Mercer v. Hemmings, 32967

• Decision Date: 29 July 1964
• Docket Number: No. 32967,32967
• Citation: 170 So.2d 33
• Court: Florida Supreme Court
• Parties: Hugh Miller MERCER et al., Individually and as partners doing business under the firm name of Price Waterhouse & Co., and Jim Walter Corporation, a Florida corporation, Appellants, v. Arthur I. HEMMINGS et al., as members of and constituting the Florida Board of Accountancy, Appellees.

Page 33

170 So.2d 33

Hugh Miller MERCER et al., Individually and as partners doing business under the firm name of Price Waterhouse & Co., and Jim Walter Corporation, a Florida corporation, Appellants, v. Arthur I. HEMMINGS et al., as members of and constituting the Florida Board of Accountancy, Appellees.

No. 32967.

Supreme Court of Florida.

July 29, 1964.

Rehearing Denied Jan. 11, 1965.

Cromwell A. Anderson, Louis S. Bonsteel, and Smathers & Thompson, Miami, for appellants.

Chester Bedell, Jacksonville, for appellees.

ROBERTS, Justice.

This case is before us on direct appeal from a final decree upholding the validity of Chapter 473, Florida Statutes, F.S.A. relating to the practice of public accounting in this state, and Rule 20-9.03 promulgated by the Florida State Board of Accountancy ('the Board' hereafter), as against the attack on constitutional grounds made thereon by the appellants. Jurisdiction of the appeal attaches under Section 4(2) of Article V of the Florida Constitution, F.S.A.

The decree was entered in a suit for declaratory relief brought by the appellants, as partners doing business under the firm name of Price Waterhouse & Co., and their client Jim Walter Corporation, a Florida corporation doing business in several other states. The partnership is composed of some 130 certified public accountants, each of whom is authorized to practice as a certified public accountant in one or more states of the United States. None of them, however, holds such a certificate in this state, nor do any of them reside in this state.

The firm, which is one of the oldest and largest in this country, has performed accounting work in Florida since 1906. Since 1931, however (the year in which our statute providing for the examination and licensing of 'certified public accountants' was adopted, Ch. 15637, Laws of Florida, Acts of 1931) its accounting work here has been limited to the fulfilling of specific engagements entered into outside the state, under 90-day temporary certificates issued by the Board as authorized by Section 473.14, Fla.Stat., F.S.A. From a modest thirteen in 1948, the number of such temporary certificates issued annually to the firm had increased to 69 issued in 1960. In that year an office (referred to by appellants as a 'work space') was established in Miami, with a manager and several assistants--all licensed by other states as certified public accountants--who with their families took up residence in Florida and devoted full time to the firm's accounting business for Florida, clients. In 1961, 88 specific engagements, requiring the same number of temporary certificates, were undertaken in this state; and in January of 1962 an additional 'work space' was established in Tampa.

In establishing such 'work spaces', the appellants carefully avoided giving the appearance of holding themselves out to the general public in this state as being licensed under Florida law to practice as Florida certified public accountants. Their firm name was not placed on their office door nor in the building directory, nor was it listed in the telephone directory. The resident employees were not listed in any directories as certified public accountants nor (except in one unauthorized instance) as employees of Price Waterhouse. The letterheads of the Tampa and Miami offices show only a post office box number, and the telephone was answered by repeating part of the telephone number. Despite their attempt at anonymity, however, their 'specific engagements' in this state increased to 134 during 1962 (including some that were acquired through their local Miami attorneys), requiring two managers at each of the offices and additional assistants (ten in the Miami office alone, all of whom were out-of-state certified public accountants) who resided in the local area and worked full-time for the appellants in the area.

The situation apparently first became known to the Board in July of 1962 when one of the managers of the Miami office applied to the Board for a reciprocal certificate to practice as a certified public accountant in this state, as authorized by Section 473.19, Fla.Stat., F.S.A. One of the requirements for the issuance of such a reciprocal certificate is that the applicant 'has been engaged in the practice of public accountancy in Florida as a full time employee of a certified public accountant, as defined in this chapter, for a period of two years, and is a resident, having resided continuously in the state for a period of two years * * *' The applicant stated in this application that he had been so engaged for the requisite period, having been employed by the appellants, Price Waterhouse. The Board denied his application and immediately adopted Rule 20-9.03 as an 'emergency' measure without notice to the appellants.

