima facie case of unreasonableness but which can be rebutted.

3. An ordinance which distinguishes between charitable solicitations performed by a non-affiliated solicitor in the community and those performed by parties affiliated with the charity or at the charity's regular assemblies or services does not violate the Ohio and United States Constitutions' guarantees of equal protection and due process of law.

The Greater Cincinnati Junior Chamber of Commerce (the "Jaycees") is an organization with the stated purpose of promoting civic welfare and of educating its members in civic duty and responsibility and in leadership. In order to finance these activities, the Jaycees solicit contributions.

Due to financial difficulties, the Jaycees entered into a contract with R. E. Holloway, who, as Holloway Productions (hereinafter "Holloway"), was to provide and promote a children's variety show to be held in the Cincinnati area on December 16, 1974, guaranteeing the Jaycees a minimum profit.

On October 24, 1974, the Cincinnati Charitable Solicitations Commission denied Holloway's application for licenses as a professional promoter and solicitor.

The denial was based on the failure of Holloway to be registered and bonded pursuant to R. C. Chapter 1716, and on the fact that the cost of solicitation in Holloway's contract with the Jaycees exceeded limits placed on such costs in the city's charitable solicitations ordinance, Chapter 821 of the Cincinnati Municipal Code (hereinafter "ordinance"). The commission also cited previous violations of the ordinance by Holloway. The commission further found that Holloway had failed to use the proper trustee bank account in handling the proceeds of a circus it had promoted earlier that year in Cincinnati.

Holloway did not pursue its right of appeal to the city manager provided for in the ordinance, but elected to join with the Jaycees and file an action in the Court of Common Pleas of Hamilton County against the Attorney General, the city of Cincinnati, and the members of the commission, seeking a declaratory judgment and an injunction declaring the ordinance unconstitutional and void.

The Attorney General filed a counterclaim, not relevant to the instant action, which has been separated from this case and is still pending in the Court of Common Pleas.

After hearing testimony and receiving briefs, the trial court, in a letter to counsel dated September 7, 1977, found the ordinance to be unconstitutional due to the vagueness of the definition of charitable organization, and the discriminatory effect of the ordinance against professional promoters. The court further declared that the ordinance set forth no guidelines for its administration. On October 4, 1977, the court journalized its entry and made permanent the injunction sought by the plaintiffs.

Upon appeal by defendants, the Court of Appeals reversed, finding that the ordinance, with the exception of its use of character and reputation as criteria for granting registration and licenses, is a constitutionally valid use of the city's police power.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

McIntosh, McIntosh & Knabe and Bruce B. McIntosh, Cincinnati, for appellants.

Thomas A. Luebbers, City Sol., and Nancy H. Simmons, Cincinnati, for appellees city of Cincinnati and Charitable Solicitations Commission.

William J. Brown, Atty. Gen., and Lawrence D. Pratt, Asst. Atty. Gen., for appellee state of Ohio.

CELEBREZZE, Chief Justice.

Pursuant to Cincinnati Municipal Code Chapter 821, no person can solicit for a charitable person (organization) unless the charitable person is registered with the Charitable Solicitations Commission. There are some exceptions to this rule.

Under Section 821-5(a) of the ordinance, if the solicitor is a member or officer of the organization and solicits voluntarily and without remuneration, among the normal constituency or supporters of the organization, no registration is required. Under Section 821-5(b), "(if) the solicitation is in the form of collection or contribution at a regular assembly or services" of the organization, then no registration is required.

In addition to the requirement that the charitable person be registered, professional promoters and solicitors must be licensed under Sections 821-31 and 821-39, respectively. A professional promoter, as defined in Section 821-1-P1, is any person, except an officer or employee of the charitable person, "who for compensation plans, promotes, conducts, manages or carries on or attempts to plan, promote, conduct, manage or carry on any drive or campaign for the purpose of soliciting contributions for or on behalf of any charitable person or engages in the business of soliciting contributions for charitable purposes."

A professional solicitor, as defined in Section 821-1-P2, is any person, other than a professional promoter, not an employee or officer of a charitable person, who is compensated to make solicitations for that charitable person.

The commission, under Section 821-13, must grant registration, upon payment of a fee of one dollar to five hundred dollars, based on the amount raised and the city's needs (Section 821-9), unless it finds:

"(a) That one or more of the statements made in the application is not true.

" * * *

"(d) That the applicant is or has engaged in a fraudulent transaction or enterprise.

"(e) That a solicitation on behalf of applicant would be a fraud upon the public.

"(f) That the applicant has violated a provision of this chapter involving moral turpitude or has violated a provision not involving moral turpitude within two (2) years prior to the date of application.

"(g) That the cost of solicitation or the cost of promotion for a charitable solicitation made in the city of Cincinnati for or on behalf of the applicant during any of the three (3) years immediately preceding the date of application was unreasonable.

"(h) That the applicant has not registered as required by Sections 1716.01, et seq., of the Revised Code of Ohio. Registration shall be effective until revoked by the commission for cause, or cancelled at the request of the registrant."

The cost of promotion is defined in Section 821-1-C2 as the reasonable cost of giving or holding an event or of acquiring goods or publications sold or used as prizes, but not including the actual cost of selling or any cost within the definition of cost of solicitation. The cost of solicitation is defined in Section 821-1-C3 as all costs incurred in raising funds except those involved in presenting an event or in selling goods. However, the actual cost of selling goods is part of the cost of solicitation as is any compensation paid to a professional promoter or solicitor.

A prima facie case of unreasonable cost of promotion is made under Section 821-19 when it is shown that the cost of promotion is more than 75 percent of the gross amount realized for the event. A prima facie case of unreasonable cost of solicitation is made when it is shown that the cost of solicitation is more than 15 percent of the gross amount realized, reduced by the cost of promotion. This allows a charity to pay up to approximately 78.75 percent of the gross amount it realizes on a given solicitation as the costs of obtaining these funds. In addition, because these figures only establish a prima facie case, the charitable person can show that higher costs are reasonable.

The commission, pursuant to Section 821-33, must grant a professional promoter's license upon payment of a $75 fee unless it finds:

"(b) That one or more of the statements made in the application is not true.

"(c) That the applicant or an officer, agent or member of the applicant has violated a provision of this chapter within three (3) years immediately preceding the date of this application or has violated a provision of this chapter involving moral turpitude.

"(d) That the applicant has engaged in a fraudulent transaction or enterprise.

"(e) That the applicant is not registered and bonded as a professional fund raiser under the provisions of Chapter 1716, Revised Code of Ohio."

The commission, pursuant to Section 821-39, must grant a professional solicitor's license upon payment of a fee of $7.50 and a finding that he has registered pursuant to R. C. Chapter 1716.

Registration and licenses can be revoked for, inter alia, violations of the ordinance, for misrepresentation, or for failure of the professional promoter or solicitor to properly keep accounts. It is a violation of the ordinance to solicit without the required licenses and registration, to commingle funds, to solicit fraudulently, or to solicit if the cost of solicitation or promotion is unreasonable. Violation of the ordinance can also result in a fine of $500 and six months in jail, pursuant to Section 821-99.

The Court of Appeals held that reputation and character criteria, which the commission was permitted under the ordinance to use to deny registration or a license, are unconstitutional considerations which could be deleted from the...