The portion of the rule objected to by appellants reads as follows:

'(3) The Board shall ascertain that the engagement for which an application is made is a specific engagement for which a temporary certificate may be issued, and does not constitute, and is not in conjunction with other engagements for the purpose of establishing, a full time practice of public accounting in the State of Florida. Temporary certificates will not be issued to firms or persons maintaining a full time staff in the State of Florida, and using facilities for full time practice of public accounting as distinguished from fulfilling specific engagements under temporary certificates.' (Emphasis added.)

The statutory provision relating specifically to the issuance of temporary certificates to out-of-state certified public accountants, Section 473.14, F.S.A. provides that

'The board may, in its discretion, adopt rules and regulations providing for the issuance of temporary certificates to persons for the purpose of enabling such persons to fulfill specific engagements or employments, the contracts for which were entered into beyond the limits of the State of Florida.

'No such temporary certificate shall be valid for more than ninety days after its issuance, and no certificate shall cover more than one engagement, and no such certificate shall be issued to any firm or copartnership unless all of the members thereof hold certificates as certified public accountants issued under the laws of another state * * *.'

The instant suit for declaratory and injunctive relief was then filed by the appellants. The Board answered and filed a counterclaim praying that the court enjoin the appellants from practicing as certified public accountants in this state except under certificates as may be issued by the Board.

Trial was had of the issues made, and extensive depositions and numerous exhibits in support thereof were introduced in evidence, upon the basis of which the Chancellor held, inter alia, that the provisions of Chapter 473 requiring out-of-state certified public accountants to obtain certificates from the Board as a condition precedent to practicing in this state, are within the police power of the State and are not susceptible to the attack on constitutional grounds made upon them by the appellants; that the residency requirements of Chapter 473 for permanent certificates by examination and reciprocity 'do not discriminate in favor of residents and against non-residents and are not invalid upon the grounds or for any of the reasons asserted by the plaintiffs'; and that Rule 20-9.03, supra, 'is in keeping with the intent of Chapter 473' and not invalid on the grounds or for any of the reasons advanced by the appellants. The relief prayed for by the appellants was denied and that counterclaimed for by the Board was granted. This direct appeal followed.

On this appeal the appellants argue that Rule 20-9.03 is inconsistent with the mandate of this court in Florida Accountants Association v. Dandelake, Fla.1957, 98 So.2d 323, 70 A.L.R.2d 425; that it is repugnant to Section 473.14, supra; and that it is without basis in the Florida police power. Their attack on constitutional grounds--against the Rule and against Section 473.14 and Chapter 473, F.S.A. if the Rule is held to be in keeping therewith--is summarized in their brief as follows:

'It arbitrarily interferes with appellants' freedom of contract and rights of property in the practice of their profession and, therefore, is in violation of the Due Process Clause. It imposes an unjustifiable burden on interstate commerce and discriminates in favor of Florida Certified Public Accountants and Public Accountants at the expense of the interstate commerce in which appellants and their clients are engaged and, therefore, is in violation of the Commerce Clause. Finally, it discriminates irrationally between Florida Certified Public Accountants and nonresident Certified Public Accountants and, therefore, is in violation of the Equal Protection Clause.'

In support of the contention that they cannot, consistently with Dandelake, be required to have Florida licenses as certified public accountants in order to maintain offices, staffed by full-time employees, in which to perform their accounting services, appellants argue that Chapter 473 as construed by this court in Dandelake is essentially a 'holding out' statute, the purpose of which is 'to protect the members of the Florida public from misrepresentation as to licensing by the state agency in the field of accountancy.' They urge that they do not hold themselves out to the general public in Florida as a firm of Florida certified public accountants, and therefore should not be required to comply with our certification requirements, any more than the accountants doing routine accounting work, involved in...